Special Feature
2021 has been synonymous with unprecedented challenges for the wine and spirits industry, due to the closure of tourist borders and non-essential businesses such as bars and restaurants. On top of this, complicated weather conditions for vineyards led to numerous losses and, consequently, historically low worldwide production. Our industry was also hit hard by soaring raw material costs. From the fruit used in the production of certain spirits to the product’s packaging components, the entire industry has been impacted. To discuss this topic in more detail, Mr. ChangSheng Wu, Chief Procurement Officer for the Amcor group, shares his vision with us.
ChangSheng Wu, Chief Procurement Officer – AFEMEA & ASC
IN YOUR OPINION, WHAT ARE THE MAIN CHALLENGES FOR THE PACKAGING INDUSTRY RIGHT NOW? HOW DO THESE CHALLENGES MATERIALIZE? First of all, it should be noted that we are facing an unprecedented situation. In my 25 year career, I have never seen anything like this! There a re multiple supply dis r u ptions ever y where, leading to soaring raw material and indirect costs. Also, from January to April 2021, we had to face many cases of force
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majeure around the world that impacted the packaging industry.
wines and spirits has not been immuned to the crisis either! There are many reasons for this.
The main case of force majeure concerns Europe in particular, w h e re te ch n ica l fa i l u res occurred at the production site lines of our suppliers, thus limiting the supply to our sites.
The COVID-19 crisis has led to some profound changes in consumption habits. For example, more users are now turning to electric cars, and they use batteries made from aluminum. The construction industry, a huge consumer of aluminium, has also seen demand explode. Finally, during the different lockdowns, domestic demand also grew significantly.
A secondary case of force majeure involves the extreme weather conditions that occurred in the United States. Many petrochemical companies located in Texas, whose infrastructures were not equipped to deal with such conditions, had to partially close, which consequently led to global shortages. These cases of force majeure have directly impacted the raw materials that we buy, as well as the production of plastic, resins, and other films. AND WHAT ABOUT ALUMINIUM? Aluminium, an important component of the closures for
The second reason is geopolitical. In order to counter competition deemed to be unfair, the European Commission adopted anti-dumping measures on aluminium imported from China, leading to complications for the proper functioning of under-capacity production in Europe. These factors taken together explain why packaging has been so impacted by this crisis: an extremely volatile market coupled with a general failure to meet demand.
