Anyone shutting down for good due to COVID-19?

[Max Action]

Just curious how everyone is hanging in there, and if the quarantine is causing any distilleries to go out of business?  I imagine it's got to be tough for those that are really dependent on tasting room sales and/or on-premise accounts.

[DrDistillation]

I won't name companies or distilleries.  But I've been doing consulting with a few companies with a buy in based on knowledge, PR & marketing.  Hence if my ideas don't help them it costs zero but if I increase profits I get a part of sales over time...  The best "fare" method I can think of.  These are small companies with 300 gallon stills or smaller. Many farm distilleries.  Non of them would likely go under as they have other means of income.

So the approach I asked them to take was to start producing GNS internally which could be used for many things including sanitizer.  We did PR for local radio and news. I had them reach out to hospitals, nursing homes, fire and police departments as well as "nursing assistance" companies that come out to the house to do rehab (think break a leg/hip, etc) AND local churches that are supplying food to those in need as well as local Red Cross and Salvation Army. Most of these were commercial enterprises but some were obviously not for profit. I had them sell "fair market" to for profit and give away to non profits (with marketing banners/marketing bottles) of sanitizer.

I had them give away "free sanitizer with purchase" at specific location that helped sponsor us.  Yep, liquor stores. Spend $50 and get 8 oz of sanitizer for free OR purchase any of the local distillery products and get 8 oz of sanitizer for free.  Shelves of products right behind the "free sanitizer" if you purchase "our product".  So spend $50 for free sanitizer or a $25 bottle of vodka from one of these distilleries and get them same thing free. Same with grocery stores or other vendors who donated products used to make the donated sanitizer.

Now even though the local bars are closed and not open for business we also cut deals with a few of them that sell food as well.  Use our "base" spirits for cocktails/shots and we included them as sponsors and allow free sanitizer dispensing there as well with an order.  We figured this would help them when business is re-opened (time will tell).

So what is the end result? Liquor stores are selling more product than ever (of our products) and as more people purchase the more is being sold. People who didn't know about the local brands are becoming aware.

So if you balance "giving"/"Charging" based on non profit vs profit and do some PR/marketing there is no reason to take a loss overall unless a substantial portion of revenue is based on your own cocktail lounge (not much you can do about that).

This is why it's good to diversify as much as possible and make relations with local pubs, bars, liquor stores if possible in your state (laws may be different).

[JustAndy]

In some markets there would be questions about the legality of what you are proposing. 

[adamOVD]

I'd be pretty concerned about tied house laws. I'm sure you've done your research, and I'm certainly no lawyer, but I would assume you'd need at least 3 separate establishments listed on the "sponsor" list,  and toe the line in a lot of other ways as well. 

Special allowance of "to go" cocktails and deliverys in California have been our main saving grace so far (along with bottles sales and a little hand sanitizer). We've taken the opportunity to submit the recipes we've been developing as RTDs and creating labels, so that after the "to go" rule is gone, we can continue to sell them.

Our tasting room is very small. It may be a long time before we can reopen. As with most business right now, I imagine, its adapt or die.

 

[38°]

My understanding is California ABC has said making Sanitizer free on condition of purchase of Alcohol is illegal.

[DrDistillation]

Will/can depend on state for sure.  Can always adapt based on location.  Nothing wrong with just giving it away or allowing 4 oz refills (bring your own bottle) and just having your spirits/sign/banner featured behind the filling station.  Just do what's allowed per state to help while doing some PR/marketing/brand awareness at the same time.

The main idea was to partner with like minded folks who wanted to be distribution points for sanitizer and would also push the local spirits as well. 

[Naked Spirits Distillery]

Illegal for us as well. State would view that as enticement for us. 

[Glenlyon]

Even though we lost over three quarters of our traffic - with increased sales directly to liquor stores and the sanitizer business, astonishingly we are ahead year over year. As far as we're concerned, the next couple of years will be pretty busy. 

[Silk City Distillers]

Of my colleagues - most everyone is holding their ground.

Spirits sales are actually up, and sales at retailers in New Jersey have been fairly brisk.  From a market perspective, growth in spirits is strongest of all categories, and spirits are strongly up year on year.

We aren't selling hand sanitizer, but it's been a tremendous positive for us.  We did it for the karma, but it's been a better investment than the equivalent spend in advertising dollars.  We gave away more than 10,000 bottles.  We gained 10x that in new customers.  The experience of working with first responders was worth every penny.  The local community has been tremendous at supporting small business.

[Silk City Distillers]

Shamefully, NJ ABC prohibited distillers from working with local craft brewers to distill stale kegged beer into sanitizer.

Figure that one out.

[Glenlyon]

We gave away a lot more sanitizer than we sold and now the big brands have returned and have killed our local market - so, we're back to strictly beverage production.

 

[daveflintstone]

3 hours ago, Glenlyon said:

We gave away a lot more sanitizer than we sold and now the big brands have returned and have killed our local market - so, we're back to strictly beverage production.

 

Are you saying the big brands of hand santizer are back in the supply chain in your location?

[Glenlyon]

By the truck load. I suspect that soon some distillers will be sitting on sanitizer stock they can't move. When we started selling to the large retailers near us they told us up front, when Purell ships, you're out. And, that's exactly what happened.

[Foreshot]

In PA most people I know are selling out since the state stores were closed but we were allowed to stay open.

Which, oddly enough, is where the only distillery to shutdown I know of happened:  https://www.ydr.com/story/news/2020/05/12/bald-hills-distillery-dover-close-due-coronavirus-concerns/3120363001/

[DrDistillation]

7 hours ago, Naked Spirits Distillery said:

Illegal for us as well. State would view that as enticement for us. 

I'm curious.  What part of that would be enticement? I'm not sure that type of thing would be legal for the state to do.

1996 Supreme Court case "Liquormart, Inc. v. Rhode Island", ruled that the state can’t inhibit advertising language as a form of alcohol control.

[daveflintstone]

"get this free if you buy this liquor"

That is commonly seen as an illegal enticement to purchase in many jurisdictions. 

[daveflintstone]

7 hours ago, Glenlyon said:

By the truck load. I suspect that soon some distillers will be sitting on sanitizer stock they can't move. When we started selling to the large retailers near us they told us up front, when Purell ships, you're out. And, that's exactly what happened.

This is exactly my concern.  I don't want to be stuck with 10s of thousands of plastic bottles and closures once the regular supply chain comes back online.  In my far flung location Purell sells at wholesale around $1 / 4oz bottle and $2.24 / 8oz bottle.  And of course it gets lower per ounce the larger the bottle.  But there is no information about when Purell et al will be back at retail.

[Naked Spirits Distillery]

7 hours ago, daveflintstone said:

"get this free if you buy this liquor"

That is commonly seen as an illegal enticement to purchase in many jurisdictions. 

Exactly! 

[DrDistillation]

13 hours ago, daveflintstone said:

"get this free if you buy this liquor"

That is commonly seen as an illegal enticement to purchase in many jurisdictions. 

Yes in some locations that may not be allowed.  However you could still have the distillery banner or product behind the free (without purchase) sanitizer correct?

Laws are so completely different and often times super wacky it's hard to know area to area!

 

What gets me is how this would be different than buying a bottle of liquor that comes with a free glass or two?  You can't purchase the glasses separately and can only get them with the purchase of the liquor.  If different, how?  Because it's not in the same box/package?  If that's the case could you hypothetically shrink wrap a bottle of sanitizer to the liquor bottle?  Just curious.