Alcohol Professor — COVID-19 Recovery: American Whiskey Distilleries & Distillery Tours

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No one really knows what the future holds for the hundreds of distilleries that dot the American landscape, but there are clues from the past that can help us understand the unique challenges we are facing right now and what a recovery might look like. We have a vaccine that is now being administered, which means that the pandemic may not be affecting our daily lives as much by this summer. But even with that hopefulness, there is still a lot of work to be done to bring distilleries and distillery tourism back to pre-pandemic levels and set them back up on the growth trajectory they were knocked off of early in 2020.

Facing The Challenges

“The pandemic has caused challenges for all industries, and the distilling industry is no exception,” says Buffalo Trace Senior Marketing Manager Kris Comstock. “For safety reasons, we stopped doing tours onsite in the spring and didn’t resume those until July. If you go back in history, it’s nothing new for us. There’s a story about perseverance.”

 Comstock explains that, throughout history, Buffalo Trace Distillery has gone through a fire that completely burned down Colonel Blanton’s distillery, a flood in 1937 when half of the distillery was under water, Prohibition, wartime rationing, and more. This is just another historical moment to overcome.

 “Production has been affected quite a bit from a standpoint of manpower,” says Buffalo Trace Master Distiller Harlen Whestley. “We’ve had to deal with contact tracing and making sure that we are running and working as safely as possible. Just the labor and manpower part of it is a big piece of our puzzle because we have 540 employees now and any time you introduce a new variable like a pandemic, you’re going to have that to deal with. One of the things we did early on was we started making hand sanitizer to help with the shortages that were going on at the time, and we were able to do that because we had the equipment and the technology and the ability to do it and get it out there. That actually boosted production for a while. Our production has continued to grow, but we have had to shift focus from on-premise to off-premise because people are going and buying bottles instead of going to restaurants.”

In the Kentucky distilling industry and beyond, the story is similar. The larger distilleries have been through difficult times before and already know how to navigate them. In fact, many of the larger distilleries like Brown-Forman, Maker’s Mark, and others have used their strength to support the hospitality industry through months of shutdowns and layoffs. But even the newer companies understand the value in supporting the community in these difficult times.”It’s tough to predict how the recovery will look, but it’s not tough to predict how we will handle it,” says Chris Seals, CEO at Still Austin Whiskey Co. “We will continue to focus on supporting local farmers, the artists in our community (who create our labels), and supporting our local community. Supporting our community is how we made it through 2020 – and it’s what we will focus on in 2021. As well as making great whiskey.”

Distillery Tourism & Retail

The impact of distillery tourism and retail cannot be underestimated. “St. Augustine is a destination distillery and truly a unique experience,” says St. Augustine Distillery Founder Philip McDaniel. “Pre-pandemic, we typically hosted over 175,000 visitors each year and in 2018 were voted the best whiskey tour in North America by the Drammie Awards. Tourism is the lifeblood of our distillery and central to our success.”

The smaller, newer distilleries and non-distiller producers across the nation face a slightly different struggle as the economy slowly comes back online. Smaller brands rely on face-to-face interaction with potential customers, both at on-premise events and in distillery tasting rooms. The loss of those customers and that foot traffic has dealt a blow to smaller brands. The shift to online purchasing with the help of emergency orders in some states has kept some of these businesses afloat.

“The longer the pandemic has kept us in our houses, the more people have been turning to online retailers to purchase for their home bars. Initially, the focus was on ordering from local stores or third party retailers but increasingly sales are being placed directly on producers’ websites, with stores fulfilling quietly in the background,” says Lost Lantern co-Founder Nora Ganley-Roper. “While online orders are unlikely to fully make up for lost revenue from the tasting room and local guests, this direct interaction with customers is invaluable to struggling distilleries. In the short term the additional revenue and higher margins that go hand-in-hand with most online solutions, will allow them to stay afloat. In the long term, the data they have on their customers, which would have been impossible to collect previously, will allow them to make smart decisions about how to spend their money. And their ability to ship online to new states where they aren’t otherwise available allows them to expand their customer base quickly and at lower cost than if the pandemic hadn’t hit in the first place. That said, there are still risks. Some states have tighter restrictions on tasting rooms and bottle sales than others, and distilleries in those states (like Texas and New Mexico) are fighting hard to survive. But overall, there are promising signs. We expect the distilleries and producers who were early adopters of online platforms, and those that do an exceptional job with their online presence, will catapult ahead of the competition as the recovery gets into full swing. And even once things return to normal, some of the hallmarks of the pandemic–like shopping for spirits online and attending virtual tastings–will be here to stay.”

While online sales and direct to consumer shipping emergency orders have been a lifeline for those distilleries that count on tourism to get their brands to market, the tourism businesses themselves are having somewhat of a different challenge. With many tourists remaining at home, these businesses have been hit hard. But still, there are lessons to be learned from the lesser amount of overly cautious tourism that is taking place and which will continue well into 2021. “The continued commitment to the guests’ safety and the creativity of offerings by the distilleries during this time has truly been amazing to witness,” says Mint Julep Experiences co-Founder Sean Higgins. “The focus on the quality of experiences over quantity of guests I believe will drive the distilleries, large and small, to continue to develop tour and experience offerings that are unique, and hand crafted for smaller groups. Seeing full production and operations within the distilleries will most likely not be available again to the public until much further down the road in order to protect the product that we love so much and the people who make it. Therefore, capacity and ticket availability may become issues at some of the most popular destinations.” 

The Long View

So when will whiskey tourism resume in full force? “Whiskey tourism is about sharing the passion for the product and it’s authentic history with your friends and family,” Higgins says. “That will never change. What has changed is the comfort level within those group dynamics regarding the safety of traveling. With the vaccine availability to the general public still being a couple of months away, it is difficult to determine “when” a true recovery will begin. However, we feel that individual leisure travelers and smaller groups will still be the norm as will private tours vs. general public tours for most of 2021. It won’t be until 2022 until we begin to see the freedom of travel, the distillery’s more fully open up and an unencumbered return of visitors to the Kentucky Bourbon Trail.”

At St. Augustine Distillery McDaniel is optimistic. “We are so excited that there are now 2 approved vaccines available and hopefully more on the way. We recognize and expect that it will not be until the 2nd or 3rd quarter of 2021 before the general population has access to protection against COVID-19. We will continue to take an abundance of caution to protect our guests and our amazing team. Our tour is the best way for guests to experience and learn about both how and why we make our spirits that are uniquely Florida.”

Challenges are different for each aspect of the distilling industry, and each distillery and tour company are doing their best to ensure the safety not only of guests but also of employees. After all, without the good folks who make the whiskey and drive the buses what would we be celebrating? Recovery for distilleries and distillery tourism, as with many industries, rests on safety and mask-wearing now and vaccination and economic recovery later.