Collect 40 gems (distillery) is a mission in Daxter. After the "Collect 30 gems from the tanker" mission, Taryn gave Daxter a flamethrower attachment for his spray gun. In return, she requested that he handle bug infestations in the distillery, as well as the same request at the fish cannery.
The new flamethrower is noticeably more useful than the gas, as it instantly kills most bugs, though it does require more gas to operate than the normal spray. It is otherwise vital for moving and hovering your way through the area, as well as incinerating spider webs blocking your path. As before, this location is rather linear so keep heading forward, dodging collapsing floors and burning both bugs and webs until you reach a large chamber. There are several large crates hanging from cables; hover from crate to crate, spend some more time walking and then hang from the bottom of the crates as they move through the room to reach the exit of this chamber.
The next platforming challenge is up ahead in the form of the inside of a massive vat filled with a red liquid. Platforms are spaced out evenly along the wall, climbing higher with each step, which you must use to avoid the liquid which quickly starts to rise when. After exiting this area you will soon run into a new version of the metal klaw, one which has instead of a stinger a strange four-pronged tip that produces electrical shocks. These have quite the range, so be ready to use your pressure boost attachment to close in and burn them.
By now you will have the necessary 40 gems, fight more bugs as you make your way through the remainder of the distillery until you reach the exit.