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.

iStill Universal Frame!

Let me introduce you to the all new iStill Universal Frame. What it is? Well, a frame or exoskeleton that aims to create a safe space for some new and amazing technologies we are about to release to the craft distilling industry.

Equipped with wheels and a pushrod, like on the pictures underneath, it will be the cart and exoskeleton to the all new iStill Pump. Without the wheels and pushrod, the universal frame will give a safe working environment to a new line of filters we’ll be introducing shortly. It is also designed to hold the new power manager that we are designing for our bigger manual stills.

One universal frame that, in the near future, will hold five or six new innovations! So keep following the iStill Blog and stay up to date on what more we are working on. iStill is here to empower the craft distilling industry, and there are some major power boosts underway!

iStill Universal Frame …

iStill Universal Frame with pushrod …

iStill Universal Frame with all-new iStill Pump …

http://www.iStill.com

Roadmap 2021 and Beyond!

First, we are going to develop a solution to the copper particle contamination issue, that plagues such a large part of the craft distilling industry.

We’ll then introduce a line of automated and robotized copper stills in order to help those craft distillers out that, by law, are not allowed to use stainless steel for the production of certain spirits.

Thirdly, we will introduce a webshop where we’ll sell various after sales parts and distillery components that aim to make craft distilling easier.

Rethinking Distillery Design in Six Simple Steps!

1: Traditional set-up

Imagine a start-up whiskey producer that does initial research for his distillery design. Based on the traditional approach, he wants to invest in the following equipment:

  • 1000 liter masher;
  • 1000 liter fermenters (5x);
  • 1000 liter stripping still;
  • 500 liter finishing still.

Depending on where he orders, the above traditional approach to whiskey making will set him back 200 – 750K. To set-up his distillery, he’ll need an architect, installation engineers, probably a steam boiler, builders, and electricians.

For his day to day operation, he’ll need to hire an assistant to deal with all the manual labor involved. Think: grain handling, pumping, and cleaning. The distillery, after a slow learning curve, will make okay product. High quality is difficult to achieve since especially the traditional fermenters (where taste and alcohol are formed) aren’t supervised. Scalability is another issue, since any change to his set-up will create a bottle-neck.

2: Introducing modern technology

Now imagine that start-up whiskey producer doing some more online research. He finds iStill’s modern distilling solutions. When he applies iStill technology to his original, traditional set-up, the solution he comes up with will probably look something like this:

  • iStill Masher 1000;
  • iStill Fermenter 1000 (5x);
  • iStill Potstill 1000;
  • iStill 500 Hybrid.

Investing in the above solution will set him back 250K. He can cut down on staffing. He’ll also see an improvement in product quality due to the modern controls that the mashers, stills, and (especially) fermenters give him. An architect is optional. Installation engineers and builders don’t have to be hired anymore, and an electrician can hook the distillery up in about a day instead of a week.

3: Applying hybrid technology

After talking to maybe another iStill customer, our start-up whiskey producer starts to realize what additional goodies iStill’s hybrid still technology brings him: he can make better tasting whiskey in one (1) distillation run, saving him both time and money! He doesn’t need a separate finishing still! His set-up will now look like this:

  • iStill Masher 1000;
  • iStill Fermenter 1000 (5x);
  • iStill 1000 Hybrid.

Investing in the above solution will set him back 210K. He can cut down on staffing, since there is less grain handling and/or cleaning needed. The single distillation approach saves a day and a half on his weekly schedule and generates up to 20% more flavor in his New Make spirit.

4: Integrating technology

Imagine our start-up whiskey distiller then visiting a whiskey producer that already uses iStills. To his astonishment, he sees that this distiller has the following set-up:

  • iStill Fermenter 1000 (5x);
  • iStill 1000 Hybrid.

The distiller explains to him that the iStill 1000 Hybrid, with the mash & ferment package, can also mash and ferment. That’s why he didn’t invest in a masher, but decided to use the iStill 1000 Hybrid as both his masher and his still. This way he saves money on his initial investment, that’s now brought down to 175K, and on staffing.

5: First Principles solution

Now fully understanding the solutions that iStill’s disruptive technology offers, and reasoning from first principles, our new craft distiller finally gets it. This is the iStill distillery he ends up purchasing:

  • iStill 5000 Hybrid.

He can mash, ferment, and distill in the same machine. He no longer needs any staffing. Grain handling and cleaning is minimized, as is his initial investment, that is now down to 145K. The only thing he can still improve upon is the traditional slow learning curve whiskey producers are faced with. To solve that issue, he simply takes the first step …

6: The first step

He buys the iStill Mini and iStill Distilling University Course via: https://istill.com/mini

Does Big Eat Small?

In today’s world, it’s not the big that eat the small, but the fast that eat the slow. Yesterday’s world was about size, but what matters in the more connected, international, and vibrant modern economy is speed. Speed of innovation. You outgrow your competitors by innovating faster, by learning faster, by improving faster. By being faster than the ones you are competing with.

It’s what iStill does, and it works out pretty well with our market share in new still sales rapidly approaching 30% globally. And guess what? It’s what you should do as well!

Who your enemy is, whom you compete with? Big Alcohol. That limited number of world-wide producers of alcohol with unlimited brands, outlets, and funds. How to get them? You nibble away at their market-share one bite (or one sip) at a time. If you are faster, that is.

But are we faster? Is the craft distilling industry faster on its feet than Big Alcohol? Let’s see … Big Alcohol uses advanced controls and computers and automation, where many distillers still define themselves (and their workflow and value creation chain) via equipment that hasn’t left the 1800’s.

So the competition is bigger and faster? Good luck to you! Imagine the chunks and bites they can take out of craft distilling’s already smallish market share.

“Well, but they didn’t, didn’t they?” one might say in rebuttal, “Because the number of craft distillers is still rising.” I am inclined to disagree, though. I am inclined to disagree with declaring that easy metric, of a growing number of craft distillers, as a measure of success for the craft distilling industry. Here’s why:

If we take the North American craft distilled whiskey market as an example, rumor has it that over 80% is purchased via MGP. Whiskey that’s bought in from … Big Alcohol. So … that simply means that the North American craft distilling industry “just” lost the battle for whiskey to Big alcohol. Let’s dive in a bit deeper:

When 100 distillers open their doors and each produces, as an example, 10.000 liters or 2.600 gallons, then 80% of that is 800.000 liters or 200.080 gallons. Craft distilling only produced 200.000 liters or 52.000 gallons. See how this practice benefits Big Alcohol’s market share more than it helps the craft distilling industry forward? Four times more, actually.

Now how’s that for having someone taking a bite out of your market-share? How’s that for your biggest competitor having the dominant position in an important segment? Doesn’t get worse than that, me thinks!

My point? A large part of the craft distilling industry, as a generalization, had already placed its future success in the whiskey market segments in the hands of Big Alcohol, the moment it decided to outsource over 50% of their alcohol production to them. At 49% the craft distilling industry actually grows at a faster rate than Big Alcohol. At a 51% isn’t it basically game-over?

How do we escape the death-trap? Well, we simply need to move faster, be more innovative. Innovations allow us to make better drinks at lower production costs. That’s what’s needed to turn the tide and to start chasing Big Alcohol. If we learn at a faster rate, we can catch-up and eventually even overtake them. But for that to happen a paradigm-shift needs to happen as well. Or better phrased: “for that to happen a paradigm-shift needs to happen first!”

A summary on what’s needed to turn the tide? What do craft distillers need to do to secure a long time presence in the alcohol industry? Here you go:

  1. Replace “Romantic Era”-paradigm by “Innovative Future paradigm;
  2. Embrace innovation on every level: it’s key to a growing market share;
  3. Bring spirits production in-house and stop sponsoring Big Alcohol.

The good news is that more and more distillers are converging in the above direction. iStill is proud to support many hundreds of craft distillers that favor innovation over romance, and that actually make their own spirits, instead of purchasing from what’s basically your biggest competitor.

iStill’s role in all this? To provide the craft distilling community with the innovations it needs to move faster, to produce in-house, and to start taking market share away from the competitor.

My role in all this? To help the industry innovate and to spread the message of a brighter future.

But since I am not a craft distiller, but you are … may I ask how you guys see your role in all this?

Innovative craft distillers, chasing Big Alcohol …

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?