Where's My Wine? Thanks to COVID, we’ve all become intimately familiar with the intricacies—and limitations—of global supply chains. Here’s some of what the wine industry has been going through.
Even though I’ve been working in wine for more than 20 years, I’m still amazed by some of the wines we’re able to acquire and sell at SommSelect. There’s one that comes immediately to mind: It’s made by a literal garagiste—i.e., someone who makes wine in his garage—in the northwestern-most corner of Italy. He probably makes around 200 cases of wine in total, but some of that wine still ends up on store shelves (and e-commerce platforms!) in places like Brooklyn and San Francisco. I find that amazing.
But, like everyone else, I take it for granted. Or at least I did, until the one-two punch of tariffs and COVID put the intricacies (and costs) of importing wine on paper for all to see.
First, there were the tariffs, initially implemented in October 2019 as part of a dispute between the US and EU over aerospace industry subsidies. A 25% levy was placed on wines from France, Spain, Germany, and the U.K., sending many importers we work with into a tailspin. Many of them simply didn’t order wine; others chose to sacrifice margins rather than pass the increased costs of their wines onto consumers. Some, of course, had no choice but to raise prices.
Then COVID exploded in 2020, and all the vulnerabilities of the wine-import supply chain were exposed. As the Wine Spectator reported in January 2021, French wine imports to the US fell 37% in the first nine months of 2020. That came after “10 consecutive years of volume growth” for French wines in the US. As we noted in our January edition of “Tasting Notes,” French wines represent the largest percentage of what we offer on SommSelect.
Although tariffs were suspended in June of 2021, COVID has persisted, and the effect the pandemic has had on international shipping has been well documented. People who knew (or cared) little about the “supply chain” now understand it in detail. At SommSelect, we’ve felt the impact of shipping delays most acutely when selecting wines for our monthly clubs: some of the bottle quantities we’re requesting are larger than importers are accustomed to keeping on-hand in the US, and ordering more is taking much longer than it used to.
How much longer, exactly? I spoke to a few people who spend all their time arranging wine shipments from Europe to the US. One of them was Jon Levine, General Manager of North Berkeley Imports in Berkeley, California, a major importer of French and Italian wines. “It used to be that the time from the start of the process to the wine arriving in the port of Oakland was about six weeks,” Levine explains. “Now it’s a good four months, or more.”
He cataloged the myriad reasons why, starting with a pandemic-related dearth of shipping containers. “Early in the pandemic, manufacturers were shipping ‘PPE’ all over the globe, including to places that had no means of returning the empty shipping containers,” Levine says. “So, you had a bunch of empty containers sitting around and no way to access them.”
It turns out that there aren’t many manufacturers of shipping containers in the world, so more weren’t going to miraculously appear, and, beyond that, there were more goods (things like Peloton bikes, musical instruments and other products for which online orders surged during the pandemic) competing for less container space. Coinciding with this was a shortage of trucks, and truck drivers, to pick up products and get them loaded into containers in the first place.
“A lot of the time lost is in the time it takes between when we place an order for a wine to when it shows up at the port to be loaded onto a ship,” Levine says, noting that this process has ballooned from two to eight weeks. “And once the boat has left, it spends twice as long on the water, or longer, before it reaches our shores.”
The delays obviously left not just North Berkeley but lots of other importers and distributors flat-footed, with lots of products selling out. As Levine recalls, “there was a time last summer, when the world was trying to open again, when a restaurant in San Francisco couldn’t order a bottle of Sancerre for their list. There wasn’t any to be had.”
North Berkeley (and most US-based importers of European wines) work with an international shipping company called Hillebrand. I spoke with Jessica Brady, Hillebrand’s California-based Marketing and Communications Manager, who added some even finer detail to the picture. “Everyone wants one single ‘magic bullet’ explanation, when in fact it’s a whole bunch of things in a chain reaction, starting with labor,” she says. “It’s not just the labor of people manufacturing the goods but everyone in the transportation chain and everyone who has to load or unload a truck or a container. One day of disruption at a major port, be it a bunch of people being sick, a strike, whatever, requires at least a week to cover the backlog.” And if a container ship is forced to skip a stop because of a backlog (which has been happening a lot in California, with huge backups at ports like Long Beach), it most definitely affects product pricing, as the added shipping costs (trucking back to its desired port) must be factored in.
Here’s another wrinkle I hadn’t considered: Most European wine nations have regulations governing when certain wines can be released into the market. Brady says that, even with a time-sensitive product like Beaujolais Nouveau, there wasn’t much flexibility in getting it to the US market on time. “The French government only allocated one extra week in advance,” Brady says.
But wait, there’s more! At the winery level, producers are contending with critical shortages of bottles, boxes, and other supplies—all of which are, given their scarcity, increasingly expensive. As Jon Levine of North Berkeley notes, the assorted increases in shipping costs are felt more acutely at the lower end of the market. “Growers have held the line for a while, but we’re seeing prices rise across the board now,” Levine says. “There’s no avoiding it anymore.”
Another California importer we work with is blunt about the situation. “It’s gonna get weird this year,” says Ted Talley, owner of Terra Firma Wine Company in Oakland, who shared a recent article from Fortune Magazine detailing the record profits being hauled in by container shipping companies during the supply chain crisis. “Our per-case shipping costs have jumped from $9 to $16, so yes, prices are going to have to go up. Meanwhile, these big shipping companies are printing money.”
More from February’s Newsletter
Through the grapevine
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