Thank you, Mr. Chair.
My name is Germain Guitor, or Gerry for my Anglo friends, and I'm the founder and president of Spirit of York Distillery, located in the Distillery District in Toronto.
First of all, I want to thank all of you for the invitation to speak to you this afternoon. It really is an honour to be here today to share our company's experience during COVID-19. I hope that our story provides this committee some useful insights and helps in guiding any future federal response to these types of national crises. My story won't be as eloquent as Mr. Dyck's. This will be more of a personal story, but I'll walk you through what we experienced during this COVID period.
When the pandemic hit the shores, Spirit of York was one of the first commercial enterprises to pivot to help our communities, and arguably, the first distillery in the country to start shifting operations to produce hand sanitizer to satisfy the incredibly high demand. Our intent was to help front-line staff, the needy and the vulnerable. This effort was consistent with our company values to give back to the community, as the distillery contributes 10% of our profits to assist social and cultural groups in our home province.
As you can imagine, as the first company to pivot, we received a tremendous amount of attention from local, national and international media. In addition to taking advantage of these media opportunities to challenge the business community to get engaged in helping our communities through this tragedy, I openly shared the World Health Organization sanitizer formula we uncovered, in the media and in the hundreds of subsequent calls received from across Canada and all over the world. Suddenly we were bombarded with individuals who volunteered to help and a great many companies that offered tools and assistance. Companies started donating labels, bottling machines and raw materials.
We started by producing hand sanitizer in a small 140-millilitre format that was being sold for three dollars, with all net proceeds going to Ontario food banks. We would distribute these at the front of our distillery, with the product being free for the elderly and for those who could not afford it.
We immediately started donating and distributing sanitizer to local police departments, fire stations, hospitals, community organizations and homes for the elderly. We would even courier sanitizer weekly to the federal government's COVID-19 response at the government operations centre. Because of their role as the lead organization for the coordinated federal response, it was important to help them out in any way we could to ensure that they received support to assist them in maintaining a safe working environment. Over time, we donated tens of thousands of litres of sanitizer.
Suddenly we were getting phone calls from large corporations with critical front-line employees seeking to buy large volumes of hand sanitizer. We were very careful to price our products fairly to ensure that we did not come across as taking advantage of the situation. Again, 10% of the revenue generated from these sales was donated to the food bank. We even took some of the revenue to produce an ad to recognize and thank front-line employees and first responders, which garnered almost a million views across Canada.
All of a sudden, sanitizer became a significant venture for us. Luckily, we kept honing our supply chain to allow us to meet the ever-increasing demand.
This initiative allowed us to hire a significant number of recently unemployed hospitality staff who wanted to work rather than collect CERB. At its peak, we had 50 incremental staff to whom we were paying wages significantly higher than minimum wage. The venture also generated incremental income that allowed us to keep donating sanitizer. We rented another facility to satisfy the ever-increasing demand. It had become a virtuous cycle: sell sanitizer to large corporations, hire unemployed staff, donate sanitizer to first responders and the needy and generate money for the food bank. To this day, we still continue to supply sanitizer to private corporations.
However, when it came to supplying the federal government, we quickly realized it was a whole other game. We started getting a number of phone calls from brokers and sub-brokers, individuals who wanted to buy cheap and sell high to the government. They would tell us that they had connections with the federal government, thereby the ability to bypass the procurement system, and were looking to source very large quantities of hand sanitizer. We would supply pricing and then we would never hear from them again. This probably happened at least a dozen times, and I'm being conservative. It was very difficult to know who was and who wasn't legitimate.
We entered our information, a Canadian company with the ability to supply hand sanitizer, in the federal government's purchasing portal. We tried reaching out several times and the guidance was always to ensure that we were identified as a supplier in the portal, which we were. We kept monitoring and waiting for a call to tender, which never came. No one ever contacted us from the federal government to see if it was possible to supply; yet the calls from these brokers kept coming in.
We would then see bottled sanitizers being distributed that were clearly imported from overseas, with local labels, and were told of huge bulk purchases, with contracts being fulfilled with product originating mostly from Asia. In retrospect, it was disappointing that the federal government didn't see the benefit of purchasing locally to satisfy its needs.
I'm not sure those mandated with purchasing decisions were aware that they were being supplied by either importers of overseas-manufactured product or foreign bulk sanitizer. I believe somebody—or somebodies—made tremendous amounts of money acting as an agent for a foreign-manufactured product. Somehow, someone failed to understand that many Canadian companies had pivoted to satisfy the sanitizer demand. Someone missed that these Canadian-based companies would buy raw materials from Canadian farmers, transform the product into sanitizer using Canadian manufacturing sites, buy packaging, labels, bottles and other raw materials from local suppliers, employ local employees, oftentimes the recently unemployed looking for work, and support local distributors and transporters. It was Canadian sanitizer produced by Canadian companies.
I'm not suggesting there was some form of questionable conduct. I know it was a challenging time for everyone to secure supply. People and organizations were scrambling. However, I'm not sure it takes a Ph.D. in economics to understand the benefit of the economic multiplier effect in having truly supported a burgeoning Canadian industry. Also, there may have been a failure to realize the positive social impact of companies like mine, and like Mr. Dyck's, that were donating sanitizer to front-line employees and to the needy in their local communities.
I believe the federal government not only overpaid for their sanitizer needs but also missed a great opportunity to reinvest in local economies and create economic multiples, thus reducing the financial burden on our government and taxpayers, creating employment, and allowing these companies to continue to selflessly contribute to their communities. As I mentioned, I suspect that a few companies made a lot of money due to our failure to understand what was possible in this crisis situation. It would be an interesting case study to understand the cost, both the real cost and the opportunity cost, of the federal government's decision to supply from overseas.
In closing, I think it's important to recognize that Health Canada was a significant and positive contributor during this crisis. They legitimized us quickly by providing product and site licences. They provided guidance on packaging when required and moved quickly to remove companies who were using ingredients that were potentially dangerous. Although there's much to learn about the government's procurement process, I believe Health Canada should be recognized for how they positively handled the sanitizer supply issue.