Our business incorporates both.
As The Spirit of Manchester Distillery, we produce a number of award-winning spirits, including Manchester Gin, through our manufacturing arm, and our cocktail bar venture, Three Little Words, is also based on site, offering an all round experience for our customers.
Having launched in 2019, just before the pandemic hit, we have been lucky that our balanced business model, independent ownership and strong existing landlord relationships have allowed us room to breathe, but it was the Distillery arm of our company which truly kept us afloat. While our on-trade element was forced to temporarily close due to numerous Covid lockdowns and restrictions, maximising the off-trade element of the company was key and we were able to concentrate on retail sales, both independently, and with distributors across the UK and internationally, to stave off financial pressures.
We acknowledge we’ve been lucky to have been able to lean on this two-pronged approach, and like others, we entered 2022 with a sense of cautionary optimism that the worst was over. Yet, as one saga draws to a close, as business owners we are steeling ourselves for a new crisis dawning on the horizon.
Supply chain disruption and rising raw material costs have been creeping up on the hospitality industry for months if not years. Along with other sectors, we experienced a first taste of the issues mid 2021 when driver shortages impacted both arms of our business, but with rising inflation and no end in sight for the current global economic turbulence, we’re bracing ourselves now for further impact.
Rising costs
We are seeing rising costs across the board for raw materials – affected not only by rising costs at the supplier end itself, but also by import prices pushed up by global logistic shortages.
The cost of blackberry juice for one of our gins, for example, has risen by 300% in just six months, while our glass bottle itself has increased 18% since 2021. Fruits such as grapefruits and peaches are also providing trickier to source, affected by poor climate and growing conditions, while other spirit distillers - especially those manufacturing tequilas and cognacs, ceased production altogether during Covid lockdowns, leading to backlogs of orders.
Like most operators, we’re hesitant to reflect these increased costs on our customers just as we’re welcoming them back, and to date, we've been able to absorb these fluctuations successfully. However, as business owners, we’d be naive to assume this level of absorption can continue without damage.
At Three Little Words for example, we’ve altered cocktail recipes which were once reliant on now-rare ingredients for newer alternatives, and removed some items from our menus until we can renew our sourcing channels at reasonable costs. While this changing menu is exciting for the customer, and a move we can exploit in our favour to offer exclusive limited edition offers, from a business perspective, it adds pressure to our bar team and our chefs - which ingredients are running low, and which products do we need to remove from menus shouldn’t be questions we’re asking ourselves every day.
Supplier changes
We’re also reselecting our suppliers to counter price increases. It was once a given that sourcing abroad would save costs, but it’s now suppliers closer to home which offer stability and value for money. As our name suggests, Manchester is always close to our hearts, and although we have always tried to source locally where we can, we’re now seeing what more we can source locally to counter the rising import prices.
In addition to these impacts, we must also now prepare for ever-rising energy costs, which will undoubtedly increase as the terrible atrocities in Ukraine continue and powers around the world continue to limit their dependence on Russian oil and gas reserves. While we’re unsure at the moment how damaging these decisions will be, we’ve heard reports of energy bills increasing four-fold by the end of the year and this is an area we are steeling ourselves for now in preparation.
As any operator will agree, business comes with risks, but after months of closures and uncertainty, our industry is desperate for a break.
Although we have been lucky to have been able to stave off the difficulties thrown our way so far, we know of many others who will struggle in the coming months and we’ll be working closely with our fellow operators across Manchester to share ideas and initiatives to help each other. If there is one thing I’ve noticed during Covid, it's that those in our sector have an unreserved passion that will always win, whatever crisis comes our way.