Lockdown Economy USA in a Craft Distillery with Jill Kuehler
The interview was transcribed and adapted into an article by Tapasya Das
Lockdown Economy: Interviews by think tank AlterContacts.org with real entrepreneurs sharing insights, challenges and successes during the COVID19 global pandemic to inspire, motivate and encourage other entrepreneurs around the world.
In this interview, we meet Jill Kuehler, the founder of Freeland Spirits, a craft distillery in Portland, Oregon. Jill’s background is in food and agriculture and she had been running a non-profit farm in Oregon whose mission was to educate children about where food comes from. As she was wrapping up her seventh year at the farm and dreaming of starting her own business, she was inspired during a visit with a longtime friend who is a grass-fed cattle rancher in eastern Oregon.
The two women were sipping whiskey and talking about the origins of the grain when they came upon the idea of starting a craft distillery. They were excited about creating a women-owned and operated venture in what are traditionally male-dominated businesses. Their trifecta was completed when they found an accomplished woman distiller at a small distillery in Bend, Oregon, who had earned her masters in distilling in Scotland.
They were in business for about three years, making gin, bourbon and geneva (a Dutch gin), when the Covid-19 lockdown came in March of 2020. They quickly pivoted to making hand sanitiser, helping the Portland area community with a glaring need early on in the pandemic while finding a creative revenue source for their business. As the weeks of restrictions wore on, Jill and her team initiated a curbside pick-up marketing plan and also created a line of canned cocktails. They also pushed hard on the store sales component since their restaurant and bar sales had all but dried up. Through flexible creativity and perseverance, Jill and her team were actually able to increase their 2020 sales compared to 2019 and are planning to come out of the lockdown restrictions later this year with the grand opening of a second tasting room in the Portland area.
My first question-just give us a breakdown of how your business came about, how many employees you started with, how many you have now and what you do.
Jill: My background is all in food and agriculture. I was running a non-profit farm, in Portland, that taught kids where good food comes from, for seven years. I had always wanted to start my own business and I always wanted it to be something connected to food. I got to connect with my good friend. She is a rancher in Eastern Oregon. She raises grass-fed beef and we always drink whiskey when she comes to town. So Corey and I were having one of our fateful whiskey nights and I was like, “This is a delicious whiskey but I don’t know where the grain comes from. I don’t know the terroir with my whiskey, the way I do with my wine.” And she was like, “Well, I have always wanted to incorporate grain production on the ranch. I will grow it if you make it.”. That was kind of the birth of “Freeland” and that was about probably six or seven years ago. So I got really excited at that point for it to be a women-owned and operated venture. There is just so few women in distilling, just as the few in ranching. So it was really exciting to highlight women in these places where you just haven’t seen them that often. So I began my search for a female distiller, knowing there was only a handful in the world. But one happened to be in Bend, Oregon. Molly Troupe has her masters in distilling from Scotland and was running production at a small distillery in Bend. I just went out and threw her over my shoulder and dragged her back to Portland. We started making gin and so we released our gin just over three years ago. That was the birth of the business. Now we have got a gin and a bourbon. We actually have a Geneva which is a dutch style. We released a London dry gin and we have also got into the canned cocktail business as well. So that’s where we are.
So how much time between that fateful night when you were hanging out and you are shipping some whiskey? How much time between that night and when you open your doors?
Jill: It was about three years or four even! Everything was just painfully slow. Obviously, a distillery is going to be a very capital intensive venture. So there was a lot of fundraising that had to be done and just finding the space in Portland took over a year. Our beautiful still was an 18-month waitlist. So every piece of it was painfully slow. It was a true celebration to finally throw the door open.
How many employees do you have now?
Jill: It started with me and Molly. We were making gin then. Then we slowly added. Once our tasting room was open, it was a full cocktail bar with food and some got up to 15 employees. Then when we had to shut the tasting room down. We dropped to 6 and we have stayed at 6.
So that leads me right into my next question. Please talk to us about how the pandemic and the restrictions have affected your business. What are the steps you have taken to get through this and muddle through?
Jill: So it was terrifying of course because as a distillery about 40% of our sales were bars and restaurants. Then our own tasting room was huge. Being a young business, the tasting room is still really a big part of our business. We are only distributed on the West Coast, in California and Washington. So we really rely on our tasting room, our bar and our restaurant partners. So it was terrifying. But we got really creative, really quickly. I think that was the key to our success. A lot of distilleries in the US started making hand sanitisers and we were one which was amazing. We were glad to be able to help the community that way. It was also amazing for cash flow. We started, we got big contracts with the city of Portland, the fire department, Providence hospital, Wells Fargo. And just around the clock, I had my daughter there, putting on labels on hand sanitiser jugs. It was just a very grassroots effort that helped a ton. Then, even though our tasting room was closed, the state allowed for curbside pickup. So we pivoted very quickly and we started the option where one could order online throughout “booze-through”. We package it up for you and have it ready to bring out to your car when you pulled into the parking lot. So that was, I would say the best thing that we did. We quickly started making fresh juice mixers. So we had all spent hours just hand-juicing lemons and limes. But we were able to put together cocktail kits. So novice people that normally go to a bar for a delicious cocktail could just get the bottle, could get the mixer, go home and make a delicious cocktail. And the funny thing is, that in-turn made our tasting room sales actually triple in 2020 versus what they had been before, with just two people working instead of 10. So I would say, all of our efforts to really be creative and pivot quick paid off for us.
So your tasting room was essentially in itself sort of a restaurant bar. So like many other restaurant bars, you had to close your doors and then figure out a curbside protocol. It turned out that, you do that, incorporating the mixer kit, and then the cocktails that you were serving, allowed you to increase your business over the year before in 2019.
Jill: Absolutely yeah! We ended up doubling over 2019. So this ended up being great. While we did lose all the bar and restaurant sales. Retail really picked up. So we were able to make up a lot of the difference. There too we were able to focus on getting into some of the bigger chains. So I would say that not only did we survive the pandemic, we actually thrived.
That's good to hear. So have you been in contact with the folks in your industry? Have you been in contact with your customers and maybe other folks out there to find out how they are faring?
Jill: I get a lot of ideas from them and we do a lot of sharing. I would say that a lot of the craft distilling industry are probably out of business if 100% of their sales were bars and restaurants. Several had to close their doors mostly because they have a very narrow focus on one aspect of their business. They weren’t diversified enough. But I would say a lot of them have done pretty well. They have at least maintained sales and then some like us have done really well. So it’s kind of all over the map and a lot of it just depends on how willing you are and how you are able to throw your plans out the window, try new things and be willing to risk.
Yeah! Be nimble, be ready for change. Be ready to fail and start again on whatever ideas you come up with.
Jill: It’s critical and I think it’s just human nature to want, to have a plan, to implement it and also to think that things are predictable. But pandemic or no pandemic, things are never predictable. Whatever plan I set out in a year, all I can tell the staff is that “All we know is that this plan isn’t going to happen.”. But I wouldn’t say that planning isn’t important. But you have to be able to quickly throw the plan out the window and start over. So I think the pandemic only made that more obvious in your face and it was forced. But I think you have to always run a business that way.
So speaking of plans! What have you and your team decided for coming out of this at some point soon? What would your game plan be like over the next, say three months and then possibly six months? I think we are getting towards a point where we can see some sort of a finish line over the coming months.
Jill: Yes, so will be looking at getting back into bars and restaurants, opening our tasting room back up. I think we will keep a lot of what we’ve been doing. We will keep our fresh mix program. We will keep focussing on the home customer. You know luckily, we have been able to grow the tasting room. We do have a bigger and direct customer market that we didn’t have before. So we really want to maintain that. Laws are changing here pretty quick. We are not able to ship out of state but I could see that changing. So the e-commerce side is going to become a much bigger part of our business. So these are the new developments.
I think I remember reading that there was some relief in the tax that the beverages industry was paying. The beverages industry had a reduction in the tax they were paying. But that was a temporary thing. Did they extend that or did they formally make it the real regular tax rate? Do you know what I am referring to? It can be the per proof gallon tax.
Jill: So the federal one, yes that happened. It has been made permanent. So that has been reduced and it is super helpful for the craft distiller. Then there are statewide things that are happening too. Like in Oregon we are trying to pass legislation to reduce our tasting room tax. We are actually hoping to open a second tasting room in Oregon if that goes through.
Wow, do we have a location on that yet?
Jill: I am looking at Lake Oswego.
So I can’t wait! If I am ever back in Portland, I am gonna stop on by, both the first one and the second one. So can you name a couple of things that you need help with?
Jill: Oh, good question. I would love the fairy in the glass ball that tells the future. There are quite a few things that we need to do as a business. If we were to grow, we would require to get out of state. That means a lot of challenges with distribution and so I always need help around navigating. Knowing how fast to grow is important. Once things open back up, what would bars and restaurants look like? Will it be a return to normal or will things look completely different? How do I build a team around those needs? I think the team is so critical. It’s such a tight-knit team of six right now. They are able to be creative and nimble. As we grow, how do we maintain that sense of creativity and fun? Something that has become apparent to me over the pandemic is that I feel like people have taken a real look at mental health in a new way. I think the chance to slow down has been so good for so many of us and a chance to reevaluate how we do business and the way that we assume whatever that’s expected, has been great. We got to ask, “What is really necessary?”. If you kind of lead with like “How is everyone well?” and “What fuels that?”, it’s much enlightening. We didn’t put enough emphasis on this before. I hope the founders are able to look at mental health as a critical piece rather than just a hard-charging go-go-go. Take a much more holistic approach! So I know, I am going to be looking for help around, personally, in maintaining the growth of the company and in making sure that everyone is taking care of themselves in that process.
Yeah! The balance factors are coming into play and I like that idea that you have said. We might as well take this chaos that we’ve been forced and try to find an opportunity to recreate from scratch. So that leads me to another question that I have for you. There has been a pandemic and a lot of restrictions were imposed on your business. How has it pressed you into doing something that you normally wouldn’t have done? Something that you did do initiate or implement that you recognise as something great today.
Jill: I think it was scaling back. We had big plans for adding new states. We had to just hone in and focus on Oregon and build the whole market. My nature is like, okay this is a start-up and we got to grow, that means spreading wider. In fact, you know there is a lot we can do. We could grow just within our own backyard. So that ended up being a real success. So just hone in and know your home market. I think that will keep serving us really well as we do like that.
Right! Jill, final question, what would you want to share with other entrepreneurs out there who are listening?
Jill: I can’t think of anything, in particular, I think. Every industry has been impacted by this. In so many different ways. Some businesses have been able to thrive. Some have just completely destroyed. I think it’s just the human aspect of it that speaks to me. We are all in this together and we can reach across the industry lines, support each other, maintain that empathy as we come out and look at rebuilding the world.
So let’s hold on to the empathy that we build as we are going through this together and see if we can clear the past.
About the Guest
Freeland Spirits celebrates the women of the craft. From the gals who grow the grain to those who run the still, we’re creating superior spirits that celebrate all the Northwest has to offer. Jill Kuehler, Founder and CEO, has a background in nonprofit management, including seven years at the helm of Zenger Farm, a farm-based education organization teaching youth where good food comes from. With a passion for food and agriculture, Jill dreamt of starting a distillery, featuring the best of Oregon’s farm fields.