Beach Whiskey Company Acquires American Harvest® Organic Vodka

Award-winning craft organic vodka highlights farm-to-bottle movement

I’m pleased to share our acquisition of American Harvest Organic Vodka from the Frank family. This is an incredible brand and we could not be more excited to add it to our Beach Whiskey Company portfolio. Our Beach Whiskey™ is taking off and we have had the most incredible reception from the trade including some of the most important national accounts in the industry. This is driving us to move faster and rollout nationally early. The addition of American Harvest fits perfectly with this effort as it was national and in most of the key national accounts under Sidney Frank Importing Company.

  

We believe the new branding (packaging) fits perfectly the farm to glass, sustainable nature of American Harvest. While the old packaging was unique, this new look, with American glass and recycled paper label, disclosing the source of all ingredients is on message. I hope you all like it.

I look forward to bringing both Beach Whiskey and American Harvest to market and to scale this year. Below is the official announcement:

The Beach Whiskey Company, a national spirits company, announced today its acquisition of American Harvest Vodka®, an American-made organic vodka, which merges the farm-to-bottle movement with the exploding craft spirits category.

American Harvest Vodka was created by the Sidney Frank Importing Company (SFIC) in 2011 and gained a strong national foothold by 2014. When SFIC was acquired by Jägermeister of Germany in 2015, the Frank family retained ownership of the brand. The sale of American Harvest to the Beach Whiskey Company returns the brand to one of its creators, Bill Henderson, now Chief Marketing Officer of Beach Whiskey.  Terms of the deal were not disclosed.

“Organic and craft spirits have shown significant growth over the past five years, and Double Gold Medal-winner American Harvest has already shown its ability to stand apart from other super-premium vodkas,” said Smoke Wallin, CEO, Beach Whiskey Company. “Now is the time for a national organic craft vodka, and American Harvest Vodka fits seamlessly into the Beach Whiskey portfolio while accelerating our national growth plans. Distributors who previously carried American Harvest are eager to have it back, and this is creating additional opportunities for the Beach Whiskey portfolio.”

American Harvest is handcrafted in small batches from American wheat and distilled with 100 percent certified organic ingredients to yield a distinctly smooth spirit with a crisp, clean and slightly sweet hint of real agave. The wheat is estate grown from a single family farm, and the water is from a protected source beneath the Snake River Water basin.
“American Harvest is a brand near and dear to my heart,” said John Frank, former Chairman of Sidney Frank Importing Company and new member of the Beach Whiskey Advisory Board. “We went to incredible lengths to ensure purity from farm to bottle in creating this truly American spirit.  I’m pleased to see American Harvest in the hands of Beach Whiskey’s very capable team, and I look forward to contributing to their portfolio’s exciting growth.”

“Acquiring American Harvest made perfect sense to all of us at Beach Whiskey as we look to create value for our investors and bring innovation and a great marketing to our trading partners, “ said Andrew McGinnis, co-founder and Chairman of Beach Whiskey Company

“While craft spirits have taken off, so too are consumers becoming increasingly focused on the provenance of their food. They want to know who raises their beef and from which farm their fruits and vegetables are sourced,” said Bill Henderson, Beach Whiskey CMO. “American Harvest Vodka was created because we believe the same can and should be true for spirits.”
American Harvest Vodka (40% ABV) will be returning to shelves across the country and is expected to regain its national footprint in 2017. SRP: $24.99/750ml.

Here is a video on the American Harvest brand story… (old bottle):

American Harvest Organic Vodka Full Video Story from J. Smoke Wallin on Vimeo.

About The Beach Whiskey Company
The Beach Whiskey Company is a disruptive brand innovator in the adult beverage space that is building a portfolio of rapidly growing national brands. The Beach Whiskey portfolio includes Beach Whiskey Bonfire Cinnamon™, Beach Whiskey Island Coconut™ and American Harvest Organic Vodka®.

Beach Whiskey™ is a reimagined take on traditional whiskey. A line of smooth, clear, naturally flavored American whiskies made for sun worshiping, moon chasing, fun seekers, Beach Whiskey offers day-drinkable flavor profiles presented in sea glass-inspired bottles. No matter where you are, our mission is to bring the beach—”your place in the sun” —to thirsty, fun-loving whiskey drinkers everywhere. Please sip and swim responsibly!

American Harvest Organic Vodka® is proudly handcrafted in small batches from organic American wheat, certified organic ingredients and Snake River water.
For more information, please visit:
www.facebook.com/americanharvestvodka

Amazon Prime Now – Disruptive Same Day Delivery Arrives In Indy

Various Blog Post Banners 2015

I have to admit, when I first read about the same day delivery service I was a bit skeptical.   How would it work?  Why would I really want it?  Could anyone really do it at scale on a sustained basis?

Experience:

Well, early this morning I was reading the news on my iPhone and received a message from Amazon that all Prime members now had access to same day delivery (1-2 hours from order) through its new service called Prime Now.   #PRIMENOW   It piqued my interest.  Is this real?  Can they really pull it off?  So I downloaded the Amazon Prime Now app and started browsing.  I was amazed at the breadth of offerings from grocery to sports to electronics and more.  I’ve been in the market for a luggage rack for my truck and found exactly the type I wanted. I knew we were out of eggs and browsing the groceries made me think about breakfast so I added some free range organic eggs and all natural sausages.  Click click click and my order was in process.

They gave me a delivery window of 8-10am (my order was placed around 5:45am).  I received my order exactly as expected at 9am and was able to make breakfast before the rest of my day unfolded.  The driver told me I was among the first 10 orders in Indy.  This was a profoundly positive experience.

IMG_6058

Amazon Prime Now is currently available in Atlanta, Baltimore, Chicago, Dallas, Indianapolis, Manhattan and Miami. The service will continue rolling out to additional cities in 2015

What does this mean?

It is a game changer.  Not immediately, but with a sustained effort, I believe this could drastically change how consumers (and businesses) think about behave with their purchasing.   Home delivery is great and has been around for a long time (think the milkman of old, bottle water delivery etc).  We get deliveries from Amazon and tons of other companies all the time.  Some of these are next day or 2nd day which is super convenient.   We get a weekly grocery delivery of organic and locally grown produce from Green Bean Delivery which is FANTASTIC!  We have to plan our order by Monday at noon and receive our delivery of groceries on Wednesday of each week.

All that said, the idea that one can simply run out of something or decide one “needs” (wants) something, almost anything, and make it so two hours later is different.  This is what 90% of running errands ends up being.  Going to the store for this and that and picking up a few things in between larger shopping trips happens to all of us (or our families) every day. What if we could cut most of that out?  What if you need something you simply think it (a couple of swipes is not much work) and it arrives in about the same time it would take you to go out and shop, pick your items, load your car, drive home, unload your car. This requires a different kind of thinking around what is possible, but I don’t think its a that big of a leap for most of us.

Implications:

For Consumers

  • Time – For no extra cost (driver tip cancels out gas you would have used perhaps), it frees up time.  How much time in a week do we spend running to the store, shopping and returning? 4 hours? 8 hours? More?  What more productive things or fun things can one do with that time.  It is big.
  • Convenience – No need to plan very far ahead, need something, make it appear with no effort.  Wow.

For Small Business

  • Time – Same as above, many small businesses buy things by shopping.  Eliminate that need and do you eliminate a need for headcount manning the store while someone is out buying supplies?
  • Service – out of something? – now you can replenish immediately and provide your customers whatever you were missing in a short time.
  • Investment savings – reduce safety stock/inventory on certain items and replenish each day as needed.  For many small businesses (and large) space to store inventory is a real issue.  What if you could simply replenish as needed?  Though this service is focused on consumers, for many small businesses, it could be a better alternative to traditional distribution or running to Costco or Sam’s Club for stuff.  I’d expect Amazon to build out this aspect over time.

For Retailers & Distributors

  • Increased retail competition – just when you thought it could not get worse for retailers, it is getting worse.  Things that one swings in to just grab could be diverted to this.  Think of convenience, pharmacies (e.g. Walgreens and CVS), grocery (Walmart, Kroger, Safeway, Publix), electronics (Best Buy, Costco, Walmart, Target), sports equipment (e.g. Dick’s, Sports Authority).
  • Increased distributor competition – the businesses that source from traditional distributors could shift some of their purchases to this kind of model.  It will create the need for distributors to up their service level to stay competitive which can also drive up their costs.

Overall, I think I just experienced the future today.  I’d love to hear your thoughts.

 

 

 

 

Evolving Drinks Brands

Evolving Drinks Brands banner

I recently read and shared an article in Forbes by Patrick Hanlon called, “Why Brands Must Evolve” that is so spot on that it has led to a number of interesting conversations in the past week with some of my clients and partners who own brands in beer, wine and spirits. As one who spends a lot of time thinking about new brands, as well as igniting established brands in new ways, Patrick’s thoughts really resonated with me. I don’t think there is a better industry than beverage to illustrate his points about what is going on with brands. Brand proliferation is happening across the board making “breaking through the clutter” ever more difficult. At the same time, the reason this is happening if fundamentally that there is demand for new brands. As I wrote in “RE: Is Craft Beer In A Bubble”, there is a big and growing market for new brands in beer, but also in wine and spirits. Not everyone will succeed and in fact many new brands will fail. To the big brand manager, the fundamental challenge has also never been so big – how do you keep a loyal following when your following gets gigantic. I think about an Iconic brand like Patron Tequila. I was a distributor for Patron as it passed between different sales companies and was a very difficult sell. Five years from the time it launched, Patron was doing about 55,000 cases. Now that is a nice little brand, but nothing would have screamed, “This brand is on fire!” Then, it did catch on fire and became the very symbol of luxury. Check out Patron case sales for the first 10 years:

Patron sales first 10 years

Patron is an amazing brand and continues to outsell all of the other super premium tequilas (and frankly all other spirits brands at $40/750ml bottle and higher). They have a huge and loyal following. However, as brand manager for Patron today, the things one has to do to market the brand are quite different than in the early years. How does one keep the “cool” factor going when you are the largest brand in your category. There are dozens of new entrants who are going after their market and have the advantage of being smaller (think Avion, Casamigos, Don Julio) and bringing a new “cool” factor to the market. Clearly there are many that succeed at this but being true to your brand and your audience while changing things up can be quite difficult. Absolut Vodka was THE luxury brand of the late 1980s and early 1990s. It was the “it” brand among the “it” crowd.

Andy Warhol Absolut IMG_6541

Pernod Ricard paid over $8 billion to acquire the brand a few years back. How does Pernod now manage a giant brand that was formerly the top luxury vodka in a market with such massive proliferation of brands that the high-end vodka category has experienced. I’m told there are 800 vodkas in the Beverage Media New York book. Pernod recently announced a new bottle. Absolut is one of those brands that defined itself by its bottle.   Changing the bottle is a big move even in subtle ways. Adding the big A is a pretty big move. Large companies don’t usually make big moves, but staying relevant in a crowded market sometimes requires big moves.    Pepsico made an even bigger move a few years back with their Gatorade brand. I thought at the time, it was fairly risky, but it appears to have paid off (does anyone know details?).

gatorade new gatorade old label

Patrick’s article certainly cites a number of great examples of big brands that have managed to evolve over time and keep or even build on their past successes. “…the challenge for brands has evolved from creating awareness to creating meaning.” How do you keep creating meaning at scale like Nike, Apple and Disney have successfully done.  They each connect to their consumers and continually create meaning.

The wine market has evolved so dramatically, that I have to look up many of the brands on the grocery shelf today and I have been involved in selling $100s of millions of wine over the years. Why? New brand proliferation to attract the millennial consumers.

barefoot wine logo Meiomi wine

Take a look at the top 10 domestic “Hot Brands” put out by Marvin Shanken’s Impact Databank:

  1. Barefoot
  2. Black Box
  3. Bota Box
  4. Liberty Creek
  5. Boggle
  6. Apothic
  7. 14 hands
  8. Barefoot Refresh
  9. Gnarly Head
  10. Meiomi

Four of these are Gallo Brands, but none say Gallo. All have interesting, contemporary labels. To succeed in this hyper-competitive market, every brand must have a number of things. Great branding is vital, without it your brand is lost and has no chance. Great liquid that fits the taste of your target market is key, without it they won’t buy a second time. Distribution is essential, a brand cannot become relevant if consumers can’t find it. But how does a brand build a real following of consumers who care? That is, how do we create meaning? That is the question every new brand team needs to answer.

 

To quote Patrick again: “We want the added value of believing in something. The added value of belonging to something: being a part of something that hard-wires us to a larger community of “people like me””

 

Seth Godin in his fantastic book “Tribes” articulates this concept well.

“Seth Godin argues the Internet has ended mass marketing and revived a human social unit from the distant past: tribes. Founded on shared ideas and values, tribes give ordinary people the power to lead and make big change. He urges us to do so.” Brands have to figure out how to reach their tribes and how to engage with them. Notice, I did not say create their tribes. This is an important distinction. I believe tribes are discovered not created. Brands who overtly try to create one typically struggle. If a following is not organic, today’s savvy consumers sense it.   I think brands can make themselves relevant and worthy of a following and then as that following begins to show signs of life can play a role in fostering and accelerating it.

 

I’d love to hear your stories of brands you think are doing this right.

 

Cheers,

 

Smoke

 

RE: Is There A Craft Beer Bubble?

Craft Beer Bubble? May 2015

Fortune Magazine published a story by Chris Morris  May 14th that is getting a bit of attention, posing the thoughtful question: Is craft beer in a bubble?. The New York Times  published Craft Beer Is Booming, but Brewers See Crossroads asking the same question on February 4th.  I am now getting this question quite frequently from my friends both inside and outside the industry.  I’m in Chicago at the National Restaurant Association Show #NRASHOW and this was a hot topic last night over cocktails. 

It is particularly relevant given the amount of new outside money (many of my YPO and friends from other industries are investing in local breweries and increasingly distilleries.)  I read the statistic that there is a new brewery opening on average every day in the US this year.  In Fortune, they increase this by end of year to every 12 hours.   This statistic is a bit alarming on face value, but let us dig a little deeper.  To answer the question, one must answer two others:

1. Market Growth: Where is the market going – meaning is the growth in craft share going to continue and to what level?

2. New Capacity: Given the market assumptions from #1, can the size of the market absorb the growth in total capacity?

Market Growth:  First, a little perspective:  In craft beer boom 1.0 (circa mid 1990s), Chris Miller correctly points out there was a slow down in late 1997 and then flat to low growth for more than a decade before the current much larger boom.  My company at the time was actively investing in and building multiple craft beer brands both on the distribution front in Chicago (Goose Island, Sierra Nevada, Pete’s, Bells) as well as regionally/nationally (Goose Island, Rogue).   Fortunately, we also had a healthy import business (Grolsch, Staropramen, Tennant’s) that continued to boom during the slowdown.  At the start of the current boom, we helped Flat12 start-up in Indianapolis and acquired Napa Smith Brewery in 2009 (sold in late 2012).   There is very little comparison this time around from the 1990s.  The degree of craft beer penetration into the beer market is fundamentally different.   It is much deeper and wider, and is touching every market in some way.  That said, the current level of craft sales as a percentage of the beer market is still quite small nationally (11% of volume according to the Brewers Association) vs in select highly developed craft beer markets (Portland, Seattle, San Francisco, Denver).  That number has roughly doubled in the past 5 years.   I predict craft beer sales will double again and exceed 22% of the US beer market by 2020.  This mean approximately 22 million barrels of new craft sales on top of the existing 22 million.

(NOTE: one aside/caveat: craft beer is narrowly defined as independent brewers excluding cross ownership by larger companies in the alcohol industry.  This is more political than it is any reality with consumers.  Therefore the current share is actually a bit larger than 11%, adding in brands from companies like Goose Island and Craft Brewers Alliance (ABI).  My 22% number includes craft taken over by larger brewers).

New Capacity: This is where the “new brewery every 12 hours” statistic is not the most relevant one.   The important question is how much new capacity is actually being added to existing breweries combined with new breweries?  95% of the new breweries (and existing breweries) are more like restaurant businesses with a touch of manufacturing, than they are breweries.   They will never sell any meaningful volume outside their four walls of the tasting room.  There is nothing wrong with a local brewpub being a go-to stop for local people and there is clearly a market for this form of on-premise account.  The real question is how much capacity are the production breweries adding and how many of the start-ups actually believe they are going to sell beer outside their four walls.  This is where the true competitive dynamic in the marketplace will come into play.  Most new breweries that intend to go to market through distribution and retail will fail.  This is not because they have bad beer (some might but will die quickly) but rather they cannot make their brand relevant to the consumer in such a crowded field.  This lack of differentiation and branding will prevent them from having any meaningful distribution and retail penetration.

The lack of experience in running a full service brewery with a restaurant, attached to a major manufacturing operation, attached to a distribution business, attached to a consumer marketing company will be the downfall of many.   Here at the NRA, the 1000’s of operators can attest to the competitive nature of the restaurant aspect alone.  There are a lot of smart investors in restaurant companies that have leadership teams with deep experience fighting hard for their share of the consumers’ purchasing dollars.  Breweries that want to scale must both run a brew pub that competes with them and figure out how to sell in their beer to a limited number of tap handles available.

 

 

My conclusion as of today: The market can absorb many more breweries and capacity than exists today.  The ones that remain focused on serving their local clientele will have the best chance of success.  The ones that enter the fray of production and distribution will enter one of the most competitive and tough businesses that exist.   Those that do not bring an experienced team, significant capital, creative and compelling branding and distribution to the table will fail.  There is a bubble of inexperienced entrepreneurs combined with inexperienced investors who are entering the market.  I look forward to the shake-out and the opportunities it will create for those prepared. In the meantime, I love capitalism at work and entrepreneurial spirit the craft beer market is demonstrating for all to see.

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