The COVID-19 pandemic has impacted every business, in some way or another, over the past six months. One industry that found a way to repurpose its products was Missouri’s craft distilleries.

While revenue from traditional alcohol sales dried up in 2020, many distillers turned their attention to hand sanitizer production to address a national shortage and keep their businesses afloat. Now that the coronavirus-related restrictions across the state have relaxed, craft distilleries are starting to see an uptick in business, several mid-Missouri distillers said.

While the distilling industry within the state has potential to continue growing, there have been several setbacks, both due to COVID-19 and "antiquated" spirit regulations, said Gary Hinegardner, owner of Wood Hat Spirits in New Florence

"The whole of last year has been overshadowed by what’s happened since March," Hinegardner said. "When you can’t get out and you let people into your place of business to sell them whiskey, it’s not good."

Beyond the pure sales, the pandemic also put a damper on the Missouri Spirits Expedition, which promotes a driving tour to visit the 33 craft distilleries that belong to the Missouri Craft Distillers Guild, including Wood Hat, DogMaster Distillery and two Higbee distilleries, Woodsmen Distilling and Skullsplitter Spirits. The expedition is meant to promote tourism in the state and encourage whiskey and bourbon enthusiasts try out each distiller.

"It was just starting to get some traction," said Van Hawxby, owner of DogMaster Distillery in Columbia. "We were really looking forward to 2020. Everybody was working on a united front to push people to the various distilleries around the state, but with the whole COVID thing it was really very challenging. We still see a few people, but it’s not as vibrant as what we’d hoped for now."

Despite the hit to traditional alcohol sales caused by the pandemic, distillers did have one avenue for replacing lost revenue.

In mid-March, when there were national shortages of hand sanitizer, the Food and Drug Administration issued a temporary policy that allowed distillers to compound and sell hand sanitizing products. Both Hinegardner and Hawxby, along with other mid-Missouri distillers like Skullsplitter Spirits, quickly began producing sanitizer to help keep their businesses afloat.

"For us, it’s not a hobby. I’ve got basically five families that expect me to write them a check every week," Hinegardner said. "We got into [making] hand sanitizer early and it was kind of a salvation for us. We were able to keep a cash flow and keep our employees."

The halt in sales caused by COVID-19 came right after a economic boom in 2019 for the state’s distilling industry. The 50 distillers in Missouri, collectively, brought in about $367 million in gross sales and about $200 million of indirect value to the state economy, according to a recent study conducted by the University of Missouri Extension. Unfortunately, those numbers have taken a large hit in 2020, because of the pandemic, which disproportionately affected the small distillers in the state, Hinegardner said.

From 2017 to 2018, the number of craft distillers increased by 18%, more than the national average of 15%, according to the MU Extension study. Of the 50 distilleries in the state, 31 are considered very small, meaning they produce less than 1,000 proof gallon sales in 2019.

Last year, the lawmakers passed a bill allowing distillers in the state to label their spirits as ’Missouri bourbon’ so long as a majority of the ingredients are sourced within the state and the mash, fermentation, distilling and aging processes are done in Missouri. While not fully responsible for the industry’s growth in 2019, the distinction of Missouri bourbon set distillers in the state apart, Hawxby said.

"People in Missouri, I have found, like to support each other," Hawxby said. "Now that they know this is a product made with grains that are grown in Missouri and barrels that are manufactured in Missouri, people in the state naturally have that connection to it."

While there are plenty of skeptics from outside of the state, a lot of Missourians have supported the efforts to promote the bourbon distinction, Hawxby said.

"Most people are really supportive of what we’re doing," he said. "I think the skeptics are those outside of the state who say, ’If it’s not made in Kentucky with Kentucky, then it’s not going to be good bourbon,’. If you ask me, I think bourbon should be a uniquely Missouri product, instead of a Kentucky product."

Hawxby and Hinegardner maintain that a majority of a bourbon’s flavor profile comes from the white oak barrel it’s aged in, many of which come from Missouri cooperages such as Barrel 53 Cooperage and The Oak Cooperage, both of which are in Higbee.

"We’re showing people that you can make a high-quality product on a small batch, local basis and put that out to the public," Hawxby said. "Much like the craft beer industry 20 or 30 years ago, we’re doing the same thing with distilled spirits. People are catching on."

Aside from the challenges that COVID-19 has presented to craft distillers, the business owners still have to deal with steep fees and stringent regulations.

The license fee for a domestic winery is $5 per 500 gallons, not to exceed $300, according to the Department of Public Safety Alcohol and Tobacco Control. Microbrewery license fees are $5 per 100 barrels, not to exceed $250. Liquor manufacturer-solicitors have a $450 license fee, so even small batch distillers, including those making 100 barrels or fewer, still have to pay the flat license fee.

Unlike wine and beer producers, distillers can not ship their products directly to consumers or out of the state, which has made it even harder to generate revenue during the pandemic because distributors have been buying fewer spirits in recent months, Hingardner said.

"We’re just so far behind in the legislative process," he said. "We’re back in the 30s. Those [laws] were really to take care of moonshiners and bootleggers, but we’re stuck with those antiquated laws."

Both distillers are hoping to see some movement on state and federal legislation to relax some the regulations place on the spirit industry.

"It would be nice to have parity with the wine and beer manufacturers in the state," Hawxby said.

Despite the challenges faced by the industry, both regulatory and COVID-related, the distillers are optimistic about the future of the Missouri’s craft distillery scene.

"It will change," Hawxby said. "We have no doubt about that."

Because people may be less likely to travel out of state while the pandemic continues, the hope is that more people will travel in state, while socially distancing, which could promote local tourism and the Missouri Spirits Expedition, Hinegardner said.

"We have high hopes," he said.