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HOW TRUMP TARIFFS OF 25% AFFECT CHINESE GLASS BOTTLE MAKERS
Source: ROCKWOOD & HINES GLASS GROUP LTD.
July 16, 2019
As Trump ramps up his trade war with China, the beverage and spirits industry has been wondering what the impact will be on them, specifically as many beverage companies have sourced their bottles from China.
The answer from Chinese glass factories is straight forward, "U.S. importers have not cancelled any orders so far." There has been some pressure on the Chinese glass factories to lower prices but Henri Berthe, CEO of ROCKWOOD GLASS GROUP, based in China, says that all his current orders have been maintained.
Chinese glass factories are offering solutions to marketers that want unique bottles. There is no other place to get, for example, 1.75L bottles which are difficult to shape, or special colored glass like COBALT BLUE or BLACK GLASS.
China is the only place in the world running year-round campaigns for blue and black glass. Most other bottle manufacturers run campaigns twice a year for about 2 months. If you miss the date of the campaign you must wait for the next one. At Rockwood, their lines for blue and black glass run year-round, not on a campaign schedule, so marketers can basically get their bottles whenever they want, no waiting for the colored glass campaign to start.
For importers buying inexpensive bottles or wine bottles, the 25% tariff increase will bring them close to U.S. glass factory prices. But Chinese manufactured bottles are still less expensive, as on average, Chinese production has always been 30 to 40% lower in terms of price than American. Besides, U.S. importers do not want to invest in expensive molds and months of preparation to make the switch. The status quo will be maintained, and U.S. importers will absorb most of the rise in costs for the next few months.
In general, the market is hoping that these tariffs will go away as quickly as they were implemented. If the situation persists however, Chinese glass factories will absorb some of the cost in the hope that next U.S. Presidential election will usher in a better commercial and economic relationship between China and the United States.
ARTICLE THAT APPEARED IN USA INDUSTRY NEWS LETTER IN MARCH 2019
PROS AND CONS OF CUSTOM GLASS BOTTLES MADE IN CHINA vs EUROPE or USA
How small craft distilleries can get an outstanding bottle at a fraction of the cost of a European or American glass factory
Trump tariffs on empty glass bottles should not affect sales from CHINA to the USA. Indeed the current 10% tariff or the possible new 25% tariff will affect sales, although Chinese factories will be able to absorb most of this tariff increase as long as it does not last too long.
Large Chinese glass factories like ROCKWODD GLASS GROUP, will be able to sustain their sales, thanks to their low cost compared to US competitors.
While in the Western world, the initial cost of a CUSTOM MOLD can be financially discouraging-- ranging from $40,000 to $100,000-- top Chinese factories offer mold costs starting at $3,800 with a very flexible purchase minimum quantity starting at 20,000 bottles per run. Although the tariffs are a concern, U.S. bottlers, and particularly craft distilleries, will still see an advantage in buying from China due to the smaller quantities required by Chinese factories. Even with the tariffs, Chinese glass factories can produce at 40% to 50% lower costs than American factories.
Why CHINESE GLASS FACTORIES are important to the CRAFT DISTILLERIES of America
Without China, craft distilleries would not be able to create their special bespoke bottles to compete in a crowded market dominated by the big brands. With private molds at $3,800 in Chinese glass factories, most small start-ups can afford to create their own uniquely shaped bottle. Although, big US glass factories may not like the idea of China competing in their own market, it gives them the opportunity to acquire as clients these small craft distilleries once they achieve larger sales volumes.
Rockwood Glass Group CEO Henri Berthe says, “I am very proud to help these smaller distilleries start their business with bottles that engage the consumer. In a very busy spirit market, a brand with a nice packaging will make a statement and distinguish itself from the pack.”
Too many craft distilleries invest several hundreds of thousands of dollars in fancy distilling equipment but forget that packaging is a key element for the consumer in picking a particular brand.
The upside is that a bespoke bottle can provide a distinct, even iconic look. This is where China excels in flexibility and quality, supplying bottles that the rest of the word is often incapable of producing. Indeed, China still has a future in supplying bottles to the US.
When looking for a bottle supplier in China or elsewhere, Rockwood CEO Henri Berthe advises, “Don’t work with someone who will only design the bottle. Work with a glass factory that wants to understand your consumers, wants to understand your story, what you want to convey to your consumer, and what are the dreams of your distillery.”
The Rockwood method delves deep into a distillery’s consumer profiles to understand the target audience and what is best suited. A vintage look, a modern and fancy look, simple lines reflecting a natural unique product, or super different lines. After a long marketing brief, a story board and many exchanges, Rockwood understands what clients want to do and say.
“When developing a new product, consider whether it makes sense to spend $50,000 on a fancy designer company,” says Berthe. “Several Chinese factories have in-house designers, ours happen to be French, and can design an outstanding bottle for as little as $850 in a couple of weeks.”
It’s also important to work with a factory that has a track record of making beautiful bottles. Look for a factory that has an in-house designer who understands glass blowing techniques and knows how to use them to keep costs down while optimizing design. “Ask for a factory to supply you with their portfolio. If you see that they have won Gold and Platinum Awards for Best Design in international fairs, then you should be in good hands… as long as they don’t overcharge you!”, advises Berthe. “And of course, make sure that the factory has superior quality control and aren’t going to send you bottles that don’t close properly or ones that have imperfections or defects.”
Lastly, Berthe recommends working with someone who is not just a supplier, but rather a partner, someone who will bend over backwards to satisfy your demands.
“When we cannot make it in glass
we make it ceramic”
The Spirits and Liquor, water, juice, health beverages and perfume industry is a highly-competitive landscape, with thousands of brands demonstrating glass bottles that are more and more sophisticated, should it be for liquor, spirits, juices, health drinks, or water like: Grey Goose, Bacardi, Bombay Saphire, Absolut Vodka, Captain Morgan, Cuervo Gold, Glendfiddish, Jack Daniels, Pernod, Ricard, Coca Cola, Budweiser, Voss, Jagermeister, Jose Cuervo to name only a few, competing for the same consumer (men or women) coin. It is a tough market, and creating an exceptional glass bottle that allows you to stand out on shelves with a bottle design in stores/shops/boutiques environment by its beauty, style, vintage and antique or modern look, is the only way to ensure your brand's success and sustainability.
Rockwood recognises the importance of having an outstanding brand with a great glass bottle design and logo. Making a great first impression with superb packaging is a vital way to engage consumers while shopping and go on to build long-lasting brand loyalty. Competition is mostly based on the design of the bottle, logo and label today.
With a multidisciplinary team, Rockwood has a fully integrated design, development and production capability, enabling us to realise the vision you have (or in some cases: don't have, yet) for your brand: this is where our specialist designers and marketing/engineering sales team steps in. We do all this based in China - the world's lowest cost centre for manufacturing - with a highly-skilled French team of designers and technicians. The result is an affordable and reliable manufacturing solution at a level of quality rivalling our competitors in Europe and the USA.
Our website offers a plethora of designs for glass bottles intended to demonstrate our capability and provide inspiration to those about to open a mould and new glass bottle. A very accessible undertaking with Rockwood, with moulds costing less than one-tenth of the prices found in Europe and the USA.
We would encourage you to look around our website to see what we can do; and please feel free to contact us with your project requirements for your customized glass bottle.
We look forward to hearing from you.
Henri Berthe, CEO