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The UK could be hit with a shortage of glassware over the next few months, triggered by soaring energy costs. Bottle suppliers are already experiencing problems sourcing glassware as the production is energy-intensive, pushing its price 80% higher over the past year.
This is a major blow for the UK’s once-prosperous smaller bottled brands, which are already struggling with surging costs and, in many cases, have still not fully recovered from the economic hit of the Covid-19 pandemic.
While the bottled giants have the resources and revenue to help them weather the storm, small producers are set to be left out in the cold. According to reports, they are struggling to absorb the costs, and in turn, independent retailers stocking small brands are finding themselves unable to absorb increased supplier prices.
Some brands are turning to cans as a cheaper replacement for bottles, but this could put even more pressure on an already limited supply of aluminium in the UK. In fact, a source told The Grocer that there is simply “no room” for any additional suppliers to use cans.
Julie Dunn, operations director at family-run wholesaler Dunns Food and Drinks, believes that many producers will be unwilling to make the switch.
She told The Guardian, “Specialist bottles and glassware hold a very important place in the heritage of the beer industry and I expect that while some breweries will convert to cans to ensure consistent supply, others will look at this as devaluing the brand, so will inevitably pass the additional cost on to beer drinkers.”
Last month, the government published its Energy Security Strategy, partly in response to the crisis in Ukraine, which has wreaked havoc on the UK’s energy supplies. The key aim of the strategy is for the UK to achieve long-term independence from foreign energy sources and decarbonise the nation’s power supply.
Industry bodies have argued that the long-term plan will not help producers struggling now, and doesn’t go far enough to tackle the issues facing the manufacturing industry.
Commenting on the energy security strategy, Dave Dalton, CEO of British Glass, said, “The energy security strategy is welcome in terms of the medium to long term solutions, but it does not address the issues that the energy-intensive users are facing following the increase in wholesale energy costs since last autumn.
“It is critical that glass is included in the EII compensation scheme to alleviate some of the current pressures on manufacturers in the UK.”
Priority given to large suppliers
Aside from the economic blow the soaring prices will cause for smaller producers, they will also face the end of the queue when it comes to shortages. Co-packers are prioritising large orders, giving the drinks giants an even greater advantage over small brands.
As Andrew Goodacre, CEO of the British Independent Retail Association (Bira), explained, “Many products are seeing significant increases in costs, and glassware is another example of this.
“Our concerns are that shortages tend to favour large companies who use their buying power to secure stock. Indie retailers often have agile supply chains and will need to source alternative products.
“It is hard to know how the government can intervene with some of these stock issues other than re-doubling efforts to reduce the inflationary pressures in general so that suppliers can ultimately reduce the costs. Looking ahead it will be important to ensure that costs do come down when inflation starts to recede – all too often we see suppliers maintaining higher prices because they are the new ‘market price’.
“We can all see what is happening with the cost of petrol and diesel rising to record levels (even though the cost of oil is not) to see how this can occur.”
Julie added, “Our wine and spirits suppliers from around the globe are facing ongoing struggles that will have a knock-on effect. As a result, there could be less variety in the bottled beers we see on UK shelves.”
Because smaller producers will be at the bottom of the priority list, this will hit independent retailers hardest as they will experience the biggest lack of variety. With a shortage on the horizon, indies will need to prepare for increased costs at a time when inflation is at its highest in 40 years and begin to source alternatives to bottled products.