As the COVID-19 pandemic, and the ensuing economic effects, hit Australia, Joel Hauer braced to take a hit to his whisky subscription business Whisky Loot. But it never came.
For many people, it turns out whisky in the mail is just the tonic for tolerating isolation. With an increase in gift subscriptions and existing customers ‘doubling up’ their orders, Whisky Loot is on track for a bumper coronavirus season.
Back in January, when Whisky Loot bagged its first funding round of $400,000, the business had about 1,300 subscribers. Now, that number is closer to 2,000, Hauer tells SmartCompany.
March was Whisky Loot’s best month of the year so far, he adds.
And in April, “it looks like we’re going to get close to doubling March”.
In fact, the founder is expecting this to be his biggest month of sales ever, outside of Christmas or other seasonal events.
As it became clear the coronavirus crisis would have serious economic consequences, Hauer and the Whisky Loot team started to prepare for a dip in business.
“We didn’t quite know which way the business was going to go, so we started extending our runway,” he explains.
“The cash we had that we thought would last us four months, we needed to extend to last us 12 months.”
But the crash Hauer was expecting never came. Unexpectedly, the opposite started to happen.
“We thought we would get all these cancellations on our subscriptions. But the cancellations actually reduced compared to an average week,” he says.
At the same time, the numbers of new subscribers started to increase.
“It was a bit of an unusual turn of events for us,” he adds.
“We ended up being quite profitable in that late March period.”
Initially, that growth was “very much organic”, based as far as Hauer could tell on the startup’s existing Facebook Ads spend.
In hindsight, Hauer theorises that other struggling businesses may have taken their investment out of Facebook Ads, meaning the ones that remained got more airtime.
“Instead of us getting a new subscriber every $50 that we spent on Facebook, we were getting a new subscriber once every $30 we spent on Facebook.”
Even so, just last week Whisky Loot doubled its ad budget for Facebook, because things were going so well.
“We doubled down on what was working,” he adds.
More whisky, more often
That’s not all Whisky Loot has doubled down on. It is also offering subscribers the option to double up their deliveries, receiving six 60ml bottles a month, instead of the standard three.
Hauer had been discussing the business’ surprise uptick with a friend, who suggested people may well want more whisky in their lives at a time like this.
“We’ve never considered doing anything more than once a month. Our only other option is quarterly,” Hauer says.
All of the news reports suggest people want to save money, that they’re losing work and facing hardship, the founder notes. So offering them additional products felt counterintuitive.
However, when he put out a customer survey, asking how frequently they would like their deliveries at the moment, more than 50% of customers said they would welcome more whisky, more often.
The team whipped together an offer for people to get two boxes in one delivery, for $99 instead of $59.
“About 25% of our subscribers opted into that,” Hauer says.
“We didn’t want to do it without knowing how customers were thinking … but it proved to be something people wanted.”
At the same time, Whisky Loot has called upon three additional Australian distilleries, and created a one-off, non-subscription box featuring a tipple from each.
The business is donating $15 dollars for each box sold to the distilleries, to help them with their own cash flow during this period.
As for the motives of the customers who are spending — whether they have a desire to help Aussie distilleries, to support a young startup, or just a desire to drink whisky — it’s hard to say.
From customer service feedback, it seems that some, especially those that have been subscribers for a matter of years, aren’t cancelling because they do indeed want to support local small business, Hauer says.
“It’s hard to tell whether that’s because of us as a business or because they’ve got that habit of receiving three new whiskies to try every month.”
However, Whisky Loot has also seen an increase in gift subscriptions, and the team can see what people are writing to their loved ones. Many of the messages talk about offering “something to help you through isolation”, Hauer says.
“We can’t go to the bar right now,” he adds.
“Everyone has got a little bit of a ‘going out’ budget that they’re now not spending. It fits within the accessible home-delivery service that is a bit of a surprise every month.”
Whisky Loot customers seem to appreciate a little treat in a time when there are not many of those to be had, Hauer suggests.
He shares one customer review that says the service “helps you tolerate the apocalypse”.
“Ever since being relegated to the social distancing wasteland I’ve been pining for some kind of excitement and meaning in my dreary, housebound life,” the review says.
“Whisky Loot has filled the black void of my heart and truly makes life worth living.”
Whisky delivery may seem like a frivolous service, but “people actually really need us right now”, Hauer laughs.
Expansion on hold
Despite its recent run of success, Whisky Loot has still had to make a few tweaks to its 2020 roadmap.
Hauer had been planning to embark on a second, larger funding round within the next month or two. That’s been pushed back to at least September.
“It’s still the plan,” he says.
“We’ve realised we’re in a great position. We’re a business that was going really well in the good times, and even better in the bad times.
“It’s still a great opportunity for investors.”
The business was also about to move into a bigger warehouse space that it would be able to grow into over the next three years.
“That would have been a huge expense plus probably triple what we’re paying in rent,” Hauer says.
“That’s been pushed back.”
He was also planning on investing in a new industrial bottling machine for the warehouse, but that’s also been put on hold.
All of this is about extending the runway and protecting the business if things do go south, says Hauer.
“We’ve extended the amount of time that the cash that we’ve got and the revenue we’re generating is going to buy us,” Hauer explains.
“It’s pretty much the same plan, it’s just pushed out a little bit.”
Finally, Hauer had had plans to launch Whisky Loot in the US in November. The timeline on that expansion is now completely out of the founder’s control.
“That’s really going to be determined by how much the borders can open up,” he says.
“It’s still in our plan, it’s just moved forward to a date in the future that we’re guessing at the moment.”