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Upscale Player Hotaling & Co. Seeks To Weather The Storm

March 27, 2020

While off-premise sales continue to spike, drinks companies that skew strongly to the on-premise are being heavily impacted by the COVID-19 crisis. San Francisco-based importer and producer Hotaling & Co. has a portfolio led by such upscale brands as Old Potrero, Nikka, Kavalan, Luxardo, and Hine, and with on-premise sales accounting for 40% of the company’s business, it’s been battling some stiff headwinds.

Hotaling president and CEO Dan Leese said he’s seen a 40% fall-off in product orders. His 65 employees are working from home, and all distilling has been suspended at Hotaling’s San Francisco facility—though he added that stocks of Junipero gin and Old Potrero should be sufficient to meet orders for weeks, and even months, to come.

In addition, Leese said, all of Hotaling’s products continue to move out of its warehouses in Southern California and New Jersey for shipment to distributors, and then retailers around the country. “The supply chain is 85% intact,” he added. “Luxardo in Italy, Hine in France, and Kavalan in Taiwan are all still filling orders for us. Since beverage alcohol is considered an essential product, trucks can still travel and deliver all of our brands, nearly everywhere.”

But the closing of the restaurant and bar sector remains a major impediment. “Many of our products are super-premium, and aren’t often found in the grocery channel where so much beverage alcohol is being sold,” he said. “With 40% of our business in the on-premise, we can’t make up for the loss of all that at retail.” In many states, officials are allowing restaurants offering takeout meals to also sell packaged alcohol, usually at retail prices. That may help somewhat, but won’t offset the shortfall.

Leese is predicting that sales won’t be back to normal until late summer. “If that happens, we’ll be fine,” he said. “If it goes beyond that, we’ll have to look for new ways to preserve cash.” So far, he said, Hotaling hasn’t laid off any staff. Employees are conferencing online with their colleagues and customers from home. —H. Lee Murphy

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