What Retailers Need to Know About Q4 Product Shortages
With categories like Champagne, tequila, and whiskey in high demand, adaptation will be key to success for the 2021 holiday season
Amid surging demand, retailers across the country experienced shortages of popular beverages such as Champagne, Cognac, and high-end tequila during the 2020 holiday season. With experts predicting that customers will splurge on winter cheer in 2021, ongoing supply chain issues and packaging shortages will present similar challenges for retailers this year—and into 2022.
Imported beverages will see the greatest scarcity, notes David Ozgo, senior vice president of economic and strategic analysis at the Distilled Spirits Council. “First off, you have a hard time getting a shipping container,” he says. “Then once you cross the ocean, you have a heck of a time just getting the ship unloaded. Once that is done, you run into issues with the complete lack of truck drivers.”
Though President Biden recently announced a plan to keep the ports open 24/7, Ozgo points out that running them on that schedule will be difficult due to labor shortages. Scarcity of packaging materials such as bottles is another issue.
“Our store is in Louisville, Kentucky and there are whiskey and bourbon brands that are 10 minutes from our offices,” says Mike Fisk, the head of sales and marketing at Cox’s Spirit Shoppe. “We have barrels of whiskey that we’ve already committed to buying that are sitting at distilleries right now because they don’t have any bottles to put them in. There are a lot of repercussions to the glass issue, which I think is going to continue into 2022.”
The upside, Ozgo says, is that consumers who traded up during the pandemic are still seeking out premium beverages. It may just take some extra effort to find their favorites this holiday season.
Tequila and Whiskey in Demand
Tequila currently accounts for approximately 25 percent of the overall liquor category on Drizly—up five percent year-over-year—and continues to be one of the platform’s hottest sellers. Liz Paquette, Drizly’s head of consumer insights, predicts that with luxury tequilas in demand for the holidays, supply shortages are likely for products such as Don Julio 1942 and Clase Azul.
Darren Enenstein, the co-founder of The Bad Stuff tequila brand, notes that in addition to supply chain issues, tequila producers are facing agave shortages. “It appears to be related more to specific distilleries that service multiple brands,” he says. “Some premium highland distilleries, including the partner distillery for The Bad Stuff, have excellent agave supply with the highland ranches of Jalisco.”
Supplies of Cognac and whiskey will also be limited in Q4 and beyond, as the categories continue to gain share and producers struggle to make products fast enough to keep up with consumer demand.
Beyond Big Houses
The Champagne category has seen a significant spike in 2021 and currently sits at No. 3 among Drizly’s top wine categories. The average unit price to date has increased approximately 24 percent year-over-year. Always a top seller for holiday celebrations and gifting, Champagne specifically is certain to see supply limitations in Q4—exacerbated by restricted yields and smaller bottlings in 2020.
“In 2019 and previously, it would take six weeks to get from the cellar door in Champagne to California,” says Michael Kennel, the wine buyer at Champagne specialist D&M Wine and Spirits in San Francisco. “It is now taking five to six months for a restock from France. This has made us think further ahead than we used to in order to make sure we have an ample supply.”
While Kennel has seen some shortages for grower Champagnes, the issue is largely with products from larger houses. “The producers that are out of stock or have limited stock are promising that by mid-November they will have supply of what we need,” he says, “but I am skeptical.”
In preparation for the holidays, the store will take a larger order this month from Billecart-Salmon that D&M would normally purchase piecemeal over six months. “For ourselves, it’s grit the teeth and buy early,” Kennel says.
The store will also focus on grower Champagnes, such as Chartogne-Taillet, Pierre Moncuit, Laherte Frères, Forest-Marie, and Jean Vesselle. Among the larger houses, Kennel says he’ll recommend Laurent-Perrier Grand Siècle over Dom Perignon, and will stock high-quality sparkling wines from other French regions, including the Loire Valley, Burgundy, and Alsace.
Like Kennel, Fisk is placing larger orders than normal to ensure that his store has enough Champagne to last for the next couple of months, and he is working with distributors to explore alternative products.
“We’re dealing with our smaller distributors to see what other sparkling wine brands are available,” Fisk says. “We normally can make a little higher margin on these kinds of items as well, so that makes it a little nicer.”
This is true not only for Champagne but for tequila and other in-demand spirits. Rather than relying on imports, suggests Ozgo of the Distilled Spirits Council, retailers should consider adding domestic and craft beverages to their inventories.
“Across the board, there are more good whiskeys, rums, vodkas, tequilas, and cordials on the market than at any time in our history, and there are over 2,000 craft distillers operating in the U.S. today,” he says. “Some of the large [distribution] companies have very broad portfolios, and there’s a good chance that they’re going to have something to your liking.”