At the onset of the Covid-19 pandemic, supply chain disruption became a common phrase in the media. In truth, it went well beyond what was being reported in the newspapers and on TV. Supply chain disruption became a key talking point for just about everyone. As a supply chain analyst, I know that I instantly became more popular in my neighborhood as friends had lots of questions about what the next shortage would be. At this point, we were in the throes of a global toilet paper shortage, and people wanted to know what would be next. The answer, it turned out, was a lot of things.
The toilet paper shortage got the ball rolling. Consumers were hoarding, stores were limiting purchases, and there was a general sense of chaos. One article touched on an interesting point that no one else was looking at. Will Oremus wrote an article about what everyone was getting wrong with the toilet paper shortage .People weren’t necessarily hoarding; in fact, they were buying more toilet paper because they needed more. The commercial market had dried up, and everyone was home, resulting in a sharp increase in the residential market. This shortage has come and gone, and so have so many other Covid-related shortages as well.
But now, we are in a new era of supply chain disruption. This stems from a lack of raw materials and production capacity (remember the baby food crisis), increased demand for specific products, such as semi-conductor chips, the changing global climate, and labor and truck driver shortages. I read an article over the weekend that highlighted a number of products that consumers may have a hard time finding the coming months as demand spikes and supplies dwindle. And if they can find these items, they will be paying a premium. Let’s look at a few categories.
The first category of items that may be harder to come by is alcohol. Supply chain disruption has had an impact on beer, wine, and liquor around the world. For these spirits, there is not one single cause for supply chain disruption. And these disruptions have ebbed and flowed over the years. Nearly fifteen years ago, there was a major hops shortage, which raised prices for every style of beer, but significantly impacted India Pale Ales, which are known for their intense hoppy taste. Now, there is a fear over another hop shortage, as severe drought and wildfires have negatively impacted farmers this year. And this does not just apply to hops. For wineries, the drought and wildfires have resulted, in some cases, in a fully lost harvest to make wine. This includes wineries in California, Italy, France, and others. These lost crops will result in lower availability of wine, thus driving up the costs.
The beer, wine, and liquor world faces another supply chain disruption as well. Wine and liquor makers are facing a glass bottle shortage. The cause is the same for a lot of the recent shortages, including logjams at ports, truck driver shortages, and warehouse labor problems. While many wine and spirits will have a generic bottle, this shortage becomes more problematic for those companies that have a distinguishing bottle design to set it apart from its competition. This applies to breweries as well. While the majority of breweries have moved away from bottles and are canning their beer, an aluminum can shortage has been driving up prices. With cans harder to find, this is impacting distribution. So if you are looking to host any holiday parties this year, stock up early.
We are just five weeks away from Halloween, which means stores are putting up decorations and stocking shelves with costumes and candy. Although this year, candy could be a little harder to find. In early September, Hershey said it would fall short of meeting demand for the Halloween and Christmas holiday seasons this year, blaming a scarcity of raw ingredients and difficulties in securing suppliers. The ongoing pandemic-induced supply chain disruptions, along with the Russia-Ukraine war, limited available supplies of cocoa, edible oil, and other food ingredients. Hershey Chief Executive Officer Michele Buck said those issues, along with the company’s focus on meeting demand during non-holiday periods, would lead to a likely shortage during Halloween, but added that sales will still top last year.
And just a few weeks ago, Mars Wrigley confirmed that it is facing a temporary shortage of Mars bars in UK supermarkets due to production issues. A Mars spokesperson said that while the company is indeed facing high levels of demand, the company is producing significant quantities and wants to reassure the British public that its candy bars are still available nationwide.
Supply chain disruption will also affect the holiday season. The Christmas tree shortage started in 2020, as people were homebound due to the pandemic, causing a surge in demand for trees. As a result, suppliers cut and shipped trees that normally would have been given another year to grow. This resulted in a shortage for the 2021 holiday season, as well as higher prices. Unfortunately, things are not looking up for 2022. The lingering effects of early harvest, combined with drought and wildfire, means that Christmas trees will be harder to find and more expensive in 2022.
Supply chain disruption will continue to cause product shortages and price increases. While I have outlined a few of the categories that will see an impact in the coming months, there are plenty of other categories that are facing shortages as well. Climate change and drought is a big reason for some of these other shortages, such as cereal, wheat, tomatoes, olive oil, and peaches, to name a few. However, much like the other shortages we have faced as consumers, we will have to weather the storm, and look for deals when we can. And remember to stock up early.
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