Monday, January 24, 2022

Corona, Modelo beers to cost more due to inflation, supply chain woes

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Well-known beer brands Corona and Modelo are expecting prices to rise to 2 percent this year due to bottlenecks, rising commodity prices due to inflation and supply chain problems.

Constellation Brands Inc., the largest beer importing company in the U.S., said in a profit survey on Thursday that shareholders were to blame for the brown bottle shortage.

The company also said that the increase in shipping and storage costs due to disruptions in the supply chain is also increasing costs.

“We are working hard to address the brown window shortage,” Constellation CEO Bill Newland told shareholders, according to a Acesparks report.

Scott DeFife, president of the Glass Packaging Institute, said in an interview with the Financial Times in November that the alcohol industry was dealing with the same problems that plague other sectors of the economy.

He said the supply chain crisis was exacerbated by labor shortages and declining freight volumes.

In an interview with National Public Radio, DeFife said that while U.S. glass manufacturers are “still producing a lot of bottles,” the problem is that logistics are flawed and “import congested.”

Constellation Brands is a U.S. distributor of Corona and Modelo beers.

But due to a lack of carriers, delays in shipping have lagged behind in ports. This is detrimental to the industry, as 20-30 percent of the bottles used in the U.S. are imported from Europe or Asia.

Others in the industry have noted that part of the bottle production is focused on making vials for the COVID-19 vaccine from wine and alcohol.

The problem was so acute that the St. Augustine Distillery in Florida was forced to use wine bottles to store hard drinks such as vodka, gin, rum and whiskey, which could not reach store shelves.

California-based Vintage Wine Estates said it was unable to ship about $ 7 million worth of wine due to a shortage of bottles that delayed production and delivery.

Demand for wine and alcohol in the U.S. increased by at least 13 percent during the pandemic, according to the Bureau of Economic Analysis.

Shares of Constellation Brands, headquartered outside Rochester, New York, fell nearly 3.5 percent in Wall Street trading on Thursday.

In recent months, the brewing industry has struggled with rising prices for aluminum cans and bottles. Breweries across the country have been forced to raise prices and shift costs to the consumer.

Inflation rose to 6.8 percent in November, the highest in 39 years, according to the latest government data. In November, the consumer price index rose 0.8 percent.

Analysts say inflation is being driven by demand exceeding supply as the global economy gradually emerges from blockades in the early stages of the COVID-19 pandemic.

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