Bigs Colluding to Kill the Craft Distilling Industry?

[Patio29Dadio]

Like many of you after being hammered by the administrative orders to shutdown and then run at limited capacity, I am now unable to purchase at a reasonable price if at all... glass, corks, barrels, labels, GNS, whiskey, grain, etc... just about everything we need to continue to operate.   Now obviously some of this are just the problems with the global supply chain and the inflationary result of the government dumping trillions into the economy while also pushing policies that prevented and dissuaded people from working.   However, (and my suppliers admit this too) much of it seems to being caused by the big spirits brand owners buying up supplies to drive up costs, but more importantly to make them scarce for the craft industry.

And let's not even get into the distribution consolidation.  That is another topic for another day.

The prime example is barrel of supply problems are barrel stave oak.  ISC is all sold out for 2022 and cannot even give a commitment for 2023.  Smaller cooperages are telling me that they cannot find oak staves.  

The federal government requires new barrels for American whiskey.   Obviously we all know that the large distillers push this for their competitive advantage.  But what we seem to be seeing now is complete monopolistic collusion to aggressively destroy the craft spirits industry after these big brand companies watched what happened to beer beginning 25 years ago.

Where is ADI on this?  The state of our national politics is a mess, but this should be a front and center topic for our trade associations.  I have heard and read very little in advocacy for the craft distilling industry.       

[daveflintstone]

Just label your stuff "whiskey" with no qualifier? 

Just get your bottles custom made?  

Just get neutral from Greenfield?

I've seen no shortage of bartop corks, nor labels from my vantage point.

Buying pre made whiskey I can see is a problem right now.  Get a whiskey still and start distilling?

Laugh all the way to the bank...

[Patio29Dadio]

Have you priced custom glass?  $120k investment for your first order.  $60-$80k per order after that.

I can get GNS, it is just a lot more expensive.

Labeling "whiskey" so you can take advantage of used barrels?  I might be wrong here, but I think you need a qualifier. 

Grain is 2x the cost it was 18 months ago. 

I am crying all the way to the bank!

[Glenlyon]

There is probably some truth to this. Way back before prohibition there were loads of 'craft' distillers in both the US ands Canada. Known by the big 8 in Canada as the 'nuisance distillers', they convinced the government to pass all kinds of laws to restrict or eliminate the small distillers and basically, succeeded.  While I doubt today there is an organized plan, it is becoming much more difficult for even larger mid-list distilleries to operate. Even us, small as we are - are now forced to spend upwards of $40k to buy bottles at a time - rather than the few pallets we used to get. And with the cost of money and inflation these days, I don't see many new start-ups (a few but few) - and the guys I compete against are not really thriving. You absolutely need a very significant competitive advantage if you are going to make money in this game going forward.

[daveflintstone]

18 hours ago, Patio29Dadio said:

Have you priced custom glass?  $120k investment for your first order.  $60-$80k per order after that.

120K???  where are you getting this from?  Go to Rockwood in China, French run and terrific.  $3500 mold.  Sure as hell not 80k per order, unless you want your bottles layered in 24k gold and platinum...

I can get GNS, it is just a lot more expensive.  

a lot more expensive??  Calculate your per bottle cost for GNS and cry me a river if it's over $1.  More like 60 cents...ohhh that's sooo much $...

Labeling "whiskey" so you can take advantage of used barrels?  I might be wrong here, but I think you need a qualifier. 

used barrels and call it whiskey. Consumers won't give a crapola...

Grain is 2x the cost it was 18 months ago. 

again, calculate your per bottle cost and revel in your massive profit margins.  100% increase is huge but you don't take percentages to the bank, you take dollars and cents...

I am crying all the way to the bank!

use a wheelbarrow for all your money, it will save your back...

 

[daveflintstone]

As it's always been, making the stuff is pretty easy, selling it is the hard part.  Now making it is a bit more costly, but selling it is still the hard part.  One must find one's niche. 

When I started not that long ago there were around 80 distilleries in the US; now there's what, 2500+ ?  I think that goes a long way in explaining your shortages and price increases.

[Patio29Dadio]

On 7/24/2022 at 10:18 AM, daveflintstone said:

As it's always been, making the stuff is pretty easy, selling it is the hard part.  Now making it is a bit more costly, but selling it is still the hard part.  One must find one's niche. 

When I started not that long ago there were around 80 distilleries in the US; now there's what, 2500+ ?  I think that goes a long way in explaining your shortages and price increases.

Maybe.  Although there were 2500 in 2019 when supply prices were stable and a number of smaller distributors/brand owners existed.