Craft distillery impact bracing for impact from pandemic
More than 40 percent of employees have been laid off or furloughed while sales have dropped a staggering 64 percent.
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A survey from the Distilled Spirits Council of the United States and the American Distilling Institute reports the craft distilling industry has taken a 63 percent blow in sales since the start of the COVID-19 pandemic. Meanwhile, more than 40 percent of employees have been furloughed or let go.
Iron Wolf Ranch & Distillery in Spicewood, Texas, is normally a place for social gatherings in the hills outside Austin. The venue brings guests from all over to enjoy distilled spirits, food and live music.
Texas craft distillery braces for impact as recent data reveals a 63 percent loss across the industry since the start of the COVID-19 Pandemic. (Fox News)
But now, Iron Wolf is one of 2,000 craft distilleries fighting to stay afloat amid the pandemic. While the distillery has product in 120 different bars and restaurants across Texas and is sold in roughly 60 liquor stores, business is still down.
“It has been a substantial impact to us,” Iron Wolf Ranch & Distillery CEO Jordan Watters said. “Bars and restaurants are shut down and they can’t do anything. so that whole piece of business is gone. … Our whole business out here, having people congregate and socialize for events is gone.”
The only thing left for the distillery is distribution sales — and a shift to making hand sanitizer — but revenue is still down.
“I would say two-thirds to three-quarters down, and that’s huge,” Watters said. “That is what has brought us to the hand sanitizer business. It allows us to recover some profit and help out.”
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Like so many other distilleries across the country, Iron Wolf started making, bottling and distributing hand sanitizer in May.
“We are donating about a third of it and selling about two-thirds of it just to try to keep the lights lit,” Watters said. “The point is really to help out and do what we can.”
OVER 600 DISTILLERIES, BIG AND SMALL, NOW MAKING HAND SANITIZER DURING CORONAVIRUS OUTBREAK
The owner of Richland Distilling Company in Georgia, which produces rum, said sales stopped when the pandemic began.
“Since then, we have had no new orders from any of our distributors in the 15 states or the 11 countries we work in,” said Erik Vonk, owner of Richland Distilling Company. “It’s like the plug was pulled and sales dropped to absolutely zero, it has been an enormous hit.”
The distillery was unable to produce hand sanitizer due to the method it uses for its rum production — so selling some sanitizer to stay afloat wasn’t an option for them.
The Georgia craft distillery has had zero revenue since the start of the pandemic, according to the owner. (Richland Distilling Company)
“For us, that is very difficult because we use very simple and old-fashioned copper pot stills,” Vonk said. “For us to switch over to the new process and base material would have been a huge disruption in our production capabilities.”
The distillery has had zero income for roughly six weeks, but nonetheless managed to keep all of their employees on their payroll.
“We are paying these people out of our personal savings,” Vonk said. “In the not-too-distant future, we will start to scrape the bottom of the barrel.”
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Vonk applied for the Payroll Protection Program, and even though they were approved, it only covered payroll costs for a few weeks.
“We have received the loan, but then it is based on the average payroll in 2019, and we were a fast-growing company. So the payroll at the end of the first quarter in 2020 was considerably larger,” Vonk said. “So while the loan is intended to cover about eight to 10 weeks of payroll, on our case it only covered four weeks, so we have depleted the loan entirely."
Richland Distilling Company in Georgia reopened their tasting rooms on May 2. Since then they have seen a small boost in revenue.
Georgia is now reopening, so Vonk's company is hoping to make up for lost revenue and replenish their personal savings. He said it's slow going so far.
“We have had both tasting rooms open and have begun to see, though be it very modest, we have begun to see some traffic, a few hundred dollars per location per day,” Vonk said. “It doesn’t pay the bills, but it gets us above zero.”
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Brad Plummer, a spokesperson for the American Distilling Institute, said losses may cause the loss of distilleries in the industry.
“Most of those companies say they aren’t going to be able to stay in business longer than a couple of months … unless something major happens,” Plummer said. “At the moment, we are closing in on 2,000 distilleries and I couldn’t even hazard to guess what that number is going to look like six months from now.”
The American Distilling Institute, which represents between 500 and 600 distilleries across the country, added that “this is a difficult time” for everyone, including this industry.
“I think it is a little too soon to say across the industry what the impacts are, because it really depends on the business model,” Plummer said. “But, I think the craft distilling industry may be in for some rocky times.”
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Back in Texas, Watters said Iron Wolf is hoping to perform the “big bounce” once they are allowed to reopen.
“Hopefully we can bounce back as quick as we can, all the way back to where we were.” Watters said.
As of May 11, Texas Governor Greg Abbott has not announced a date that bars will be able to open.
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