There are two trends taking place that are starting to affect the industrial world in general and craft distilling specifically, and we feel we need to share them with you, our customers. We are referring to the global chip shortage and the ever rising prises of raw materials.
Copper and stainless steel have, since the beginning of this year, seen price increases of 30%. Since stills are made out of copper or stainless steel, this price-rise directly results in higher production costs per still. How it affects craft distillers? Well, stills are bound to become more expensive soon.
The global chip shortage is the result of pandemic-related lower production numbers, combined with souring demand. It affects the price of electronics and may lead to increased lead times.
iStill, so far, has been able to keep the pricing of its units stable. We haven't increased our prices at the beginning of the new year. We haven't yet had to increase our prices during 2021. Our goal is to keep our prices at the current level as long as we can. The Covid Crisis has hit the industry hard enough.
Anticipating even higher demand for our innovative distillation technologies, we have purchased a lot of automation-related parts early in 2021. But as demand for the iStills is growing at an exponential rate, and chip supplies run lower and lower, we anticipate that this trend will impact our future lead times.
iStill, so far, has been able to maintain a 3 to 4 month lead time. The iStill Management Team, in anticipation of increased demand and potential chip shortages, expects our lead times to go up to 5 to 6 months soon. For some specific certifications, like ATEx and IECEx, lead times will increase to 7 to 9 months.
The way in which we will manage these challenges is conform the "first-in/first-out"-principle. Those orders that come in first (in terms of us receiving a signed purchase agreement and the associated first installment), will be first in line for delivery.
At your service,
iStill Management Team.
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