Brand Creation Tuesdays & Thursdays, Week 3 - The Liquid, Part 2

On Tuesday, we went over how to find a contract distiller. There's a business model whereby you build an entire distillery from scratch, but that's a whole lot of work, and you'll need to select a contract distiller so you have something to sell in the meantime anyway.

If you're new to the drinks business, you have to get to grips with the fact that the liquid invariably is one of the cheapest components; for a 700ml bottle, the liquid will usually start at around $1. It won't be much more for gin, vodka or other unaged grain spirits, it can be 20-30% more for grape-based spirits, other-fruit based spirits or those based on unorthodox bases such as whey or strawberries, but think around $1/700ml. Aged spirits like whiskey start off costing the same $1/700ml and only increase in cost due to opportunity cost and inflation. Inflation will typically trim 3% per year off the value of any asset (like 700ml of a liquid that's going to be whiskey) and you could have invested that $1 in a safe mutual fund yielding, say, 8% per year, so your net increase in cost during aging is 5% per year. Your 700ml of whiskey you distilled yourself will have cost, after 10 years, $1.63. (You've probably noticed that bottles of 10-year-old whiskey in shops cost considerably more than $1.63, and that's where bottles, labels, closures, boxes, dividers, advertising, promotion, amortization of plant maintenance, labour and, hopefully, profits come in.)

Back to liquid.

Yours needs a reason to exist. When Michel Roux created Bombay Sapphire, he simply briefed the Greenall's distillery - a contract distiller - to create something different, building on the existing Bombay Dry Gin brand. They added two botanicals, cubeb and grains of paradise. Your reason to exist could be that simple, but if it is, you will need a LOT of brand muscle to elbow your way into the spirits market. Many celebrity brands are in fact unremarkable liquids depending heavily, even wholly, on "their" celebrity's halo effect. Unless you're rich or a celebrity, you need to be distinct.

That starts with becoming an expert on the category you wish to enter. Read up on the category in Drinks International, The Spirits Business, Shanken News, and become an expert on all the leading brands; buy them all and taste them all, then work out what place your brand can claim.

What is everyone seeing but nobody doing?

A client recently hired me to create two brands, one of which was to be a spiced rum. I've done a lot of work for rum brands over the years, but not much for spiced rum brands, so I took a deep dive into the sub-category. It is utterly dominated by Diageo-owned Captain Morgan brand, which retails at $24. You simply cannot compete with the Captain at that price. (Also, as revealed in Matt Pietrek 's award-winning book "Modern Caribbean Rum", Diageo received a subsidy from the US government amounting to $2.7 billion - you really can't out-Captain the Captain).

The category of spiced rum is growing fast, though. and very few brands in it have even had a stab at a premium product. So for GOATz Spiced Rum we made what I modestly think is the best spiced rum in the world, featuring bourbon-barrel-aged pot-still rums from Jamaica, Barbados and the Dominican Republic, with minimal sweetening and traditional spices. It will retail for $35, so we're not aiming for the bulk of Captain drinkers, just the small percentage who are interested in trading up. This premiumisation is what Absolut did to other vodkas in the early 1980s, what Bombay Sapphire did to every other gin in the late 1980s, and what Zacapa and Diplomatico are doing to regular rums as we speak.

Your point of differentiation may also be price, but it could encompass process or ingredients, too. Good Vodka is a brand created by Tristan Willey and Mark Byrne and it's fermented and distilled from cascara, the fruit of coffee beans that would otherwise be discarded. Consequently, each bottle has a negative carbon footprint of 30 lbs of CO2.

Leopold Bros., a distillery in Colorado, discovered that there was an extinct type of still, the three-chamber still, that was much used in 1800s distilling, especially of rye whiskey. So they commissioned one, and made the first three-chamber whiskey in the world in more than a century.

When I was creating my brand Old Duff Genever , I learned about 100% maltwine genever, the style of genever that dominated sales all around the world until around the start of WWI. Within that category is 100% maltwine genever with the Seal of Schiedam, which additionally certifies that the genever is not just 100% maltwine but distilled only in a pot-still, in Holland, and between 43 and 48% abv. (Almost every large genever brand - and most small ones - claiming to be from Holland aren't distilled in Holland at all, but instead bought-in, usually from a distillery in Belgium.) In 2016 there were only two brands of 100% maltwine genever with the Seal still in existence. So in 2017 we launched Old Duff Genever in New York, selling the first 100% maltwine genever available in the USA in more than one hundred years, and becoming only the third brand with the Seal.

Barrels are a way to stand out too; you can age your spirit in barrels, finish it in different barrels, use non-traditional woods, etc. This isn't limited to whiskey or brandy any more; there are barrel-aged tequilas, mezcals, and even gins. There are whiskies aged in coffee barrels, and you can buy coffee that's been aged in whiskey barrels! And if you don't like your category, create a new one!

Ruben Maduro founded Spirited Union Botanical Rum in Amsterdam, and rather than compete as a spiced rum, he created the concept of Botanical Rum, just as Ryan Magarian coined the term "New Western" gin to describe Aviation American Gin , a brand he co-founded in Seattle.

The Brief

Briefing a distiller is like briefing any creative person; you need to be clear on specifics, but leave enough wiggle room for the creative to put their expertise to work. You need to be quite well informed about the product you want to make, but still defer to their expertise. Here's a simple example:

"The brief is for a one-shot gin with juniper, angelica, orris and lemon peel, plus 2 additional botanicals, one of which should be an exotic pepper and one of which should be an exotic citrus. The gin should have a strong juniper character, such as Tanqueray or Gordon's. It should be 43% abv and have a cost of goods not more than $1.50 per liter. Base can be any grain sort."

When tasting a sample from your distiller, always retain some of the liquid to test against future samples, and always test against the same competitive set of 5 or 6 rival brands. Crucially, ensure your distiller is meticulous about only sending you samples that are production-ready. A liquid you taste in a lab sample can differ widely when scaled up to 1, 000 or 10, 000 or 100, 000 bottles.

Right, that's the basics of The Liquid covered then!

Naturally I could go on and and on just about liquid, so if you have questions, DM me or drop them in the comments.

Next week, on Tuesday and Thursday: Bottles & Labels!

Previous articles:

The Client Agreement - Part 1

The Client Agreement - Part 2

The Brand - Part 1

The Brand - Part 2

The Liquid - Part 1

Want to talk about hiring me to create a brand for you, reposition an existing one, or educate and engage with the on-trade?DM me here, or email me: [email protected]

Follow me on X/Twitter: www.twitter.com/philipduff

Follow me on Instagram: www.instagram.com/philipsduff

My podcast The Philip Duff Show:

Spotify: https://open.spotify.com/show/1LSCgtZ6j2wHBPUxzA2Vdc

Apple: The Philip Duff Show