Consumers perusing the broad array of bottles in their local wine store may not realize that many wines actually travel in giant tanks from their country of origin to markets where they are bottled and sold. In fact, changes in production and consumption, along with economic and environmental factors, have driven a significant increase in the amount of wine bulk shipped over the last decade. A 2012 Rabobank study estimates that between 2001 and 2010, the amount of wine bulk shipped by New World wine producing nations, in aggregate, went from 23% to 43%. Here’s an overview of how wine is bulk shipped, the market size/segments, and the benefits of bulk wine shipping.
How Wine Is Bulk Shipped
Bulk shipping wine is not new. In fact, the practice dates back to ancient times when Greeks and Romans shipped wine in amphorae. Over time, amphorae were replaced with barrels, which were later replaced with tanks. Then, in the 1980s, along came the flexitank—a “plastic bag” that transforms a standard 20-foot sea shipping container into a bulk liquid transportation system with a capacity of 24,000 liters. Think of a giant “wine box” that fits on the back of an 18-wheel tractor trailer. Today, wine is primarily bulk shipped in flexitanks, but steel ISO tanks (“pill-shaped” tanks with capacities of up to 26,000 liters) are also used. (For more on flexitank logistics, watch for our upcoming blog.)
Market Size and Segments
Between 1.5 and 2 billion liters of wine are shipped in bulk each year, with volume growing at 10–15% per year. According to JF Hillebrand, the world’s leading global beverage logistics company, every major wine-producing region ships some wine in bulk, but the key trade lanes are from New World producing regions to Europe and the UK, which is the world’s largest wine importer. The US Department of Agriculture estimates that in 2012, 53% of Australia’s exports, 30% of New Zealand’s exports, 39% of Chile’s exports and 61% of South Africa’s exports were shipped in bulk. About half of US wine exports are bulk shipped.
The bulk wine market has three distinct segments. The first segment is wine that is bulk shipped for blending purposes. This is wine that is bulk shipped with the intention of blending it with local wines as part of the production process. Second is the “buyer’s own brand” segment. This is wine that is sourced in bulk by an importer and bottled at local facilities under the importer’s own brand or label—a common practice for supermarkets and big retail chains. Finally, there is the “commercial brand” segment. These are recognizable brand name wines which are bulk shipped and bottled in the destination market for economic and environmental reasons. Small volume and premium wine brands are not typically bulk shipped as the economics are not as compelling for them as they are for high-volume/lower-margin brands.
Benefits of Bulk Wine Shipping
The economic benefits of bulk wine shipping are significant. Shipping wine in a flexitank reduces transportation costs significantly because a flexitank can hold the equivalent of about 32,000 750ml bottles of wine—significantly more than the 12,000–13,000 bottles of wine that fit in the same size shipping container. It also eliminates costs associated with damage to bottles and labels while in transit and can result in reduced warehouse costs as flexitanks can be used to store wines before export or prior to bottling. Bulk shipping wine and bottling it in the destination market can also reduce import duties, bottling costs and foreign exchange exposure. In a 2012 study, Rabobank estimated that the amount saved can range from US$1.50–US$3.00 per case.
Studies have proven that bulk shipping also has environmental benefits. It reduces carbon emissions by reducing the number of ships needed to transport wine. Bottling wine in the destination market enables the use of recycled, lightweight glass, further reducing carbon emissions. Flexitanks are also disposable and fully recyclable.
Finally, there are quality and other consumer benefits. Numerous studies have shown that wine shipped in bulk is less likely to experience temperature fluctuations during sea transportation because a single large volume of liquid has a greater thermal inertia than a small volume of liquid. This helps protect the wine against damage associated with thermal shocks. Shipping in bulk and bottling at destination can also mean that the product in the store is fresher and has a longer shelf life compared with wine shipped in bottles; since the wine’s entire shelf life is spent in the country of its sale, risks of damage to bottles and labels in transit are minimized. Finally, bulk wine shipping gives winemakers and retailers more flexibility in meeting the demands of the marketplace by allowing them to efficiently source wine from different regions around the world.
Thanks to Alex Norton, Global Marketing Manager of JF Hillebrand Group for his insights. JF Hillebrand has been dedicated to the business of beverage logistics for over 170 years and is active in every major beverage market in the world. For more information on the company, see www.jfhillebrand.com. Photo courtesy of JF Hillebrand Group.