A Sustainable Future for the Craft Distilling Industry!

Introduction

Sustainability is about acquirability and maintainability. Is the craft distilling industry able to carve out a market for itself and is it able to maintain and defend that market share? Without competitive advantages, no market share can be acquired or defended. In this iStill Blog post, I want to dive into the future of craft distilling and investigate how a sustainable position can be found.

Catering to three basic needs

Alcohol in general is part of many of the world’s cultures. There is, in other words, a market for alcoholic beverages. Alcohol plays a major role in celebrations and socializing events. As there is a market for socializing and celebrating, consuming alcoholic beverages is further enhanced. And there is a need for authenticity. In a globalizing world, more and more people want to focus on what’s unique in their neck of the woods. As such the craft distilling industry caters to basic needs, in an environment that is not predisposed against it becoming successful.

In three basic bullet-points, here’s what the craft distilling industry should provide in order to exist:

  1. Alcohol;
  2. Socializing events that are fueled by alcohol;
  3. Authenticity in a globalizing environment.

Competition

It’s always good to cater to specific, existing needs. If you don’t believe me, ask the guy that invented a bicycle that rode backwards. No need for bicycles to do that, so it didn’t really become a success, and you’ll probably have a hard time – outside of the asylum – to find anyone willing to invest their time and money in bikes that ride backwards. Get my point?

But there is a consequence also, and that is that others have identified these needs as well. Distilleries that basically beat craft distilling to it, when – about a century ago – the invention of continuous distillation, prohibition, and the first world war allowed for huge, centralized, alcohol producing companies to be established. Big Alcohol. A few big, global companies that serve the world’s needs. How? By providing alcohol, by creating socializing events (think: bars), and by selling an authentic image of their products to the consumers.

So, Big Alcohol – the craft distilling industry’s main competitor – caters to the same needs as you do. It does so in a specific and peculiar manner, that is worth investigating, summarizing, and framing:

  1. The alcohol they make is cheap, with production centering around economies of scale;
  2. Socializing events mostly take place in the bars that Big Alcohol supports or has contracts with;
  3. Branding is done via marketing, where huge amounts of money are spent to convince as many as possible via generic messages.

Competitive advantages

Big Alcohol has the advantage of producing cheaper alcohol, having more outlets for socializing, and by being able to spent huge amounts of money on marketing. You can try to match them, but will fail. The way to beat them is in realizing that every coin has a flip-side. If the craft distilling industry is able to bring that into the light, we have a winner. Shall we explore further?

If Big Alcohol chooses to have the monopoly on cheap alcohol, craft distillers must choose to go for high-quality flavors. The higher price-point of craft distilled spirits now serves to highlight it’s higher quality.

Big Alcohol has an amazing number of outlets, but – as a downside – it does not very well control the bars, how these are set up, and what they communicate or what image they have. You, as a craft distiller, have the opportunity to choose the outlets that really support your message of quality. And if you turn your distillery into a bar, this gives you a perfect way to control that message even more. Your reach may be smaller, but your niche will be more valuable.

Where Big Alcohol messages to the masses, you need to tailor to the individual. Craft distilled spirits are by definition authentic (right?), which appeals on a personal level. Forget marketing, invest in selling your drink one experience, one glass, one bottle at a time. It is your customers that will do your marketing for you, when you provide them with high-quality spirits, socializing events that fit their profile, and a genuine and authentic experience when they visit your distillery.

Quality spirits, controlled distribution, authentic experience …

Distillers Tradeshow now offers Workshops!

Our latest initiative to empower the craft distilling industry has just seen a major update! The Distillers Tradeshow now offers workshops. For anyone interested in craft distilling and in learning all about its perks and quirks.

The workshops will have livestreams, Q&A-sessions, and lots of interviews with distillers and organizations servicing the craft distilling industry. Sponsored by iStill, so free of charge, and for everyone to attend!

Sunday Musings!

Last week, Christiaan approached me and asked why talking, writing, thinking, and basically occupying myself with the ADI Affair, over the last few weeks, was so important. The question didn’t stem from criticism, but from a genuine wish to understand my preoccupation with the subject, while so many other topics need attention too. “We are successful,” he said, “why spend time and energy on them, if there are other things to do? Why do you dedicate your time to a bunch of dinosaurs?”

Since Christiaan has been with us from the very start – he is the guy that builds our websites and online applications – I found it important to give him an elaborate and to the point answer. And by the time I finished, he proposed that maybe I should share my answer with the craft distilling community. So here is my answer to him, that I now want to share with you.

I told Christiaan, as I tell you now, that there is a deeper issue at play, when we analyse the ADI Affair. It isn’t just that they prioritize sponsors over distillers, and money over service. It isn’t just that they favor some sponsors over others, because these give ‘m more money or revenue opportunities. Oh no, the rabbit hole goes much deeper than that! And that’s why it deserves more attention than some other things.

“Imagine,” I told Christiaan, “a group of craft brewers, coming together to celebrate a beer-related event, having drinks together.” Since he has visited some craft beer festivals, he envisioned a group of bearded guys talking and having fun, while drinking each other’s beers. Laid-back, informal, amicable, with positive vibes all around. You get the picture, right? It takes but one craft beer festival or tradeshow to get what Christiaan got: it is pretty darn good to be a craft brewer, drink some beers, and meet-up with fellow-brewers!

“Now imagine,” I told Christiaan, ” a group of craft distillers, coming together to celebrate a spirits-related event, having drinks together. Since he has visited a specific North American tradeshow with us, he envisioned a group of people, less beards more suits, talking seriously, complaining about the Senate still contemplating to sign-off on new tax breaks for their industry. The vibe isn’t great and everybody is drinking their own drinks, instead of tasting what others made. Where the brewers talk “beer”, the distillers talk “issues”.

“How come?” I asked Christiaan. “How come, that the brewers’ glasses always seem to be half-full, where the distillers’ glasses are so often half-empty?” He didn’t know the answer, but I do. The answer is, and it doesn’t sound very sexy, but it is a very important answer, so hear me out … the answer is “entry barriers”. Or, to be more precise: low vs. high entry barriers.

The reason why so many brewers are happy campers, when they meet and mingle, is because of the low entry barriers the craft brewing industry has. The reason why so many distillers, sharing drinks at a tradeshow event, especially the ones that do not hang around the iStill booth, look like a rather grumpy bunch, is because of the high entry barriers the craft distilling industry has.

There are two entry barriers that we should focus on: information and capital. If you want to enter the craft beer industry, the information on how to make beer is readily available. If you want to start a craft brewery, you usually first take advantage of that low entry barrier on information. In plain English: you make beer in your kitchen. Then, as a next step, with a moderate capital investment, you can set-up your first brewery. You start with a small one and invest in a bigger brewery as you grow. Capital investments are moderate because of competition between suppliers. The markets for information and suppliers are both mature.

Let’s compare the above brewery scenario to a distillery scenario. If you want to learn how to produce spirits, the information is not readily available. You are told that it is difficult, neigh impossible. But luckily there is the ADI tradeshow, their courses, and their associated consultants that are willing to take your money and let you see a glimpse of the secret sauce! Information, in the craft distilling industry, is compartmentalized. It is monopolized by the few and sold to you at a premium.

Having compared the information-rich environment of craft brewing to the information-deprived situation that exists in the craft distilling industry, let’s look at the associated capital investment. Stills are expensive. Setting up a distillery is even more expensive. Where a brewery start-up can take-off with an equipment investment of  50 to 100k, the wannabe distiller quickly learns that, for some weird, fucked-up reason, he needs to invest 5x or 10x that amount. “Weird, fucked-up reason” as in you needing to purchase traditional equipment, that is low-tech, inflexible, unscalable, and over-priced.

Of course there is more. Brewing, with its free, shared, and information-rich environment, as a consequence, is ruled by scientifically based choices. Copper pots are replaced by stainless steel pots. The big guys with long beards and large wooden spoons are replaced by agitators and computers that do the boring, repetitive work. Those big, happy brewers have better things to do, like having fun meeting other brewers, while drinking a beer at one of their great craft beer shows.

Craft distillers are not allowed that courtesy. They need to invest in 1870’s technology. They need to invest in manual labor. They don’t have time for beers or drinks, and the boredom of continuously having to do repetitive tasks wears them down, one distillation run after another. Or so they have you believe!

And how about ownership? The starting brewer makes his first beer in the kitchen at home. If he screws up, he’ll learn something and then he’ll try it again. He has other brewers he can reach out to. If the workload stresses him out, well, there is always another brewer and another reason to just go out and have a few beers.

Instead, the distiller needs to listen to consultants. Highly-paid consultants. They tell him how he can make their spirits, but not how he can make his own. He cannot work in the kitchen. Goodness, no! He might go blind! No, instead, he is sucked dry for each and every penny that he has.

Being left with a low cash position, a huge still, for which he was overcharged and that needs constant supervision, without experience in how to actually make spirits … do you start to see why the distillers’ glasses are half-empty more often? And how problem solving becomes more about hiring the next consultant instead of just whipping up another batch and having another go at it, supported by hundreds of others that share their opinions, chime in, or at least offer you a beer and a laugh somewhere down the road? 

Christiaan got the picture and – I am sure – so do you. I then asked him how the students of the iStill University behaved. Did their behavior resemble the brewers or the distillers that I prototyped above?

Since he has seen many classes come and go, here at iStill HQ, he quickly responded, nodding with understanding: “I get exactly what you mean! The distillers that visit us, after about a day, behave like brewers at a beer festival instead of like a bunch of grumpy distillers at a spirits festival!”

“After about a day?” I asked.

“Yes!” Christiaan answered, “When they come in, it is as if with a neck choke. A bit nervous. Afraid even. Unsure and insecure. Out of breath, almost. Typically, well, like distillers are, when they meet at a tradeshow. People that have had a hard time and know there’s more crap waiting for them, just around the next corner.”

“So what do you think changed them?” I asked.

“Easy!” he said. “In one day, our training staff have started to take down the information monopoly and shared with them the real secret sauce. In one day your team has basically empowered them by teaching them they do not need 500 grand to start a craft distillery!”

“So … who or what put on that neck choke?” I asked.

He told me that it must be the high entry barriers that the craft distilling industry has on information and capital investment.

Circling back to the ADI Affair, I then asked him if he started to understand why it is worthy of my energy and your attention that we dive in, get to the bottom of it all, and solve whatever issue we find down there?

He said he did. He totally understood that, from a representative body (or a company posing as one), we might expect efforts to lower the entry barriers, by democratizing knowledge and by telling suppliers that overcharge to fuck-off. “If they were, in any real way, supporting the craft distillers, they should have loosened the neck choke so many experience by lowering our industry’s entry barriers!”

I told him, just like I tell you, that the above, and all of the above, is the reason I am disappointed. I am disappointed in ADI for posing as a representative body, yet acting as a profit-center. I am disappointed in ADI prioritizing sponsors over distillers. I am disappointed in ADI for favoring some sponsors over others.

But I am not just disappointed, I am angry! I think, as ADI doesn’t want to change, that they should go out of business! I think that each and every one of their “members” (customers) and “sponsors” (facilitators) should immediately cut ties with this organization.

Not because they were ineffective at relieving the neck choke, but because they are the neck choke.

Who is riding your horse?

Live Stream and Q&A on all things Gin!

Block Monday 12th of October in your agendas! As part of the iStill Distilling University’s Certified Craft Distiller Program, we’ll be doing a live-stream on making Gin. Starting time? 14h00 / 2 pm Central European Time Zone.
 
Free participation for everyone interested in gin!
 
Livestream via YouTube:
 
Livestream via Facebook:
 
And as an extra … we’ll show off the all new iStill 200!

The Distillers Tradeshow is Live!

iStill provides the craft distilling industry with equipment, education, and recipes. Is that all you need, running or starting a craft distillery? No, it isn’t. As a craft distiller, you have many more things on your plate, many more decisions to make.

More products or services that you need, for example. More questions that need answering, often on an ongoing basis. Like “who is my ingredient suppliers and where do I buy my yeast and barrels?”, “Where do I get provisions like pumps and hoses?”, and “What services do I need, related to representation, education, design, electricity, or leasing?”

The Distillers Tradeshow – iStill’s latest initiative to further empower the craft distilling industry – aims to be an accessible source and provider of information, organizations, and companies that can help you answer the above questions. The tradeshow initiative presents customer friendly, solution driven third parties that can help you out.

Not just any company or organization, but only those that come recommended and endorsed by actual iStill customers. And not just any tradeshow either …

The Distillers Tradeshow will be ongoing in nature, accessible to anyone, and free of charge. Contrary to “regular” tradeshows, your information will not be sold to third parties for commercial or promotional use.

Currently, the Distillers Tradeshow has the following headers:

  • Finance;
  • Ingredients;
  • Barrels;
  • Bottles;
  • Services.

Each category sees a limited number of suppliers, that we’ll end up ranking according to your experiences. Ultimately, we might ask those suppliers if they have discounts or bonuses in place for the tradeshow visitors …

The Distillers Tradeshow is for craft distillers and by craft distillers. It is a living support platform to the industry, here to stay. Even though still in its infancy, currently, we expect it to grow organically over time.

“Organically” as in that you’ll develop it and that we will help develop it. How? If you have recommendations on suppliers, that you feel deserve a place on the Distillers Tradeshow floor, please email Odin@iStillmail.com with your suggestions and recommendations.

iStill now offers finance and leasing in Canada!

For Canadian craft distillers, iStill now offers finance and leasing options! Very exciting stuff! If you are interested in purchasing an iStill distillery, and want to learn more about finance and leasing, please reach out to Esther@iStillmail.com. We also have finance and leasing options to the UK and the USA.

Towards even more Canadian customers …