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March 2014 Issue of Wines & Vines

Winery Glass-Buying Patterns Evolve

Suppliers see bigger demand for 2012-13 vintages and return to luxury bottles

by Jane Firstenfeld
Innovative Bottle Shapes
Innovative bottle shapes are growing in popularity. Global Package distributes the MBS self-decanting bottle (left), while Bruni offers the 750ml Duo Fondos bottle (right).

As the economy hobbles back to a normal stride, wine consumption and brands continue to grow, but nothing is as certain as uncertainty in the wine industry.

Despite growing competition from alternative packaging in ever-new guises—bag-in-box, pouches, boxes, single-serve PET ready-to-drink vessels and more—glass bottles remain the industry standard.

We contacted leading suppliers of glass wine bottles, who shared their observations, opinions and predictions about their industry. Our respondents include: Marty Sychowski,?president of?All American Containers, Pacific Coast; Jean-Pierre Giovanni, VP sales and marketing, West Coast, at Bruni Glass; Erica Harrop, president of Global Package LLC; David Schwandt, VP sales, wine category, at Saxco International; Suzanne Gordon, sales manager for TricorBraun WinePak; Bob Parise, vice president, sales, at Verallia North America, and Cynthia Fisher, sales manager at West Coast Bottles.

Bottle buying patterns
Based on experiences from recent years, our supplier panel discussed bottle purchasing patterns. As always in packaging, advance planning is advantageous.

Schwandt confirmed: “Each new season brings changes to the buying habits of our customers. We actively listen and shape our supply programs to meet changing needs. Changes in harvest timing and quantity, changes in consumer behavior and demands have resulted in changes. We are responding by reducing lead-times, improving availability and identifying new value sources.”

“As always, we are an agriculture-based industry, and we always have fluctuations in ordering based around the time that harvest happens to fall,” Sychowski said. In 2013, he noted, “Harvest happened to come early, which meant that wineries were trying to get wine out of tanks and into bottles a bit earlier than usual.”

“Order size is highly dependent on harvest yield and the allocation of the juice into various single-varietal or blend wines,” Giovanni said. “There has been a small trend toward later purchase commitments as glass supply has been relaxed by low-yield vintages and a growing supply of glass.”

He predicted coming changes, though, especially in 2014 and 2015 bottlings, where the combinations of high-yield harvests in 2012 and 2013—as well as glass-production capacity constraints—will require early commitments to ensure adequate and timely bottle supplies.

Global Packaging, Harrop said, is seeing larger orders and more premium bottle sales at higher prices. “We are returning back to pre-2007 purchasing requests for high-end bottles.”

At TricorBraun, Gordon said buying habits have remained stable for the past couple of years. “We do see a trend in large retail chain competition, where several customers will request pricing for a large project—10,000 to 20,000 cases with very little lead time. These are difficult because several accounts are requesting quick turnaround, but only one ends up with the project. Often, these projects go into whatever package is available in that quantity.” So wineries that are picky about packaging are well advised to build lead-time into their prospective projects.

What the market wants
Every winery has different demands for design, pricing and environmental priorities. Suppliers have observed fluctuations:

“Based on our observations, the smaller wineries are leaning toward moving their bottle choices back to heavier weight and more unique bottle shapes and styles to attempt to differentiate themselves,” Sychowski said. “Larger operations really
are being pressed to go into lighter weight and more eco-bottles in order to control costs and be seen as environmentally friendly.”

“Magnums and even larger size bottles up to 6 liters and more have come back after the crisis, but they remain a small portion of total bottling volumes, mostly targeted at events like wine auctions and specific customer segments such as wine club members,” Giovanni observed.

“There is always a search for new shapes, mostly with wineries that already have and are developing custom glass packaging for a reserve or estate wine. Otherwise there is a continuing trend toward wineries trying to limit the number of glass SKUs by bottling several wine brands, blends or varietals in the same
bottle in order to gain flexibility and leverage similar labels, capsules and corks.

“The traditional and most popular color remains antique green, with some variation in the deepness of the green depending on manufacturing origin. Dead leaf green—also called French green—continues to lose market share,” becoming harder to find and more expensive due to reduced production. “White flint remains the color of choice for some white wines like Sauvignon Blanc and for the growing number of rosé wines,” he said.

Giovanni continued, “Weight requirements—mostly driven by associated price and transportation savings—seem to have stabilized in the 600-800g range (21-28 ounces), with some ultra-light bottles going into the 400g (14-ounce) range.” Many premium wines remain loyal to heavier bottles, though.

“The Canadian market is also being pushed heavily toward lighter bottles,” he noted, with government regulations requiring them for mid-range and lower priced wine brands.

In the past year, Harrop said, “Sizes are beginning to extend into 375ml and some unusual sizes, such as 1 liter. There are more requests for exotic bottles, which is exciting for new design development.”

Schwandt confirmed, “During the recession, fewer heavier bottles were purchased. Now heavy bottle demand is growing. The color ‘antique’ also continues to grow in demand.” And screwcap orders continue to increase.

At TricorBraun, Gordon said, “I have not experienced a lot of variation in non-750ml bottle requests. I do see a lot of 375ml requests for screwcap—even if (the brand’s) 750ml bottle is cork-finished. Seems like the hotel bar and hotel give-away segment is a big market for 375ml bottles, and the convenience of screwcap is in demand. We also have some customers moving into custom molds.”

Verallia continues to promote its FlexRun program, which, Parise said, “Has made custom molds a viable option. Previously, minimum production quantity kept a lot of people out of custom molds.

“Our customers are always looking to differentiate or distinguish themselves in the highly competitive marketplace on the retail shelf.…Our FlexRun Service is the first of its kind in North America. It provides any winery—large or small—increased flexibility to run specialty bottles with limited investment.” FlexRun makes adding a customized embossment to a stock bottle or creating new bottle design relatively fast and inexpensive.

Fisher also reported increased orders of both larger and smaller bottle sizes.

Alternative impact
Incursions of “alternative packages” are making themselves felt on supermarket and liquor store shelves across the continent. Is this hurting bottle suppliers? Not surprisingly, glass suppliers see the material as unique and irreplaceable. In fact, Harrop stated, “Glass bottle sales are increasing.”

“We have experienced no impact of the alternative containers—box, plastic, kegs and others—as they have their own environmental and production constraints and will never replace glass for the educated and value-conscious consumer,” Giovanni said.

No longer edgy, or even alternative, screwcaps have swiveled into the mainstream. “There is a growing number of screwcap bottles sold in the market, but the switch from cork to screwcap is still slow as it requires familiarization with new technology, and the long-term viability for wines crafted for aging still remains to be demonstrated,” according to Giovanni.

“We see little to no impact with our customers switching to alternative packaging materials,” Parise stated, citing its infinite recyclability.

“Although we do see alternative containers in the marketplace, the growth of the wine industry overall really has offset any of the market share that has moved toward alternative packaging,” Sychowski said. “We do continue to observe growth in screwcap closure demand. This has continued to be slow and steady growth, but definitely has continued.”

For one particular size, glass is now the alternative, Gordon said. “The 187mls are not in glass anymore. There are still a couple of hold-out wineries using glass, but the bottles are difficult to get due to the drop in quantities being ordered.” Nevertheless, she added, “So far, alternative segments such as kegs, BiB and pouches have not made a significant dent in glass needs. (It) seems like the amount of wine being bottled—in all containers—has grown enough to maintain glass volume.”

Overall, according to Schwandt, “The market for glass bottles remains healthy. Demand is strong. Wineries are more open to considering alternative sources and value-priced alternatives.”

Who dares to experiment?
Large established wineries may have more SKUs, broader distribution and bigger budgets, but smaller, newer operations scrambling for recognition tend to be more willing to experiment, our sources agreed.

“The smaller and start-up wineries definitely seem to be more open to this experimentation, and sometimes even prefer these options,” according to Sychowski.

The West Coast focuses on small to medium-sized wineries; Fisher agreed that some of its clients ask for different styles.

Gordon commented, “When a large winery looks to be innovative, it will generally go all the way, pushing the envelope on experimentation. Large wineries don’t tend to do that very often, but when they do, it creates a trend in the industry.

“Small wineries, which are more likely to experiment with bottle styles, colors or finishes, have a difficult time experimenting. The scale needed to do unique things in the industry is not workable for wineries under 100,000 cases,” she said.

Gordon added, “In my area, established wineries are more likely to experiment. Their label has already been established, so it is easier for them to move into different bottles for small runs without impacting their consumer base.”

A winery’s management style will influence if it experiments or not with packaging, Harrop said. “I see all sizes of companies. It depends on management style whether they are experimental and progressive or whether they remain with existing older styles. Some medium-sized wineries are pushing into new generational packaging—so are some larger wineries with fun new marketing ideas.”

“Smaller or craft wineries are more likely to experiment with different shapes, colors and finishes. They need to differentiate on the shelf to combat the marketing power of larger wineries, and there is much less risk for them to do so that an established wine brand,” Giovanni said.

“Large wineries do use different packaging also for some brands under their portfolio in order to differentiate from the other wines they sell and to target specific segment of the consumer market. These large wineries are likely to do more of it. The volume of wine coming out of the past two harvests is expected to be much bigger and to give them more room to launch new brands or blends,” he predicted.

The big picture
Some panelists summarized their observations to describe current mega-trends in the glass bottle sector. Easy customization is perhaps the most notable for winemakers.

“I’m not sure if it qualifies as a mega-trend just yet, but the ability to create and manufacture custom bottles (cartouches, for example) will increase the number of bottles that are customized for specific wineries or specific brands,” Gordon suggested.

Giovanni cited “The steady gain of glass made in Asia.…Chinese factories have continued to invest and improve, and they can now provide a wide array of wine bottles with reliability and shorter lead times at very competitive prices. This will continue, while leaving plenty of room and market share for European and North American glass.”

Global Packaging does not deal in these lower cost “standard” bottles, Harrop said. “We feel it is not sustainable. These standards are mainly coming from China at low costs. W ith international currency valuation equilibrating, we might see these value products becoming less competitive. Our focus is on producing what is most rational for production sizes and value-added proposals.”

Demand for premium-shaped bottles will continue with recession recovery, Schwandt predicted. “Alternative” packaging does not have as much potential impact as the trend toward kegs and bottles refillable at wineries (growlers), he said.

Sustainable shipping remains a concern, according to Sychowski. “Wineries of all sizes—including small—are continuing to advance in their capabilities, and desire to operate their bottling out of bulk glass rather than having glass in cases delivered to them. Eventually they’ll be able to have bulk glass delivered with flat cartons and partitions, be able to bottle from bulk and erect their own cartons on site.

“This reduces the carbon footprint, the number of times that the glass and components are touched prior to being bottled, and reduce packaging costs. This would definitely impact the future of our packaging industry,” he said hopefully.

Did you see it?
Many of the suppliers showcased new products at January’s Unified Wine & Grape Symposium. TricorBraun introduced its Ecologic wine bottle system—pressed paper with internal bag. “The availability of this package has greatly increased since last year,” Gordon said of the packaging similar to Truett Hurst’s Paper Boy package featured in the story “Bleeding-Edge Packaging Tests the Market” in our January 2014 issue.

Bruni spotlighted its Ultralight bottles in Burgundy and Bordeaux styles, with cork or screwcap neck finishes, as well as some of the innovative models for which it is famous: Due Fondos and Regine ranges, and samples of the winning bottles at its biennial glass design competition, Progetto Millennio.

All American showcased higher range bottles and a 375ml, cork-finished Burgundy-style bottle that is “traditionally difficult to find.” The company also informed attendees about its new, Sonoma County re-pack capabilities.

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