SCOTCH whisky distillers are seeing operations worryingly hampered by major shortages of cardboard and glass, as concerns grow that doing business in the US is being significantly impeded by the continuing ban on British citizens travelling to the country.
As pressure mounts on the UK Government to address Britain’s growing supply chain woes, driven by a huge shortage of HGV drivers, it has emerged that distillers are facing significant delays in receiving orders of crucial packaging materials.
The disruption to the supply chain is also ramping up input costs, undermining efforts in the industry to make up ground lost because of the pandemic and the impact of tariffs on exports to the US.
The GlenAllachie Distillery in Speyside, which is spearheaded by Scotch whisky veteran Billy Walker, said the lead time for cardboard is now up to six months.
A spokeswoman told The Herald: “The growth of online shopping has resulted in cardboard being in much higher demand. This, coupled with the move away from plastic packaging by many firms in favour of more sustainable materials, means numerous companies are unable to access cardboard as freely and quickly as we previously could. The current lead time for cardboard is around six months which is double the normal rate.”
John Laurie, managing director of The Glenturret in Crieff, Perthshire, also noted that the pressure on cardboard supplies has been driven by the surge in online shopping during the pandemic. But he also flagged issues arising from Brexit as a concern.
Mr Laurie said: “The shortage of cardboard has meant we were delayed in receiving our gift cartons, shipping cases and cardboard dividers, ultimately causing us to miss dates booked with bottlers and delay our annual launch by three months.
“Brexit has also caused complexities with receiving goods into the UK. Many EU-based glass and cork providers were having to adapt to exporting to the UK as a new territory, [and] the delays everyone saw at Dover went on a lot longer than we saw in the national press with lorry loads of goods getting turned away for even the slightest issue with paperwork.
“The double transport costs along with the new customs declaration costs were not factored into original plans for manufacturers so these were all margin-eroding impacts.”
Mr Laurie said early indications are that The Glenturret’s input costs could have risen by as much as 10 per cent because of the supply chain disruption, with the shortage of HGV drivers playing a significant part.
Highlighting the huge dependency of the Scotch whisky industry on road transport, he added: “The shortage of almost 100,000 HGV drivers has both delayed delivery times and increased costs per delivery. Many of the most reliable shippers have simply been overwhelmed as smaller operators have struggled to keep up.
“We are in a very strange place just now – demand for single malt Scotch is globally high, we have the product, but the UK infrastructure has been eroded over the last few years and we are struggling to get our product to our customers.”
Meanwhile, one Scottish drinks company said supply chain pressures have undermined its plans to expand in Australia.
Liam Hughes, co-founder of the Glasgow Distillery Company, said: “We have got a big new customer in Australia who has taken on board our G52 vodka. Dan Murphy’s went from 50 stores to 150 stores nearly overnight, which has caused us some challenges anyway. Now the biggest challenge is we can’t get the glass to put it in the bottle.”
Mr Hughes said the distillery’s plans to launch its whisky in the US had been pushed back into early next year partly because of the glass shortage, though US tariffs and the pandemic were also factors in this regard.
He added: “These are things that you don’t anticipate.
“It’s not just us. I’ve heard some horror stories where people say their cost of goods have gone up 20 per cent. That’s a big number.”
The difficulties come as the Scottish North American Business Council expressed frustration over the continuing ban on British people travelling to the US. He said the ban is preventing Scots business owners from negotiating with importers and distributors in person in their most lucrative overseas market, and from travelling to trade shows. It is also stopping Scottish businesspeople from visiting their companies’ own bases, and customers, across the Atlantic.
Allan Hogarth, executive director of the SNABC, said it was frustrating that while US citizens are now free to travel to the UK, which is helping Scottish tourism, the agreement has still to be reciprocated.
Mr Hogarth said: “There are huge cultural differences across the 50 States of the US, and there is no doubt we were all encouraged by the messages of much more global thoughts from the Biden administration. We were pleased they did remove the penal tariffs on Scotch whisky.
“But this crucial issue of letting businesspeople travel to meet, especially when they are paying a large amount of taxes on their properties and employees into US coffers, is a stumbling block.”