The Corona Virus and the Corona Crisis started on December 31st 2019. It first affected China and the Far East (as we see it), and then quickly migrated to Europe and North-America. Soon the rest of the world followed. Where the Virus can cause huge health issues on a personal level, the Crisis creates economic pressures, challenges, and even havoc across industries, on a global level.
As the world's leading manufacturer of distillation equipment, with a global reach, a large workforce, and over 750 iStills producing spirits from Alaska to Australia, and from Chili to Japan, for sure we are impacted. Not by the Virus. I am happy to inform you that nobody at iStill fell ill. Knock on wood.
But the Crisis must have affected us economically, right? And, yes, it did. In the last 4 months we did 163%
, relative to the first 4 months of 2019. Right, that's a 63% increase.
What!?! A plus
of 63%? Yes, that's how much our turnover increased. And not as a result of pre-Corona orders, but simply via new orders: new deals signed in January, Februari, March and April. And May 2020 is looking to be a significant improvement over May 2019 as well, thanks for asking.
A tour along colleague distillery manufacturers teaches us that we are the outlier. Other still manufacturers are in panic-mode, because of dwindling demand and orders being cancelled on a scale never seen before. Indications? Rumors whisper of a 30% to 40% relapse ...
So I took up the phone some more, and reached out to customers, especially the ones that ordered over the last few months, to investigate what makes them or us (or them and us) special. Here is the feedback I got, to help make sense of it all. Presented in four one-liners and provided with the interpretations and explanations the interviewees gave me.
"The crisis acts as a massive reset button"
"Odin, the crisis acts as a massive reset button!" one of our customers said. The crisis hits craft distilleries hard and puts many in an existential crisis. There will always be a market for spirits, but what does it take to survive, now and tomorrow? More efficient stills allow for profit margins, even in times of Corona. More versatile stills allow distillers to switch from laying down aged spirits to producing cash-rich white spirits. More automated stills allow distillers to lay-off staff while keeping production running and fostering a focus on sales.
"Traditional stills are not the solution, but part of the problem"
"If traditional stills are (or at least: have been) a benchmark for the last 15 years," I asked "why not stick with that?" Many new iStill customers told me that they are not just looking for stills that are more efficient, versatile, and automated, but that the prices of many of the traditional still manufacturers from the UK, the USA, and Germany are just too high. Especially with the additional piping, tubing, and steam generation taken into account.
"In times of headwind, lower sales volumes, and lower margins, investing in expensive, inefficient equipment with a very big staffing requirement is not feasible." And, preaching to the choir, bigger investments in higher cost solutions do not make sense in a contracting market, business-wise. Or, as one customer put it: "No need for an expensive traditional token still if the distillery is going bust because no-one can visit."
"This crisis presents opportunities, not threats"
Most of the people I called and interviewed clearly stated that a crisis like the pandemic we are experiencing today is as much an opportunity as it is a threat. This seems to be reflected in the high number of iStill distilleries that switched from spirits to hand-sanitizer production. Seeing the world as a place of opportunities, and having the versatile equipment to take advantage of 'm, clearly pays off.
"Quality is king"
"If money is tight, then why not go for the cheapest still you can find?" The answer I got to that question can be summarized as "quality is king". First, people find, in the production of high-quality spirit, and its inherent higher value, a survival strategy. Less is more if less demand translates to higher quality product and higher margins per liter sold.
Secondly, investing money in a highly reputed company like iStill (thanks for those kudos!), with its professional helpdesk, online support, and proven track-record in build-quality and longevity makes more sense, it seems. One interviewee put it like this: "With so much at stake right now, we can't afford to add surprise distillery down-time to the already toxic mix of challenges."
Making sense of it all
Listening to our customers, it all started to make sense to me. Under great-enough pressure, everything liquifies, moves, and shifts. A craft distilling industry, that has been (self) strangled by tradition for a decade and a half now, may - in a way - have needed this crisis as a wake-up call and a charge to newer, greener pastures.
The crisis also brings up that essential/existential question: "Who am I?" Is a facade distillery with a fake still and bought-in, contract-distilled whiskey from Indiana worth going broke for? Fuck no! Is my family business, where we truly and proudly produce our own spirits, blood, sweat, and tears, worth fighting for? Hell yeah!
Just looking at our amazing growth, it becomes clear that the current pandemic has sorta created the perfect storm for us. The perfect opportunity for iStill to shine, because of the reset button being pushed, because of fluidity replacing the rigid structure of traditionalism, and because our customers - more than anyone else - actually make their own spirits.
What we are witnessing here, is a paradigm shift. An industry transformation long in the waiting, that is now accelerated by the current crisis. All signs point in one direction: a shift away from tradition and - instead - a move towards innovation. And it is in innovation, instead of tradition, that craft distilling finally finds its future footing.
Welcome to that future ...