Spirited Conversation

Straight Talk. Served Neat.

History in a Glass: A Spirited Conversation with AJ Hochhalter, Producer of Neat: The Story of Bourbon

There really is no other spirit quite like bourbon. The richness and structure it has forged over years in specially crafted barrels nestled snugly in grand rickhouses, yields a drinking experience so unique it’s hard to put into words. One film documentarian sought to capture that experience and bring it to the masses. AJ Hochhalter, a native of Kentucky, musician, and now, aspiring film maker, along with his friend David M. Altrogge, released Neat: The Story of Bourbon. This movie is a passion project for AJ, someone who went from knowing a little about the brown liquid that his home state is so famous for, into a deep understanding of the ingredients, patience, and ultimately people behind the crafting of bourbon. AJ talks about his journey, and like many entrepreneurs, the pivots and necessary adjustments made in the process of bringing life to the film’s themes, so that the final product embodies the true story of bourbon – artistry, time, and fellowship.

Legacy and Creativity: A Spirited Conversation with Few Spirits Founder and Master Distiller, Paul Hletko

When you think about legacy in the American whiskey business, many names come to mind harkening back to generations of families that passed down techniques and trade secrets so that the name, brand, and product remained intact and of the highest quality decade after decade.

Imagine, however, if your legacy was tied to a different storyline. What if your family had a brewery that was seized by a dictator and on top of that, your family imprisoned? And if this history wasn’t bad enough – imagine if only one person survived the imprisonment and spent a lifetime struggling to get back what was taken?

Hopefully none of us would have to contemplate such a family history, but this is exactly the background that Paul Hletko, Founder and Master Distiller of Few Spirits, has experienced. Paul’s grandfather was the sole survivor of his family’s death at the hands of the Nazi’s in a concentration camp in Poland. A once successful brewery was stolen from them as well as their lives. Paul’s grandfather paid a dear price and never succeeded in getting the family brewery back and operational before his death.

Paul had motivation. He learned his trade through crafting beer for over twenty years, exploring his creativity through various jobs including a stint as a musician. He was more than ready to pick up the mantle and do his grandfather and his family legacy proud in the development of the Few Spirits brand.

And if the process of establishing a distillery wasn’t hard enough, Paul decided to do it in his home of Evanston, Illinois, the birthplace of Prohibition led by suffragist Frances Willard, head of the Women's Christian Temperance Union.  

Paul found a way to respect both his family and the town’s rich history in his approach to business. By paying respect to the process, and allowing creativity to infuse how his team innovates on products, and accelerates the growth of the Few Spirits brand, it’s no wonder why in just a few short years, Paul has expanded Few Spirits to be one of the top producing distilleries in the U.S.

Enjoy the conversation!

The Journey to Excellence: A Spirited Conversation with Dennis Carr, President and CEO, Anchor Distilling Company

The burgeoning spirit business has seen a host of small and large labels eagerly seeking new ways to reach consumers. The Anchor Distilling Company has secured a unique place in the category by offering a broad collection in a variety of spirit categories (and you thought they just had great beer!), with an emphasis on consumer education. The more people know, the better they can assess their choices. I was very excited to get a chance to speak with Anchor Distilling Company President and CEO Dennis Carr to learn more about his thoughts on the vision and direction for the market.

Q: How did you get your start?

A: I grew up in the Northern California wine country. After I got my degree in business I started looking for a job. Gallo Wines had a sales training program so I joined them. The experience gave me a deeper appreciation for wine and was the foundation for why I value the education piece of this business so strongly. Eventually, I expanded from wine to beer and then spirits.

Q: Why did you join the Anchor Distilling Company?

A: In 2011, craft spirits were starting to move but were not yet well understood. I was seeing it develop and I felt it was a good trend. I have seen my share of trends in the beverage industry and, often, it’s a generational thing. Typically, it doesn’t happen with mass produced brands. Take craft beer – the focus is on smaller production brands and the business model continues to be incredibly successful. I saw the same opportunity with spirits and wanted to get involved.  Anchor already had a rich history with a strong brand, and they wanted to create a platform that would sit somewhere between the small producer and large producer; serving the market in a way nobody else was doing. That was very exciting and a key factor in my decision.

Q: What challenges did you face in building the platform?

A: Many small and/or independents don’t have the resources to build a national brand. They move slowly...one state at a time. On the other side of the spectrum, huge suppliers often can’t or won't focus on small brands. We occupy the space in between to build the platform to meet that need showcasing small/niche markets from all over the world.

The first major challenge was that nobody (wholesalers and retailers) knew what to make of the emerging craft spirits category. We decided to come up with a one-stop shopping concept and go to wholesalers and explain to them how they could manage both inventory and operations effectively.  Building the portfolio was one thing but, to get traction, we had to bring in experts to work with sales teams, re-think traditional distribution channels, and educate the producers themselves to create a price program and build a brand within an existing infrastructure about a category they were not necessarily comfortable with.    

We got the support and attention of larger wholesalers early on and have helped them develop their craft spirits divisions. There wasn’t much money in the beginning; nice margins but not enough volume to put lots of resources against.   The education piece came up again in a big way and eventually the model made more sense to people and is now the default go-to-market strategy.

Q: Education continues to be a theme – why is it so critical for spirits?
 
Alcohol and beverages go back centuries and come from cultures all over the world. With whisky there is a lot of narrative that you can share with others.  Drinking is about learning stories of communities, cultures, and how families have made their product for years. Consumers want to know what goes into the bottle not just the alcohol but who made it, where, why, etc.. They want to connect the passion to the product and marry that with quality.

Education is an important aspect of our industry, and we need to learn more about other people in the industry who want to protect this business and have something to give. The keys are responsibility and authenticity.   Bartenders too – they take it seriously and they are all about education and teaching people about the spirits that make them passionate. Today it’s OK to ask your bartender questions and get to know brands and tastes. I can walk into any bar and ask about spirits in a much more relaxed way; but it is every bit the same kind of education as we associate with wine. You merge the environment with the ease of learning, you feel comfortable and you can explore much more and be much more excited about the cocktail or spirit you’re consuming. 

Q: Do you think the increase of small US craft distillers and the expansion of world whiskies is related?

A: Absolutely they are related. The common thread is that the consumers are looking for better quality and more information. Twenty years ago Anchor focused on that thinking – first with Old Potrero and with Juniper gin. It was not about mass appeal; it was about quality. And that attitude is what has driven and continues to drive the industry.

It’s a matter of people wanting the best whisky they can find. It doesn’t need to be from Kentucky where you get the best quality; you can get it from many other parts of the world. For example, we introduced Nikka from Japan.  That product, along with the information and education we put behind it, drove consumer interest in Japanese whiskies and opened our eyes to the capacity for quality outside of Scotland or the US. Another perfect example of this is Kavalan from Taiwan.

Taiwan is not Scotland – it’s the complete opposite: hot, humid and pretty terrible conditions for making whisky. But they figured it out.  Start with a great distillate that is ready to accept the wood and, once barreled, store it properly, extract the flavor more quickly and you have a flavorful single malt in 3-4 years; not 20.   

Q: Kavalan is an example of a non-age statement whisky. Many producers are addressing demand with non-age statement releases. Do you feel this is necessary or is it a marketing gimmick that could harm consumer understanding and receptivity to the spirit market?

A. We present a single malt scotch called The Glenrothes. It was ahead of its time with the non-age statement process. The producers felt a whisky matures in barrels differently and that bottling should occur at the optimum time for the whisky to be good not because it reached a specific year stamp like 12 or 15 years. So they took age statements off and use vintage dates instead.  

People are learning that an age statement is just that – a statement– versus a number. It has more to do with whisky itself and how long it should be aged. For instance, you can’t age Kavalan for 12 years because the climate would ruin the whisky. There is no 12-year-old Taiwanese whisky because they have to get it out of barrel quickly before the whisky passes its peak. Producers understand the practicality that removing the age statement provides flexibility and the option to blend different years.

The industry, in general, will go in this direction for two reasons: the rarity of aged whiskies and the desire to focus on quality and not get trapped by marketing.  Defining the age of whiskies is the real marketing. Consumers have been taught to look at age alone to determine quality; the myth is that the older the whisky, the more expensive product. But it's not always better. You might find a 15-year-old whisky is not as good as a 12 and that could be due to the whisky staying in the barrel too long because marketing wanted to have a 15-year age stamp on the bottle.   

Q: Knowing the current and forecasted supply and demand issues with the whisky market, would you be more prone to starting a distillery or a tech company?

A: The discovery period around whisky has not completed its journey. One thing driving innovation and creativity in this category is that it has challenged people to be more imaginative across the board - wine barrel finishes, wine barrels aging in different climates, etc. The key is not to sacrifice quality because consumers won’t allow or accept any compromise.  They are good at researching and communicating. You share the story of a great experience you had and the brand gets known and built. But, if you have a bad experience, you will share that experience and steer your friends away from the brand because of your quality expectations.

Quality is what governs the category. It challenges us to adapt and find ways to make great whisky. It keeps us real and very grounded. That being said, I know many small producers are popping up, and similar to start-up tech companies, they want to get to a point and position themselves for a big exit from a larger producer. I’m not sure that’s the best strategy and I imagine many tech companies don’t operate that way. Bottom line either industry requires a ton of work, focus and passion.  But if I had to choose, and I’m biased, I’d place my bet on spirits.

Q: What other changes are you anticipating in the category?

A:  We will see an influx of new brands and more localization. We are, in many ways, already there with the craft movement. The idea that my local town whisky is my favorite, versus another country's product, is increasing. When we see such excitement about a category the product sensitivity rises. If producers try to cut corners and impact quality, the consumer will be turned off. Many players will try to get in quickly during this period but, ultimately, the consumer will shake things out and many new labels won’t last. Besides that, too many choices could lead to consumer fatigue.  If that happens, people will just go back to the brand they like. Even with new experimental products, the consumer will qualify which ones deliver the best value expectations for what they are willing to spend.

Q: Final question – if you could have a drink with anyone who would it be and why?

A: I would love to have a drink with George Washington. He was one of our country’s original whisky producers. I would like to know why he felt whisky was so important. I also want to know what was happening in his time that included the whisky. Did he, like many of us do today, enjoy a whisky at end of day? Has it really changed that much since his time or is it still the same basic enjoyment?

***

Anchor continues to grow its portfolio and influence in the spirits category.  Education doesn't apply solely to the end-user; they continue to learn more about consumer choices and connect that to product improvements, and business requirements.  You don't get this kind of knowledge sitting behind a desk.  The Anchor team is out there speaking to the people, learning from competitors and implementing common sense.  It's what makes their curated portfolio stand out in the field.  The pioneering spirit of Fritz Maytag is deeply woven through Anchor Distilling Company. There is no doubt, with Dennis at the helm, Anchor will continue that spirit in defining new categories and markets.

2016 WhiskyFest San Francisco

WhiskyFest is coming to town September 23 and the team at Spirited Conversation could not be more excited!  Spirited Conversation was founded because we saw the parallels between building a great company and the crafting of fine spirits.  

WhiskyFest is the longest-running and best-attended whisky festival in the U.S. It is unique, offering the finest whiskies from all over the world, poured by the people — the very living legends — who make them. It was created by Whisky Advocate (WA) magazine, the country’s leading whisky publication.

We contacted WA to find out how WF came to be. Amy Westlake, Sr, Vice President of Advertising and Events at WA was kind enough to give us the back story.

WhiskyFest was the brainstorm of Amy’s husband, John Hansel. This is how it emerged. He woke up one day back in 1998 and said he dreamt that he was in a grand ballroom; when he asked for a whisky, the manager handed it to him and told him how it was made. And it was then that he decided to create WhiskyFest.

Nobody had ever done an event like this before with the focus on the creators of the spirits. Meet the Makers became the theme and in addition to the tasting, they offered seminar times for distillery managers and master blenders. This was before the idea of “brand ambassadors.”

John and Amy met with the Marriott Marquis in Times Square, rented a ballroom and pitched their idea to the whisky companies. Some embraced the idea immediately while others wanted to know who else had signed up. In the end, they had about forty different companies pouring whiskies from Scotland, Ireland, Canada and the United States. They sold out of tickets a month before the event. 

And since then the journey has seen more venues, more producers, and more sold out venues. The 2016 San Francisco event is no different so grab your tasting glasses and enjoy!

Check out the San Francisco WhiskyFest venue

Breaking Tradition in the Whiskey Industry: A Spirited Conversation with Tom Lix, CEO of Cleveland Whiskey

As we all know, whiskey has a very rich tradition steeped in history and most notably the manner in which its made. For instance, bourbon has always been aged in oak barrels. It has been done like this for 1,000 years. The very thought of doing something different in the aging process would render any traditionalist faint of heart. But imagine what it would be like to craft a bourbon with the flavors of other woods? No one wood can store liquid like oak, so how would you do it? 

Enter Tom Lix, CEO of Cleveland Whiskey. Tom is an entrepreneur but also a self-proclaimed experimenter. Since he was a kid his curiosity knew no bounds – for example – he almost blew up his family home mixing substances from a chemistry set. Several years later he became the apprentice to a Petty Officer in the Navy to distil spirits in a decommissioned destroyer.  

Now he has set his curiosity on addressing the bourbon shortage but figuring out how to bring bourbon to market faster and with different wood flavor notes thanks to a top secret distilling process he has come up with. 

Using the WeFunder platform for equity crowdsourcing, he has already raised millions and raised the disdain of many in the bourbon trade for his practices. But Tom is quick to point out that he is a technology company, not a craft distiller, and he wants to disrupt the way in which we think about how bourbon is made with sacrificing quality (or tradition). 

Check out my podcast with Tom to learn more about his journey towards turning the bourbon market upside down.



 

Fans Unite!: A Spirited Conversation with Paul Scanlan and Jeff Annison, Founders of Legion M

My Spirited Conversation with Paul Scanlan and Jeff Annsion, founders of Legion M, was an experience I'll long treasure. I remember everything that led up to that meeting, which occurred during the 2016 inaugural Silicon Valley Comicon or SVCC.  

I'm proud to admit that I am a huge comic geek, especially the Marvel Universe. I couldn’t wait to experience the convention. As if attending such a convention wasn’t cool enough, I was also afforded the chance to tick off one of my bucket list items - getting Marvel creator Stan Lee to sign my Marvel Universe encyclopedia.   

SVCC certainly did not disappoint, especially the many information sessions scattered throughout the convention center. One session caught my attention-- Legion M, Disrupting The Studio System: Crowdsourcing w/Equity Makes its Debut. Curious, I popped my head in and found a panel that consisted of not just Paul and Jeff, but also their partners from Meltdown Comics, Stoopid Buddy Stoodios and 42 Entertainment

As I listened to Paul and Jeff explain the concept of Legion M, pushing the notion of a fan-owned crowdsourced approach to entertainment, partnering with multiple creative studios, and the potential for unique projects to come to market, I was blown away.  The light bulb went on instantly.   My Chief Communication Officer, Roxanne, who was with me at SVCC, was so psyched she stood up at one point and applauded. The Legion M business model was at the heart of, not only disruption but opened a window into a changing world that is just emerging; thanks to the passage of the JOBS Act.

After the panel ended, I made a beeline to their booth to learn more. As Paul and Jeff outlined additional details about what had spurred the idea, I quickly understood that these were two powerhouses of innovation. Paul’s background in sales and marketing and Jeff’s background as an engineer coalescing into the partnership with digital content delivery business MobiTV; it was clear that anything these guys touched was going to be successful. 

I was impressed at the kindness, warmth and genuine passion they had, and the willingness to explain their story to anyone and everyone that wanted to hear it. For them, the decision to go-live at SVCC was a smart move and exemplified the power, connections, and capabilities they had access to and the genre of narratives they could bring to market.

Fast forward to a few months later, their WeFunder campaign, the most successful Title III offering in history with over one thousand investors and over $500K in investments, grows day-by-day, and is supported by tons of press.  Their explosive momentum from the comic convention circuit to a full blown operating business model made me even more anxious to give the world insight into who they are and how they tick.

My spirit choice had to be special and, as luck would have it, there is a wildly successful equity crowdfunded spirit called Cleveland Whiskey (also on WeFunder). The CEO, Tom Lix, has created massive innovation in the production of bourbon, with a proprietary process that uses special aging and unusual woods to craft a quality product incredibly fast. I chose the Underground series bourbon finished with black cherry wood.  The resulting taste was amazing considering the timeframe. No surprise this funding campaign was a huge success and continues to expand its markets.

Thanks again to Paul and Jeff for being so generous with their time just before leaving in the Legion M company car (a 1959 Cadillac named Marilyn) for the San Diego Comicon.  Their goal is to be the most influential entertainment company in the industry.  A goal that will likely be met and exceeded.  For me, their candid words of wisdom, and the laughs, are a part of a conversation I won’t soon forget.

Paul and Jeff's journey is a great use case for anyone interesting in learning about startup fundamentals. Below are a few nuggets from the conversation:  

  • MobiTV was not a rocket ship by any means, with its start in 1999 to its launch in 2004. Jeff spoke of the lean days such as eating PBJ sandwiches at the office while they worked through the night.
     
  • Jeff and Paul had to hustle on a regular basis. For them, the essence of entrepreneurship is to get to the next proof point with the least amount of money, reach it, then double down to the next proof point.
  • In terms of go live, they explained how there is a magical moment when the rubber meets the road and you have your first customer – the actual proof that you have a product people want.
     
  • MobiTV grew very quickly and required management of scale while maintaining company culture.   As Paul put it, you would be surprised how much 20 people can lift if they are lifting together versus 100 who aren’t aligned.
  • When creating a disruptive model you have to be ready to build everything.  Legion M, like MobiTV had several hurdles to jump when defining a category – i.e. people think it can’t be done or you are crazy, but you keep bringing in more pieces until you have a full picture.