The exploding costs of wine production

Worldwide, the costs of wine production increase. In Germany, too, the producer complaints are getting louder and louder. We analysed Germany's wine production cost structure.

Credit: Kevin Schneider on Pixabay
Credit: Kevin Schneider on Pixabay

In Germany, as elsewhere in the wine world, producers are suffering more and more from rises in production costs. These include steeper increases in costs of oil, gas and electricity; viticultural and vinification materials; packaging and logistics than have been seen in decades. Energy costs in August 2021 were on average 24 per cent higher than in the same month last year. Those relying on natural gas had an even harder time, with a year-on-year hike of 44.2 per cent.

The price of glass has already gone up by 10 to 12 percent this year alone. 

 

 

Factory prices rocket

Factory prices of industrial products were 12.0 per cent higher in August 2021 than in August 2020, according to Germany’s Federal Statistical Office (Destatis), the highest year-on-year increase since December 1974 (+12.4 per cent), when prices rose sharply in connection with the first oil crisis.

Wages are rising too, and seem set to rise even further in reaction to general cost-of-living increases. 

 

 

“Transport costs are impossible to calculate”

Hennig Seibert, Chairman of Mosselland, Germany's largest cooperative told Meininger’s that

“We expect price increases of up to 10 per cent for bottles, and even more for closures, labels and packaging. Transport costs are completely impossible to calculate, because on the one hand there is a lack of drivers - a topic that is becoming more and more explosive - and on the other hand we don't know where this is leading, because of rising diesel prices… Two factors are causing the price increases at the moment: sharply rising energy costs, which have an impact on glass and aluminium in particular; and the availability of wood for pulp production, for example, which makes paper and cardboard prices go through the roof”

Seibert also describes the impact the situation high transport costs and the lack of availability of wood are having on wooden pallets, one of the essential elements of modern logistics. “I get first-class pallets delivered by the manufacturers and return scrap pallets and make money from them… Trading in pallets has now become part of the business of freight forwarders.

 

 

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