There’s a new class of entrepreneurs looking to an old staple of life for the next big payoff - liquor and wine. They’re mixing up bold new flavors; using innovative packaging; exploiting new technology and means of communication to reach their consumers; inventing daring new names and product images, and working long days and nights to get their brands off the ground.
The alcohol business in the USA has, to say the least, a colorful history. Going back to pre-revolutionary America, it was in the taverns that men discussed politics and where the first talk of revolution began, some of the courage to speak against the King undoubtedly coming from a bottle. In 1919 the teetotalers convinced Congress to amend the constitution, (the 18th Amendment) and outlaw alcohol for consumption. Prohibition turned into a gift to the gangsters, mobsters and smugglers of the time and made millions for men with last names like Bronfman, Kennedy and Capone. In 1933 Congress repealed the amendment which ended Prohibition, but in order to do so the Federal government ceded liquor regulation to the States, creating a complex set of rules and regulations which vary greatly from state to state and in some cases from county to county. But it’s recent liquor history that interests the new entrepreneurs. It’s the stellar success stories of the independent brands, (independent meaning started, owned and operated not by one of the major brand owners but rather by one or a small group of individuals), such as Maurice Kanbar who practically invented the “premium” vodka category with his wildly successful impurity free SKYY vodka; or Sidney Frank who, before his recent death, sold Grey Goose vodka to Bacardi for reported $2.2 billion dollars.
“The liquor business is sexy, like the movie business,” says Michael Kanbar, Owner & Founder of Strong Spirits (and nephew of Maurice Kanbar) the producer of two new brands, Floot, a sparkling wine in a can, and 80 Strong, a traditional hand-made Kentucky Bourbon with a new and edgy label. And it seems he’s not alone as there are a whole crop of new brands started by people with their eye on creating the new ultimate status symbol. Kristen Raskopf, founder and CEO of Dirty Blonde Cocktails, left her sports and marketing law practice to “do something fun, challenging and creative." Her line of champagne cocktails is slated for an early 2007 launch.
Getting started takes an idea, some seed money and “a lot of figuring out how all the regulations, taxes and other stuff works,” says Kanbar, “if you’re getting into this business be prepared to make some mistakes, especially at the beginning. And some of those mistakes can be really costly. Finding good people to work with and making a few friends in the industry will help reduce the cost of your education.” Zachary Brinley of Brinley Gold Rum who has been selling his premium flavored mango, vanilla, coffee and coconut rums since 2002 recollects his early days “when I started I was working seven days a week just to keep up. But now I’ve got the hang of things and it’s definitely much easier, now I’m only working six days a week!”
Complete Liquor Compliance, LLC (CLC) out of Bethesda, MD is one of the companies that new startup brands go to for help in navigating the labyrinthine rules and regulations at both the Federal and State level. CLC’s Operating Partner Zachary Maltzman describes their services as “A comprehensive menu of services designed for the startup and independent brands. Basically CLC should be the first stop for anyone looking into starting up a new brand, or any existing brand looking to save money in practically every aspect of their operations from licensing to warehousing and even marketing and various business support services such as bookkeeping and invoicing.” According to Maltzman, CLC designed its menu of services specifically with the needs of small business and startup brands in mind, “streamlined, efficient, cost effective and creating much needed liquidity for the brand.”
Once the production is done and the paperwork is squared away the marketing begins. I spent some days and nights doing the rounds with Michael Kanbar. During the days we visited liquor stores and we spent the nights bar-hopping. A typical visit to a liquor store consisted of chatting with the staff or the owner, asking how the brands were doing and checking the shelf position, pricing and finding out if they need a rep from the wholesaler to visit them to replenish their inventory. The store owners and staff also reported on who was buying and what the consumers were saying about the brand and offered suggestions for how to boost sales. Each evening we’d stop in a few bars, talk to bartenders and patrons and buy a few rounds of drinks. Owning a brand, even a small startup, seems to attract attention from the bar patrons, his presence and sometimes an introduction from the bartender prompts a few of the regulars to congregate around Kanbar to talk about the bourbon and the brand. Kanbar calls it the “I met that guy” effect, when people like meeting and talking to the owner and have something to tell their friends later. “I really dig hanging out at the bars that sell Strong and long before coming out with Strong I was totally one of the guys playing pool, playing songs on the jukebox and just hanging out. Now I still get to hang out and get the word out about the brand at the same time. This is the difference between a small independent brand vs. the large corporate brands; I doubt you’re going to get the CEO of Brown-Foreman (the makers of Jack Daniels, Southern Comfort and other well known brands) to just chill and hang out like one of us regular people at our neighborhood bar. I think this sort of direct involvement is one of the important things that makes independent brands genuine and real and separates them from corporate brands.”
It’s the growing number of independent brands and a possible relaxing of liquor regulations on the horizon that might be forever changing the landscape of the liquor business in the US. Some recent court decisions in Washington State allowing the sale of wines directly from producer to retailer (circumventing the wholesaler) may be the beginning of a national wave of re-evaluation of liquor regulation policy. “This is a great time and an exciting time to get into the liquor business,” says Maltzman, “it’s not wide open yet, but it may be pretty soon, and right now may be the last chance to build a brand before the whole business becomes easier to get into, which means more competition. It’s mostly been the arcane regulations that have deterred people from getting into the business, and severely hampering them from doing business if they got into it; many of those regulations may soon be a thing of the past.”
The appeal of creating and building a brand is attracting a crop of talented, innovative and energetic entrepreneurs and changing the face of an industry with the introduction of an unprecedented amount of independent brands. Some will be bought up by the big brand owners, some will develop into nice little family businesses and naturally some will fail. All though start out with the same chance to succeed, and it’s on this chance that the front-line entrepreneur places his or her bet. A toast to the new liquor barons: The big shots are only the little shots who keep shooting. Good Luck!
Article Contact List:
Michael Kanbar
Strong Spirits, Inc.
info@strongspirits.com
http://www.strongspirits.com/
Zachary Brinley
Brinley Gold Rum
http://www.brinleygoldrum.com/
Kristen Raskopf
Dirty Blonde Cocktails
http://www.dirtyblondecocktails.com/
Zachary Maltzman
Complete Liquor Compliance, LLC
info@liquorcompliance.com
http://www.liquorcompliance.com/
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