Imagine this: the sun on your face, a gentle breeze, and after a long day's work, what could be more refreshing than an ice-cold Pacifico beer? That crisp golden liquid, with its effervescent bubbles dancing upward, instantly awakening your taste buds—this is the ultimate experience Pacifico delivers.
However, consumers might have noticed increasing difficulty finding their favorite Pacifico beer recently. This isn't imagination—it's the result of a quiet "amber bottleneck" affecting the supply of this beloved beverage.
The Unsung Hero of Brewing: Brown Glass Bottles
Constellation Brands, America's third-largest beer producer, currently faces challenges from a shortage of brown glass bottles—a critical issue impacting its star product Pacifico and other imported beer inventories.
Brown glass bottles serve as the unsung hero of beer production. These unassuming containers function as faithful guardians of beer quality, effectively blocking ultraviolet light—beer's greatest enemy. UV exposure can degrade beer components, causing spoilage and flavor deterioration. The brown glass acts as a protective shield, preserving the beer's distinctive taste profile.
For imported beers like Pacifico, brown glass bottles represent more than just packaging—they embody brand identity and quality commitment. Each bottle signifies trust, assurance, and dedication to excellence, representing an entire culture and lifestyle.
CEO Acknowledges Growth Headwinds
William Newlands, Constellation's CEO, openly addressed the brown glass shortage during the Q3 earnings call, identifying it as a significant "headwind" for this year's growth. The shortage has particularly affected Pacifico production, leading to inventory declines and consumer availability issues.
Global supply chain challenges, including logistics disruptions, have compounded the problem, creating a domino effect throughout the supply network. Shipping delays, labor shortages, and rising material costs continue to plague the entire alcohol industry, with these trends persisting into the present.
Newlands confirmed the company is actively addressing the shortage but noted full recovery timing remains uncertain. The issue has demonstrably impacted Constellation's current quarter delivery capabilities.
Resilient Demand Amid Supply Challenges
Despite these obstacles, Constellation's imported beer business maintains strong consumer demand and significant growth potential. Newlands projects 10-11% net sales growth for the beer division in fiscal 2022, acknowledging that the glass shortage has "weighed on what would otherwise have been outstanding performance."
The shortage isn't new—during last month's Morgan Stanley Global Consumer & Retail Conference, Newlands revealed the company missed some growth opportunities for Pacifico and Modelo Negra due to insufficient brown glass supplies.
Strategic Advantages and Expansion Plans
Constellation benefits from partial self-sufficiency through its joint venture with glass manufacturer Owens-Illinois. The partnership provides about 60% of the company's bottle needs from a Mexican production facility, somewhat mitigating supply pressures.
The company continues strategic expansion, including plans for a major new brewery in Veracruz, Mexico, following the abandonment of its Mexicali project due to a water dispute. Additional investments totaling $700-$900 million annually through fiscal 2025 will expand facilities in Texas and Sonora, ultimately adding 25-30 million hectoliters of capacity.
Broader Supply Chain and Inflation Pressures
Supply issues extend beyond beer—Constellation's wine operations face shipping container shortages, freight cost increases, and port congestion affecting products from New Zealand and Italy. CFO Garth Hankinson anticipates "high single-digit to low double-digit" commodity cost inflation next fiscal year, with persistent inflationary pressures expected through 2023.
Correction: A previous description about glass production quantities outside the U.S. contained inaccuracies.