When life hands you lemons, make lemonade. Globally, companies in the alcoholic beverage, perfume and ethanol industries have taken this aphorism to heart by swiftly moving into the market for hand sanitizers.
Pernod Ricard (the maker of Jameson Whiskey and Absolut Vodka), LVMH (the maker of Christian Dior and Louis Vitton perfumes, among other things), and Aemetis Advanced Fuels Keyes Inc. (a California ethanol fuel producer) have all announced recently that they have shifted production facilities from their ordinary product lines to the production of hand sanitizer.
With closed bars and restaurants and millions of involuntarily housebound consumers, COVID-19 preparedness measures paint a dismal demand profile for makers of alcoholic beverages, perfumes and automobile fuel. While the profit margins on hand sanitizer cannot hope to match those of perfume or vodka, the shift to the hand sanitizer market is good corporate citizenship, savvy public relations and some opportunity to mitigate the damages of the global economic freeze.
Regulatory agencies have assisted in this effort. The alcohol product used in hand sanitizer is largely similar to that used for alcoholic beverages, perfume and fuel and is rigorously monitored by the U.S. Department of the Treasury’s Alcohol and Tobacco Tax and Trade Bureau (TTB). When the alcohol is not intended for human consumption, it is required to be ‘denatured’, or chemically toxified so as to make consumption unpleasant and poisonous.
On March 18, the TTB announced that it was waiving certain provisions of tax law with regard to denatured distilled spirits and providing the requisite authorizations to existing permit holders to produce the ethanol-based hand sanitizers so urgently in demand due to the COVID-19 emergency.
French authorities have accorded LVMH similar assistance in speeding the production of additional hand sanitizer.
For its part, LVMH has stated that it will donate large quantities of the product to the French government for use in the nation’s hospital system. “LVMH intends to help address the risk of a lack of product in France and enable a greater number of people to continue to take the right action to protect themselves from the spread of the virus.”
Similar charitable donations are underway in the US. Green Plains Inc., a Nebraska ethanol producer, has announced that it had donated a large quantity of ethanol to the Nebraska Department of Correctional Services for use in the production of hand sanitizer. Absolute Energy and Western Iowa Energy announced that they had donated large quantities of ethanol to Iowa Prison Industries and that the State of Iowa would distribute the product free of charge as circumstances in the coming days dictate.
Governor Kim Reynolds of Iowa on March 20 announced, “At our department of corrections, we will be producing hand sanitizer,” she said, noting that ethanol plants within the state will be shipping denatured alcohol down to the department of corrections. “It’s really been incredible the number of businesses that have reached out to say ‘what can we do to be helpful during this really, really critical time.”