Liquor shortage impacting Virginia ABC, but to what extent?

Virginia

RICHMOND, Va. (WRIC) — Virginia’s ABC stores are feeling the effect of a liquor shortage that is impacting several other states across the country amid supply chain and delivery issues coinciding with the coronavirus pandemic.

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According to spokesperson Taylor Thornberg, as of Oct. 15, 169 of the 5,287 products that Virginia ABC sells are completely out of stock. Although that’s only about 3% of the agency’s inventory, there are concerns that supply could become even more strained with the holiday season approaching.

“We work from January to September, getting ready for October, November, December,” local distiller David Cuttino said. “You do most of your work in those three months.”

Cuttino is the co-founder of Reservoir Distillery in Scott’s Addition. He said that although Reservoir has not completely run out of anything yet, there have been some close calls.

“Reservoir has not reached a point where we have run out of product. Now, some of our local peers here in the state have had some difficulties trying to find and locate different format bottles to put their spirits in,” Cuttino said. “We’ve been able to manage to stay on top of it and stay in front of it. [But that] does not mean that we haven’t had a few circumstances where we got delivered bottles just in time.”

Cuttino said that the issue is not a literal shortage of the liquor and spirits, but instead challenges finding bottles in which to put the alcohol, as well as containers in which to ship it.

“It’s different from what it was before,” he said. “It’s a bit more strained and it’s a little more just-in-time, and that will drive people in charge of logistics crazy.”

According to Thornberg, since the beginning of the pandemic in March 2020, the highest number of out-of-stock products at Virginia ABC was 250 in January 2021, and the lowest was 55 in April 2020. She said that bottles, raw materials, vehicles to transport products and truck drivers are in short supply, prompting many of ABC’s suppliers to look into alternative container options in an attempt to resolve this situation quickly.

Also contributing to the liquor shortage in Virginia is unprecedented consumer consumption.

This chart shows the number of out-of-stock products at ABC stores throughout Virginia. (Courtesy: Virginia ABC)

“Consumer consumption trends have been outpacing forecasted growth and historical trends,” Thornberg said. “A lot of our suppliers are indicating this. We’ve seen, personally, volatility in sales since the start of the pandemic in March 2020, and so that includes — our sales grew 13.6% in fiscal year 2021 over fiscal year 2020.”

Moreover, Thornberg said that there has been congestion at some of the major U.S. ports, causing backups of imports, such as cognac, scotch, gin, vodka and Irish whiskey. She said that customers may also see tequila shortages in ABC stores, but that is more attributable to difficulty securing glass containers and plastic enclosures.

“Our suppliers have indicated that, if these current sale trends continue — I mean, they’re trying to keep up, obviously, and try to anticipated that forecasted growth in sales,” Thornberg said. “But they’re hoping to probably have this, maybe, worked out or work itself out by mid-2022.”

Thornberg said that although the out-of-stock issue has largely been the result of external supply chain problems, some of the shortages in stores have been because of adjustments made during the transition to ABC’s new distribution center in Hanover County. Throughout September, ABC shipped products to stores from both the new distribution center in Hanover County and the warehouse in Richmond. This resulted in a delay in shipments to some stores. By early October, ABC began shipping solely from the new, highly automated distribution center in Hanover.

Cuttino, who works closely with Virginia ABC, said that the agency is doing everything it can to make sure shelves are stocked, especially ahead of the holiday season.

“The alarm bells start going off if it’s getting too tight,” he said. “Going through the holidays this year, yeah, it’s going to be tight, and I think where you’re really going to see a lot of pain is just in the logistics cost, especially when everybody wants to have things shipped. Doing direct-to-consumer sales has been a big part of business for every distiller in the state this past year because of the pandemic, and now, suddenly, with all this cost popping up, it’s kind of difficult and it’ll hurt your sales when, to ship a single bottle, it’ll cost $20-$30.”

Cuttino said that as U.S. manufacturers resume operations, the problem has shifted from not being able to get products to there being a significant delay.

“Demand has remained very strong, and so as long as we continue to just keep selling at the pace that we are — the money that’s coming in is being reinvested into the business,” Cuttino said. “For us, that means working with our suppliers and getting ahead of it, and we’ll continue to do that until we see some of the pressure released on the system.”

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