Mass-market vintners seek lower-cost options as fuel, wine, grape costs rise
One of the ways that some vintners are looking to distinguish the look of their high-end wines is novel bottle embellishments.
“I say you can do a custom emboss in glass, and then you will need to pay for a custom mold,” said Erica Harrop of Global Package in Napa. “If you only have 500 cases, you may not be able to invest in a custom mold. There are ways to have an emboss on glass, and one way is a metallic label.”
She’s been working with local label designers and pewter label manufacturer Etiq’Etains of France. Gracing spirits bottles for years, these labels can have a gold or bronze finish and be applied as pressure-sensitive, or sticker-type, labels.
The cost of these labels has come down in recent years, she said, but they still come at a premium. For a minimum 500-label order, the cost for a 1.5 inch by 2.5 inch label can range from 20 cents to $1 each.
Global Package has been developing pewter labels for two Australian wineries, Bookwalter Winery in Washington’s Columbia Valley, the Talcotts of St. Helena for a premium olive oil, a Napa Valley port by Vincent Arroyo Winery of Calistoga and two late-harvest wines by Quivera Vineyards & Winery in Sonoma County’s Dry Creek Valley.
Another avenue for bottle embellishments is screenprinting, according to David Hanson-Jerrard of 4parts Design in Napa. Two aggressive producers of such work are Bergin Glass in Napa and Monvera Glass Décor of Richmond.
On the mass-market end of the wine business, rising fuel prices are bringing back the escalating freight surcharges of 2008 at a time when vintners also are facing rapidly rising prices for bulk wine and grapes for new and renewing contracts.
Freight companies are now starting to look at adding fuel surcharges of 3 percent to 6 percent later this month or next, though many are waiting to see the direction of global petroleum prices, according to Dave Reed of Healdsburg-based logistics consulting firm FreeRun Winery Services.
“Generally, everyone is talking about glass prices going up an average of 4 percent to 6 percent, and almost everyone is taking a pause in locking up rates much beyond the first quarter,” he said. “Two suppliers bringing in glass from Asia and Mexico said they are getting killed with container rates going up $300 to $500 because of fuel prices.”
An oceangoing shipping container can hold 2,100 cases worth of bottles, so that works out to an landed cost increase of 25 to 30 cents per 12-bottle case just for freight, he said.
That may not mean much for ultrapremium and luxury wines, but it adds up quickly in the thin-margin, highly competitive popular premium and superpremium price tiers — $9 to $15 a bottle retail. The margin shrinks further when escalating grape and wine costs are considered, Mr. Reed said.
“In Mendocino County last year we were able to buy wonderful organic wine at $6 to $10 a gallon, and now its $10 to $14 a gallon,” he said. Filtering and other processing costs can add another $1 per gallon, before outgoing freight fuel surcharges are factored.
At those prices, some mass-market producers are looking closely at federal requirements for how much wine has to be from the appellation and vintage year listed on the bottle in coming up with sourcing options amid rising costs and shrinking availability, Mr. Reed said.
“The vast majority of our customers are asking how much of their programs have to be from California and how they can reduce costs in packaging and handling,” he said.
Getting glass-packaged mass-market wines to market also is being rethought. FreeRun is working with large local and global wine companies with wines bound for East Coast markets in exploring options for moving wine in bulk by specially designed railcar to bottling locations there. Producers of imported brands also are considering more bulk-to-bottle packaging to save on ocean freight costs.
A tanker car can move 24,000 liters, or about 2,700 cases of wine in bulk, compared with 1,100 cases in bottles.
“One of the most interesting things is that as fuel costs rise not only are people more environmentally aware but also more economically aware,” Mr. Reed said. “Tough times are getting people to think out the box.”
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