Michigan Information & Research Service Inc.
Michigan Information & Research Service Inc.

High Gas Prices Adding To Liquor Distribution Disruption

04/07/22 01:17 PM By John Reurink

(Source: MIRS.news - Published 04/06/2022) The spike in gas prices is the latest problem in a continuing supply chain disruption that would drive Michigan liquor providers to drink, if only they could get some.

 

Delays that started with pandemic shutdowns haven’t returned to normal, said Lew Cooper III, the Co-CEO of Great Lakes Wine and Spirits, the state’s largest wholesaler told the Michigan Liquor Control Commission Wednesday at a public hearing.

 

“The economy was running at 100% pre Covid, and then it shut down,” Cooper said. “And all these different parts of the supply chain re-engineered.”

 

Many of the disruptions are due to shortages, including labor in Michigan. Cooper said many shipments are delayed due to a shortage of truck drivers.

 

Labor shortages and other transportation delays are worsened by spiking gas prices in response to the war in Ukraine, said Liquor Control Commission Chair Patrick Gagliardi.

 

“It’s been a problem in the midst of all these supply chain issues. We’ve got jobs everywhere, but we have trouble selling them,” Gagliardi said. “When prices spiked directly in response to the war in Ukraine, you could say that was kind of like adding injury onto injury.”

 

Gagliardi's comments came as the Michigan Liquor Control Commission met today with retailers, manufacturers, suppliers and the public to address ongoing supply chain disruptions that have resulted in out-of-stock liquor products.

 

Gagliardi said it’s been hard on all businesses that rely on receiving goods through transportation systems. But for bottle and can manufacturers, the costs of glass, aluminum and cardboard have also gone up.

 

When manufacturing is slowed, distributors are “at the mercy of the international marketplace,” said Brian Pizzuti, the vice president of sales for the Republic National Distributing Co. of Michigan. “Global producers are just struggling to keep up with demand across the world, including the U.S.”

 

Higher demand is a result of people who anticipated shortages during the pandemic, and both consumers and businesses have bought more in bulk, Pizzuti said.

 

With more to ship, the results are container shortages, boat delays and worker shortages at the docks, which all slow distribution. Ships that had previously been unloaded in a few days were now sitting for nearly a month off the coast, he said.

 

Pizzuti said liquor products may be back ordered for several months. Orders that usually arrive in two months are now taking up to seven.

 

He anticipated the disruptions would slow by the end of 2022, but distributors and retailers are hoping for a concrete solution.

 

Pizzuti suggested changing the way the state oversees liquor distribution. The current method is first come, first served, and every order placed must be filled.

 

He said a possible solution would be limiting the amount of orders retailers can place.

 

But Scott Ellis, the executive director of the Michigan Licensed Beverage Association, said that option would discriminate against smaller sellers and independent businesses.

 

“We are the ones that can’t afford to buy 5,000 cases,” Ellis said. “If you allocate by the highest seller, guess who’s going to get left out.”

 

Gagliardi said the commission plans to maintain equal access for businesses, regardless of their size.

 

“The Governor has told me to try and keep the playing field level for all business people in Michigan that have our licenses,” he said.

 

Gagliardi said supply chain disruptions won’t be solved in one meeting, and global shortages are out of their hands. But Thursday’s open commission meeting will include brainstorming more ideas to help.