In July 2024, Dane Sunderland, Head of Global Operations at Liv-ex, hosted a masterclass discussing the current challenges facing the UK fine wine supply chain and how to overcome them. The Below is an extract:
The Perfect Storm
In general, supply chains are long and complex but still flexible: designed to adapt and efficiently navigate through occasional issues. However, what has happened to global logistics since 2020 is a perfect storm of five or six crises which not only put pressure on lead times, but also the supply chain itself. All of which increase the cost of doing business.
It may have taken up to 12 months for the admin burden of Covid and Brexit in particular, to hit, but only now is the cost and strain they’ve put on the industry apparent.
- According to a UKWA report, there were 17.4% fewer forklift drivers in Q4 2021 compared to Q4 2019.
- Savills published data showing how, in the 12 months prior to 2023, warehouse costs went up 10%. It is predicted that by 2026, warehousing costs will rise by 25%.
- The number of businesses classifying themselves as ‘transport and storage’ in the UK increased by 21% between 2019 and 2022.
- At the end of Q4 2021, transport companies reported a 43% vacancy rate in the HGV drivers. By 2023, it was at 23% – taking nearly two years to claim that slow recovery.
- 43% of HGV businesses reported that they had to increase wages to fill vacancies.
- The price of diesel jumped 33% between July 2021 and January 2022 – it has taken two years for the prices to return to 2021 levels.
- There was a 70% increase in the non-domestic electricity rate and 56% increase in gas prices between 2022 and 2024.
The masterclass goes on to explore ways in which wine businesses can successfully minimise the disruption and cost increases ahead:
- Compliance with changing UK wine labelling legislation
- How to use market challenges to improve your efficiency and save money
- Forthcoming changes to UK duty laws and how they may impact your business
‘There’s generally always some good opportunities provided when things are a little bit tough because you look at how you can be more efficient, what you can do better, and then potentially looking at how you can be better with your partners as well’.
Dane Sunderland, Head of Global Operations at Liv-ex.
Or request a demo to find out more about how Liv-ex can help your business navigate the fine wine supply chain.
