A pandemic of Covid-19’s nature seems to be driving people to drink—but what they drink has been changing. While demand in liquor stores, which are open as essential businesses, is skyrocketing, craft distilleries, breweries and the startups that aid them are facing unique challenges with bars and restaurants confined to takeout or delivery and consumers less likely to purchase more expensive craft spirits.
Triangle-area startups Aeva Labs, Next Century Spirits and Precision Fermentation tell us how their businesses are changing during this unprecedented time.
Co-Founder Zachary Fearnside of Raleigh-based Aeva Labs, which provides rapid aging technology to distilleries (and we featured previously here), said the industry is facing upheaval right now. He said many craft distilleries thrive through their tasting rooms and supply to bars and restaurants, which have been eliminated or sharply curtailed. That problem is compounded by the fact that many consumers are now choosing cheaper brand-name products at their local liquor stores rather than craft spirits.
Fearnside said many distilleries are hurting but are instead transitioning their production capacity to help the community, such as through producing hand sanitizer and giving it to local first responders and hospitals.
In turn, Aeva Labs has changed its focus from sales to supporting the local community in using its 3D printing capabilities to make plastic face shields for medical workers. (We wrote about that broader effort today here.) Aeva Labs is also using social media to encourage the purchase of craft alcohols from startup distilleries that the company doesn’t even work with, in an effort to help out the broader industry community.
“I’m not sure what we’ll see come out of this,” Fearnside said. “I’m worried about the lasting impact of how consumers, how do people change coming out of this? Are people more conscious about going out in general? Is it going to take six months, a year to get back to normal, normal tourism and normal touring of these distilleries, because a lot of these guys have built their whole business plan off this.”
Still, Fearnside said the good news is that he thinks people do want to go back to bars and restaurants quickly after feeling cooped up for these few months, allowing that market to recover.
Before Covid-19, Raleigh-based Next Century Spirits had developed a patented filtration and finishing technology to improve the quality of spirits. (We wrote about them last April.) But now the startup has pivoted to at least 90% of its production capacity being utilized to create hand sanitizer, said Nick Scarff, Next Century Spirits’ master blender and vice president of business development.
“Obviously the safety of both our employees and the community is a first priority here,” Scarff said. “When it comes to providing materials to medical groups and first responders, we’re going to drop what we’re doing to try to help out because it’s a weird time for everybody. Every industry is hurting, including ours. So the more that we can do to help keep things going and get things back on track, keep people employed, I think the better off everybody is.”
Initially, Next Century Spirits produced hand sanitizer for the medical community, including first responders, but has expanded to provide hand sanitizer to ‘essential’ private businesses still operating like manufacturing companies—and soon, to the general public.
Scarff is thankful for the many other brewing and spirit distributors that have partnered along with Next Century Spirits in the goal of helping the community.
“Just as an industry as a whole, I think it’s important to appreciate that even though some people might be considered competition in some cases, different brands and spirits, really I think everybody sort of came together and pooled resources to help each other on this,” Scarff said.
Durham-based Precision Fermentation, which offers a comprehensive fermentation monitoring system for brewers, had a similar experience as Next Century Spirits and Aeva Labs. (We previously wrote about Precision Fermentation here.) Many customers can no longer afford Precision Fermentation, and so the startup has refocused towards just how they can help customers now.
“There are businesses that came to us and said ‘look, your product helps us but we can’t afford it,’” Resnick said. “And every person that comes to us, we’ve said, ‘okay, then if you can’t pay for it, we need to help you and so just stop paying for it, but keep using it.’ We feel like we’re in a unique position to be helping people stay afloat and stay alive.”
Fearnside said the biggest shocker for clients and businesses in general came when the federal government extended social distancing recommendations for another month, something he said he believes threw a wrench in everybody’s plans. Through this, Aeva Labs is there to help.
“If we have to help you by either shifting rent around or working together or lowering costs just so that we will take the hit, so that you take less of the hit and we’ll kind of share this burden, that’s kind of how we’re approaching it,” Fearnside said. “We’re just trying to make sure all of our customers survive at the end of the six weeks, and we survive at the end of six weeks with all of our employees. That’s really our major goal.”
Moving forward from the pandemic, Fearnside said he foresees business owners will be more conscientious about having emergency funds and reserves and remote working could become much more common. In the meantime, Fearnside said this is a good time to focus on internal research and development.
Precision Fermentation recognizes that customers likely do not want someone selling them something right now, says the company’s Chief Revenue Officer Michael Simon, so the startup is focused on keeping craft brewers alive in whatever way they can.
“If the customer is in a new normal and they’re going to be operating differently,” Simon said, “then the startup has to be nimble enough to be able to work with the prospective customer under the terms of the new operating environment for that customer. And I think we’re well-positioned to do that.”
