The Current Tariff Brinksmanship Punishes All of Us by Erica Harrop September 04, 2019
The reality of the tariff impact on profits has not yet jolted the wine industry, but it will. The industry has had the great fortune of benefiting from moderated pricing for glass because of hugely less expensive sources from China. As the domestic glass factories have raised prices at a steady rate, to where they are almost as high as European glass, our industry has benefited from globalized competition. Personally, I am frustrated by the lack of agreement on how important it is to share this global economy. Whether it is parts for cars, phones, or your wonderful tasty wines, we need to have low price options in order to make our economy grow. And for those nay-sayers, hey, you, too, are all benefiting every single day from this global economy.
Globalization, yes, I use that nasty word to remind people of what often gets sidelined in political conversations …namely, that we all benefit when we can keep our products profitable in a price competitive market. If we don’t, we will only be making products for the rich, or “the Tesla-category,” widening that gap between the haves and have-nots. And that gap will grow even wider as a result of this ongoing tariff battle.
Because glass factories are not expanding, there is no new production capacity coming to help us out over the next 24 months. I urge those who suggest that these tariffs are helping in any way to look at the real impact they are having in nearly every economy, with talk of recession around the world. Tariffs are taxes and consumers are paying, and the Chinese are betting they will bring US consumers to their knees to win the war. The biggest consuming nation will have a hard lesson to learn from this political quagmire. We will soon see the damage it will cause here and abroad as the flow of commerce is shut down in the short term and becomes increasingly expensive over the long term as businesses seek other markets and supply sources.
Our wine and spirits customers want creative and elegant design, a broad variety of bottles and packaging from which to choose, and, equally important, economical competitive pricing. That competitive pricing is established when producers are making and selling similar products around the world.
Because of long-standing and hard-won relationships that Global Package has developed over the years, we have been able source from anywhere—domestic, European, and Asian—with products that are good quality from each of our suppliers. However, the current situation requires wineries and distilleries to keep an open mind, so we all can consider alternatives, options that are both unique and that can also fit within even budgets.
The wine and spirits industries sell at both commodity and luxury price points, and differentiating all these products on the shelf has become increasingly critical. While the label is no longer an easy identifier of a category, bottles and their embellishments have become more important. Bottles can provide a thousand silent cues by using color, weight, taper, punt, and personalization.
However, finding quality glassmakers that are dependable and who have the capacity is not easy, especially for smaller, specialty companies like Global Package. Large corporations have big purchasing power so they buy up most of the domestic glass, which is always in short supply to begin with. This predicament affects not only suppliers, but low-volume wine and spirits producers, as well. A winery selling a bottle of wine for $8 retail cannot do so without the lowest pricing at every stage of production, including packaging.
For 14 years, Global Package has been creating bottles in new shapes and styles in China to fill the need for quality glass at competitive pricing. While European glass is an alternative in terms of quality and supply, it cannot compete with the aggressive competitive pricing Chinese glass affords. Without a doubt, this pernicious trade war with China will continue to disrupt and do great damage to all of us who are in the business of trying to keep our respective industries afloat.
Erica Harrop is founder and CEO of Global Package LLC (www.globalpackage.net). The company’s owner has worked for over 32 years in the glass industry with more than 30 suppliers around the world, and provides stock as well as custom bottles for the premium and ultra-premium markets. The team is comprised of talented and experienced professionals to help source the best bottles and provide custom shippers, glass decoration, pewter labels, closures, and design for the wine and spirits industries. The company stocks a good selection of domestic bottles and specializes in European bottles, with the ability to source higher-end bottles at very good pricing.