Amid the gloomy reports of companies on the brink, some have found salvation meeting one particular demand thrown up by the coronavirus, says TERRY MURDEN
It had been a busy few weeks with revenue exceeding management expectations. “Sales of these products have been exceptional,” beamed Michael Williams, chief executive of a small distillery making gin and vodka from honey, though he wasn’t speaking about his core product.
As the coronavirus took hold in early Spring, the British Honey Company was among those drinks producers that switched all or part of their production to hand sanitiser, helping to meet a worldwide shortage. In just a few weeks into the lockdown the firm generated revenues of more than £500,000 which more than offset the decline in revenues from the company’s key brands.
Before the outbreak the world produced just under three billion litres of hand sanitiser per year, according to market analysts Arizton Advisory and Intelligence. Healthcare professionals alone are now getting through that much per month, or about about 35 billion litres per year.
So the world’s distillers and brewers, hit by the collapse of the hospitality and travel industries, and able to produce alcohol content that meets World Health Organisation specifications, have stepped up to the plate by switching production. Some have donated output to health workers and charities, while the transition has enabled smaller producers to compensate for lost sales.
Pernod Ricard, which makes Absolut Vodka, and Diageo, the Johnnie Walker producer, are providing alcohol to be used for making sanitiser – or are making it themselves. Diageo pledged to help create eight million bottles of sanitiser by donating up to two million litres of grain-neutral spirit to hand sanitiser producers.
“This is the quickest and most effective way for us to meet the surging demand for hand sanitiser around the world,” said Diageo’s chief executive Ivan Menezes.
Aberdeenshire brewer Brewdog is producing about 4,000 litres a week of its Punk Sanitiser for the NHS and local charities.
Bacardi has turned its rum distillery in Cataño, Puerto Rico, into a hand sanitiser production site, while some US distilleries, such as Chicago’s Koval and Kentucky’s Lexington Brewing & Distilling Co have made the switch.
Nor is the phenomenon limited to distillers. Perfume companies such as Christian Dior and Givenchy have turned to producing sanitiser, and new businesses specialising in the sprays and gels have emerged.
Edinburgh-based ClearWater Hygiene has received £3 million of orders since its launch at the outbreak of the lockdown and says it has secured multi-year deals amounting to ten times that sum.
The company, founded by property developer Andrew Montague and his wife Rachel is selling more than 900,000 litres a week supplied by Deeside Gin Distillery in Banchory which launched its own Still River brand and gave away some product to schools and food banks.
ClearWater, which has also donated some of its product to NHS charities, has an ethical pricing policy to counter what Mr Montague saw as profiteering by some producers as demand exceeded supply.
It has won contracts with a range of corporate customers including Aldi, BP, O2 Retail and the Post Office. The company employs 12 full- staff and a further eight contracted workers at its headquarters in Leith and elsewhere.
Business adviser to the couple James Horton, of law firm CMS, said: “They have pulled together production, design and packaging providers in different parts of the UK and are well on their way to building a successful and sustainable business.”
Deeside Distillery switched to producing hand sanitiser after becoming “completely overwhelmed by the number of organisations that have contacted us regarding shortages.” The distillery’s Mike Bain coordinated a nationwide distribution effort by a host of gin and whisky distillers.
Isle of Harris Gin has partnered with local makers like Essence of Harris and A S Apothecary to produce and donate hand sanitiser to local care homes and NHS workers, while Verdant Spirits, the first distillery to open in Dundee in nearly 200 years, also switched its production. William Grant & Sons, the company behind Glenfiddich whisky and Gordon’s gin, refocused production at three of its distilleries.
Churning out sanitiser may be easy, made to WHO’s simple recipe based on three key ingredients – ethanol, hydrogen peroxide and glycerol – but the challenging part was the taxation liability. Pure alcohol has a tax of about £28 per litre.
However, on 23 March the tax was waived on the product, drastically reducing overheads and helping to sustain an industry which has grown out of a crisis.