Distilleries Raced to Make Hand Sanitizer for the Pandemic. No Longer.

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Distilleries Raced to Make Hand Sanitizer for the Pandemic. No Longer.

As the coronavirus pandemic shuttered bars and restaurants in March, Phil McDaniel’s craft distillery in St. Augustine, Fla., stopped producing bourbon. Then he realized there was one alcohol-based product he could make that people would still clamor for: hand sanitizer.

His St. Augustine Distillery soon churned out the first of what became 10,000 gallons of the disinfectant. With sanitizer in short supply nationwide, he quickly sold and donated most of the supplies to hospitals and emergency responders along Florida’s northeastern coast.

“In the beginning, it was just unbelievable, the sort of frenetic demand that was out there,” said Mr. McDaniel, 62. “It was so gratifying to us to be able to come in and help.”

But as virus cases have spiked again in Florida and other states, Mr. McDaniel said he had no plans to make more sanitizer. That’s because the early demand he experienced tailed off in June when large brands like Purell were able to pump out more product. The price for sanitizer, which had hovered at $50 a gallon, plunged to around $15 a gallon. Today, he still has about 1,000 gallons of it, spread between 250-gallon square totes of finished product and 50-gallon drums of ingredients, sitting in a warehouse.

Mr. McDaniel is one of more than 800 craft distillers across the United States who leapt into action to help in the first wave of the pandemic, urged on by federal agencies, but who are now hesitant to invest more time and money into those efforts. With demand for sanitizer fluctuating, distillers have faced unforeseen costs and excess supplies that they could not get rid of.

Now as Arizona deals with new virus cases, much of his remaining 1,000 gallons of sanitizer has sat idle. He blamed the changing demand on the “vacillating” by officials over the pandemic’s severity and their “flip-flopping” over which businesses could reopen — and stay open.

“The bigger frustrating issue is the fits and starts,” he said. “A lot of these bars and restaurants don’t know if they’re open today, if they’re open tomorrow.”

To help distillers, advocacy groups like the Distilled Spirits Council have lobbied Congress to provide economic relief. They also want the F.D.A. to specify how long it will allow sanitizer production by distillers to continue, to give the businesses some certainty.

Some states, like California and many of those in New England, have also temporarily suspended laws that prohibit distilleries from directly shipping alcohol to consumers. In states where those rules haven’t been changed, some distillers said their willingness to make and donate hand sanitizer during a crisis merited a reprieve from the shipping restrictions.

Distillers “have absolutely done their civic duty,” said Mr. McDaniel, who is also president of the Florida Distillers’ Guild, an advocacy group. Now “they’re all on life support.”

For some distilleries weighing whether to continue sanitizer production, the decision was easy: no way.

Barry Butler, the owner of Tarpon Springs Distillery in Tarpon Springs, Fla., had teamed up with a nearby rum distillery to give away about 15,000 gallons of sanitizer and had made $40,000 by selling 10,000 gallons more. But when demand plummeted in June, he returned to producing moonshine and ouzo, a Greek liquor.

The business, which initially lost money, has been profitable since the bourbon finished aging nearly four years ago, Mr. McDaniel said. But when the pandemic hit, the packed tasting room and tours became just a memory. In April, Mr. McDaniel slashed advertising and furloughed about 15 of his more than 45 employees.

“It’s terrifying,” he said.

Mr. McDaniel said his sanitizer made enough to cover the cost of what he donated and a little more. In June, when demand dropped off, he stopped making it.

St. Augustine Distillery is now producing bourbon again — but it is seeing only half its normal amount of liquor sales.

“At the end of the day, our core business is making really great alcohol,” Mr. McDaniel said. “To be able to get back to business and have demand for that and to sell it profitably is what we’re all looking for right now.”

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