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Michael Willkomm Michael Willkomm is the managing director of Peter Mertes, Germany's largest winery. Every day it fills one million litres, which are sold by food retailers (LEH) and at discounters. In an interview with Raffaella Usai, Willkomm reports on the biggest crisis in the wine business for decades.

How is the wine industry doing at the moment? We often hear at the moment that winemakers can't bottle because there is a shortage of bottles and all the materials.

Willkomm: Of course, we notice that too. When the first reports about the shortage of raw materials were published last summer, I spoke to our suppliers and asked them to comment. Most of them replied that they didn't know for sure themselves - but there were clear signs. Many supply chains have completely broken down in the pandemic, containers are stuck somewhere, the usual delivery routes have been disrupted. We warned our food retail customers early on that there would be massive shortages of raw materials for the production of cardboard boxes and glass. Nevertheless, they have all ordered their usual quantities. That's why I asked my suppliers for guarantees, because I have a responsibility to the trade.

Have you been able to fulfil all orders so far?

Willkomm: We have been able to fulfil all the existing agreements so far. But we had to turn down many new orders.

What about the wine quantities? The harvest was small in Italy, but also in France. Did you have to look for new suppliers or switch to other wines?

Willkomm: Especially with French white wines, we had to rethink. We always had an organic Chardonnay from France in our range, which did very well. But we had to discontinue it everywhere because the producer only harvested 30 per cent and needed the goods for his own market. We tried to get bulk wine from Italy and Spain, but we could not offer this wine as before. In such cases, we try to give the trade an alternative, a blend of different grape varieties, for example. Some have accepted that, others not.

That sounds like difficult negotiations.

Willkomm: There are currently bottlenecks in the supply of goods in many areas - including basic foodstuffs. A rice producer friend of mine from Italy has his warehouse full of rice, but can't find any film to pack it in. Finding alternatives is difficult, because paper and aluminium are not available at the moment either. The problem is: it's the same for everyone. In the past, you had the chance to go to different suppliers. But now there is no competition at all.

The shortage of raw materials has led to price increases. Have you passed on the higher prices to the customers?

Willkomm: It is a constant negotiation and individual discussions are always necessary. Everyone knows that energy costs and packaging materials have gone up by 30 per cent. Accordingly, we would also have to raise our prices per bottle by a few cents. With more expensive wines, five cents don't matter, but with tightly priced bottles that sell for 1.99 or 2.49 euros, every cent counts. Compared to other products, the higher prices are still least reflected in wine.

That means your margin will be lower this year?

Willkomm: Yes, absolutely.

What about the bulk wine prices?

Willkomm: Due to the small harvests, prices rose massively in autumn. We are always transparent with the trade and the bulk wine prices are public. This is taken into account in the annual talks. It is always good for the trade if the supplier has a creative solution. Therefore, we try to meet the current situation with flexibility and offer innovative solutions to the trade partners.

But it has never been as extreme as this year. Has it?

Willkomm: I have been working in the wine industry for 50 years. I have really never experienced anything like this.

Have you experienced any other problems since the start of the Ukraine war?

Willkomm: Certainly, because important raw materials such as the aluminium ore bauxite and also lime, which are used in agriculture and also for the production of sheet metal and alloys, come mainly from the Donetsk region. The European economy also obtains many raw materials from Russia. Medium-sized companies, which are much less flexible than large corporations, are left behind.

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