North Coast vintners have been looking to cut costs any way they can for the past two years, with bottle closures and other production consumables such as other packaging and barrels also coming under scrutiny.
“It’s gone from a question of preference to a question of price,” said Daryl Eklund, director of sales and marketing for Amorim Cork America, the Napa-based distributor for the giant European closure producer. “When times were good, wineries buy the best cork they can, but now they’re picking the next grade or two down or moving from natural cork for a $15 chardonnay to twin-top stoppers.”
He said the approach parallels what he witnessed in winery purchasing during the economic recession of the early 1990s. That cycle had a quick rebound in the latter half of that decade as the dot-com boom helped ignite sales of high-end wine until 2001.
M.A. Silva Corks USA in Santa Rosa finishes and sells nine grades of natural and agglomerate corks in four length options, and increasingly more wineries have been adjusting the quality purchased to save a few pennies per stopper over tens or hundreds of thousands of corks on ultrapremium brands, according to Jeff Barnell, sales and marketing manager.
“We’re seeing that more in glass, capsules and labels that many wineries are looking to maintain brand position while driving cost out of consumables,” he said.
Yet brand image and communicating value have become more important than ever for higher-end wines, so vintners are being cautious about changing to cork alternatives such as screw caps and synthetic stoppers or even picking a slightly lower-quality cork stopper, according to James Herwatt, chief executive officer of Cork Supply USA, which distributes cork, synthetic and aluminum screw cap closures.
“Wineries are going to more traditional marketing, so they want traditional packaging,” he said.
But cost flexibility for the “traditional” look can be adjusted via sourcing bottles from lower-cost suppliers and selecting different grades of paper, he said.
The move to traditional packaging also has brought back demand for capsules from the flange-topped, wax-sealed bottles that dominated store shelves until recent years, according to Jeremy Bell, general manager of Rivercap USA, part of the Cork Supply Group.
Stable tin prices at $16,000 to $18,000 a ton since the 2008 peak of $25,000 a ton has helped with costs of tin capsules commonly used for wines selling for more than $25 a bottle, he said. For less expensive wines, plastic capsules dominate, with polylaminates for wines retailing for more than $5 a bottle and PVC for wines selling for less.
To keep up with demand for plastic capsules for growing lower-priced wines, the Spain-based Rivercap and France-based Sparflex will start making polylam capsules by October at Sparflex’s 3-year-old Ukiah plant, according to Mr. Bell. The 17-employee plant makes 200 million PVC capsules a year, and it will start polylam production at 120 million capsules annually.
As sales of higher-end wine sales started slowing in 2008, many vintners started putting off closure purchases as long as possible to avoid purchasing more than required for bottling a particular brand program, according to closure suppliers.