With 30 years in the drinks industry, you’ve seen the shift from a landscape in which craft spirits didn’t exist, to today, when there are thousands of craft brands. Did that story arc surprise you?
No. It doesn’t surprise me, because it happened first with beer. What it says is it’s a very romantic business to be in. And it touches on people’s utopian ideas of what work is. I love the stories and culture of spirits. These ideas that are centuries old really spark the imagination. People are starting to talk about the shakeout, and I think there will be to a degree, but I also think you’ll find that the craft distilling business is an inherently different business than the global spirits business because it’s local. I think there’s nothing wrong with it being local. Tamworth is an entirely different business than the brands I consult on because the goals are completely different. We are the number one distillery in New Hampshire by far, and we have a very good business up there. Our goal is not to be in all 50 states. Our goal is to saturate and dominate our market and then extend somewhat regionally.
Over the next five years, what opportunities do you think will exist for small spirits brands? What threats are you most concerned about?
I think the one thing we did right with Tamworth was open with 14 different products, as opposed to laying down whiskey for two years and not selling anything. I think people underestimate how long it takes to get the whole thing going. When we opened with 14 products, we had a very robust onsite retail trade instantly. We also had 14 products that were very unique, as opposed to yet another bourbon or whiskey. We are making those things, but we also make beaver ball whiskey and something with black trumpet mushrooms. So you need to stand out and to make things that are unique. One mistake I see a lot of craft distillers make is expanding too quickly into other states. If you can’t service that market, don’t go there. If you can’t make a presence in that market, don’t go there. Become very well known in your neck of the woods, then expand across your state, then maybe extend. If you go to a control state like Pennsylvania and get listed and then they delist you, they will never look at your products again. One of the reasons we were eager to sell Art in the Age after six months was the product took off very quickly, and suddenly we were ordering tons of glass, we were filling tons of bottles, warehousing tons of product, and having all our cash outlaid until we got paid. And it kept growing and growing. We were at 200,000 cases when we sold. Imagine having to float that! With a lot of craft distillers, you need to think of your business model and make sure you’re self sustaining before you grow too much.
What’s the deal with nonalcoholic spirits? Are you going to make one?
I think it’s funny! They’re not spirits. Am I going to make fruit juice? I don’t know. Owning our own retail stores, we get to see in real time what works, and we’re monitoring non-alcoholic spirits. We do weekly cocktail classes in Philadelphia at our Art in the Age store, and we do a non-alcoholic cocktails class. We’ve had to add two or three encore classes for that class because demand was overwhelming. There’s definitely a market for it at this point. I get a lot of questions about cannabis too, with the idea that cannabis is something we should have an affinity for because of 20 years of tobacco. In some ways, I think it’s tobacco meets spirits. But I was working in tobacco when it went under FDA, and it changed, and it was no longer fun to be a part of anymore. And I feel like that’s got to happen with cannabis. There’s this euphoria now, but that stuff’s got to go under FDA. Spirits already went through Prohibition, so there’s some clarity there. But if anybody has a cannabis project they want us to look at, well, we might be interested.
Steve Grasse is founder of Quaker City Mercantile. For more information visit www.quakercitymercantile.com or call (215) 922-5220.
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