As 2021 draws to an end, the time arrives to start thinking about 2022. How will the year look like and what will be our good intentions? Even though it is not an easy prediction, to look ahead in these uncertain times, I'll give it a go anyhow. On our good intentions for the new year? That's easy, since we (mostly) have that in our own hands. To further the empowerment of the craft distilling industry? For sure, that is our goal. But let's start with some predictions on the industry as a whole.
Craft distilling industry 2022
In 2020 the pandemic took us all by surprise. As hotels and bars were closed, more and more craft distillers focused on online and out-of-distillery sales. Long term plans were replaced by short term survival tactics.
The year 2021 started in good hopes. People were getting vaccinated and there was a general consensus that we'd go back to an old normal by summer. That didn't happen. And as a new wave of regulations and lock-downs were prepared, the craft distillery dug in once more, focussing on making money during the summer season, while postponing major investments.
ACSA research showed that less than 25 new distilleries were openend in the USA, between August 2020 and August 2021. The world's former biggest market space for craft distillers came to a halt. That's like a tenfold downturn. Personally, I am proud that many, of the few that opened up, have chosen iStill. Of those 25 new distilleries that opened shop, 11 decided to work with our equipment, our team, and our educational facilities.
For 2022 I expect a further continuation of lock-downs and an intensification of regulation. Both will put pressure on the craft distilling industry. Yet, at the same time, the realization will sink in that insecurity and unpredictability are the new standards in our markets. Lots of investments that have been postponed will start to be released in the understanding that craft distilling has an amazing long-term future ahead, whatever the short-term future may bring.
I also expect a further focus on newer, more advanced distilling equipment, like iStill has brought to the industry over the last decade. From the beginning of the pandemic, we have seen a rise of our sales, in a market that took a nose-dive like never before. When I speak to distillers in general, and our customers specifically, they tell me that opening a distillery with equipment that is more efficient, more consistent, and that helps you save on staff expenditure is the future and thus the way forward.
As such, every crisis comes with its own benefits. A shift from hobby to business. A shift from production towards marketing. In these uncertain times it is adapt and thrive or fail while pretending everything stays the same. The old normal is no longer just around the corner, waiting to be reinstated. The pandemic pushes our industry into maturity at a lightning pace.
iStill in the global market place
In 2020 we plussed with 26%. In 2021 we will grow again. We expect strong growth for 2022 as well, but are also faced with the economic challenges that grip the world currently. We are crises-resilient like no other manufacturer, but we are not immune that what happens to the world economy in general. The following challenges are important to watch and monitor:
As you have probably heard, chips are in short supply. We have purchasers on all continents, to counter the chip shortages. We also have a work around, where the iStill, in case of shortages, can be controlled and managed via a laptop or tablet. Problem solved, especially with the industry experts claiming that the chips shortage crises will diminish significantly in 2022.
Material costs have been rising throughout 2021. Prices for copper, stainless steel, etc. are expected to rise further in 2022. We have implemented a cost saving strategy in 2021 and have further streamlined our production processes to counter these price increases.
Transport costs are expected to increase with around 40% in 2022. Since we (all) are reliant on third parties here, there isn't much we can do about this. Transport costs are a given in any situation, and higher or lower costs, well, they are just the cards that are dealt to all of us. For 2022? Higher transport costs, for sure.
Our good intentions for 2022
We have designed and perfected the craft distilling industry's new, 21st century technology. It allows the industry to take on Big Alcohol. It enables each and every family that starts a distillery to make a decent living.
Our good intention for 2022 is to help make it easier for you to invest and grow. How? For the second consecutive year, we will not raise our prices. Yes, chips and material costs go up steeply, but - at least for the first quarter of 2022 - we will maintain our current pricing levels. With our prices staying the same, we expect it to become easier for (future) craft distillers to make a positive decision on investing and growing.
Secondly, we stop the software and support fees contracts, that are still in place with pre 2021 customers. We expect this decision to lower the costs of our existing customers, and that is - in these times of crisis - always a good thing.
Merry Christmas and a Happy New Year!
At your service, as always,
On behalf of the iStill Team,
Drs. H.E.J. (Odin) van Eijk, MScBA, etc.
Founder, owner, and CEO of iStill.
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