Cork Supply: Climate change will be an even bigger issue after lockdown

One of the world’s largest cork producers was one of few companies in the drinks industry to record positive sales in its first quarter results, as producers stocked up on stoppers before lockdown measures came into force.

Jochen Michalski founded The Cork Supply Group in California in 1981. Since then, the producer has enjoyed more than three decades of growth, and operates production facilities in all corners of the globe, including Australia, South Africa, Argentina, China, the US and, of course, Portugal.

Portugal declared a state of emergency on 18 March, just two days after the first COVID-19 death was reported. This forced the closure of schools and non-essential businesses.

“We are super fortunate that we are associated with food and drink”, the founder told db. As a supplier to the wine and spirits industry, Cork Supply was able to keep its factories open in most international markets, but not all. The plant in China shut down for roughly five weeks, and a facility in South Africa has now just reopened as the country grapples with deciding whether or not to permit wine exports during lockdown.

But having facilities spread out around the world also meant Michalski could see what was coming. “When it came to the US, we were pretty much prepared,” he said. Now, around 80% of office workers are working from home. Canteens in all production facilities have installed plexiglass to prevent contamination, and there are fewer workers on the factory floor, all on a shift rotation, so the working day drags on longer.

So far, the damage has been limited. The company has currently put in place a “plan B”, scrapping their initial outlook for the year and predicting that annual sales would fall 20%.

However, Michalski told db that Cork Supply’s revenue grew 10% in the first quarter of the year. He attributes this to strong performance in the off-trade, as well as a certain degree of stockpiling from beverage partners who were unsure whether they would be able to order corks under lockdown rules at the start of 2020 and right before the bottling stage.

Sustainability

Cork Supply has funded research into the net benefits of using natural cork as a stopper, and has just completed a project that converts whatever is leftover in their production into biofuel to power Cork Supply’s factories around the world.

“Sustainability was a big topic before the coronavirus crisis,” Michaelski told db, “and it’s going to be much bigger after this.”

Since coronavirus started to spread worldwide at the start of the year,  global warming had taken something of a backseat in the daily news cycle. Only in January, Rob Symington, associate director of Symington Family Estates, called climate change “one of the greatest risks facing humankind”, but reports of sustainability initiatives have since been overshadowed by the virus.

However, the closures boss said that, due to lower levels of traffic, quieter cities and a slower pace of life, global lockdowns could actually bring sustainability to the forefront of consumers minds.

The United Nations said in March that Europe’s NO2 emissions have fallen since March, when Italian cities first started implementing social distancing measures. NASA has also published data which showed that air pollution in China fell at the start of the year as a result of the coronavirus outbreak.

Last year, a study commissioned by rival producer Amorim and carried out by Ernst & Young found that a natural cork captures 309g of CO2, and a natural cork for sparkling wine captures 562g of CO2. It is often suggested that the average bottle of wine’s carbon footprint is around 1200g, so in theory, cork stoppers reduce this by a quarter in a still wine, and nearly half in a sparkling wine.

“We are very fortunate to be carbon negative already,” Michalski told db. “A lot of companies are already looking to reduce their carbon footprint.”

Cork Supply has continued to work on reducing carbon emissions in its own production process. This week, the company is due to start converting some of the waste from its cork production into biomass, which will be used to power its two major production plants in Portugal.

“This should have been ready two weeks ago”, the founder said, adding that Portugal’s own social distancing measures meant that the switch over to biofuel was delayed.