Tin prices today are back down to what they were two years ago--and those lower costs are being passed on to wineries that are purchasing tin capsules.

According to the London Metal Exchange, tin peaked at around $25,500 per ton in May 2008 and has been steadily dropping ever since, reaching a low of about $10,000 in May of this year. By mid-summer, in July 2009, tin was selling for around $14,000 per ton, an almost 50 percent decrease from one year ago.

Tin Trends

Although no one can say for sure what tin may do next, one capsule company reported feeling that tin has stabilized for the time being and, given the recession, will likely stay put for a while. However, another capsule company representative said that tin will likely continue to drop in price as demand continues to decrease. "We should see a drop in tin prices over the next six months to about 25 percent less than what it is at now," he said.

Tin prices are down because the demand for electronics is lower than last year (electronics manufacturing requires a great deal of tin) and production is up (more mines are open) in countries that produce tin, such as China. One manufacturer noted that tin stores are double what they were at this time last year. "In general, for the worldwide economy, the inventory is quite high," he said. "So this will allow prices to stay stable."

But because tin is so cheap right now and supply is greater than demand, the future of tin, according to one supplier, looks bright. Overall, his company has noticed a fair amount of new tin business this year and is taking advantage of the lower prices by starting to manufacture champagne capsules in tin, which have historically been made of polylam.

While tin remains the favored capsule choice for wines around $25 and above, some wineries are buying less tin in an effort to shave costs at every opportunity (since tin prices relative to other capsule options still cost more). Some wineries selling at higher price points are finding it difficult to sell their wines above $25 to $35 so they are looking for ways to cut costs, and bypassing tin capsules is a step that some are taking toward this goal.

Flint Nelson, winemaker for Kestrel Wines (30,000 cases) in Prosser, Wash­ing­ton, said that the price difference is one of the main reasons he has been gradually switching all four tiers of his wines (ranging from $12.99 to $60) from tin to polylam capsules. But in addition to the price break, he feels that the quality of polylam capsules is comparable to tin.

"We've been using polylam for about four years now, and it's performed so well that we've decided to switch everything to polylam," Nelson said. As for customers noticing the change, Nelson said maybe one-half of one percent of his customers notice. The only real difference, in Nelson's opinion, is that cutting and peeling the tin feels like you're tearing metal, while polylam does not. "But polylam capsules have come a long way, and they resemble tin quite a bit," he said. "They look nice, so we're happy."

Additionally, some wineries are bypassing large tin orders because of the lack of cash-flow that was seen two to three years ago. "Tin requires serious cash-flow," said one supplier. "And wineries don't want inventory just sitting there."

This is driving more small and mid-sized wineries to opt for on-spot buying to avoid carrying inventories. Suppliers have noticed an increase in demand over the last six months for generic capsules, primarily in tin and polylam. The seam that is a feature of polylam capsules becomes less relevant as the price of the wine decreases; and manufacturing advancements produce a much more elegant capsule than was seen just 10 years ago.

Large wineries selling at price-points between $3.99 and $15, however, are just starting to get hit with the slowdown that smaller and mid-sized wineries have already felt, so the larger wineries have not been ordering stock items at similar rates. An overabundance of bulk wine on the market right now is also driving wineries' interest in on-spot buying of generic capsules.

Wineries' Response to Tin

The lower price of raw tin has been carried through to wineries, said one manufacturer, who estimates that tin capsules are about 35 to 40 percent cheaper now than they were a year ago.

Last year, in mid-July, an average capsule order was close to $200 per 1,000 pieces ($.20 per capsule). Today, tin capsules are selling closer to $130 to $150 per 1,000 pieces (on a base order of 50,000 capsules). For orders of less than 50,000 pieces, customers begin to pay more per capsule, closer to the $.20 per capsule number of last year.

But not everyone is sold on tin, even at its lower prices. "Quite frankly, most people don't even look at the capsule; they're more concerned with the wine, the bottle and the closure type," said Rod Moniz of Moniz Family Wines based in Rocklin, California (2,000 annual cases), who uses only polylam capsules. "My wines sell in a lot of restaurants, and I've never had a complaint about my capsules."

Moniz says that as long as he continues using thicker, premium polylam capsules that don't wrinkle or crease and uses high-quality, straight glass, he feels he can achieve a look close to that of tin. Any cost savings allows him to invest in what he feels are more important things, such as high quality grapes, corks and barrels. "If I was selling wine costing $50 or more a bottle, I'd go with tin; but in the $15 to $20 range that I'm working in, polylam fits the profile best," he said.

At the end of 2008, David Cohen, owner and winemaker for Moondance Cellars in Sebastopol, California (7,000 annual cases), closed his Sonoma-based tasting room after 13 years due to the poor economy. He also decided to try polylam capsules instead of their usual tin in an effort to get costs down, but was dismayed with the results. "We tried polylam on about 3,600 cases, but didn't like it," he said. "Tin just makes the package look so much nicer, plus it spins on better and is just a more substantial capsule."

Cohen, who says they are back to using tin on all their wines, priced from $20 to $65, has appreciated paying less for his tin capsules as a result of the reduced price of the commodity; but even if it goes up again, he would continue using tin. "It wouldn't make any difference," he said. "It's worth the extra $.50 or dollar per case when you're trying to portray a certain image."

In general, most of the biggest wine producers have gone with polylam for wines priced between $7 to $15 per bottle while most wineries producing wines over $15 are sticking with tin since it has such a polished, classic look and forms nicely around bottle closures and necks. But for wineries in these two groups who are seeking to cut costs, the trend seems to be that larger wineries using polylam are making a shift toward PVC, and smaller and mid-sized wineries that are using tin are giving polylam a chance.

Despite any influences by cost reductions, tin remains the premium wine capsule--and wineries wanting to project a premium image will likely continue to choose tin, especially given that the price of capsules are a comparatively small slice of the packaging pie. wbm

Tin capsules Tin is the most expensive capsule on the market and is generally used with premium wines, retailing for $15 and up. With its sleek, seamless finish and ease of application and removal, tin has traditionally had the highest quality perception among consumers. One-piece tin capsules are frequently silk-screened prior to application and are spun down onto the neck, allowing for a smooth surface without wrinkles. Tin is also softer than the other metal capsule, aluminum, thus making it easier to remove. Cost: between $.13 and $.15 each (for large volumes).

Polylaminate or "polylam" capsules have a look and feel similar to tin but at less than half the price. Polylam capsules are usually used with wines retailing for between $7 and $15 a bottle and on lower-priced wines that will be opened sooner than later. Polylam capsules are formed as sandwiches, with two sheets of aluminum encasing a sheet of LDPE (low density polyethylene). Polylam capsules differ from tin in that they are flat-printed and applied as a two-part capsule with a seam, but they can be applied by hand or spun down (similar to tin). Polylam capsules can be printed, embossed and hot-stamped, both onto the skirt and the top disc. Cost: between $.034 and $.045 for large volumes.

Aluminum capsules have a look that is similar to tin (both are seamless). Aluminum can be decorated in a similar way to tin but is thinner than tin; thus it is more delicate and has sharper edges when cut than tin (some people feel aluminum is awkward to remove from the bottle and are willing to pay more for tin because of its performance). Aluminum capsules are being used less by wineries today and are being carried by fewer vendors. Aluminum capsules are, however, still a very popular option for finishing Champagne bottles, which do not require a flat skirt finish. Cost: between $.065 and $.10 each for large volumes.

PVC capsules are the least expensive capsules and are mainly used with mass-market wines and wines at the low end of the price scale (retailing for less than $7 a bottle). PVC capsules are made using two pieces (skirt and top disk) and have a seam, similar to polylaminate capsules. PVC capsules are made of plastic and are heat-shrunk onto the neck of the bottle (PVC capsules can be easily used with bottles of different diameters). Some PVC capsules are perforated or come with a tear tape for easy removal and can be customized in their design via printing, hot-foil stamping and custom embossing. Cost: between $.02 and $.03 each for large volumes. wbm