Industry Spirits

I'm calling it now. The Distill Ventures implosion has finally shown that that emperor's new clothes model of metropolitan hipsters picking brands based only on some American domestic insider identity competition? That's not a'gonna work. I've been talking to my distributor RNDC for two years now, trying to warm them to the idea that they should be the ones that have these accelerators. You know who knows what's going to work in the pipeline? A distributor. Any of us brand people who have spent a lot of time talking to distributors knows that the distributor picks up based on really specific criteria, and at the top of that triage is: does it work in the marketplace pipeline? I've remember when Distill Ventures picked up this Japanese whisky, and while I am one of America's biggest proponents of Japanese whisky, I knew it's not going to sell. Americans don't buy Japanese whisky in a measure that spirit start up needs to grow to keep their place in the portfolio. Europeans do, but Distill Ventures, even though fronted by a European conglomerate doesn't pick up stuff to sell in Europe. Much of their press is/was about the American market. So it's really the distributors that need to be funding companies or hosting accelerators/incubators. They know exactly what works for them, and they're the ones who have to decide if they're going to put their own muscle, their own processes, their own networks and people behind a product. And we all know that when they try ... they succeed. So really, there's only two people I would trust to pick the winners. 1. One of the big distributors 2. People that already have a history of success in creating, growing and selling brands. Everyone else is just a dilettante being paid a lot of money in one of America's large metropolitan centers feeling pretty chuffed with themselves at expensive dinners or bars, but we see how that's worked out. Last thing I'll say – what informed me to start Industry Spirits as a well brand and not even a mid-level brand was a story about a guy in Maine who started the first flavored vodka company. Yesrs and years ago, he sold it for hundreds and hundreds and hundreds of millions of dollars as people were laughing at him. He then while they were still laughing started another brand and sold that one, doing the same thing just for a different name for another couple hundreds of millions of dollars. Those cosmopolitan hipster money people would not have bet on him. But that is obviously the market. You can be cool, you can be socially inspiring (which I support), or, you can make a shit load of money. They don't always work together hand in glove. Make a choice, because the prompt for ChatGPT image was, "make an image of inspiring strong women standing in front of a warehouse". Because that's in the end is where it matters.

The prompt said, "Make an image of a cool QR code shaped like a dollar sign, and friendly", and...well, I need to get better at prompts to make better images. This is something that I've been working on for a while for our next bottling for either myself or partner brands, because VERY FEW brands have QR codes on their labels to capture customer info. How is this possible? No one. I mean, no one is typing in a website address and then finding a contact form and then...zzzzzzz But, the kids are all over QR codes. We see them everywhere. We order drinks at bars with them, we see menus, we buy tickets...... SO, why are few to as far as I know no brands taking advantage of this? It seems impossible. The uses are grand. Why not buy drinks for someone at a bar or restaurant using the contact info captured from a QR code? Why not work with liquor stores to ...uh... help the customer with a special bottle at a very, very reasonable cost? This is marketing $$$ spend directly AT the customer. And, as we know, once we capture that customer, we can market to them IN.THEIR.HANDS. How to use QR codes? Find the untaggable Jason Lattrell at www.kmsops.com and ask him. But - before you go. Check this out: --- Customer acquisition cost (CAC) for a liquor brand varies widely based on factors like marketing strategy, distribution channels, target audience, and brand positioning. However, here’s a rough breakdown of typical CAC considerations: 1. Industry Benchmark Estimates - Direct-to-Consumer (DTC) via E-commerce: $20–$100 per customer (varies based on ad spend, promotions, and retention strategy) - Retail/On-Premise (Bars, Restaurants, Liquor Stores): $50–$200 per customer (includes distributor fees, trade marketing, sampling events) - Premium & Craft Spirits: Higher CAC ($100–$500), but higher customer lifetime value (CLV) --- Now, imagine that the CAC spend is just the cost to buy a drink at a partner bar, or a specialty bottling for a liquor store on an owned opted-in customer contact... Someone's probably going to take this idea and make more $$$ than I will selling these bottles. Thanks to Adam Smith and Samuel Anderson and their live broadcast to inspire this post.

Activations and Effective Programs for Brand & Bars. One thing that probably was the most important lesson from my 12 years at Liberty in Seattle was how brands used their time to market their products to bars & bartenders. Liberty arguably did more events and activations* than any other bar, so we saw it all. Here's my call: 90% of brands and brand managers didn't do it right. Most did this: The brand manager or distribution salesperson would come into the bar (sometimes when we were busy) and arrange for an activation. That means they'd arrange to bring in some product (for free), and then depending on the brand/company, they'd maybe buy some food, also depending on if this was an industry event or not. This means we'd spend some time deciding on the menu and what the event would look like. 1. If it was NOT an industry event, the rep would most often print up a menu and for a few hours or the evening, we either just at the bar or on the floor would distribute to the customers the menu and encourage them to have one of the drinks on the menu for free or reduced cost, depending how now much the brand wanted to spend. If they spent a good amount ($250+, it'd be free drinks, less than that, it'd be product and reduced cost for the customer). 2. If it WAS an industry event, we'd invite barfolk by on a slow night or during the day for some kind of entertainment or educational program. Here's where it gets dicey. Usually, for #1, it'd be a total waste of time. The cost would be product (a few bottles which they'd either pull as samples, or the smarter ones would have us buy, and then they'd reimburse us for the cost - giving them depletions) and just...$$$. The cost usually was around $250 for the evening, depending on what they wanted to do, usually just we present the menu, we make some drinks with the product and we sell the drinks until either stock is gone or the event/evening ended. Usually we'd not sell all the product, so we'd have now free product going forward. This kind of activation was just...practically useless for the brand, and often represented a busy or shoddy rep just needing an activation on the books and a 'spend' (some of their marketing budget for which they were mandated to show expenses). Brands usually just see an event and expense report, having NO IDEA if the activation was effective. Sorry brands! The rep had to, they were mandated to spend that brand's money, so they were happy to see the money spent at my bar, but without any idea if this money was spent effectively in order to create more customers either through the customers or the bar. Usually a total failure in practice. See #2 in comments as LI limits how long these posts can be. * - Liberty went out of our way to encourage brands to host events, so we made it really easy to do, so we were usually the first bar in contact when they had an ambassador come to town or needed to spend money, from 2006-2018 when I sold the bar to the staff.

I see a lot of conversations about spirits brands trying to break into the market. We used to sell our tonic, commercially. So, I’m well aware of the hurdle of distribution, because that’s exactly where we failed. We have a great product, but that’s only half the equation. As a bar owner, I also represent the other side of the equation, as the consumer. Our establishments are very small, and the message that we are sent by Big Distribution is that we simply don’t matter. So, we have taken our business elsewhere. There are plenty of amazing products represented by people who will actually work for you. Big Brands have the Big Distributors locked down. They have a quid pro quo relationship. They will always have the placement at the entertainment districts, stadiums, Costco, etc. - simply because they are already scaled to meet the demand at that level. Small brands aren’t breaking into those arenas. In fact, big distributorships will often take on smaller brands to eliminate them from the potential of competing with their money makers. They’d rather your product sit in a warehouse collecting dust, than work to push something that competes with a Big Brand product that sells itself. My two cents is to build your brand around your local economy, and grow slowly as you can add boots on the ground representation of your brand in every market you want to enter. Develop relationships with small distributors that don’t have 100 other products in their portfolio competing with yours that are already 100 miles ahead of you. Slow and steady wins the race.

Years and years and years ago, I was judgmental as all getout about anything not craft-y, relating to bartending. All us second-gen (after Sasha at M&H or Dale Degroff, Murray, etc.) barsnobs really derided anything relating to big-brand marketing. I could go on and on about it, but I remember one time at a training at Liberty, we had 'Tuesday Training', a weekly open training event for our barfam and then anyone else could join, so we'd have dozens of people every week, learning about all things bar/spirits/service, etc. One time, probably 2015 or so, there was a conversation of some people who joined that Tuesday who were making fun of some cocktail contest. At first, I kinda listened along agreeing, but it became clear all of a sudden that this was some bad-energy shite. That was me, fairly often, pontificating about big-brand indoctrination and the like, but...hearing these younger bartenders all compete to talk smack? It sounded gross. That day, after whatever we were doing as part of the training, I spend just a few minutes opining that while I agree that the big brand indoctrination ('Come to the hacienda!' 'Come to camp!', 'Come to our party, we'll get you smashed!') sucked, I had to say that while contests and such, the trips and other indoctrination events? At least it was people DOING something. Yes, the contests were just manipulative appeals to emotion connecting the brand to one's identity, but...for those that tried. That was meaningful to them. I remember simply saying something about how we should support those that try, because at least that's effort towards betterment. If you get picked to go to a hacienda or camp, that's because the brand notices you DOING something, and that's to be awarded. What we do with that gift? Well, that's different. We can choose to take what we can, accept what we want, do with the experience what we feel's good for us... But, yeah. Let's stop being jerks. I write this because as I see the kind of content that the USBG promotes, it drives.me.crazy. Big brands doing big brand sponsored stuff. I mean, I've been a broken record, ESPECIALLY when I was a VP of Education for the USBG of making the org at least glace at craft. Most of the hipster barfolk like craft more than C?roc, small, independent brands more than Bacardi or such. But! I mean, that's not the reality. Gotta fight from the inside, I suppose...shouting from outside the gates doesn't really help anyone. SO! Go on. Do that contest. Go on the free trips. Get paid and get experience. Take advantage of what they'll give you. Until then, don't forget your favorite bartender-owned wells brand, Industry Spirits.

The most successful drink brands have three things in common. They: 1. solve a need in the bar range 2. build their category before their brand 3. solve a challenge in the distributor's portfolio Then, they sell bottles and cases. Brands are built bottom-up.

Well, I may be beating Chris Maffeo to the punch by posting our interview relating to all things bar, barcraft and barproduct, but give it a listen if you want to hear me pontificate on Chris' awesomely useful and valuable podcast. https://lnkd.in/gbUWpPM9

Franchise. This is an age-old tactic to grow a brand using a combined effort of like-minded folks to more quickly attain a market reach and escalated product growth. It's no secret that it's been a very difficult ride to fund Industry Spirits - a bartender-owned brand. But, the bar industry is behind us, there's tons of great, really, really smart people who have been operating bars or who have gone from bartender to brand advocate who have a terrific amount of knowledge on how to operate and grow a brand. They just...don't yet have the opportunity to do so. Well, now they do. We've already chatted with a few people of great experience, skill and integrity about starting a franchise of Industry Spirits in their markets. One of Industry Spirits most difficult issues is that our distributor, RNDC, wants us in more markets, but...we're not funded to do so. And, with that funding, the main issue is not just delivering the product, but moreso, supporting it. Anyone can sell a few a pallets of product. We've sold dozens and dozens and dozens, and - we did that because we support out brand and we support our salespeople from RNDC. Franchising will allow us to grow more quickly and with the new markets, we can and will be able to support the product in these markets. Once we're in more markets, raising money will be A LOT easier. WE can do this. SO! Who has questions about franchising? Who has questions about our Label You effort to white label for everyone? We can do both for anyone, anywhere. Let's chat. Industry Spirits will be the product for our industry, we're positioned to do so, and let the other wells keep watching us a bit as we again grow to where we were before, and where we will again. Industry Spirits Loves You.

We're working on a coffee liqueur, because the Northwest needs a unique Northwest coffee liqueur, and I thought it'd be fun to see what ChatGPT and Copilot did with the same prompt.