Editor’s note: Part 2 of a three-part series analyzing the current state of the wine industry.
The effects of supply chain disruptions in the global food industry are well-known and easy to identify: low inventories, unavailability of certain food offerings, shipping delays, spoiled produce and more. Some might assume the wine world shouldn’t be affected heavily by such issues. After all, wines are grown, harvested, and vinified on site, and they spend months (if not years) aging in wood barrels in some cool dark basement somewhere, right?
Well, not exactly…
Only about 20% of the wines produced on a given year end up spending any meaningful amount of time in storage, be it in wood barrels, stainless steel tanks or concrete vats. The remaining 80% spend – at most – a few weeks (usually 4-6) in any sort of “holding” or “aging” vessel at the winery. Soon after fermentation and filtering, they are bottled, labeled, packaged, and shipped worldwide.
Like most global industries, wine is highly dependent on the global supply chain. In a way, it can be argued that wine suffers from two potential disruptions: one is “agricultural” and the other is “logistical.” The “agricultural” disruption has been widely understood for a long time; bad harvests, frost, hotter than normal temperatures, and excessive rain can greatly affect the ultimate product. For example, it is widely expected that French champagne will be in short supply for the next 2-3 years due to poor weather because, in April 2021, 12 nights of frost wiped out 30% of this year’s champagne crop.
However, the “logistical” disruption (bottling, shipping, and delivery), which is the one more directly linked to the global supply chain, has not really been a factor until now. On the contrary, the global supply chain has facilitated the ever more efficient distribution of wines globally and has directly contributed to greater availability, more efficiencies of scale and lower consumer prices. Even with rising wine production volumes, the supply chain has continued to work well. Increases in wine production have been largely steady and gradual over the years, so the supply chain has had ample time, room, and know-how to accommodate it.
This accommodation, however, may be significantly tested in the coming months.