Wine Country supply chain all corked up
FILE - Red wine is served at a restaurant.
NAPA, Calif. - California's wine industry makes a $45 billion contribution to the Golden State's economy. But supply chain issues, have plagued this marquee industry as never before; forcing the entire industry to over purchase and squirrel away essential components for the products they sell without breaking the consumers' bank.
Napa's Portocork is part of the world's largest cork harvester and processor of corks, almost all imported from Portugal. Though there’s plenty of cork, getting it to the wineries is quite another matter.
"We used to have a 60-day door-to-door lead time from our Portugal port to the Port of Oakland and we're average 112 days right now," said Portocork CEO Dustin Mowe.
That is some 90 million corks at stranded sea or in ports. "I have never, in my career, had as much product that is in route as I have right now," said Mowe. Some of Potocork's containers sit at the Port for as much as a month, because they're buried in a mass of containers and trucking is not available.
Before the pandemic screwed up shipping, Portocork would have bags shipped to it with 5,000 corks each for just $7 per bag. Today, that is $37 a bag times 78,000 bags a year. Big picture, one container from Portugal to Oakland pre-pandemic shipped for $2,500. Today, it's $14,000.
"We don't have any recourse with the shippers. We don't have any lines of communication with the Port of Oakland," said Mowe. One ship, lined up at the Panama Canal for Oakland, was rerouted to Virginia and now will be rail shipped cross country.
It's not just corks. "After COVID, I thought we had hit the worst of the worst, but it's not gotten better. In fact, it's gotten worse," said Julia Smith, Vice President of Supply Chain for Napa-based Delicato Family Wines, a major producer of many brands of wine. Beyond corks, Delicato also requires imported bottles, neck sleeves and ornate labels, all in short supply and long delayed.
"Thank goodness we have great suppliers and partnerships with those suppliers," said Ms. Smith. Like Portocork, Delicato has over purchased these items, hoping that things will get better. "The containers are costing more. The vessels are in short supply. The containers are in short supply. Truck drivers are in short supply," said Smith. Now it's a sophisticated, high stakes guessing game. "Predict what we need almost 26 weeks in advance for some of the components," said Smith.
With much of China's factories and ports in COVID lock downs, things are bound to get worse.