December 7, 2023 • 35 mins
In this episode of the Drinks.com Podcast, host Brandon Amoroso chats with Brian Rosen, Chairman of Growth Beverage, whose rich background as a scion of Chicago's first post-Prohibition liquor license holders sets the stage for an enlightening discussion. Discover the keys to success in this competitive landscape, from sustainable business models to the role of e-commerce. Plus, learn Brian's investment criteria, emphasizing financial acumen and receptive leadership.
Through this conversation you will gain valuable insights into evaluating potential investments in the beverage alcohol industry, where financial acumen and strong leadership qualities intersect with the ever-evolving landscape of consumer preferences and market dynamics.
Topic timestamps
🎙️ Introduction and Brian Rosen's Background (00:00:00)
🚀 Founding Bev Strat and Role in Brand Sales (00:02:10)
🌱 Introduction to Growth Beverage Ecosystem (00:03:12)
🚫 No and Low Alcohol Alternatives (00:05:38)
❌ Challenges in Seltzer Market (00:07:56)
🌿 Sustainable Business Models (00:08:24)
👥 Building Direct Customer Relationships (00:10:01)
🔍 Regtech and Compliance (00:14:27)
🌟 Strategies for New Brands (00:15:32)
🌎 Expanding Distribution (00:16:07)
🌑 Challenges in the Gray Area of Alcohol (00:17:08)
💼 Capitalization for New Brands (00:18:04)
💡 What Investors Look for in Beverage Alcohol Businesses (00:25:55)
👔 The Importance of a Good and Active Leadership Team (00:26:45)
📊 Key Metrics Investors Want to Know (00:27:02)
🛠️ The Role of Expertise and Resources in Investment (00:29:25)
🍻 Favorite Alcohol Memory (00:30:22)
🎤 Wrapping up the Interview (00:33:04)
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Hey everyone, thank you for listening to the
drinkscom podcast, the businessof online alcohol.
I'm your host, Brandon Amoroso,and today I'm talking with
Brian Rosen, the chairman ofGrowth Beverage and also the
founder of Bev Street and AlgomaCapital.
(00:23):
I hope I got all three of thosecorrect, but thank you for
coming on the show.
Speaker 2 (00:28):
You got it.
Thank you for joining me.
This is any chance we havereally to speak to suppliers or
founders about the industry.
I'm happy to participate.
Speaker 1 (00:39):
So before we dive into some of the topics we want
to cover today, can you giveeverybody just a quick
background on you and all theareas ventures you have going on
?
Speaker 2 (00:47):
100%.
So I take a lot of pride inthis first sentence.
My family, I should say, wasthe first liquor license ever
handed out in Chicago afterprohibition.
So we've been in business since1933.
That one liquor license, thatone singular license, turned
into the largest grocery andwine and spirit retailer in
(01:09):
America.
So if you're on the West Coastyou think Bev Moe, you're on the
East Coast, you think Total.
If you're in Florida, like youare, you think Big Daddy or ABC.
We were bigger than the mall inthe day.
We were the first big box store.
We were the first store to putwine, cheese, glassware, cigars,
reading material all under oneroof.
(01:33):
That grew to be roughly $100million enterprise and I sold
that company in early 2000.
I went on from there to becauseit seems like that's a natural
progression.
I went on from there toPricewaterhouseCoopers, from
entrepreneur to corporate wonk,and ended up running the adult
beverage division for PWC,covering North America, canada
(01:54):
and Mexico.
After I realized I don't liketo wear a tie or a sport coat
for that matter I went back tomy entrepreneurship ways and
founded a company called BevStrat, and Bev Strat became the
largest single salesorganization for independent
brands.
We all know, if you'relistening to the podcast, you
likely know that distributorsaren't going to build your brand
.
So we put full time salespeople on the ground in various
(02:17):
markets around the country tohelp sell goods.
I grew that business and soldthat business to MHW in 2019.
At the same time, I founded BevStrat.
I founded a company calledInvestBev which now, after our
last raise, is the largestprivate equity firm solely
focused on the adult beverageindustry only booze.
(02:38):
We're at about $250 millionunder management.
We've got that's InvestBev.
Agoma Capital, which youreferenced.
Agoma Cap, which is a $100million debt facility for
distillers.
Bev Strat I bought back at theend of my employment term.
We still have that to help ourbrand sell.
And then, of course, sproutBeverage, which is our incubator
(03:01):
and accelerator, which willgraduate its 20th brand in
November and the winner gets$100,000 and gets welcomed into
our growth beverage family.
So those four companies make upkind of what I do every day.
Speaker 1 (03:16):
And it seems like they're all sort of not
integrated but connected in someway.
Speaker 2 (03:21):
They're connected in every way.
There is no.
I know I speak in a lot ofabsolutes the biggest, there's
no other.
I understand that, but this isall fat checkable.
There is no other place for abrand to come into a system and
get capital, debt, sales andmarketing, acceleration and
(03:42):
incubation, m&a activity andexit ability under one roof.
It just does not exist, and sowe've created that in what we
call the growth beverageecosystem, and brands are
welcome to come in at any stage.
You don't have to come in fromthe beginning.
You can come.
You can be a growth stage brand, you can be a seed brand, you
can be a mature brand.
(04:03):
We welcome all people, and soit is what we call cradle to
grave.
Speaker 1 (04:10):
You're right, and are you primarily investing in
brands themselves or are youlooking at technology enablement
solutions and other categories?
Within the beverage alcoholspace, there's a primarily brand
building.
Speaker 2 (04:26):
No well, it's brand.
Of the 100% of our funds, 30%is in brands and what I would
call support services, whatyou're calling technology.
So reserve bar, we're an ownerof reservebarcom, we're an owner
of speakeasycom, we're an ownerof Philo, which is a compliant
software.
We are, we're all about thesupport services too.
(04:50):
We love to say the things thatmake the things right.
So it's low risk, lower risk, Ishould say, and higher reward
and kind of less fluctuationthan investing in a brand all
the time.
Speaker 1 (05:05):
It's like providing the plumbing for everybody else.
It's not exactly as glamorousor as sexy, but it is a great
place to be.
How to?
Speaker 2 (05:13):
make the shoe laces.
That's not sexy.
Speaker 1 (05:19):
Well outside of when it comes to like the brand side
of things and what you'reinvesting in there.
What are you most excited aboutthis year going into next year?
I've been seeing, at least fromsome of the other guests we
have come on, whether it'sdifferent ways of packaging.
There's low-alk, no-alkalternatives.
What are some of the trends andthings that you're most
(05:39):
interested in how to get intonext year?
Speaker 2 (05:42):
Yeah, all of that.
But it's funny when people talkabout no and low or drink
replacement or all that kind ofjazz, they're talking about the
brand in and of themselves, butthey're not talking about the
real usability of it all.
If the no and low-alk categoryis 100% up year over year which
(06:02):
it is that could simply meanthat if you sold 50 units last
year and you sold 100 units thisyear, you're 100% up.
But it doesn't speak to thebigger picture it was.
You're still less than 1% ofthe overall consumption universe
.
That's just a fact.
Now, when you think of no andlow, I love the trend and it is
(06:22):
a trend, and it is people thatare younger than me, much
younger than me, are doingone-on, one-off right.
So one drink of vodka, onedrink of replacement, et cetera.
One drink full alcohol, onedrink low, proof to extend the
night, to extend thesessionability of their activity
.
I get all that, but the realityis an on-premise account isn't
(06:44):
going to have two of everythingone version of alcohol, one
version of non-alcohol.
It's not realistic.
And how do you say to yourbartender screaming at a club
thank you for the Red Bull andvodka.
Now, of a Red Bull and fakevodka?
It doesn't work from apractical standpoint.
So it does work, however, inthe on-premise restaurant
(07:05):
community, because there arepeople that want to be part of
an activity and don't want tospend the time putting booze in
their body.
It does work at the at homeability.
So I like those trends.
I like Rama as a trend, I likeJin as a trend.
Tequila is saturated, vodka isdead.
(07:26):
I mean, there are things cominghere.
Mixology was a thing, rtd was athing, but if you're getting
into the RTD market now, you'relikely two years too late.
If you're getting into theSeltzer market now, you're a
hundred years too late.
But people are right.
I see it all the time.
So if the average guy is justdiscovering the popularity of
(07:48):
white claw, they're at they are.
They've missed the boatentirely and any money spent in
that production will likely goto waste.
Speaker 1 (07:56):
Yeah, there's, I feel like literally a thousand
different Seltzer brands at thispoint.
Speaker 2 (08:01):
Yeah, I was in Miami this past weekend.
One of my buddies launched theVodka Seltzer and smart, smart
guy and great brand entrepreneurand has a lot of successful
brands out there.
But launching a Seltzer now isjust putting a cup of water in
the ocean.
You know, and I don't know howyou find shelf, I don't know how
(08:22):
you find cooler space, I justdon't know.
Because, for instance, in theVodka category, for every dollar
you spend in production you'vegot to spend $5 in marketing and
that's just not sustainable.
And then when you look at newbrands coming to market, it used
to be, hey, we'll raise money,we'll come to market and if we
(08:44):
and we're gonna burn throughcash because we're gonna get our
cases up and then we'll getsold to a constellation or
diaggio or whatever, whatever.
Now, because it's harder andharder to get to fundraise
because of the economy and therecession and interest rates and
all of those things, thesebrands have to operate down
themselves.
They have to operate cash flowon their own accord and that's
(09:05):
not as easy as anymore.
So you're gonna see a bigshakeout in the new brand world.
You know, if you haven't seenit already, you're going to see
it the shelf is gonna shrink.
Speaker 1 (09:14):
Do you think it's going to slow down the new brand
growth and penetration becauseof the restriction in capital?
Speaker 2 (09:21):
It's going to slow down the people that have no
money.
It's going to slow down thepeople that once they get past
their friends and family aroundand they go looking for
professional money like Invespev.
You have to have a sustainablebusiness.
You can be losing money I don't, that's part of the game.
You can be losing money, butyou have to have a path to
profitability.
You have to have a model thatdoesn't say I'm gonna raise,
(09:46):
raise, raise and spend, spend,spend and hopefully I get bought
by another company.
You don't have to have that, soyou have to have a business,
and so I think that willfundamentally change the
landscape of the independentbrand.
Speaker 1 (10:00):
Well, that makes sense when it comes to brands,
and you mentioned on-premise.
When you're helping acceleratesome of these companies out of
Sprout Beverage, are youfocusing more on on-premise?
Are you leveraging e-commerceat all in terms of testing into
new markets, or are you doingboth at the same time?
(10:22):
Where do you see no success?
Speaker 2 (10:26):
Well, I mean, look, speakeasy is a great e-com play.
It's.
They've got warehouses, they'vegot retailers all over the
world all over the country, Ishould say and it's a great
inexpensive way to expand yourbrand without having to
necessarily expand yourfootprint.
E-commerce is great.
(10:46):
When I was at Sam's, the firstcompany I mentioned, we were the
first wine and spirit store tosell wine online, 1996.
So think about it.
Back then it was like dial-up.
It was dial-up, in fact.
If someone asked us for acatalog, we would have to fax
them a catalog.
This is like fax machinesaren't even gone, aren't even
here in New York printedcatalogs.
(11:07):
This is I'm dating myself.
Now it's a better way and Idon't.
I think there's two kinds ofe-commerce plays, to be honest.
I think there is the firste-drizzly play, where, hey, I
need a bottle of vodka and a sixpack of beer right now.
There's that.
And then there's e-commerce forshipping or holiday gifting or
what have you Like winecomreserve bar.
(11:30):
There's a lot of gifting,things like that.
So I think it's a natural partof the three tier system.
I think it's a natural part ofthe distribution model, but it's
a hard thing to figure outbecause anyone who ships, you
run the risk of these gray rulesthat affect interstate shipping
(11:51):
.
The consumer is going to haveto really understand that
shipping can't be waived like itis on Amazon, because this is a
physical, hard, heavy productthat requires packaging and
styrofoam and bubble wrap andall that stuff so it doesn't
break.
So it's never going to be costeffective.
(12:12):
What it is going to be is achance to get rare and allocated
items delivered to your doorand the sooner that that shift
is realized, the less pricebecomes an issue and the more is
the issue really becomes is canI get what I want?
So it will be great for vintageBordeaux, burgundy, high-end
tequila, high-end whiskey, rearwhiskey, things that you can't
(12:33):
get at your retailer, where thecost of shipping is a non-issue.
Speaker 1 (12:38):
Yeah, I think the higher price per unit makes a
lot more sense, and then for thebrand being able to build a
direct relationship with acustomer and offer some of that
like exclusivity A ton ofpreserve.
So I think, speaking, I've seena couple of really cool sort of
programs around rarity and thenthat appeals to a certain brand
(13:01):
.
Speaker 2 (13:01):
Speaking.
You just got the Tesla deal,where they're selling the Tesla
tequila or I think it's tequila,the Tesla brand.
They sell a lot of other rarewhiskies.
That's where it makes a ton ofsense.
It also makes a ton of sensefor if a distillery or a brand
wanted to get rid of old goodsold bean, vintage not old like
(13:24):
expired, but vintage and raregoods that's a great place to
liquidate again excuse the punall of those things instead of
putting them.
You don't have enough goods toput on a store shelf, but you
have enough good.
You have 300 bottles.
It's enough goods to put on aspeak easy and let it deplete.
That way Makes a lot of sense.
Speaker 1 (13:45):
Yeah, and you're not buying $2 box wine online,
unless it's maybe through thatlast mile delivery via.
Speaker 2 (13:53):
Yeah, my dad would say no one needs a bottle of
vodka in 30 minutes.
If you need a bottle of vodkain 30 minutes, there's a bigger
issue here.
It's not a convenience plate inthe e-commerce world of booze.
It really is.
It should be a rare andallocated play and then prices
(14:14):
off the table.
And when prices off the table,shipping cost is off the table.
Discounting is off the tablebecause you have what no one
else has.
The best users of e-commerceand booze are the ones who would
embrace that.
Speaker 1 (14:27):
And you mentioned the gray areas of beverage alcohol,
which it feels like there's anever-ending amount of them, but
over the past three to fiveyears it seems like there's been
a lot of investment in reg techto try and make it easier for
brands to be able to navigateall the various sort of hoops in
each individual state.
(14:48):
What are some of the thingsthat you've seen on that side
when it comes to technology andbeing the plumbing not
necessarily being the actualbrand builder and how is that
helping facilitate growth foryour companies?
It?
Speaker 2 (15:04):
used to be again, having the privilege of living a
lot of life.
I can look backward and say itused to be and it used to be.
We would ship five, six, seventhousand boxes a day and you'd
roll the dice.
You'd say, hey, ups, fedex, letthem catch one, but they're
(15:28):
shipping a million boxes a dayduring holiday.
So my five thousand aren'tgoing to matter and the fine at
$500 is smaller than the profitof $500,000.
So retailers kept shipping.
Now there's a couple differentplayers out there that are doing
(15:52):
things that are interesting.
One is the play, and I forgetthe brand names of these
companies, but the concepts Iknow.
One is where you buy or investin retailers around the country.
They become your beach heads.
So you invest in retailers MikeBerkoff is doing it I forget
(16:12):
the name of the company, butMike Berkoff out of Connecticut
and you invest in the retailersthat are in complying states and
then there's reciprocal statessurrounding them.
So by buying a retailer in Ohio,you can ship to Pennsylvania,
kentucky, indiana.
So that's what he's doing.
You get three states by buyingone and all you have to do is
(16:33):
buy a small, independent, tinystore, close the storefront,
begin shipping out of it andyou've got yourself compliant.
That's one way to do it.
Another way to do it is whatSpeakeas is doing, which is
having warehouses around thecountry San Diego, washington DC
, by way of example.
That's another way to do it.
Another way to do it is whatReserve Bar does, which is
(16:56):
partner with retailers aroundthe country.
You can just sell from theirinventory specifically.
But you have a lot of issuesthere with vintage auto stock et
cetera, because not everyoneruns on the same system.
Ship compliant is a great optionas well.
The net it's all going to be apatchwork of setup until it
becomes federally legal.
(17:17):
And it's funny because you cando a lot of things that are
questionable that are federallylegal, but, heaven forbid, you
want to ship Tito's from Ohio toPennsylvania.
That is a rule breaker in someway.
So I think once the federal,once the feds, get their kind of
(17:39):
the rack together and realizethis is a non-issue issue, it's
a taxation issue.
It's an issue for the statesthat are giving up taxes, they
don't know who to give themmoney to.
So everyone gets very kind ofattached to their brand and it
will be like this for a bituntil someone figures it out.
But everyone right now was justpatchworking together and it's
working.
(17:59):
But it's tough to build a big,big business on a gray, gray
area.
Speaker 1 (18:03):
And how do you see the role of distributor evolving
over the next five to 10 years?
Speaker 2 (18:11):
It's unrelated to shipping.
It's more related to electronicordering, which could be
interesting to your listeners.
The COVID did a lot of thingsBesides put four pounds on my
body, five pounds and my wifewould say 10 pounds.
What it really did was itproved to distributors that they
(18:34):
can operate with lesssalespeople.
It proved to distributors thatthe operator, whether it's on or
off premise, will order throughtheir iPad or through their
phone or through a desktop site.
So what's happening is it usedto be that a rep would go in,
(18:56):
get orders, recommend items andleave.
That rep had costs, base pay,incentive comp bonus, travel,
gas, phone, computer, all thosethings.
That's all gone by the wayside.
Now Each distributor of thebigs breakthroughs Southern R&D
C, young's Market have cut theirlabor force exponentially post
(19:19):
COVID because they've retrainedthe on and off premise account
to order online.
In fact, a lot of them won'teven take orders.
If you call in an order, theywon't take it.
They steer you to thee-commerce site or to the
electronic platform.
So that's the biggest thingthat's gonna happen and that's
gonna make my company best atmuch more valuable, because
we've got bodies that will go inand sell goods If you're an
(19:41):
independent retailer, or anyretailer for that matter.
How are you gonna discover a newbrand on your iPad?
You can't take it, you can'tlook at it, you can't touch it,
there's no tactile feel to it,doesn't exist.
They steer you.
So new items on page one of thewebsite?
That's baloney.
No one's gonna buy a brand likethat.
So new brands are gonna have alot of trouble breaking into the
(20:04):
market.
Existing brands are gonna gainshare and it's gonna hurt the
independent brand small supplier.
So if I look forward into thekind of the telescope, I see
less and less salespeople.
I see more relying on companieslike Bevstrat and I see the
independent brand continuing tostruggle to get shelf because
the store owner, for no fault oftheir own, does not know you
(20:28):
exist.
Speaker 1 (20:30):
All right and you need to buy what you think is
actually gonna sell through.
Speaker 2 (20:34):
And be paid for in 30 days.
Yeah, you know, if I'm ashopkeeper we did a seminar for
Sprout two weeks ago for 20brands.
If I'm a shopkeeper and I'mlimited funds, I'm cash.
I'm check to check.
How do I buy a brand I've neverheard of for an audience I do
not know exists, no matter howgood it is, that bill's due in
30 days?
I got payroll every two weeks.
(20:55):
My daughter needs braces.
I can't mess around withfilling my shelf with things
that might not sell.
Speaker 1 (21:03):
So, when it comes to these new brands that are
entering the market, then whatwould your advice be to them?
Like?
What are some strategic waysthat they can get that shelf
placement Cause?
Obviously, new brands are goingto start and some will be
successful, even if it's gonnabe fewer than in the past.
What are the things that theyneed to be doing?
How can they like incentivizeor not incentivize Maybe there's
a better term for that but howcan they.
Speaker 2 (21:24):
There's a more legal term for that.
Speaker 1 (21:25):
Yeah, I was gonna say that sounds, though maybe not
the right word to use, but howdo they get that shelf space and
how do you look at them beingable to grow in this new
environment?
Speaker 2 (21:38):
You gotta be capitalized.
Let's start with that.
This is a cash business.
You can't mess around and notbe capitalized.
End of story.
You have to have money.
There's no business like thisin the world that I've ever seen
.
You have all this upfrontcapital, production, legal
accounting, label design,closure, bottle formulation.
(21:59):
You're $200,000 in the holebefore you sell your first
bottle and your first productionrun is half a container as
opposed to five cases.
It just doesn't.
It's a hard, hard business.
If I'm a new brand owner, if I'ma new supplier, the one thing I
always harp on is find oneaccount on and off-premise in an
(22:22):
area where you live and bethere.
Make it a lighthouse account,be there, get in the face, let
the owners know you are around,you are available for tastings,
sampling, demos all of thosethings were legal and show that.
When you get pulled in thataccount, then you go to the two
(22:42):
accounts that are one mile awayand you say, hey, x account is
selling five cases a week.
You guys don't have thisproduct.
You should give it a try andthen you kind of spread out from
that circle there.
That's how you start a brand.
You don't.
I have more guys that call ourteam, or gals, people that call
our team and say, hey, I live inCalifornia but I want to.
(23:05):
I think Florida is a greatmarket for my brand.
I'm gonna launch there.
Okay, yin yang, how are yougonna do that?
You live in LA, you want tolaunch in Miami.
You're 3,000 miles away, you'resix hours in the air.
I mean, come on, you have to bewhere you can support a brand,
End of story.
And so when I look at peoplethat are launching brands gotta
(23:27):
have capital, have capital Forevery dollar you think you're
gonna do in sales.
You need a five X in support.
A, b have a pull strategy.
You have to have a pullstrategy.
What pulls it off the shelf?
Three, c you have to supportthe account.
D launch in the area where youlive.
All of these kind of things.
(23:47):
They seem basic but they're notand people repeatedly just
don't do those things.
And here's a scary stat for you, brandon You've got 50,000
brands registered for COLA inthe USA 50,000, and there's 500
brands that account forrepetitive skew velocity.
(24:09):
Think about that.
Speaker 1 (24:10):
That's not a great number.
Speaker 2 (24:11):
No.
And the tagline, the hashtag onSprout beverages be the 5% mean
that 95% of brands fail.
Be the 5%, so do the thingsthat will not put you in the
graveyard with Zima beer or withwhipped cream flavored Pinnacle
vodka.
What have you?
(24:33):
I wish that one stuck aroundthat one was the last thing, and
I'll tell you an anecdotalstory really quickly.
I was on a plane years ago andwe were about to take off and
the guy next to me in the seatwas on his cell phone and he was
talking and he happened to bein the wine business.
Just coincidence, nothingplanned there Happened to be in
the wine business.
He was yelling and screaming atsomeone.
(24:54):
I got off the phone and saidhey, I'm in the liquor business,
you're in the wine business.
Tell me what you do.
Where are you headed?
He's like I'm heading toFlorida to meet the biggest
distributor in Florida, who willremain nameless, and I'm
getting them to focus, I needthem to focus on my brand for
the fourth quarter.
Well, that's not an unusualstory, mr airplane neighbor, how
(25:14):
big is your brand?
And I'm thinking just launched5,000 cases, whatever.
He said, 800,000 cases annually.
And he's flying to Florida tomeet not to be named distributor
to focus on his brand at800,000 cases.
How, then, to our clients thatSprout or Invespev or Algoma
(25:35):
Capital or Bev Strat and yourlisteners brand, how do they
then get attention when they'redoing 5,000, 10,000, 100,000
cases a year?
They don't.
They've got to be in the market, they've got to be supportive.
And so that anecdotal story isa real story and it's a real sad
story, if you ask me.
Speaker 1 (25:56):
So, piggybacking off of that, what are you looking
for when you're investing in abeverage alcohol business, then,
whether it's on the softwareside or on the brand side?
Speaker 2 (26:06):
Sure, we look for either cash flow or road to
profitability.
We look for a good and activeleadership team.
We look for a category that iseither yet to virgin or a new
take on a category that exists.
We look for a team thatunderstands their numbers.
(26:27):
Know your numbers, don't guess.
Know your numbers.
And when you come to Invespevand if you're looking for
capital, how do I give you ourminimum?
Our check is one to fivemillion.
How do I give you a milliondollars or five million dollars
if you can tell me what youradjusted EBITDA is?
I need to know that.
(26:48):
I'm going to invest in you andI'm going to invest in you as a
leader and any leader of anybusiness needs to know their
revenue, their gross margin,their path to profitability,
their net income, their EBITDA,their cash balance, their bank
balance, their balance sheet.
It's a lot of stuff, but if youown your business, these are
things you should know anyway,and so I think if you come to us
with those kind of things alldialed in, you got a much better
(27:12):
chance of making it throughinvestment committee than you
would otherwise.
Speaker 1 (27:17):
Got it.
So a lot of it is the team andthe handle that they have on the
sort of the back end of thebusiness and the actual
financials.
Speaker 2 (27:27):
If 95% of brands fail , then what are you really
investing in?
Investing the people?
We just put a million dollarsinto 10 to 1 rum last week it
was very big public news.
It's us and Diageo and Proghorn, if you know that group and we
invested in leadership.
We invested in the category Rum.
(27:47):
I like rum, I mean as acategory and as a drink.
I like rum.
The founder is a smart, smartguy.
People smarter than us haveinvested in it and like the
brand.
Those are three things that are.
The guy knows his numbers.
Those are three or four thingsthat matter to us.
We're going to announce a dealthis week that is in a
(28:10):
burgeoning category or anexisting category, with a great
founder who is eager, open tofeedback and open to criticism.
That deal will be announcedthis week.
Nomadica is an investment ofours.
Nomadica Wines Great female ledcompany, an aggressive young.
(28:31):
I will do anything to make mybrand work.
Founder, we invested in her Can.
You used to live in California.
You told me can Can, the numberone cannabis beverage in the
country.
We invested in the category ofcannabis beverage because we
know that at some point it'sgoing to be federally legal.
Right now you've got 10, 12states that are legal.
It's going to be federallylegal, so things like that that
(28:54):
give us an in speak easy.
As we talked about Reserve bar,as we talked about the consumer
needs to get their brands someway, and so that's what we look
for, those things we look for inbrands, and we're happy to help
.
If you're 80% there with someof the things I mentioned, our
(29:16):
team will give you the 20%.
We'll help you with youraccounting, finance, hr,
marketing.
We will do all that to thecompanies we invest in, because
it's in everyone's best interest.
Speaker 1 (29:25):
There's definitely more on the active investment
side of things you would say.
Speaker 2 (29:29):
Yes, I'm at your dinner table with you nightly.
That's correct.
Our whole team.
We've got a very robust team inChicago made up of X Bacardi, x
Molson Cores, x Diageo, x BeamBrands I mean these are and then
from the food side, canagraFood and Honest Company and
myself, my partners from the BMOBank I mean there's a lot of
(29:53):
people here that cover both thebeverage industry and the
financial industry togetherunder one roof and they all
become the resource of the brandthat we invest in.
So instead of having, you know,paying your account $8,000 a
month to reconcile your checkingaccount, we do it for free.
So there are real big benefitsof taking invest-bev money and
you get the expertise and thehistorical kind of relationships
(30:15):
that come with us.
Speaker 1 (30:17):
That's definitely more of a strategic partnership,
for sure, and just the check.
Speaker 2 (30:21):
That was the idea.
That was the idea when we builtthis company.
Going on 10 years it was.
We don't want to be on thesidelines, we want to be your
partner and share the bed withyou, so to speak, and all the
good and bad that comes withthat.
Speaker 1 (30:38):
So I got two fun questions for you before we wrap
up here, First being what isyour favorite alcohol memory?
Speaker 2 (30:51):
Memory or forget which one.
Speaker 1 (30:54):
Memory, or I mean, you know well, I'll let you take
it however you see best fit.
Sure, Sure.
Speaker 2 (31:03):
I've had some great.
You know I'm not to be honestwith you, I'm not like I drink
one drink, it's gin and tonic,it was Sapphire, now it's
Hendrix or Gray Whale.
So, very simple, I can doanything I want.
And if you're watching this, athome behind me is a shelf full
of dead soldiers.
I've had some really good times, and generally they're overseas
(31:30):
.
They're those times where youdon't go out to have a great
night, it just organicallyhappens.
And they've been all over, fromCuba to Italy, to, you know, to
California, to Chicago, alwayswith a good group of friends,
always with a night that justdoesn't end early.
And so, you know, beverage hasbeen part of those nights and
(31:55):
part of my family, part of thethreat and fabric of my family.
You can't go anywhere in any ofour homes, my family, my
extended family, where there'snot a collection of rare whiskey
or vintage wine, or aged wine,what have you?
So beverage or alcohol hasplayed a huge part in my entire
(32:15):
life and I'm grateful for it.
Speaker 1 (32:19):
That's the common theme that I've heard from
everyone is that you know it'saround the people, almost more
so than the alcohol itself.
Speaker 2 (32:29):
I'm not my first wife in a liquor store, I'm not my
second wife in a liquor store.
I mean, I don't know if that'smaybe I'm picking the wrong
women, I don't know.
But I've owned both stores, somaybe it's okay.
But I didn't meet him in theaisles, I met him at the
register.
But you know, it's been a realimportant part of my life for
(32:51):
sure.
Speaker 1 (32:53):
And if you could share a bottle with anyone, who
would it be and what would youdrink?
Speaker 2 (33:03):
It would be.
What would I drink?
I would drink some sort ofFrench rosé, which I really
enjoy.
It'd be outside of you,overlooking water, so that'd be
the location in the drink,barack Obama.
(33:27):
Okay yeah, I think there's a lotof.
He's a Chicago guy.
He was a customer of Sam's whenhe was a senator.
He, I'm guessing, has somegreat stories to tell, because
he's not only a president, aformer president, but he's also
kind of hip.
So we regardless what yourpolitics are he's a hip guy and
(33:50):
so it'd be fun to hear about,you know, his late-night
excursions with Jay-Z andBeyonce, you know, and is, you
know, hanging out with worldleaders and and doing those kind
of things.
I think that's reallyinteresting.
The stories would be great.
Speaker 1 (34:06):
Okay, so rose on the water with Barack Obama.
That's definitely the the best,I want to say best.
Everybody's answers good, butthat's the most interesting one
that we've gotten so far, I aimto please.
Well, thank you so much forjoining us.
I guess, before we hop off, isthere anything else that you
wanted to touch base on or orcover?
Speaker 2 (34:26):
No, no.
I think that.
I think that I want thelisteners to know that growth
beverage as a whole, and all thecompanies that we have our,
exist solely for the support ofthe brand and Whether we invest
in you or not, or lend you moneyor not, or you work with Bev,
strat or Sprout, you can alwaysFind us as a great resource for
(34:48):
knowledge and because thisbusiness will rip your heart out
and then step on it.
So we, having been on the otherside of this kind of business,
I've devoted the remainder of mylife, my business life, to
helping small brands, becausethey've helped me so much in my
career.
It's awesome.
Speaker 1 (35:06):
Can you let everybody know where they can find you
online?
Speaker 2 (35:08):
Sure, we've got it's Brian Rosen.
The best way is to find me onLinkedIn.
For sure, brian Rosen, ourwebsites are.
The one website that leads youto every website is growth
beverage comm Growth beveragecomm.
And that will lead you toinvest Bev.
I'll go Macap Sprout beverageand Bev strat.
Speaker 1 (35:30):
Okay, awesome you know, thanks much for joining us
.
As always everybody listening.
This is Brandon and Maroso.
You can find me at drinks command we will see you next time.
Thanks for having me.
Hey everyone, thank you for listening to the
drinkscom podcast, the businessof online alcohol.
I'm your host, Brandon Amoroso,and today I'm talking with
Brian Rosen, the chairman ofGrowth Beverage and also the
founder of Bev Street and AlgomaCapital.
(00:23):
I hope I got all three of thosecorrect, but thank you for
coming on the show.
Speaker 2 (00:28):
You got it.
Thank you for joining me.
This is any chance we havereally to speak to suppliers or
founders about the industry.
I'm happy to participate.
Speaker 1 (00:39):
So before we dive into some of the topics we want
to cover today, can you giveeverybody just a quick
background on you and all theareas ventures you have going on
?
Speaker 2 (00:47):
100%.
So I take a lot of pride inthis first sentence.
My family, I should say, wasthe first liquor license ever
handed out in Chicago afterprohibition.
So we've been in business since1933.
That one liquor license, thatone singular license, turned
into the largest grocery andwine and spirit retailer in
(01:09):
America.
So if you're on the West Coastyou think Bev Moe, you're on the
East Coast, you think Total.
If you're in Florida, like youare, you think Big Daddy or ABC.
We were bigger than the mall inthe day.
We were the first big box store.
We were the first store to putwine, cheese, glassware, cigars,
reading material all under oneroof.
(01:33):
That grew to be roughly $100million enterprise and I sold
that company in early 2000.
I went on from there to becauseit seems like that's a natural
progression.
I went on from there toPricewaterhouseCoopers, from
entrepreneur to corporate wonk,and ended up running the adult
beverage division for PWC,covering North America, canada
(01:54):
and Mexico.
After I realized I don't liketo wear a tie or a sport coat
for that matter I went back tomy entrepreneurship ways and
founded a company called BevStrat, and Bev Strat became the
largest single salesorganization for independent
brands.
We all know, if you'relistening to the podcast, you
likely know that distributorsaren't going to build your brand
.
So we put full time salespeople on the ground in various
(02:17):
markets around the country tohelp sell goods.
I grew that business and soldthat business to MHW in 2019.
At the same time, I founded BevStrat.
I founded a company calledInvestBev which now, after our
last raise, is the largestprivate equity firm solely
focused on the adult beverageindustry only booze.
(02:38):
We're at about $250 millionunder management.
We've got that's InvestBev.
Agoma Capital, which youreferenced.
Agoma Cap, which is a $100million debt facility for
distillers.
Bev Strat I bought back at theend of my employment term.
We still have that to help ourbrand sell.
And then, of course, sproutBeverage, which is our incubator
(03:01):
and accelerator, which willgraduate its 20th brand in
November and the winner gets$100,000 and gets welcomed into
our growth beverage family.
So those four companies make upkind of what I do every day.
Speaker 1 (03:16):
And it seems like they're all sort of not
integrated but connected in someway.
Speaker 2 (03:21):
They're connected in every way.
There is no.
I know I speak in a lot ofabsolutes the biggest, there's
no other.
I understand that, but this isall fat checkable.
There is no other place for abrand to come into a system and
get capital, debt, sales andmarketing, acceleration and
(03:42):
incubation, m&a activity andexit ability under one roof.
It just does not exist, and sowe've created that in what we
call the growth beverageecosystem, and brands are
welcome to come in at any stage.
You don't have to come in fromthe beginning.
You can come.
You can be a growth stage brand, you can be a seed brand, you
can be a mature brand.
(04:03):
We welcome all people, and soit is what we call cradle to
grave.
Speaker 1 (04:10):
You're right, and are you primarily investing in
brands themselves or are youlooking at technology enablement
solutions and other categories?
Within the beverage alcoholspace, there's a primarily brand
building.
Speaker 2 (04:26):
No well, it's brand.
Of the 100% of our funds, 30%is in brands and what I would
call support services, whatyou're calling technology.
So reserve bar, we're an ownerof reservebarcom, we're an owner
of speakeasycom, we're an ownerof Philo, which is a compliant
software.
We are, we're all about thesupport services too.
(04:50):
We love to say the things thatmake the things right.
So it's low risk, lower risk, Ishould say, and higher reward
and kind of less fluctuationthan investing in a brand all
the time.
Speaker 1 (05:05):
It's like providing the plumbing for everybody else.
It's not exactly as glamorousor as sexy, but it is a great
place to be.
How to?
Speaker 2 (05:13):
make the shoe laces.
That's not sexy.
Speaker 1 (05:19):
Well outside of when it comes to like the brand side
of things and what you'reinvesting in there.
What are you most excited aboutthis year going into next year?
I've been seeing, at least fromsome of the other guests we
have come on, whether it'sdifferent ways of packaging.
There's low-alk, no-alkalternatives.
What are some of the trends andthings that you're most
(05:39):
interested in how to get intonext year?
Speaker 2 (05:42):
Yeah, all of that.
But it's funny when people talkabout no and low or drink
replacement or all that kind ofjazz, they're talking about the
brand in and of themselves, butthey're not talking about the
real usability of it all.
If the no and low-alk categoryis 100% up year over year which
(06:02):
it is that could simply meanthat if you sold 50 units last
year and you sold 100 units thisyear, you're 100% up.
But it doesn't speak to thebigger picture it was.
You're still less than 1% ofthe overall consumption universe
.
That's just a fact.
Now, when you think of no andlow, I love the trend and it is
(06:22):
a trend, and it is people thatare younger than me, much
younger than me, are doingone-on, one-off right.
So one drink of vodka, onedrink of replacement, et cetera.
One drink full alcohol, onedrink low, proof to extend the
night, to extend thesessionability of their activity
.
I get all that, but the realityis an on-premise account isn't
(06:44):
going to have two of everythingone version of alcohol, one
version of non-alcohol.
It's not realistic.
And how do you say to yourbartender screaming at a club
thank you for the Red Bull andvodka.
Now, of a Red Bull and fakevodka?
It doesn't work from apractical standpoint.
So it does work, however, inthe on-premise restaurant
(07:05):
community, because there arepeople that want to be part of
an activity and don't want tospend the time putting booze in
their body.
It does work at the at homeability.
So I like those trends.
I like Rama as a trend, I likeJin as a trend.
Tequila is saturated, vodka isdead.
(07:26):
I mean, there are things cominghere.
Mixology was a thing, rtd was athing, but if you're getting
into the RTD market now, you'relikely two years too late.
If you're getting into theSeltzer market now, you're a
hundred years too late.
But people are right.
I see it all the time.
So if the average guy is justdiscovering the popularity of
(07:48):
white claw, they're at they are.
They've missed the boatentirely and any money spent in
that production will likely goto waste.
Speaker 1 (07:56):
Yeah, there's, I feel like literally a thousand
different Seltzer brands at thispoint.
Speaker 2 (08:01):
Yeah, I was in Miami this past weekend.
One of my buddies launched theVodka Seltzer and smart, smart
guy and great brand entrepreneurand has a lot of successful
brands out there.
But launching a Seltzer now isjust putting a cup of water in
the ocean.
You know, and I don't know howyou find shelf, I don't know how
(08:22):
you find cooler space, I justdon't know.
Because, for instance, in theVodka category, for every dollar
you spend in production you'vegot to spend $5 in marketing and
that's just not sustainable.
And then when you look at newbrands coming to market, it used
to be, hey, we'll raise money,we'll come to market and if we
(08:44):
and we're gonna burn throughcash because we're gonna get our
cases up and then we'll getsold to a constellation or
diaggio or whatever, whatever.
Now, because it's harder andharder to get to fundraise
because of the economy and therecession and interest rates and
all of those things, thesebrands have to operate down
themselves.
They have to operate cash flowon their own accord and that's
(09:05):
not as easy as anymore.
So you're gonna see a bigshakeout in the new brand world.
You know, if you haven't seenit already, you're going to see
it the shelf is gonna shrink.
Speaker 1 (09:14):
Do you think it's going to slow down the new brand
growth and penetration becauseof the restriction in capital?
Speaker 2 (09:21):
It's going to slow down the people that have no
money.
It's going to slow down thepeople that once they get past
their friends and family aroundand they go looking for
professional money like Invespev.
You have to have a sustainablebusiness.
You can be losing money I don't, that's part of the game.
You can be losing money, butyou have to have a path to
profitability.
You have to have a model thatdoesn't say I'm gonna raise,
(09:46):
raise, raise and spend, spend,spend and hopefully I get bought
by another company.
You don't have to have that, soyou have to have a business,
and so I think that willfundamentally change the
landscape of the independentbrand.
Speaker 1 (10:00):
Well, that makes sense when it comes to brands,
and you mentioned on-premise.
When you're helping acceleratesome of these companies out of
Sprout Beverage, are youfocusing more on on-premise?
Are you leveraging e-commerceat all in terms of testing into
new markets, or are you doingboth at the same time?
(10:22):
Where do you see no success?
Speaker 2 (10:26):
Well, I mean, look, speakeasy is a great e-com play.
It's.
They've got warehouses, they'vegot retailers all over the
world all over the country, Ishould say and it's a great
inexpensive way to expand yourbrand without having to
necessarily expand yourfootprint.
E-commerce is great.
(10:46):
When I was at Sam's, the firstcompany I mentioned, we were the
first wine and spirit store tosell wine online, 1996.
So think about it.
Back then it was like dial-up.
It was dial-up, in fact.
If someone asked us for acatalog, we would have to fax
them a catalog.
This is like fax machinesaren't even gone, aren't even
here in New York printedcatalogs.
(11:07):
This is I'm dating myself.
Now it's a better way and Idon't.
I think there's two kinds ofe-commerce plays, to be honest.
I think there is the firste-drizzly play, where, hey, I
need a bottle of vodka and a sixpack of beer right now.
There's that.
And then there's e-commerce forshipping or holiday gifting or
what have you Like winecomreserve bar.
(11:30):
There's a lot of gifting,things like that.
So I think it's a natural partof the three tier system.
I think it's a natural part ofthe distribution model, but it's
a hard thing to figure outbecause anyone who ships, you
run the risk of these gray rulesthat affect interstate shipping
(11:51):
.
The consumer is going to haveto really understand that
shipping can't be waived like itis on Amazon, because this is a
physical, hard, heavy productthat requires packaging and
styrofoam and bubble wrap andall that stuff so it doesn't
break.
So it's never going to be costeffective.
(12:12):
What it is going to be is achance to get rare and allocated
items delivered to your doorand the sooner that that shift
is realized, the less pricebecomes an issue and the more is
the issue really becomes is canI get what I want?
So it will be great for vintageBordeaux, burgundy, high-end
tequila, high-end whiskey, rearwhiskey, things that you can't
(12:33):
get at your retailer, where thecost of shipping is a non-issue.
Speaker 1 (12:38):
Yeah, I think the higher price per unit makes a
lot more sense, and then for thebrand being able to build a
direct relationship with acustomer and offer some of that
like exclusivity A ton ofpreserve.
So I think, speaking, I've seena couple of really cool sort of
programs around rarity and thenthat appeals to a certain brand
(13:01):
.
Speaker 2 (13:01):
Speaking.
You just got the Tesla deal,where they're selling the Tesla
tequila or I think it's tequila,the Tesla brand.
They sell a lot of other rarewhiskies.
That's where it makes a ton ofsense.
It also makes a ton of sensefor if a distillery or a brand
wanted to get rid of old goodsold bean, vintage not old like
(13:24):
expired, but vintage and raregoods that's a great place to
liquidate again excuse the punall of those things instead of
putting them.
You don't have enough goods toput on a store shelf, but you
have enough good.
You have 300 bottles.
It's enough goods to put on aspeak easy and let it deplete.
That way Makes a lot of sense.
Speaker 1 (13:45):
Yeah, and you're not buying $2 box wine online,
unless it's maybe through thatlast mile delivery via.
Speaker 2 (13:53):
Yeah, my dad would say no one needs a bottle of
vodka in 30 minutes.
If you need a bottle of vodkain 30 minutes, there's a bigger
issue here.
It's not a convenience plate inthe e-commerce world of booze.
It really is.
It should be a rare andallocated play and then prices
(14:14):
off the table.
And when prices off the table,shipping cost is off the table.
Discounting is off the tablebecause you have what no one
else has.
The best users of e-commerceand booze are the ones who would
embrace that.
Speaker 1 (14:27):
And you mentioned the gray areas of beverage alcohol,
which it feels like there's anever-ending amount of them, but
over the past three to fiveyears it seems like there's been
a lot of investment in reg techto try and make it easier for
brands to be able to navigateall the various sort of hoops in
each individual state.
(14:48):
What are some of the thingsthat you've seen on that side
when it comes to technology andbeing the plumbing not
necessarily being the actualbrand builder and how is that
helping facilitate growth foryour companies?
It?
Speaker 2 (15:04):
used to be again, having the privilege of living a
lot of life.
I can look backward and say itused to be and it used to be.
We would ship five, six, seventhousand boxes a day and you'd
roll the dice.
You'd say, hey, ups, fedex, letthem catch one, but they're
(15:28):
shipping a million boxes a dayduring holiday.
So my five thousand aren'tgoing to matter and the fine at
$500 is smaller than the profitof $500,000.
So retailers kept shipping.
Now there's a couple differentplayers out there that are doing
(15:52):
things that are interesting.
One is the play, and I forgetthe brand names of these
companies, but the concepts Iknow.
One is where you buy or investin retailers around the country.
They become your beach heads.
So you invest in retailers MikeBerkoff is doing it I forget
(16:12):
the name of the company, butMike Berkoff out of Connecticut
and you invest in the retailersthat are in complying states and
then there's reciprocal statessurrounding them.
So by buying a retailer in Ohio,you can ship to Pennsylvania,
kentucky, indiana.
So that's what he's doing.
You get three states by buyingone and all you have to do is
(16:33):
buy a small, independent, tinystore, close the storefront,
begin shipping out of it andyou've got yourself compliant.
That's one way to do it.
Another way to do it is whatSpeakeas is doing, which is
having warehouses around thecountry San Diego, washington DC
, by way of example.
That's another way to do it.
Another way to do it is whatReserve Bar does, which is
(16:56):
partner with retailers aroundthe country.
You can just sell from theirinventory specifically.
But you have a lot of issuesthere with vintage auto stock et
cetera, because not everyoneruns on the same system.
Ship compliant is a great optionas well.
The net it's all going to be apatchwork of setup until it
becomes federally legal.
(17:17):
And it's funny because you cando a lot of things that are
questionable that are federallylegal, but, heaven forbid, you
want to ship Tito's from Ohio toPennsylvania.
That is a rule breaker in someway.
So I think once the federal,once the feds, get their kind of
(17:39):
the rack together and realizethis is a non-issue issue, it's
a taxation issue.
It's an issue for the statesthat are giving up taxes, they
don't know who to give themmoney to.
So everyone gets very kind ofattached to their brand and it
will be like this for a bituntil someone figures it out.
But everyone right now was justpatchworking together and it's
working.
(17:59):
But it's tough to build a big,big business on a gray, gray
area.
Speaker 1 (18:03):
And how do you see the role of distributor evolving
over the next five to 10 years?
Speaker 2 (18:11):
It's unrelated to shipping.
It's more related to electronicordering, which could be
interesting to your listeners.
The COVID did a lot of thingsBesides put four pounds on my
body, five pounds and my wifewould say 10 pounds.
What it really did was itproved to distributors that they
(18:34):
can operate with lesssalespeople.
It proved to distributors thatthe operator, whether it's on or
off premise, will order throughtheir iPad or through their
phone or through a desktop site.
So what's happening is it usedto be that a rep would go in,
(18:56):
get orders, recommend items andleave.
That rep had costs, base pay,incentive comp bonus, travel,
gas, phone, computer, all thosethings.
That's all gone by the wayside.
Now Each distributor of thebigs breakthroughs Southern R&D
C, young's Market have cut theirlabor force exponentially post
(19:19):
COVID because they've retrainedthe on and off premise account
to order online.
In fact, a lot of them won'teven take orders.
If you call in an order, theywon't take it.
They steer you to thee-commerce site or to the
electronic platform.
So that's the biggest thingthat's gonna happen and that's
gonna make my company best atmuch more valuable, because
we've got bodies that will go inand sell goods If you're an
(19:41):
independent retailer, or anyretailer for that matter.
How are you gonna discover a newbrand on your iPad?
You can't take it, you can'tlook at it, you can't touch it,
there's no tactile feel to it,doesn't exist.
They steer you.
So new items on page one of thewebsite?
That's baloney.
No one's gonna buy a brand likethat.
So new brands are gonna have alot of trouble breaking into the
(20:04):
market.
Existing brands are gonna gainshare and it's gonna hurt the
independent brand small supplier.
So if I look forward into thekind of the telescope, I see
less and less salespeople.
I see more relying on companieslike Bevstrat and I see the
independent brand continuing tostruggle to get shelf because
the store owner, for no fault oftheir own, does not know you
(20:28):
exist.
Speaker 1 (20:30):
All right and you need to buy what you think is
actually gonna sell through.
Speaker 2 (20:34):
And be paid for in 30 days.
Yeah, you know, if I'm ashopkeeper we did a seminar for
Sprout two weeks ago for 20brands.
If I'm a shopkeeper and I'mlimited funds, I'm cash.
I'm check to check.
How do I buy a brand I've neverheard of for an audience I do
not know exists, no matter howgood it is, that bill's due in
30 days?
I got payroll every two weeks.
(20:55):
My daughter needs braces.
I can't mess around withfilling my shelf with things
that might not sell.
Speaker 1 (21:03):
So, when it comes to these new brands that are
entering the market, then whatwould your advice be to them?
Like?
What are some strategic waysthat they can get that shelf
placement Cause?
Obviously, new brands are goingto start and some will be
successful, even if it's gonnabe fewer than in the past.
What are the things that theyneed to be doing?
How can they like incentivizeor not incentivize Maybe there's
a better term for that but howcan they.
Speaker 2 (21:24):
There's a more legal term for that.
Speaker 1 (21:25):
Yeah, I was gonna say that sounds, though maybe not
the right word to use, but howdo they get that shelf space and
how do you look at them beingable to grow in this new
environment?
Speaker 2 (21:38):
You gotta be capitalized.
Let's start with that.
This is a cash business.
You can't mess around and notbe capitalized.
End of story.
You have to have money.
There's no business like thisin the world that I've ever seen
.
You have all this upfrontcapital, production, legal
accounting, label design,closure, bottle formulation.
(21:59):
You're $200,000 in the holebefore you sell your first
bottle and your first productionrun is half a container as
opposed to five cases.
It just doesn't.
It's a hard, hard business.
If I'm a new brand owner, if I'ma new supplier, the one thing I
always harp on is find oneaccount on and off-premise in an
(22:22):
area where you live and bethere.
Make it a lighthouse account,be there, get in the face, let
the owners know you are around,you are available for tastings,
sampling, demos all of thosethings were legal and show that.
When you get pulled in thataccount, then you go to the two
(22:42):
accounts that are one mile awayand you say, hey, x account is
selling five cases a week.
You guys don't have thisproduct.
You should give it a try andthen you kind of spread out from
that circle there.
That's how you start a brand.
You don't.
I have more guys that call ourteam, or gals, people that call
our team and say, hey, I live inCalifornia but I want to.
(23:05):
I think Florida is a greatmarket for my brand.
I'm gonna launch there.
Okay, yin yang, how are yougonna do that?
You live in LA, you want tolaunch in Miami.
You're 3,000 miles away, you'resix hours in the air.
I mean, come on, you have to bewhere you can support a brand,
End of story.
And so when I look at peoplethat are launching brands gotta
(23:27):
have capital, have capital Forevery dollar you think you're
gonna do in sales.
You need a five X in support.
A, b have a pull strategy.
You have to have a pullstrategy.
What pulls it off the shelf?
Three, c you have to supportthe account.
D launch in the area where youlive.
All of these kind of things.
(23:47):
They seem basic but they're notand people repeatedly just
don't do those things.
And here's a scary stat for you, brandon You've got 50,000
brands registered for COLA inthe USA 50,000, and there's 500
brands that account forrepetitive skew velocity.
(24:09):
Think about that.
Speaker 1 (24:10):
That's not a great number.
Speaker 2 (24:11):
No.
And the tagline, the hashtag onSprout beverages be the 5% mean
that 95% of brands fail.
Be the 5%, so do the thingsthat will not put you in the
graveyard with Zima beer or withwhipped cream flavored Pinnacle
vodka.
What have you?
(24:33):
I wish that one stuck aroundthat one was the last thing, and
I'll tell you an anecdotalstory really quickly.
I was on a plane years ago andwe were about to take off and
the guy next to me in the seatwas on his cell phone and he was
talking and he happened to bein the wine business.
Just coincidence, nothingplanned there Happened to be in
the wine business.
He was yelling and screaming atsomeone.
(24:54):
I got off the phone and saidhey, I'm in the liquor business,
you're in the wine business.
Tell me what you do.
Where are you headed?
He's like I'm heading toFlorida to meet the biggest
distributor in Florida, who willremain nameless, and I'm
getting them to focus, I needthem to focus on my brand for
the fourth quarter.
Well, that's not an unusualstory, mr airplane neighbor, how
(25:14):
big is your brand?
And I'm thinking just launched5,000 cases, whatever.
He said, 800,000 cases annually.
And he's flying to Florida tomeet not to be named distributor
to focus on his brand at800,000 cases.
How, then, to our clients thatSprout or Invespev or Algoma
(25:35):
Capital or Bev Strat and yourlisteners brand, how do they
then get attention when they'redoing 5,000, 10,000, 100,000
cases a year?
They don't.
They've got to be in the market, they've got to be supportive.
And so that anecdotal story isa real story and it's a real sad
story, if you ask me.
Speaker 1 (25:56):
So, piggybacking off of that, what are you looking
for when you're investing in abeverage alcohol business, then,
whether it's on the softwareside or on the brand side?
Speaker 2 (26:06):
Sure, we look for either cash flow or road to
profitability.
We look for a good and activeleadership team.
We look for a category that iseither yet to virgin or a new
take on a category that exists.
We look for a team thatunderstands their numbers.
(26:27):
Know your numbers, don't guess.
Know your numbers.
And when you come to Invespevand if you're looking for
capital, how do I give you ourminimum?
Our check is one to fivemillion.
How do I give you a milliondollars or five million dollars
if you can tell me what youradjusted EBITDA is?
I need to know that.
(26:48):
I'm going to invest in you andI'm going to invest in you as a
leader and any leader of anybusiness needs to know their
revenue, their gross margin,their path to profitability,
their net income, their EBITDA,their cash balance, their bank
balance, their balance sheet.
It's a lot of stuff, but if youown your business, these are
things you should know anyway,and so I think if you come to us
with those kind of things alldialed in, you got a much better
(27:12):
chance of making it throughinvestment committee than you
would otherwise.
Speaker 1 (27:17):
Got it.
So a lot of it is the team andthe handle that they have on the
sort of the back end of thebusiness and the actual
financials.
Speaker 2 (27:27):
If 95% of brands fail , then what are you really
investing in?
Investing the people?
We just put a million dollarsinto 10 to 1 rum last week it
was very big public news.
It's us and Diageo and Proghorn, if you know that group and we
invested in leadership.
We invested in the category Rum.
(27:47):
I like rum, I mean as acategory and as a drink.
I like rum.
The founder is a smart, smartguy.
People smarter than us haveinvested in it and like the
brand.
Those are three things that are.
The guy knows his numbers.
Those are three or four thingsthat matter to us.
We're going to announce a dealthis week that is in a
(28:10):
burgeoning category or anexisting category, with a great
founder who is eager, open tofeedback and open to criticism.
That deal will be announcedthis week.
Nomadica is an investment ofours.
Nomadica Wines Great female ledcompany, an aggressive young.
(28:31):
I will do anything to make mybrand work.
Founder, we invested in her Can.
You used to live in California.
You told me can Can, the numberone cannabis beverage in the
country.
We invested in the category ofcannabis beverage because we
know that at some point it'sgoing to be federally legal.
Right now you've got 10, 12states that are legal.
It's going to be federallylegal, so things like that that
(28:54):
give us an in speak easy.
As we talked about Reserve bar,as we talked about the consumer
needs to get their brands someway, and so that's what we look
for, those things we look for inbrands, and we're happy to help
.
If you're 80% there with someof the things I mentioned, our
(29:16):
team will give you the 20%.
We'll help you with youraccounting, finance, hr,
marketing.
We will do all that to thecompanies we invest in, because
it's in everyone's best interest.
Speaker 1 (29:25):
There's definitely more on the active investment
side of things you would say.
Speaker 2 (29:29):
Yes, I'm at your dinner table with you nightly.
That's correct.
Our whole team.
We've got a very robust team inChicago made up of X Bacardi, x
Molson Cores, x Diageo, x BeamBrands I mean these are and then
from the food side, canagraFood and Honest Company and
myself, my partners from the BMOBank I mean there's a lot of
(29:53):
people here that cover both thebeverage industry and the
financial industry togetherunder one roof and they all
become the resource of the brandthat we invest in.
So instead of having, you know,paying your account $8,000 a
month to reconcile your checkingaccount, we do it for free.
So there are real big benefitsof taking invest-bev money and
you get the expertise and thehistorical kind of relationships
(30:15):
that come with us.
Speaker 1 (30:17):
That's definitely more of a strategic partnership,
for sure, and just the check.
Speaker 2 (30:21):
That was the idea.
That was the idea when we builtthis company.
Going on 10 years it was.
We don't want to be on thesidelines, we want to be your
partner and share the bed withyou, so to speak, and all the
good and bad that comes withthat.
Speaker 1 (30:38):
So I got two fun questions for you before we wrap
up here, First being what isyour favorite alcohol memory?
Speaker 2 (30:51):
Memory or forget which one.
Speaker 1 (30:54):
Memory, or I mean, you know well, I'll let you take
it however you see best fit.
Sure, Sure.
Speaker 2 (31:03):
I've had some great.
You know I'm not to be honestwith you, I'm not like I drink
one drink, it's gin and tonic,it was Sapphire, now it's
Hendrix or Gray Whale.
So, very simple, I can doanything I want.
And if you're watching this, athome behind me is a shelf full
of dead soldiers.
I've had some really good times, and generally they're overseas
(31:30):
.
They're those times where youdon't go out to have a great
night, it just organicallyhappens.
And they've been all over, fromCuba to Italy, to, you know, to
California, to Chicago, alwayswith a good group of friends,
always with a night that justdoesn't end early.
And so, you know, beverage hasbeen part of those nights and
(31:55):
part of my family, part of thethreat and fabric of my family.
You can't go anywhere in any ofour homes, my family, my
extended family, where there'snot a collection of rare whiskey
or vintage wine, or aged wine,what have you?
So beverage or alcohol hasplayed a huge part in my entire
(32:15):
life and I'm grateful for it.
Speaker 1 (32:19):
That's the common theme that I've heard from
everyone is that you know it'saround the people, almost more
so than the alcohol itself.
Speaker 2 (32:29):
I'm not my first wife in a liquor store, I'm not my
second wife in a liquor store.
I mean, I don't know if that'smaybe I'm picking the wrong
women, I don't know.
But I've owned both stores, somaybe it's okay.
But I didn't meet him in theaisles, I met him at the
register.
But you know, it's been a realimportant part of my life for
(32:51):
sure.
Speaker 1 (32:53):
And if you could share a bottle with anyone, who
would it be and what would youdrink?
Speaker 2 (33:03):
It would be.
What would I drink?
I would drink some sort ofFrench rosé, which I really
enjoy.
It'd be outside of you,overlooking water, so that'd be
the location in the drink,barack Obama.
(33:27):
Okay yeah, I think there's a lotof.
He's a Chicago guy.
He was a customer of Sam's whenhe was a senator.
He, I'm guessing, has somegreat stories to tell, because
he's not only a president, aformer president, but he's also
kind of hip.
So we regardless what yourpolitics are he's a hip guy and
(33:50):
so it'd be fun to hear about,you know, his late-night
excursions with Jay-Z andBeyonce, you know, and is, you
know, hanging out with worldleaders and and doing those kind
of things.
I think that's reallyinteresting.
The stories would be great.
Speaker 1 (34:06):
Okay, so rose on the water with Barack Obama.
That's definitely the the best,I want to say best.
Everybody's answers good, butthat's the most interesting one
that we've gotten so far, I aimto please.
Well, thank you so much forjoining us.
I guess, before we hop off, isthere anything else that you
wanted to touch base on or orcover?
Speaker 2 (34:26):
No, no.
I think that.
I think that I want thelisteners to know that growth
beverage as a whole, and all thecompanies that we have our,
exist solely for the support ofthe brand and Whether we invest
in you or not, or lend you moneyor not, or you work with Bev,
strat or Sprout, you can alwaysFind us as a great resource for
(34:48):
knowledge and because thisbusiness will rip your heart out
and then step on it.
So we, having been on the otherside of this kind of business,
I've devoted the remainder of mylife, my business life, to
helping small brands, becausethey've helped me so much in my
career.
It's awesome.
Speaker 1 (35:06):
Can you let everybody know where they can find you
online?
Speaker 2 (35:08):
Sure, we've got it's Brian Rosen.
The best way is to find me onLinkedIn.
For sure, brian Rosen, ourwebsites are.
The one website that leads youto every website is growth
beverage comm Growth beveragecomm.
And that will lead you toinvest Bev.
I'll go Macap Sprout beverageand Bev strat.
Speaker 1 (35:30):
Okay, awesome you know, thanks much for joining us
.
As always everybody listening.
This is Brandon and Maroso.
You can find me at drinks command we will see you next time.
Thanks for having me.
Popular Podcasts
Amy Robach & T.J. Holmes present: Aubrey O’Day, Covering the Diddy Trial
Introducing… Aubrey O’Day Diddy’s former protege, television personality, platinum selling music artist, Danity Kane alum Aubrey O’Day joins veteran journalists Amy Robach and TJ Holmes to provide a unique perspective on the trial that has captivated the attention of the nation. Join them throughout the trial as they discuss, debate, and dissect every detail, every aspect of the proceedings. Aubrey will offer her opinions and expertise, as only she is qualified to do given her first-hand knowledge. From her days on Making the Band, as she emerged as the breakout star, the truth of the situation would be the opposite of the glitz and glamour. Listen throughout every minute of the trial, for this exclusive coverage. Amy Robach and TJ Holmes present Aubrey O’Day, Covering the Diddy Trial, an iHeartRadio podcast.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
The Breakfast Club
The World's Most Dangerous Morning Show, The Breakfast Club, With DJ Envy And Charlamagne Tha God!