The Role of Copper in iStill’s Strategy!

Status quo

iStill aims to empower the craft distilling industry by bringing technological advancements to the market that allow for a more efficient production of higher quality spirits. In the (almost) eight years of our existence we have achieved a lot. Our innovations, and the appreciation of our inventions by the industry, has made us a markt leader with a global reach. Accelerated by the Covid Crisis, and depending on geographical market, about 30% of professional new still sales are translated into iStill purchases.

An astonishing percentage, that led me to the following question: what about the remaining 70%? If empowering the craft distilling industry is our mission, and we build the best and most efficient distillation equipment, why does the remaining 70% not (or not yet) select us?

There are three simple reasons. First, the fairy tale of “copper gives better flavors” is still very persistent in our industry. It is self-serving (from a still manufacturer’s perspective), because – as copper is perishable – selling one copper still automatically leads to selling another one a decade, maybe a decade-and-a-half down the line. Our scientific research has shown that investing in better fermentation equipment makes copper in the distillation process redundant, but the myth is still being preached as if it were the gospel.

Secondly, many established distilleries, that are already invested in copper stills, are reluctant to change. If it works, it works, and never change a winning team, right? Why risk a business that does well, especially when 2/3rds of your peers confirm the importance of copper (or labels fermentation as a non-essential part to craft distilling, which is basically the same).

The third and last reason, why part of the remaining distillers doesn’t consider purchasing stainless steel stills, has to do with legislation. In a push from Big Alcohol, trying to defend its most precious brands and markets, certain categories of Scottish whisky and Irish whiskey, by law (or at least by interpretation of law) have to be made on copper stills. The much bigger investment required to start up a copper-based distillery, as well as the inefficient potstill production process and its associated higher operational costs, combined with a three year minimum aging period, forms a great (read: very high) entry barrier to new competitors.

Why we introduce a line of copper iStills

If the above is the case, why introduce copper iStills? What do we want to achieve? What’s the role of copper in iStill’s strategy? There are basically four important strategic considerations for taking this step. Let’s dive in deeper.

First, iStill designs, builds, and sells innovative distilling equipment. It’s that simple. We aim to empower the craft distilling industry with our amazing designs and innovations. By introducing a line of copper iStills, we can reach more craft distillers. By introducing copper iStills, we can empower more craft distillers. The introduction of copper iStills is strategically important, because it broadens our reach with 70%.

Secondly, by mirroring the stainless steel iStill line-up in copper, we are able to quantify the costs of a decision for either base building material: stainless steel or copper. Instead of craft distillers having a black-and-white discussion with their business partners (or with themselves) if copper is better or not, that discussion can now be quantified. Since the copper iStills are more expensive than the stainless steel ones (the material costs of copper are significantly higher), the question now becomes one of economics as well as tradition. Even considering investing in better fermentation control, since that might be cheaper than the copper vs. stainless steel price differences, might now become an option.

Quantifying how good or bad one choice is, and putting that choice in sound business decision territory, helps us achieve two things. On the one hand, many distillers that were inclined to purchase a copper still, may now decide for the option that is more business savvy, and reinvestigate the “copper gives better flavors” myth once more. I mean, it is a decision that can cost or save you tens of thousands of Euro’s or Dollars, so it is now all of a sudden worth your time to do your due-diligence.

The other thing we achieve? Our fair and open price model will help halt the excessive profits traditional providers of copper stills make on their sales. The fact that iStill now provides higher quality distilling machines from copper prevents traditional copper still manufacturers from maintaining their current exorbitantly high price-levels.

A third reason has (again) to do with those traditional providers of copper stills. Companies like Carl, Holstein, Mueller, Kothe, and Arnold base their international sales strategies on a home-advantage of 10,000 customers (and returning customers!). A market that in itself covers all of their indirect costs. And a market pretty well protected by local and regional regulations. The south of Germany, the north of Italy, Austria, and Switzerland have close to 10,000 “Bauern-Brennerei-Anlagen”: small scale (100 – 200 liter) farm-distillers that use traditional copper stills to distill seasonal fruits into eaux-de-vies. Stills that need to be replaced every 10 to 15 years …

Our introduction of more affordable and more advanced copper stills will help us gain access to that huge market. And even if we don’t enter it at all, our fair and open price policy, combined with a marketing focus on these regions, will put tremendous strain on Carl’s, Holstein’s, Mueller’s, Kothe’s, and Arnold’s capacity to harvest these regions for excessive profits.

The fourth and final reason why it makes strategic sense to make iStills available in both stainless steel and copper has everything to do with Big Alcohol protecting certain markets by lobbying for (expensive) copper being a prerogative to entering that specific market. Most of those protectionist movements are initiated because of fear of craft distillers, with iStill technology, entering their markets, and bringing the battle to them. They have seen what’s happened to Big Beer versus the craft brewing movement, and they don’t want a level playing field for craft distilling to do the same to Big Alcohol. They have seen what iStill distilleries have done to the Irish gin market. Taking away over 50% of Big Alcohol’s market share, does not seem to go down well …

By introducing a line of copper iStills, we will enter those “protected” markets and help the local craft distillers compete with Big Alcohol via better tools. By introducing a complete suite of copper iStills, Big Alcohol and its associated lobby groups have lost their major tool in keeping our customers out of “their” backyards.

At your service,

Drs. H.E.J. van Eijk, MScBA, etc.

Founder & CEO of iStill.

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