News for North Texas
Play Live Radio
Next Up:
0:00
0:00
Available On Air Stations
Business/Economy

Supply chain disruptions cause bottlenecks for Fort Worth bars, liquor industry

Fort Worth Bars.JPG
Cristian ArguetaSoto
/
Fort Worth Report
An old fashioned sits on a counter at Blackland Distillery. Blackland owner Markus Kypreos said his business has been affected by shortages of corks and glasses. That means he has to pay more for larger amounts of supplies.

A bottleneck in supplies is affecting suppliers, distilleries and bars that make specialty cocktails. To compensate, distilleries are ordering more supplies and paying more for supplies and bars are finding alternatives to the name-brand liquors.

When Alden Aldrich, the general manager for Thompson’s Bookstore bar in downtown Fort Worth, orders liquor for the bar, he never knows what will show up. He has to make orders on a weekly basis so bartenders can make the specialty cocktails the bar is known for.
“I’ll order like a case at a time or half time, and sometimes two or three bottles show up,” Aldrich said. “Sometimes all of it shows up. Sometimes none of it shows up.”

About 40% of distilled spirits on U.S. package store shelves are imported, Lisa Hawkins, senior vice president of public affairs for the Distilled Spirits Council, said in an email to the Fort Worth Report. Backlogged ports, shortages of truck drivers and pallets are part of the challenge for distillers, Hawkins wrote.

Consumers are in luck, Hawkins said – because there are more than 16,000 spirits brands in the U.S. marketplace, there’s no shortage of options to choose from. Aldrich said Thompson’s bartenders can often find an alternative for cocktails.

“If you’re following a template, you could swap out the ingredients and spirits and, you know, mash the flavors up to make a good drink,” Aldrich said. “But as long as you’re following the ratios, it’ll probably end up good.”

Forth Worth brewry.JPG
Seth Bodine
/
Fort Worth Report
A room full of barrels distilling whiskey at Acre Distilling in Fort Worth.

Distilleries, suppliers keeping up with demand 

For local distillers, beating the supply chain means paying more money to buy more supplies than needed in the event of a shortage. Markus Kypreos, owner and president of Blackland Distillery in Fort Worth, said a normal wait time for supplies is about six to eight weeks. Now, it’s much longer.

When he placed an order in March 2021, he received the order nine months later in December. He said that he gets his glasses and corks imported, and ships are backlogged at the Port of Houston.

“When you turn the faucet off for (COVID-19) and everyone shuts down and stops working and then you turn it back on, there’s this very long line of work that needs to get done,” Kypreos said. “And you can’t do it all at once. You are limited in time and space and employees and what you can produce, and so it has created a backlog that people are still working through.”

To adapt, Kypreos makes his forecast and projections for what he needs to keep running the business way in advance, he said. That means making more orders — and spending more money — on supplies such as bottles and corks.

Kypreos said his business is growing every year — he expects he sells 15,000 of his 12 bottle cases in Texas and surrounding states such as Oklahoma, Arkansas and Missouri. He sees the supply chain issues as an opportunity to introduce his product to new customers as they seek alternatives to other brands that are short in supply.

The supply chain puts him in a difficult situation. Advanced ordering is risky. If his orders don’t match his projected growth, he will have too much supplies and not enough sales. If he plays it safe, he might not have enough supplies to meet the demand, he said.

“The troublesome part in the long run is, what are your options?” Kypreos said. “You have to spend this money now to secure packaging or you have nothing to sell later on. You’re damned if you do, you’re damned if you don’t.”

John Rydman, the president of alcohol distributor Spec’s, said the bottleneck affectis every sector of the alcohol industry. A common comment is about a shortage in glass to bottle liquor. Big liquor companies release a certain amount of product to each region to adapt, but it’s often not enough, he said.

“Most of the time what they’re giving me is not enough to even feed my own premise division,” Rydman said. “That’s not enough to even supply the bars and restaurants, much less the retail side for all the other consumers.”

Spec’s can’t move liquor over county lines, Rydman said, which means some regions might have more supplies than others. He said Fort Worth seems to be taken care of better than most because it has several distribution centers close by and receives a bigger portion of the allocation.

Texas has a three-tier system for alcohol, which dates back from the Prohibition era, said Tony Formby, the owner of Acre Distilling. Distillers can’t distribute directly to bars and restaurants, he said.

Fort Worth brewry.JPG
Seth Bodine
/
Fort Worth Report
Tony Formby, owner of Acre Distilling stands next to barrels inside the distillery. He makes bourbon out of white oak wood, which is a requirement for bourbon to be considered legitimate, he said. He worries about a shortage in oak, so he’s been stocking up.

Distributors also can’t retail the liquor. In addition, bars or restaurants have to buy their product from a sub distributor, called a Class B distributor.

“So the problem when you’re trying to fill the pipeline with product, is making sure that my distributor, a Class B distributor, always has inventory,” Formby said. “Otherwise, the bar and restaurants … get an order and stuff’s missing.”

Meeting demand or being undersupplied is the lesser of distillers like Kypreos and Formby’s concerns.

The big fear is that they will run out of charred oak barrels, which is a requirement for bourbon whiskey to be considered legitimate, according to the American Bourbon Association. There’s no barrel cooperage in Texas, Kypreos said. Most are made in California and in the midwestern states.

The barrels also have to be made from white oak that is dried for one to two years, Formby said.

“The big concern I have is whether some of the barrel makers start going, ‘OK, we’re going to use 6-month-old (wood),’ which is green, and that’s going to have an impact on our whiskey,” Formby said.

Formby and Kypreos are stocking up in preparation for more shortages. Formby said his business has felt the price increases, but he’s hopeful that will subside. The demand is causing prices to increase — both from shortages and demand and from businesses trying to make more money.

“I think a lot of people have just taken advantage of this and (are raising their prices), because everybody else is even though their supply chains may not be impacted,” Formby said. “I think that once we get back to where we used to be, prices will come back down and inflation will hopefully drop a little bit.”

Seth Bodine is a business and economic development reporter for the Fort Worth Report. Contact him at seth.bodine@fortworthreport.org and follow on Twitter at @sbodine120