Whether you know Gig Harbor-based Heritage Distilling Co. for its Brown Sugar Bourbon or one of its other signature spirits, you’ve likely seen the headlines it has been making across the state and beyond for its efforts to produce hand sanitizer.
The distillery recently began producing and selling its hand sanitizer — containing 80 percent alcohol — to help fill the gaps on store shelves left by consumers in an effort to combat COVID-19. Not only is the company selling its bottles online and in stores, but it also is offering an on-tap hand sanitizer service for customers who spend more than $15 in store and bring their own bottle, up to 8 ounces.
In an effort to support the community, Heritage also is offering a half-price discount — $7.50 down from the state recommended $15 consumer price — to frontline workers such as those in the healthcare, police, fire, grocery, and delivery industries to name a few. Moreover, Heritage cofounder and CEO Justin Stiefel said the company is donating bottles to hospitals and other organizations most in need of the product.
We recently connected with Stiefel to find out how Heritage was able to pivot amid the pandemic, his thoughts on the direction of the local economy, and some advice on how to move forward.
Q: When was the impetus for Heritage to start making this new product?
A: We started to see small distilleries taking their waste products — usually an methanol or acetone, products that cannot go into finished spirits and that are a natural byproduct of the distillation process — and making them into various small batches of hand sanitizer. And we began getting inundated with requests from people. At that time, we weren’t really geared up to do that. And then when things started to really deteriorate economically, about three weeks ago, we were forced to lay off a lot of people all in one day because we saw what was happening. … It was rough for a couple of days. Then, I woke up one day and I said, “Hey I have this idea of how we can ramp up really aggressively to start to fill the need for hand sanitizer.” So I went into the office, briefed the team, and we started on the path to really scale up. And when I say scale up, I mean we were targeting 15,000 gallons a month minimum. Now, next week, we’ll be able to do 30,000 gallons a day.
Q: How are you are able to scale so quickly?
A: A lot of it is getting access to the raw ingredients — methanol, glycerin, and hydrogen peroxide — and figuring out how to put it together in an efficient way. If you can get access to the raw ingredients, that’s fine, but you still have to be able to blend it and bottle it and package it efficiently. … We’ve been working for about four years on this project with the Chehalis Indian Tribe down in Rochester. They have a brand-new distillery; it’s going to be one of the biggest craft distilleries west of the Mississippi River. Now, their stills aren’t installed yet, but all of the fermentation and blending tanks are. So I called them up and I said, “Hey, if we make some fairly minor retrofits to your tanks, we can start to blend all of this in your facility.” They have something like 80,000 gallons of tank space. We could begin to move all of this bulk hand sanitizer, have all the ingredients delivered to (the facility), blend it, and then load into 275 gallon totes or we can literally load tanker trucks with hand sanitizer and send them off to bottling plants where they are desperate for product.
Q: How has this changed where your business was at a few weeks ago?
A: We’re putting people back to work. We’ve been able to bring back several people. I mean, there’s a line out the door every day (because) people want product. We’re shipping; we’ll put stuff up on our website and we’ll literally sell out in 20 minutes or less. What has been really amazing has been the outreach from the community where people donate money. When I go onto our website, I look at our daily sales and there are people logging on and they’re not buying product, they’re giving $5, or $15, or $100 and they’re saying, “I’m paying for this, please give it to people who need it.”
Q: When the economy recovers, will Heritage continue making hand sanitizer?
A: The Food and Drug Administration guidance allows distilleries to make this only through June 30. We weren’t (previously) allowed to make it, it had to be in specific FDA pharmaceutical companies. But they didn’t have the ability to meet the demand, so they opened it up for distillers, after all, we are an FDA approved facility, just in different ways. The challenge I have right now is I’m trying to contract forward for 200,000 or 400,000 gallons of methanol and some other products and it (will be) very difficult if, come June 30, we can’t keep making and selling it. Especially if all the experts agree that COVID is going to come back around in the fall. I could send you articles about how the bigger branded gel products now are not being seen as effective for killing viruses because they are not using alcohol, they’re using synthetic alternatives. So for a long time the consuming public has gone to the store to get their little 2-ounce squeeze bottle of hand sanitizer with the big brand name, but it turns out, it’s not as effective. I think the public is going to want stuff that actually works, and they’re going to want stuff that’s local. And we know how to do it, we should be allowed to keep making it. That’s our push. I’ve been talking with folks in Congress and (Washington) DC already to say, “Hey, let’s make this a permanent thing.”
Q: What is one thing that has come out of this that you think is going to impact your industry in a major way?
A: Right now, the Washington Liquor and Cannabis Control Board has issued a waiver for bars and restaurants to sell spirits and drinks to-go if people buy food. That’s never been allowed before. You could get a grower filled. You could order a bottle of wine, pour a glass, cork it, and take the rest of the bottle home with you. But if you said, “Hey I want a margarita to go,” that’s not legal. But now, my wife and I just went to get Mexican food last night and we ordered two margaritas to mix at home. Will there be a battle between the bars and restaurants to get the statutes to change to allow that to become a law in Washington? … I don’t see that genie being able to be put back in the bottle. That’s just one example of something that I think a lot of people aren’t even contemplating right now that will change.
Q: What advice do you have for business owners out there who are looking to innovate and pivot the way you have?
A: First, there are some basic steps: The new Small Business Association PPP loan program that congress initiated, if they have not been talking to their banks already, they need to be talking to their banks and getting that funding. The way that program is set up is based on payroll and you can use it for forward looking payroll, rent, and some other business expenses. If you spend it on those qualified expenses, the loan is forgiven by the government and it really becomes more like a grant.
If you are leasing your building, be in communication with your landlords because as long as you are communicating, most landlords know what’s going on and they will be flexible, especially if they know you’ve applied for a PPP loan and that you’re still going to pay them rent, even if it’s a little delayed. If you own the building you are in and have a mortgage on it, be in contact with the bank.
But, the thing people really need to think about — because not every business is going to make it out of this when it is all said and done on the other end — is that the opportunities for those remaining businesses are going to be dramatic. So (business owners) have to set aside all preconceived notions of what their business was before and they have to think about themselves in a new way. How can they leverage equipment, assets, people, and skills?
Q: Can you give an example of what that would look like?
A: If you are an attorney in a small firm and you just got laid off, I can guarantee you that there’s going to be a huge demand for bankruptcy attorneys starting in about 60 to 90 days. So go dust off the bankruptcy code and become familiar with it. If you are in the food business, you have got to figure out how to keep your doors open because when this opens back up, there will be fewer restaurants, there will be fewer bars and — if you can make it — people are going to want to come patronize (your business) because there are fewer options for them.
If you can look within yourself and the talent pool you have and figure out, “How am I going to survive and fight through this with the skills and tools (I) have,” it will be worth it on the back end. Everyone’s situation is different, but they must not be bound by the constraints of what they thought their business was a month ago.