(WPT) Stock Up on Your Favorite Wine Now: Low Inventory And Higher Prices Are on the Horizon

[AKR]

Stock Up on Your Favorite Wine Now: Low Inventory And Higher Prices Are on the Horizon
2021-06-11 16:10:18.624 GMT

By Dave McIntyre

(Washington Post) -- If you've been reading the news — and I assume you have,
because you're reading this — you've probably seen reports of supply chain
issues disrupting the economy. Container ships are hard to come by and, thanks
to pandemic-related worker shortages in ports, are difficult to unload. Labor
issues, as employers struggle to bring employees back to work, hinder the
ability to get products to market.

Like many sectors of the economy, wine is recovering in fits and starts. The
short-term outlook for wines we will find on retail shelves (and their prices)
is a mix of pandemic and Mother Nature. The skinny: Stock up now, because
demand will rise as restaurants reopen, and some wines may see short supply
and higher prices. The crunch is probably coming in late summer and maybe — if
all goes well — easing by the holidays.

"We're coming out of the pandemic, restaurants are opening again, and there's
pretty decent retail demand," says Adam Sager, co-president of Winesellers
Ltd., a Chicago-area importer. "The problem is supply. We can't keep anything
in stock."

In the "before times" — two years ago — an importer would place an order from
a winery in France, for example, and the winery would have the product ready
to ship in two to three weeks. The wine would take about 10 days to get from
port in France — Marseille and Le Havre are the primary departure points — to
get to the U.S. East Coast (New York, Baltimore and Norfolk are likely
destinations) or several more days to traverse the Panama Canal and arrive in
Los Angeles or San Francisco. Count on another three to five days to clear
customs and get to the importer's warehouse, and from there to market. The
process took about five or six weeks from the time the order was placed to the
wine reaching retail shelves.

"Now it is taking three to four months," says Guillaume Touton, the Monsieur
Touton of M. Touton Selection, a New York-based importer. And the problem goes
beyond France. Shipments from other European countries, South America, New
Zealand and Australia are facing the same hurdles.

Today, a shipment might sit at the winery for several weeks while an importer
tries to reserve space on a container ship. The importer pays for the wine
when the winery says the order is ready, so this time is a cost on the
importer's ledger. And with many products in addition to wine competing for
containers — shipping is harder to arrange, and prices go up.

Some importers are trying to hold prices firm despite the pressures. "Freight
increases are not yet high enough to warrant price increases to consumers,"
Sager says. But he, too, is feeling the supply crunch, with 40 labels out of
stock in the company's California warehouse.

The problem is especially acute on the Pacific side, Sager says, as shippers
struggle to provide container space amid high demand for Chinese goods. "We
have a container that was supposed to leave New Zealand in May, and it's still
sitting there waiting for a ship," Sager told me on June 7. He's now expecting
it to arrive in the United States in late July.

The supply crunch is not just hurting the ability of importers to bring wine
across the ocean. Bottles, cardboard, even printed wine labels are highly
dependent on imports from China. Glass manufacturers were shut down in the
early days of the pandemic, and it takes time to get those facilities and
supply chains back to normal operations.

Labor issues are a factor, too. A lack of crane operators in France or
delivery truck drivers in North Carolina can slow wines' voyage to market,
Touton says.

Nature is also limiting supply. New Zealand experienced an unusually cold
growing season in 2021 that cut yield by about 40 percent. Severe frosts in
several regions of France and northern Italy in April have decimated this
year's vintage before it even really started. Northern California and Oregon
had dramatically low harvests in 2020 because of wildfires, and California is
already facing drought this year. Those shortages will reverberate in months
and years to come.

Right now, both Sager and Touton see the worst coming for consumers in late
summer. "We anticipate a surge in demand over the summer, as restaurants
reopen and we return to normal, but supply will be tight," Sager says. Touton
said he expects wines could increase in price by as much as 20 percent in the
short run. So a $10 wine might cost $12 in September, and a $20 bottle could
rise to $24.

Availability problems may ease in late fall as importers adjust to the supply
chain woes. Both Sager and Touton say they are already placing holiday orders
they typically make in September.

"We should be back to normal by early next year," Touton says. "I hope."