Glider

http://canpha.com/

Nothing Matters if You Can’t Put it in The Bottle

Puppies.jpg

We all take things for granted: Turning on the light switch, filling up at the pump, opening the tap. Yet without these simple necessities, society would disintegrate overnight. And it seems we in the wine trade are soon about to re-learn this lesson the hard way.

Why? Bottles. Yes, bottles.

A very large percentage of wine is filled in to glass bottles. It is said that the invention of glass containers has been the single most important development in the history of wine. Imagine hauling home a 300 lb. earthenware “amphora” from your local wine shop, and you get the picture.

The wine industry has taken the plentiful supply of cheap glass bottles for granted. Outside the US and Australia, the glass bottle market has been very competitive, with oversupply the rule. There are lots of reasons for the surplus, but one basic challenge for bottle manufacturers is that once they flip the switch on a glass furnace, it cannot be turned off. It must run 24/7, 365 days a year. With every country in Western Europe producing wine, there have always been lots of manufacturers, competition… and supply.

Over the years, we’ve noticed a few anomalies with glass pricing: For example, in a low cost energy market like the US, low end wine bottles have historically cost nearly three times what they cost in Europe, where energy costs are much higher. It never made much sense until one realizes that the glass bottle business in the US is an oligopoly.

Graham was quoted in an article in wine.co.za last week about the shortage of glass in South Africa.
Taken in isolation, the ZA glass ‘shortage’ looks like the unintended consequence of one of the two glass manufacturers taking a furnace out of production to upgrade and add capacity. However, this is not a story exclusive to South African.

The reality is that furnaces are allegedly being taken out all over Europe as well. Coincidence? The way we see it, glass manufacturers are putting the squeeze on the wine industry. Glass prices are skyrocketing and the world’s largest glass manufacturer, Owens Illinois, with dominant market position in wine bottle markets of South Africa, Europe and many other countries, declared a 33% increase in earnings on 15% increase in sales. (Share price has tripled this year)

I am not a conspiracy theorist, but It is not hard to pencil out a carefully crafted plan, instigated by a couple of glass manufacturers to create shortages in the market and take massive price increases. This is just how it looks to me, and glass industry people are talking amongst themselves about it.

Take it from me, to have gone to all the trouble of producing a great wine, only to discover you can’t deliver it because of a shortage of something you had hithero always taken for granted- the glass bottle to put it in- is a mind-blowing experience.

To have your wine sitting in tanks without any way of getting it into consumer’s glasses, is an irony not lost on the bottle manufacturers.

It is a very bad situation for all wine producers. Mark my words, the biggest story in the wine trade this year won’t be about wine, it’ll be about shortages of glass bottles keeping the wine from getting to market.

There is much more to this story and I will try to post more on it.

Technorati Tags:
, , , , , ,

10 Comments, Comment or Ping

  1. sneaky colluders! perhaps in a way, this may help reduce the over supply of wine – albeit in a rather negative way?

  2. We seem to have an oligopoly in the supply of glass bottles here in South Africa, too.
    Consol Glass is the dominant producer. Their only (real?) competitor is Nampak. Both are listed companies, both individually responsible to public shareholders. ROI is their lives.
    Nampak produce a restricted range of products, which are remarkably similar to Consol in conformation and price.
    The Nampak bottles, surprisingly, never seem to be cheaper than the Consol equivalents.
    Should I be surprised that the Nampak furnace is also going to be shut down in February next year?
    We also have a speciality glass producer here, who one might think, with a wider range of shapes and colours, be able to save the day for wine producers wanting to provide consumers with choice and competition for their spend.
    Unfortunately, this company only runs their furnace once or twice a year, and makes limited volumes. In addition, the company is called Consol Speciality Glass, and they have the same shareholders as the other Consol, who are probably not keen to shoot themselves in the foot.
    We have had surprisingly good reaction by consumers to the widespread move toward Stelvin screw cap bottles for fine wine.
    Should we not now consider special forms of plastic for fine wine? And leave glass for beer and spirits?
    The beer companies have a major business in benefiting from recycling. They wash and recycle bottles (at least here in Southern Africa, up to 5 or 6 times per bottle).

    In the late 17th Century, glass packaging for wine retail was a major innovation that enabled the wine trade as we know today to be created and grow, establishing one of the world’s best luxury-good product markets.
    In those early years, glass was fabulously expensive, but beat any alternative for practical values hands-down. However, the barrel and household cups and jugs remained a competitor.
    With industrialisation, glass became a commodity.
    In the wine world, can we afford for glass to be more than a practical commodity?
    Do we want a glass container to become a irrreplaceable luxury good for all or most wine products.
    Is the wine or the glass bottle the chosen luxury product?
    When you finish the wine, you throw away the bottle.

  3. James Mac

    If only you had to pass a quality certification on every wine you wanted to bottle, then all the good stuff would still have some glass to go into. That would reduce the oversupply of wine too!

  4. Ok so the problem has been highlighted – what can be done to rectify it? Who needs to be involved and how can one be involved in finding a way to get the sneaky colluders to change their ways?

    Can it and will it change?

  5. Interesting article on bottles – plastic vs. glass etc from Jamie Goode: http://www.wineanorak.com/blog/2007/07/pet-wine-bottles.html

    Potential disadvantages

    Wine quality. PET allows more oxygen ingress than glass, and thus the wine has a shorter shelf-life, losing freshness more quickly.

    Health implications. Whether or not there are problems related to keeping wine in plastic is a controversial area, which I’ll explore below.

    Image. Plastics have an increasingly negative image in the eyes of consumers: convincing them that plastic is the environmentally friendly option will be difficult, and it will be hard to get away from the cheap ‘look’ that plastic bottles have.

    Let’s look into the technical issues in more detail. Sainsbury’s two PET wines are shipped in bulk and then bottled in the UK at Corby, in Northamptonshire (http://www.corbybottlers.com/). Bottling in the UK of bulk-shipped wine is increasingly common: where this happens, you’ll see an acknowledgement in small print on the label, usually with just the postcode. Usually, the wine is shipped in 25 000 litre flexitanks, and there is some potential for quality loss during shipping due to oxygen ingress.

    The PET bottle itself is also potentially problematic. As with all plastics, PET allows diffusion of oxygen. To counter this, barrier technologies and oxygen scavengers are incorporated into the PET construction. The Sainsbury’s bottles are manufactured by Amcor PET Packaging UK (here), with the barrier under licence from Constar (here). Barrier technologies lose their effectiveness at higher temperatures, which is one of the reasons that it’s inadvisable to ship PET bottles over long distances. How effective PET is in protecting wine quality remains to be seen: my guess would be that PET bottles are suitable for wines that aren’t going to spend too long on retailers shelves, much like Bag-in-Box.

    One thorny issue that needs addressing here is one of health. There is some discussion of whether alcoholic beverages stored in PET leach phthalates out of the plastic.

  6. Maybe an opportunity to go green and use refillable wine bottles – like in French supermarkets where you fill up your bottle from a stainless steel tank.

  7. Love it. Sell this stuff until there is none left!

  8. Most wine (~90%) sold here in the UK is drunk within 7 days of purchase, certainly the big retailers don’t want it hanging around on their shelves for weeks at a time so plastic or tetrapak solutions seem pretty sensible if they’re less engergy intensive. They’d certainly cut down on transport costs.

    Recycling bottles helps, reuse would be even better. Milk bottles used to be re-used endlessly, with empty’s picked up from the doorstep. If retailers needed to take back bottles as they do in Michigan, and producers stuck to green or white Burgundy, Bordeaux or Alsace shapes then sterile re-use might be a big step forward.

  9. Cash

    “…The LA Times reports on the rise of plastic wine bottles. While PET bottles are lighter and therefore welcome from a carbon reduction perspective, it bears mentioning that plastic can’t effectively be recycled (from plastic bottles to plastic bottles), only “downcycled” (from plastic bottles to park benches). ..” (as reported by Dr. Vino)

    Imagine the luxury of sitting on a reclaimed plastic park bench sipping a fresh batch of Stormhoek right from their PET bottle, barefoot.

  10. Stefan Boshoff

    I am the MD of a glass manufacturing company in South Africa called Glamosa Glass. We are small compared to Consol and Nampak and produces lampware, glass mosaic tiles and household glass. We have recently (Ocotber 2009) expanded our product range to include bottles. Our focus at this stage is on supplying niche, uniquely designed and branded bottles to producers of any product suitable for glass bottle packaging. As such we work with clients to design their bottles. At this stage we are growing rapidly in this market since nobody else can supply this kind of product in SA. If anybody is interested, please contact me at 083 417 0042 or Boshoffs@telkomsa.net

Elsewhere.

Stormhoek Activity