Time to check the math; how running bulk glass could be cheaper than cased ware
Gas prices are surging, inflation is rising, and glass supply chains are in gridlock. The result is escalating glass bottle prices in a market where the consumer demand for wine has outstripped the available supply of glass bottles, making it one of the biggest headaches for wineries and one of the hottest topics in the wine packaging world.
Most mid-size to large wineries use case ware for their bottling process. Traditionally, the cost for purchase and the ROI on buying a bulk glass depalletizer has been out of reach for these wineries. But with the current economic conditions the industry is facing, now is the time for these wineries to redo their math!
“Now that the numbers have changed,” says Marty Sychowski, a 30-year packaging industry veteran and packaging consultant to Smart Plastic Technologies, “medium-sized wineries can offset the equipment cost with their savings from buying bulk glass. The ROI for equipment is better than it’s ever been; they can regain their ROI in 3 years or less.”
Current Market Conditions
Broken supply chain – Consumer demand for wine and spirits has escalated since 2020, which means the demand for glass has increased right along with it. Simultaneously, the supply of glass has decreased by 20 percent, creating the perfect storm for wineries and distilleries. Thirty percent of the glass for our industry comes from China. With the continued shutdowns inside China and massive delays at US ports of entry, the lead time for glass has doubled. Add to that the growing cost of shipping and the wine & spirits industry is facing unprecedented challenges.
Cost of Goods climbing with no end in sight
- Cost of fuel
- Cost of corrugated packaging
- Cost of labor
These are the three main components involved in determining the cost of cased ware, all of which have gone up exponentially in the past year and show no signs of slowing down. That means it’s time to revisit the feasibility of bulk glass.
Sychowski says, “Many of the medium-sized and larger wineries are seeing that the cost of glass has increased up to 50%. Using bulk glass can save money in several ways, and those savings make it much easier to justify the equipment purchase.”
This is confirmed by the recent Food Institute report that glass prices have risen 45% since 2019, exacerbating pressures wineries are already feeling from the negative impact of the pandemic, workforce shortages and wildfires.
ROI in 3 years to 18 months – Yes. You read that right. When you do the math, the cost savings, efficiencies and reduction in carbon footprint for bulk glass far surpass the upfront temporary cost of equipment needed to convert your lines from cased glass to bulk. In fact, given the rising costs of goods along the entire supply chain, many companies are finding that what they previously calculated as a 5-6 year ROI is now a 2-3 year ROI! Some wineries have even found it to be an 18-month ROI!
The Big Picture
Converting lines to bulk glass has big benefits the whole way around.
Supply Chain Efficiency – Currently, US glass manufacturers can’t make glass fast enough to keep up with demand, not just because of volume, but because of storage. If more end-users were ordering bulk glass, the production line and fulfillment moves even faster on the manufacturing side. Bulk glass offers the benefits of Reduced Storage space, and the ability to use a common mold for many packages without having to store leftover cased ware in a specific box. All of that takes up time and space on the production floor. If it was all bulk glass going out the door, manufacturing becomes faster and more efficient, which means you have better and faster access to your product – bottles.
Reduction in Your Carbon Footprint – Consumers care about sustainability and social responsibility. Reducing your carbon footprint has big benefits. Bulk glass offers a perfect solution – not only is it responsible, it actually saves you money! Buying in bulk cuts out an entire step in the supply chain and results in a massive amount of reduction in cardboard. Waste reduction is the number one thing all wineries and distilleries can do to positively impact their sustainability. Double handling and in some cases, packing from box to a custom box, can be eliminated along with the waste that these processes create. Imagine being able to reduce your cardboard waste by 50%! That’s what bulk glass vs. cased glass will do for you.
The Silver Lining
Amidst a horizon of storms, there is a silver lining. Mid-size and large wineries have an opportunity to capitalize on the times and pivot, placing themselves in a ready position for growth. “The positive is that now wineries can handle the glass themselves,” Sychowski points out, “eliminating the inefficient added handling costs passed along from suppliers. Now, when a winery looks at using bulk glass, the ROI for equipment is almost twice as good as it’s ever been.”
“The only regret you’ll have about converting from re-shippers to bulk is that you didn’t do it 5 years ago,” says Michael Deltuva, Industrial Development Manager for Copper Cane Wines & Provisions.
Sychowski recommends talking with EMS GROUP USA, the leader in handling, palletizing and storing goods and materials, to understand the equipment needed to bring this process in-house.
“EMS Group works with wineries to help them determine if bulk glass is the best solution for them. But whatever their need, EMS has the ability to provide them with equipment that works for bulk or cased glass and improve their efficiencies on their production line. We can even utilize the same depalletizer for both bulk and cased glass.” says Beth Zarnick-Duffy, Executive Sales Director.
By re-evaluating previous costs of ownership for equipment to automate your lines for bulk glass, you can save money while at the same time position your winery for increased production capacity to meet consumer demand. That is something to raise your glass to!
