6-10-24 *INTERVIEW* Stephen Gould of the Golden Moon Distillery on Shutting Down

Episode Transcript

(00:00):
I'm very much into bourbon these days, I don't I don't drink a lot.
I don't drink every day. Ihave like one shot of bourbon once
or maybe twice a week. Andsince I'm drinking like that, I care
about quality. I care about youknow, how delicious is this stuff?

(00:21):
And I love supporting local distillers whenI can, and there's more and more
of them, although I guess withthis story we're gonna talk about today,
there's one less. And I sawthis headline over at the website of our
news partners at Fox thirty one atkdivr dot com. Award winning Golden Moon

(00:43):
Distillery closing due to multiple factors,and I find the story very interesting,
not not just because I'm I likeknowing about and supporting local distillers, but
also my background is a business guy. This is a very interesting business story.
So joining us to talk about whythe distillery is shutting down and the

(01:07):
associated speakeasy may or may not beshutting down is the owner of Golden Moon,
Stephen Gould. Stephen, welcome toKowa. Thanks for making time for
us. Hey, thanks for havingme. Before we talk about closing it
down, just tell us a littlebit about starting Golden Moon and the concept
and why and how you got intoit. Well, so I got fascinated

(01:33):
with food and beverage, and alcoholbeverage in particular, strangely as a teenager.
I started working in restaurants when Iwas thirteen, started home brewing at
fifteen, kind of illegally obviously.In college I started a small micro brewery
back in sort of the early days, the dark ages, if you will,

(01:57):
of micro brewing. And then ingraduate school I thought about and put
a business plan together to start adistillery. Now I've had four separate careers.
I've done a lot of different thingsin my life, but alcohol beverage,
the alchemy of it, if youwill, has always fascinated me.

(02:20):
And so I was talked out ofstarting a distillery as I was getting out
of graduate school by a kind ofa luminary individual and the brewing in distilling
world named Fritz Maytag. He's theguy that is a graduate student resurrected Anchor
Brewing, started Anchor distilling, andit's sort of a great great grandfather,
if you will, the American craftbrewing and distilling movements here in the United

(02:44):
States, arguably in the world,and So what Fritz said to me when
I was in graduate school was goget a real job, build your resume,
learn how to run a business backdate if you still want to do
it. And so I went off, and I'd been in the military,

(03:05):
I was in the reserves. Iwent to Ford Motor Company when I when
I actually graduated, was very successfulthere. Ended up running their international supply
chain in Asia. You know,worked in in what seventeen countries for Ford.
Did more international trade than most peopleyou'll ever meet. It's funny.

(03:29):
I said that once at a party, at a charity event here in Denver,
and the guy said it too,said I doubted that, And I
said, what do you do?He said, I'm outside counsel for pursuing
Tunel. I said, okay,you win, but no. So so
you know, I was sort ofa corporate entrepreneur. Built Ford's first integrated
supply chain organization in Asia in thecorporation's history. Built the first trading company

(03:53):
in China for Ford in the company'shistory to streamline import some exports into and
out of China of components and rollmaterials and et cetera. The vast majority
of what Ford was doing at thatpoint in time and still is is not
buying from China, it's selling toChina. I want to emphasize that,
you know, most of what I'vedone has been export, though I am

(04:14):
a licensed customs broker and I havedone all fair amount of import. When
you never got the alcohol out youout of your brain, not only did
I not get the alcoholut of mybrain, but so I. When I
was running forward supply chain in Asia, I started a side business using strangely
initially contacts I knew from the MarineCorps Reserve that worked for Paps, buying

(04:38):
over stocks of beer brewed by Pathsand Strows, things like Piece Wicked Al
and shipping them into China while workingfor Ford. And then I got to
know the folks at Allied the MECwhich is now Diagio in India, and
I started buying over capacity of Scottishwhiskey that was bottled in India and ship

(05:00):
that into China. So I kindof even though I was I was doing
all this other stuff forward, andyou're running this massive supply chain with my
with my boss's blessing, I hada side business. It was dealing still
with beer and with whiskey and sonow let's move up just in the interesting
time. Let's just move up toGolden Moon. Well, yeah, so

(05:21):
fast forward. I left forward,I went to a consulting firm. I
went to another big corporation, stayedin the reserves. War came, I
went off to Iraq. I camehome from Iraq, decided the corporate world
wasn't for me, and I starteda consulting and an international supply chain support

(05:42):
company. And as a hobby business, I decided to make a little absent.
I'd fallen in love with absence,and so we started the business that's
now known as Golden Moon. Andthe original plan back in two thousand and
eight was to make a few hundredbottles a year of one of the best
absence on the planet. And youknow, the absence that we produce up

(06:05):
until say this week next week whenwe finally have to get this place is
highly respected in the alcohol, beverageand absence communities. So that happened.
But then as time moved on,the political winds in Washington changed. I
ended up doing a lot of businesswith the government with my other company.

(06:28):
With that company, Google Global,and so we decided to phase that out
and focus on Golden Men. Soin twenty ten we changed business plans and
decided to make Golden Moon a worldclass distillery with a large family of unique
spirits, but ultimately focusing on Americansingle made But we took a very slow

(06:55):
and deliberate path of R and Dand market development, and because of my
background, we took a very heavyemphasis on developing international trading relationships to exploit
the global demand for American whiskey andspirits, which is still there. So
your primary market in your mind asyou're building this is actually an export market

(07:15):
for Colorado whiskey or Colorado other spirits. Doesn't have to be whiskey, correct,
So the business plan calls for thirtyto forty percent export, But that
was really you know that, Andwe spent years building those trading relationships,
and then in twenty seventeen we wereincredibly profitable working out of a tiny postage

(07:36):
stamp two thousand square feet here inGolden We'd set up trading relationships in five
countries in Europe, we had atoe hold in Taiwan, and we were
in seventeen state markets around the USwith no marketing, no sales, no
pr So at that point we tookout a sizable loan to build a world

(07:58):
craft production facility to scale, andthat loan we took out in spring of
eighteen and began building and finished thebuild out in the fourth quarter of nineteen.
So in spring of eighteen, aswe're you know, taking out this
loan, the rhetoric coming out ofWashington, largely initially against Mexico. Remember

(08:22):
the twenty flat tariff. We losta quarter of our business to which was
which was a Mexican contract for animporter of premium spirits in Mexico, and
were never able to recover that.And they literally said to us, you
know, the anti Mexican rhetoric comingout of Washington, we don't want to
do business with the US, willsource products in Europe. So that was

(08:45):
that was the first hit on thechin, if you will. Then came
to steel, an aluminum tariff issue, and we went from doing even with
the small plant, we were doinga nice six figure revenue out of Italy
alone, but all of Europe,you know, we were about to scale.

(09:05):
We even had a massive deal forwhiskey with a German grocery chain.
All of that came to a screechinghalt. With the Steel and Aluminum tariff
war, followed by the blowing airbuswar because the very first unit of tariff
that the EU and the UK placedon American products, the very first tariff

(09:26):
was whiskey. Wow. Okay,So we got two trade wars crushing your
business and then well, COVID hit. But people seemed to drink a lot
during COVID. Didn't go out todrink, but they drank a lot.
Right, Yeah, let's talk aboutthat. So we finished the build out
in fourth quarter of nineteen. COVIDhit first in Europe and January twenty so

(09:48):
by March of twenty the US wasshutting down heavy and still Golden Moon Speakeasy,
which is our little cocktail lounge.There's a world class cocktail venue with
the awards and the accolades to proveit not only local, but national and

(10:09):
international. The revenue there went tozero. So while our wholesale grew during
COVID, the whole of the overallcompany's revenue did not, because you know,
our retail outlets went to win wentdown pretty heavy. Now at the
same time, you know, we'renow saddled with the overhead of a massive

(10:33):
world class production facility that it's brandnew, and the original business plan had
called for us to be negative cashflow for eighteen months and then you know,
we would go back positive because ofthe of the sales we forecasted based
largely on on on growth in Europewith growth following in the US. So

(10:56):
we viewed export as low hanging fruit. I still do if they're with the
exception of international factors. Now that'sso we just we just have a couple
of minutes here, So fast forwardquickly, yeah, so fast forward to
twenty twenty two, and the EUremoves the punitive tariffs on whiskey, the
big grocery chain deal they've been they'vebeen hovering since late late nineteen in Germany.

(11:24):
They say, okay, we're readyto move. That's January twenty two.
February twenty two, Russia invades Ukraine, the natural gas gets cut from
Russia to Germany, the German economycrashes, the German grocery chain sites forts
Magerre, and that deal goes away. And that was sort of the beginning

(11:45):
of the end. You know,were six years in negative cash flow and
and my wife and I, whoare who are the majority investors in this
I mean, we own ninety sixpercent of this company, so you're just
funding this out of your savings atthis point and you're are you personally on
the hook for the big loan toexpand or was that non recourse we oh

(12:09):
yeah, no, No, it'san SBA loan. And most people don't
realize when you borrow from the SBN. I've I've had multiple SBA loans with
priorate businesses that were painless. Yeah, that worked very well. But because
of the timing of everything, I'mgoing to lose my house, I'm gonna
lose all my assets. I'm goingto start over finally. Oh yeah.
In fact, what's even worse isI am I am losing part of my

(12:31):
veterans benefits. No, because I'ma viewed as having been and I'm one
hundred percent combat connected, disabled veteranand retired Marine retired out of the reserve
ten acted twenty reserve. Yeah,I like, i will never be able
to use the VA home loan benefitagain because I've now a defaulted. Wow.

(12:52):
It's kind of a really horrible worstcase scenario. And don't give me
wrong. As the owner and managerof this operation, I made a whole
bunch of mistakes, but we allkind of got caught in the perfect storm
of external factors. And there werebig ones and there were little ones.

(13:13):
I've told you the big ones,but there were some little ones as well.
Like I have been a board memberof the Colorado the Shoulders Guild for
fifteen years and I handled government affairswell. One of the local retailers decided
they didn't like the Colorado Deshoulders Guild, wanted manufactured direct consumer the same as
our friends that make wine have,and decided because I was the voice to

(13:37):
go after my capital race and impededmy ability to raise capital big retailer and
Boulder And then you know, finallyin April, you know, we put
the company on the market. Ihad four offers in April, and we
chose a known entity in the alcoholbeverage world, not realizing that they had

(14:01):
overvalued their assets and overextended and allof their deals, not just us,
fell apart. Oh my gosh,and that spooped all the other investors.
And really we went from thinking thatwe were, you know, we were
back on track the first week ofApril of this year to losing everything today.

(14:22):
Wow, what a what an unbelievablestory. What terrible. I cannot
believe that. Well, and letme get something out. The alcohol beverage
world is struggling right now, especiallyon the craft side. Yeah, nationwide,
pretty much the entire distilled spirits industrywas down between thirty five and in
twenty twenty three. Here in Colorado, Prop one twenty five, which is

(14:46):
beer and wine and grocery, hasgutted the craft industry and gutted our independent
retail partners. And when people votedfor that, I don't think they realized
what they were doing. But Ipredicted thirty to forty percent of craft beverage
in Colorado we'll go out of businessthe next twenty four to thirty six months.
Wow, it's not just me.We are not the first. We're

(15:07):
just probably the eye of profile becauseof all the awards and what unbelievable.
So if I say anything to yourreaders, it's go out, buy local,
find a local distillery, buy bottleBooze. It's made here in Colorado.
Support your local distillers, support yourlocal birds, support your local sidaries,

(15:28):
and support your independent retailers. Areyou is there still any Golden Moon
Distillery stuff available for listeners to buybefore you shut it down or is it
all gone? Oh no, there'sWe're we're in most major retailers here here
in Colorado or many major retailers.Yeah, I'm still shipping orders. I
mean I literally have a discussion wemight looker this morning about when's the bank

(15:50):
actually pulling the equipment because I'm stillshipping orders. Oh my gosh. And
I you know, I thought itwas going to be this week. He
so, I don't think it's goingto be this week. It might be
next week, but we don't know. They could come in tomorrow. And
I'm like, well, do Icharge the skills and run a couple more
batches of this to fill that order? And I still got this is I
mean, I even have an ordergoing out to another client in Germany this

(16:11):
week, not a big one,but it's a false skid, you know.
I mean, well, I'm wayI'm way over time here. But
couldn't you just couldn't you shut thisthing down? And I realized there's a
lot of financial pain that comes alongwith that and start again on a smaller
scale and get out from under thisoverhead. We're we're negotiating with a bank

(16:32):
for the intellectual property, and Idon't know if we'll be able to retain
it, but if we can retainthe international intellectual property which we've spent years
developing, maybe maybe. Wow.Well it's not really worthful lot to anybody
else, but yeah, you'll giveus the chance to start over. Wow,
that's a remarkable story. Still,you know, I'm recognizing the industry

(16:52):
as a master stiller, and Imean I'm consulting. I've consulted throughout this
whole process, helping bring revenue intothe distillery. I mean I worked for
Bono in Ireland for two and ahalf years, part time as a master
distiller while running Golden min and allthe prototypes for his whiskey project were done
here at Golden Min. As recentlyas last week I was I was on

(17:14):
the East Coast working valuing massive stockof whiskey and distillery for a major investment
bank. So you know, I'mstill recognized in the industry. I'm not
leading the industry, right, butwell, I hope, I hope you
find a way to a better endingthan what you just told us, Although
it seems like it's it's pretty faralong, folks. If you get a

(17:37):
chance, you know you're you're ina liquor store, look for some Golden
Moon stuff and buy it while youstill can. And I'm going to I'm
going to do the same. StephenGould is the founder of Golden Moon Distillery
and Golden Moon Speak Easy, whichwe didn't have time to talk about,
which may or may not stay open, but we'll keep in touch on that.
And thanks for sharing time, Thanksfor sharing your story, and I'll

(18:00):
definitely keep in touch. I reallyappreciate it. And as I said,
everybody, please support your local distillers, brewers, sideries, wineries and your
local small independent retailers. Couldn't agreewith you more. Thanks Steven,