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‘Perfect storm’ causes glass shortage and price hikes for UK wine industry

Published:  24 January, 2019

The UK wine industry is running out of glass, creating unprecedented price hikes for bottlers - and the situation is unlikely to be resolved before 2020.

Mark Lansley, chief executive at Broadland Wineries, said demand for glass bottles had been “building up over the last few years as the spirits market, in particular gin, boomed and then grew again as drinks consumption boomed during the hot 2018 summer. There is also evidence that quite a few UK bottlers have been building stocks ahead of Brexit and some brand owners have been switching from plastic bottles to glass. These all combine to form a perfect storm".

And while “demand has been growing, bottle manufacturing capacity has stayed static, or even declined when furnaces have to go down for periodic maintenance. So demand has started to exceed production capacity. And when this happens, the bottle manufacturers prioritise the production of spirits bottles as they make more profit margin on these than wine bottles”.

Trevor Lloyd, director of planning and procurement at Greencroft Bottling Company, said there has been a “massive increase in the demand for glass over the past 18 months and hence a shortage of supply across Europe. Some earlier furnace closures and a number of planned and unplanned furnace rebuilds have only exacerbated the issue. Manufacturers are working to resolve the issue, however a glass furnace can take several months to rebuild and even longer to construct new furnaces and production lines".

He added that “despite our strong relationships with a number of glass producers across the UK and Europe, we are still finding supply tight. It is important to remember bottle manufacturing is run in campaigns and that a furnace may be required to undergo a colour change to produce the bottle required, hence lead times on certain bottles may be months, even in times of low demand”.

As well as furnace closures or rebuilds, Lloyd also pointed to the “demonisation” of plastic packaging, whereas glass is “easy to recycle with a long established infrastructure for recycling”, the “renaissance in gin and premium mixers” in glass bottles, and the combination of last summer’s heatwave and the World Cup, which “helped increase an already healthy demand for glass".

He also said if there is “another hot summer we can expect the current issues to persist throughout 2019 and into 2020. Investment is happening across Europe but it is too early to predict if capacity will catch up with the current increases in demand”.

Lansley also predicted shortages in supermarkets as demand for wine consumption "ramps up towards summer. We could see quite a few gaps on the supermarket shelves then”.

Brexit is also contributing to the shortage he added. “Broadland increased its UK bottle and finished goods stocks because of Brexit. I imagine others have done similarly and that will have only worsened the shortage.” He also predicted Brexit-related disruption at the ports could “worsen the situation”.

To combat the shortage, Lansley said “bag-in-box and pouch is looking like an attractive and safer option for new product development. As is PET for single serve. Sourcing from Europe, where suppliers may also be nearing or at full capacity, is fraught with the difficulties of Brexit. Bottles could be sourced from China but this is a long way to ship bottles in terms of cost and is not sustainable for the environment".

He added the “only way to resolve the issue is to create more production capacity, but this will take at least one and two years to happen".

To pile further pressure on the situation, UK bottle prices increased on 1 January 2019 from anywhere between 10%-40%,” said Lansley. “Green is harder hit than flint. I have not seen increases like this before in my 13 years in the wine trade.”

But Lloyd suggested the shortage of glass “isn’t itself necessarily causing prices to increase. The rise in energy costs, especially gas, has driven the price increase; as you’d imagine, a lot of energy is required to run a furnace. The strength of the pound and the increase in transportation rates are also contributory factors".