US Wine Industry is facing Supply Chain Bottlenecks after Shortage of Bottles

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A viticulture specialist with the University of California Davis, Dr. Kaan Kurtural said the wine industry in the US is experiencing supply chain bottlenecks following a shortage of bottles. Kurtural also said that the industry is currently facing even more issues. He said, “Seeds being difficult to come by and the price of fertilizer shooting through the roof. It’s millions of dollars of investment these folks have made over many generations, so hopefully, it’ll be resolved soon”. However, demand for wine has increased during the coronavirus pandemic, as Americans sheltered in place to prevent potential infection. A market research and analysis firm Nielsen reported that wine has led as one of the strongest alcoholic categories last year. The industry has been dealing with a severe drought and supply chain issues on top of that as the demand for wine increased.

The NOAA (National Oceanic and Atmospheric Administration) has reported that California and several other Western states have had the hottest summer on record, exceeding the 1936 Dust Bowl Summer only by less than .01 of a degree. At least 60% of the west is experiencing extreme drought conditions, and 98.32% of the states are experiencing abnormally dry conditions. The 2021 winter forecast of NOAA indicated the likelihood of precipitation in California is significantly below average while temperatures run well above average. Point to be noted that California is already running a water deficit. The wine production is down an average of 20% and in some vineyards, it’s as much as 60%. She pointed out that the vines have actually died in many cases, which could impact harvests for years.

Various companies have also noted higher logistics-related costs and disruptions to their normal operations. Vineyards are no exception as the backlog at ports and the truck driver shortage are leaving them short of products. The issues have also impacted consumers in the form of empty shelves and higher prices. It also prompted fears that lower spending will slow the economic recovery. It was announced earlier this month that US consumer prices in September accelerated at their fastest annual pace in 13 years. The US Labor Department said the Consumer Price Index increased 5.4% year over year last month and matched the July reading for the hottest print since 2008 and prices increased 0.4% month over month. Analysts were expecting prices to increase 5.3% annually and 0.3% in September. The Labor Department also said the price for wine at home in September increased 1.6% from the same time last year.