029 | Building Bottom-up in the US 3-tier system | with Brian Rosen, Chairman of Growth Beverage (Chicago, IL, USA)

Show Notes

Episode Deep-Dive Analysis Available at maffeodrinks.com 

In Episode 029, I had the pleasure of chatting to Brian Rosen. He is the Chairman of Growth Beverage and Founder of InvestBev, Sprout Beverage, Bev Strat and Algoma Capital. He has decades of experience in building drinks brands in the US. He gave us incredible insights about the dynamics of the US market. I hope you will enjoy our chat.

Time Stamps

(5:08) How To Spend Money Effectively
(12:28) Building Demand Effectively
(15:04) Home Court Advantage
(18:39) Doing The Boring Stuff
(27:35) Running Out of Money
(31:25) Breaking Into The US
(40:00) Demand Generation

About the Guest: Brian Rosen

Interested in Group Subscriptions, Keynote Presentations or Advisory? You can get in touch at [e-mail] or find out more at maffeodrinks.com 

Creators and Guests

Host

Chris Maffeo

Drinks Leadership Advisor | Bridging Bottom-Up Reality & Top-Down Expectations

Guest

Brian Rosen

Chairman | Investbev Capital Management

What is MAFFEO DRINKS Leadership Insights?

The MAFFEO DRINKS Podcast is a leading drinks industry podcast delivering frontline insights for drinks leadership.

For founders, directors, distributor MDs, and hospitality leaders navigating the tension between bottom-up reality and top-down expectations.

20+ years building brands across 30+ markets. Each episode features drinks builders: founders, distributors, commercial directors, sharing how the drinks industry actually works. Not the conference version. Honest conversations.

Insights come from sitting at the bar.

Beyond episodes: advisory for leadership teams, subscription with episode deep dives and principles to navigate your own reality.

Beer, wine, spirits, Low and non-alcoholic.

Bottom-up Insights & Episode Deep Dives at https://maffeodrinks.com

Welcome to the Matheo Drinks
Podcast.

I'm your host, Chris Matheo.
In episode 29, I had the

pleasure of chatting to Brian
Rosen.

He's the Chairman of Growth
Beverage and founder of Invest

Bev Sprout Beverage, Bev Strat
and Algoma Capital.

He has the case of experience in
building drinks brands in the

US.
He gave us incredible insights

about the dynamics of the US
market.

I hope you will enjoy our chat.
Hi, Brian, how you doing?

Hi, how are you, Chris?
I'm good, I'm good.

Thanks for accepting my
invitation.

That's a good honor to have you.
I've been following you for a

while on LinkedIn.
We've been connected and finally

we we actually meet in person,
so to say.

We should tell your listeners
the truth.

The truth is that I've been
following you and I reached out

to you and I said you need to
have me on and you said yes, no

problem.
So I appreciate your kindness.

But I've been watching your
success and growth for a very

long time and you are the
European version of Brian,

right?
I really.

So I like that with more hair
and probably less body fat.

Yeah, I'm not sure about the
body fat, but on the hair I.

Went on the hair and and thanks,
thanks.

And but anyway, I sent you the
invitation at the end.

So you accepted it.
And to be honest, like you have

been an inspirational for me
because I've been following you

on LinkedIn on when you were
doing all these videos that

you're doing.
And then I said I should do

something similar.
And then it got me like I don't

know, two years to do that.
But now finally I'm here and so

let's have an interesting
conversation because as I told

you, a lot of our listeners are
Americans and and I think the

other half probably they want to
get into the US So it will be a

very interesting conversation.
And So what do you think is the

biggest thing on creating demand
for a brand, for a small brand

because I've been reading what
you are writing on LinkedIn and

so on and you are very
pragmatic.

So we shared this view.
That's why I'm happy to say that

I'm the the Brian Europe.
Yeah.

So any listener, anyone who
wants to be in the beverage

business needs to have one kind
of common theme, I feel.

And yeah, in Chicago, I'm in
Miami today, but in Chicago

yesterday we had our Sprout
beverage cohort.

And we had 20 brands come in
from all over the world who are

vying for this $100,000
investment from Invest Bev, one

of our companies.
When I went on the the stage

yesterday to introduce the
people and to welcome them into

the cohort, I said one simple
product, one simple sentence,

and your listener should know
this sentence because it's the

only thing that matters every
day.

And this is what I said, Chris.
No one needs your shit.

That's it.
No one needs your product.

You're not inventing anything
new.

And I'm talking to the
suppliers, mind you.

No one needs your product.
No one needs your tequila.

No one needs your gin, vodka,
rum, a pair of teeth, lemon,

shello, mezcal, Moscato.
I can go on and on.

Think about it like this.
In the US, there are 50,000

brands that are registered for
cola, 50,000.

There are 500 brands.
That account for skew velocity,

right, 500.
That account for skew velocity.

So when you look at all of those
things together, no one needs

your stuff.
So my pragmatic way of entering

the US market learn that lesson.
Because when you learn that

lesson that no one needs your
stuff, you become the best

salesperson you could possibly
be for your own brand.

That's a great line there
because I come from an export

experience in my corporate
previous life, so to say.

And I I was working for all
these big major multinationals

and beer, but I was always the
the export guy.

And I remember like having these
meetings and we were invited to

all these big meetings with all
the big companies like Pilsen or

Collins Republic, you know Pedro
in Italy, old basically they

were either #1 or #2 or maximum
#3 in the market you.

Know what they were asking you?
Hey, tell me about the flavor

profile of of Pilsner.
Account.

No one said that you just
entered there like it's like

selling Cocacola.
It's just like you go in and

they know you.
I mean it's just like.

Listeners and my customers are
the same, and they're all

artists and they're all
Craftsman.

And if you're all left brain
like that, you're pretty shitty,

right brain?
Math, business planning,

forecasting, what you can make a
great product.

And so that's why this business
is so hard.

And there has never been a
business that I've been

experienced in where you spend
all this money in advance, you

spend it on sales, on
formulation, on growth, on

label, on bottle, on this, on
that, before you've sold your

first thing.
That's right.

So you're already 100,000
dollars, $200,000 in the hole

before you get out of the gate.
That is the thing.

A lot of these brands that we
are talking to, they need

guidance on where to spend money
because there's a lot of

messages that I get and I'm sure
you get the same.

Can I pick your brain?
Can I get your feedback on this?

Can I get a?
Brand was ever made by the

quality of their tshirt.
Hey, what a tshirt should I get?

I don't know.
How about a sales team?

The thing, the thing that drives
me nuts sometimes is that I say

OK, oh sorry, I haven't got
budget to work with you as an

advisor.
And then I say, OK, actually I

feel bad And then I say, OK, let
me see how can I help you pro

bono for a second?
And then I realized that they're

spending a lot of money on
conferences, trade shows, your

example tshirts and merchandise
and so on.

And then it's just like why you
spending all this money in this

BS rather than actually putting
the money where you know where

it matters.
Listen, this is like a little

bit of what I talked about
yesterday as well with the

Sprout cohort.
It's a simple business.

You and I talked about it at the
top of the show.

It's a simple business blocking
and tackling.

Find one account that's near
your home or near the distillery

or near the winery.
Find one account and make them

your lighthouse account.
Give them the support.

Make them everything they need.
And then from there you

epicenter out.
You go out from there's and you

because you can go.
If you're selling 10 cases a

month in this account, you can
go to that account and say I'm

selling 10 cases a month over
here by a couple cases you can't

do.
How bad can that be?

And you go to the next account
and say I sold two cases here

and they're selling 2 cases a
month by one case.

And then all of a sudden you've
created this epicenter of sales.

But to think, to have the balls
as a brand owner or supplier, to

have the balls, to think because
you put it in a bottle, it's

going to sell.
Is going to be suicide for your

brand.
And the brand owner and their

bank account will separate.
There'll be nothing there.

And so you don't want to get in
that position.

So as you look at, as you look
at a brand, you're really,

there's so many kind of nuances
and intricacies, but you really

need to be mindful of making a
brand for everyone and not

making a brand for yourself.
If you make a brand for

yourself, Chris, you're going to
have an audience of one person.

Make a brand for everyone.
You can have an audience of

everyone.
Yeah.

And that's a great, that's a
great point because I think very

often there is this thing like
you mentioned it before, it's a

world of artists now in in that
sense.

And there is a risk of doing the
eco chamber kind of effect now

because at some point is like,
hey Brian, check this out, taste

it.
And there's, oh Chris, I love

it.
This is amazing.

This is you'll smash it.
Maybe I love it, but then it's

just be cautious about that
because create something for the

buyer for the.
Here's a kiss of death.

The kiss of death is a supplier
who comes to us and says I've

been making this cream liqueur
every Super Bowl for 20 years

and everyone drinks it and loves
it.

It's so fucking stupid.
Your audience is not that, your

buddies at the Super Bowl party.
Your audience is 20 random

strangers who don't owe you
anything but the truth.

And when people come to me and
say that I got a woman two years

ago.
I make this cream liqueur and

all my friends love it and I
give it out for Christmas every

year.
Good for you.

That's what you're doing then.
That's not, that's not something

I can invest in.
That's not something I can sell.

That's not something that has
any value to me at all, and

maybe not even to a listener,
right?

And one kind of more thing to
think about on this, if you go

to your and where are you
located in the world?

I can't recall.
I mean Prague.

I'm a Prague.
Trickery, Brad.

Beautiful.
Great pretzels, by the way.

Those those pretzels on the Come
on guys.

Look great.
This is the same universally

everywhere in the world.
The linear shelf is 4 feet.

That's what it is.
A linear shelf in the store is 4

feet.
If your product falls one inch

before the shelf or one inch
after the shelf, there's still

no shelf.
You're not on the shelf.

You're going to have to find a
way to get on the shelf.

You're going to have to find
your competitor and slit your

throat.
Not really.

Like figuratively.
And that's how you're going to

make shelf space, because
they're not going to make more

shelf for you, no matter how
good your product is.

You're not inventing a new
vodka, I promise you.

Right?
So the suppliers are listening

to your podcast, need to
understand they may have the

best thing in the world, but if
the second best thing exists and

is on the shelf, that's your
shelf spot too.

Absolutely.
Absolutely.

And you've been for generations
as a family.

You've been a retailer now,
like, for many years before.

Which part of my career?
Yeah.

And what was the line that would
make it on the shelf for you?

So we were a little different
and I talked about this

yesterday also when we ran
retail and by just by way of

familiarity, we ran the biggest
retailer in America.

So today you would know it is
Total Wine.

So we were gargantuan, but we
start.

We didn't start out that way and
we.

Took everyone in because we're
an immigrant family.

We understand the struggles of
the supplier.

And what's the big deal?
If I spend $500.00 of $100

million company.
If I spend $500 getting Joe Blow

Lemon Cello on the shelf, who
cares?

Who cares?
You're doing the guy a solid who

cares?
And we operated a whole company

like that and some of them took
off and some of them didn't.

And that's life.
It's different now.

It's different.
Now it's all done through

Nielsen ratings and I RI data
and I WSR data.

And if it's not trending, no one
wants it and you've got to pay

to be on the shelf and you got
to pay for your floor stack and

you got to pay for your window
and you got to pay for this and

pay for that.
It's no longer a fair playing

field where you can be judged
simply on the quality of what's

in your bottle.
It's no longer fair at all.

So when I was a retailer was
much easier the our decision

process to your question.
Our decision process wasn't hey,

what's the flavor profile?
What's the hectares for the

wine?
What's the closure?

Who drinks this?
Who doesn't drink this?

It was.
If the suppliers are to come in

and support the brand at a
tasting level, Saturday,

Sundays, Thursday nights and sit
there behind a table and pour A1

house drink for someone and say
try my bourbon, whatever, well,

take them in.
They're willing to work for

their own success.
So that was then.

Now it's a much harder to get on
board and that's exactly why

reserve Bar and Speakeasy and
all these other companies both

of which Full disclosure we own.
That's why those things have

come into relevance because
there's more brands than liquor

stores, there's more brands than
people that drink.

So we're going to, it's going to
continue to shuffle out every

kind of skew reduction
opportunity.

It's going to continue to
happen, but.

I've would not want to be in
retail now and I would not want

to be a brand now.
Now we own a bunch of brands.

So I'm not, I'm OK owning them
and helping and advising, but I

would not want to be the
operator of a brand because too

many brand operators, suppliers
have this Pollyanna vision of I

make it and they will come
customer and it's just not like

that anymore.
And you really got to be smart

and creative and social media
driven and and all of those

things and how do you create
demand for a brand.

So like I'm I'm listening to A
to a podcast that is very

interesting.
It used to be called the state

of demand, Jen, now it's called
the revenue vitals and it talks

about creating demand and
capturing the demand.

And I really love that also for
our industry now because nobody

wants to go into a bar where
nobody has heard about you know

or to a retailer, you know, like
it, it doesn't make sense.

So if I come to your retail or
to your bar and you have never

heard about it, with all the
connection you've got, there is

something wrong.
Now if you haven't heard it,

probably there's very high
chances that I haven't built any

demands.
So how can a brand build that

demand to appear on the radar
before entering and trying to?

It's a new day, man.
It used to be.

Hey, we're gonna spend so and so
in print, and we're gonna spend

such and such on billboard.
And it's over now, because now I

could have my son make my social
media account and you can get

10,000 likes in two days on a
brand.

You have to create great social
and more important than anything

else, you have to be able to
prove to an account on and off

premise.
You can drive people to it.

You got to prove to an account
that by you taking one case of

my brand, I can bring 100 extra
people into your venue, into

your bar, into your restaurant.
Because no one needs what we're

making, not a soul.
And how do you create demand?

Good poll programming, good
strategy work, knowing who your

audience is.
If you are making a drink for

lefthanded people, don't go to
any righthanded stores knowing

your audience.
And it's okay to be the biggest,

tallest person in the sea of
short people.

It's okay.
But you don't want to be a tall

person in the sea of giants.
So going to pitch.

LCBO in Canada are going to
pitch.

Bevmo or Total or Specs or
Binny's or Stew Leonard's or any

of these things here in the US
and not knowing your audience is

just a death wish.
Make a great bourbon.

So go pitch Brooklyn, where
people love bourbons and craft

and unique and unusual.
Go to Brooklyn.

You want to make a great
sacramental wine?

Then go pitch the archdiocese,
right?

Don't pitch the Jewish
Federation.

So there are.
People that they get caught up

and how big they can be, not
even paid attention to the

audience that's right under
their nose.

Yeah, that greases a lot of the,
a lot of the friction of getting

on the shelf.
It goes back to what you were

saying earlier, which I'm a big
fun of building the like we used

to call a local bigness.
No, In our old days is be

perceived bigger than you are in
a certain neighborhood, in a

certain area, because that's
where you can actually make an

effort, No.
And if to your point, if people

are not going to buy it and they
are living 100 meters from the

distillery, why should somebody
in Europe buy it?

And it's so fucked up.
Like people that have a

distillery in Minnesota and they
want to be the number one

bourbon in LA.
Even everyone bourbon in

Minnesota, yeah.
Think about it.

You're most powerful, Chris, in
your own neighborhood.

You're most well known.
You're most well respected.

You get the most favors.
You get the most waves right in

your own neighborhood, Yes,
that's where you're going to be

the most successful as a person.
Being a bourbon distillery in

Minnesota and thinking you want
to be on the shelves of the Ivy

and of Wally's and on Disney at
Disneyland.

It's just silliness.
And people think, oh, I don't

want to start so small.
It's bullshit.

And I'll tell you something
else.

People always come to me and
they're like.

I've got national distribution
with Southern or I've got

national distribution with
Breakthrough.

That's great.
How are you selling it?

I only have one salesperson, so
the national doesn't mean

anything.
You've got the cost of being a

national brand with the sales
and being a local brand.

People put the cart way ahead of
the horse and it's only going to

lead to Trump.
We clean up this mess all the

time with our brands.
This is super, super true

because there is a tendency to
think no, no one is a prophet in

his own land kind of thing.
So it's like I'm the Minnesota

bourbon so I want to launch as
far as possible because

Minnesota people they would
never get it.

I'm the.
You know, yeah.

So I like to get born and raised
here, but they would never

understand exactly.
So there is that element and

then there is that kind of like
moment of like self-confidence

in which you're going for the
most trendy CD's around the

world and you think you're going
to make it.

No, and I'm not with big.
Market will tell you the truth.

The market doesn't care how
handsome, how rich, how poor,

how smart or dumb.
The market will tell you the

truth.
If you're not successful in your

own backyard, you're not going
to be successful in someone

else's.
That's just a fact.

And so, as you have known me,
I'm pretty frank.

I'm pretty honest.
I'm definitely forward in my

comments.
And the more brand, and it's not

because I'm as a person, it's
because this industry is People

get lied to all the time for the
wrong reasons.

People get so pumped up with
bullshit when the reality is if

you sell 100 cases in Minnesota,
in this case in a in the 100

bars in downtown MSP, that's
success.

You've got less travel time,
less truck time.

You've got no export tax.
You don't.

You have one distributor.
You're a local hero.

You're the guy who owns
Tattersall or whatever the brand

is.
That's good enough for right

now.
And then you rise and repeat in

another market.
But to think for one second that

anyone in New York or LA gives a
shit.

It's just plain ego.
And when you start playing with

the ego piece, you're fucked.
Because people make good bourbon

everywhere.
Everywhere there's good bourbon,

not just Tattersol or in this
case Tattersol or whatever.

The Minnesota brand would be
100%.

And there is something like I
was, I'm having Steven Grass as

a guest on the podcast.
I was reading his book Brand

Mysticism and he has a line
there that he says nobody says

no in LA and and it resonated so
well because is this thing, like

we know that this is the people
business because we do drinks

and we have fun and it's a nice
environment, but it's sometimes

it's too supportive in a fake
way because Oh yeah, I love your

product.
You're going to do great.

No, you're not.
If you don't put the effort and

the feet on the ground, then you
take the effort on doing the

boring steps, like apart from
the sexist stuff, because nobody

wants to do the effort.
Everybody wants to do the sexist

stuff.
No, I'm going to be out agency.

I'm designing the logo.
I'm talking to a cool designer,

but The thing is that then you
open the door is like if you're

training at home while you're
doing all the push ups and then

you're checking all your clothes
and you're trying 5 shirts on

and then you go out and you have
the wrong clothes.

It's just like, you know, look
out of the window.

It's a blocking tackling
business, that's what it is and

you got to do the basics people
get very excited about.

I sold 1000 cases here or an
international distribution with

our in DC or the Liquor Control
Board of Canada wants me or the

Pennsylvania Liquor Control
Board wants me.

That's great.
People forget if I can run it

through.
You can sell as much as you want

into the three tier system into
the channel.

If no one buys your shit on the
shelf, you're still out of

business.
You're one and done.

That's it.
So your PO is go way up.

You get a lot of cash that comes
in, no customers pulling off the

shelf, which is the key.
No one pulls.

That means that retailer is not
going to buy again, which means

that wholesaler is not going to
sell that retailer, which means

that wholesaler is not going to
buy from that importer again,

which means that importer will
drop you.

So this business is not about
big drops and let the consumer

discover you.
It's about slow, methodical

buildup to a manageable across a
full P&L and a G and a according

to gap accounting.
Like the the the running of the

business.
It's a slow and methodical build

up to your success and people
that try and get too big too

quick, fail always since
prohibition.

What you explained is the
essence of my philosophy or

approach about building brands
bottom up now, so it start from

the glass.
It doesn't start from the

distillery, like the flow is top
down.

As long as you have created that
a flow backwards, Chris.

There's four audiences here in
the States, there's four.

You've got a different message
to the investor, a different

message to the supplier, a
different message to the

retailer, a different message to
the consumer, 4 messages.

And they're all different
because all of them have

different needs, all of them.
So supplier wants to sell their

goods, investor wants to make
their money, distributor doesn't

want to get stuck with the
thing, the retailer needs to

sell it to pay his bills.
And the consumer wants to

discover something different,
something new.

And that all has to repeat every
day.

So if you are coming into the
market with one pitch deck,

you're coming into the market
with one message, you're totally

fucked.
You got it, It's 4 messages,

it's 4 decks, it's 4 audiences
and four calls to action.

And that's what people don't
get.

It's not about the juice or how
about Prettier label is, or how

or the Spotify playlist in the
back of your label that you want

people to drink as they enjoy
your Caribbean rum?

That's great.
No one can enjoy it if no one

can buy it, if no one's gonna
buy it, if no one can see it.

No one's gonna see it if no one
purchased it before from the

distributor.
Absolutely.

And how do you?
I'm not passionate at all about

this shit.
No, not at all.

I can see that.
I love listening to you because

I know what you think about
things, but we never had a.

The discussion around it, and
The thing is that it's very

aligned in the thinking, because
sometimes I'm afraid that I

sound negative when I'm talking
to people because I speak the

truth and then it's like, what
the fuck?

Like, why did I call you?
To ruin my day?

It's funny because you're in the
you're a consulting gig, right?

So as a consultant, the more
negative you sound, you're

really discouraging your
customer from hiring you.

But the right and so you're
like, do I be optimistic and say

there's an opportunity so I can
get this retained relationship.

The reality is you're doing a
bigger service to the brands by

being honest and what the market
looks like, then not that's

going to be your win.
This other stuff, people who

really want to be in the
beverage business are going to

continue to move forward with
you.

Because honesty is not the deal
breaker.

The deal breaker is when the
person sees the honest outcome

and then turns around.
Yeah, but if they really want to

be in the business.
Honesty, Pollyanna, optimism.

It's all part of creating a
brand.

I love the Pollyanna face and
one of the things that I

remember of what she was saying
that nobody ever thinks about

this, I want to go big thing is
what she was saying.

One of your videos like recently
about the fact that you need.

You need to be well funded to do
that.

Like you, you've got so much
money at stake on just even just

some payment terms.
And I would say be careful what

you wish for because do you
really want to be in in Costco?

Can you afford being if the
buyer is your cousin?

Can you do big deal here?
That's the cousin that ever gets

going to Thanksgiving.
Our private equity firm Invest

Bev has right now $250 million
under management.

We have brands like Reserve Bar,
Speakeasy, Siembra, Tequila,

Nomadica, Ceelo canned cannabis
beverage and about 100 and 1000

and $20 million worth of raw
whiskey.

And I tell you this, not for
bravado.

Every one of them, everyone is
running out of money.

These are brands we own.
They run out of money.

It's an expensive business and
there is a precipice.

There's a bar you have to cross
where you say I'm going to go

for the revenue number and fuck
everything else or I'm going to

go for the net income number and
run a business.

And so this running out of money
is the single biggest thing that

happens in the adult beverage
business.

And by the way, now what's that
ad on top of that?

There was a time during the
previous presidential

administration here and a little
bit of the end of Obama, where

it was all about revenue.
Grow revenue, get sold.

Grow revenue, get sold.
The way the interest rates are

around the world, the way
inflation is right now, the way

this recession is playing out,
you really have to build a

business to run a business,
which means managing your labor,

managing your cost of goods,
managing your sales strategy,

managing your marketing.
You have to do that because if

you're run out of money, the
same environment that lets you

exist is not giving money
anymore.

Not giving any money anymore.
I'm not giving money anymore to

things I don't believe in
wholeheartedly of people that

can run a business.
It's not about everyone gets

George Clooney on the mind or
Ryan Reynolds or Babe Rose or

any of these fuckers.
Like neither of us are George

Clooney.
Chris George Clooney had

lightning in the bottle.
It's an average tequila with two

super handsome guys with two
super hot wives that are high

profile and can talk about their
shit all the time.

At the same time their tequila
was in every reality TV show in

the country being talked about
for free at the same time they

were the first, the celebrity
game.

That's how you get a billion
dollar evaluation.

Not if Brian and Chris make a
tequila.

Look at these two ugly fuckers.
No one's going to buy our shit.

So people that use George
Clooney as a model or Ryan

Reynolds, the sexiest man alive,
according to People magazine,

people who use them as models
and say, why would you invest in

my gin?
Look at what happened to Ryan

Reynolds.
Because you're not Ryan Reynolds

at all and you're not George
Clooney.

So now the makers have to really
make a business.

They have to make a business.
And that's where the rubber

meets the road here.
My point, to your point, you

need to have a business model.
You can't just run for the

finish line without shoes on.
You need a business model that

you can execute on that's
articulate, that involves a two

or three, a five year lifespan
so you don't run out of money.

Yeah.
And and what, what is the

biggest driver on running out of
money as many elements, I'm

sure.
But is it maybe that they, they

trust labor and production?
Yeah, yeah, you're over labor.

You got something in your head
that says you need to direct

national director of sales who
charge you $250,000 a year.

And you wrote his contract run.
So he's not incentive for any

sales or opening up markets or
any distributors.

You got to pay the guy 75 grand
and pay him 200 grand for

success.
Instead, the young founders say

I need a director of sales.
I'm going to pay this guy 250.

That's a mistake.
It happens all the time.

I see it every day.
Mistake one.

Mistake two is you overproduce
from market that you have not

yet seasoned because you want to
lower your gross margin.

So you're going to go and buy
1000 cases of X even though you

haven't proven anything, but you
got a really good gross margin,

but no one's buying it, rather
have a worse gross margin,

produce 100 cases of it to
approve a concept in a small

town somewhere in the country
and then by 200, same small test

then by 300 and slowly raise
your gross margin.

And investors, people like us,
we will see that.

We will applaud that.
Any savvy investor will see that

and say they're managing cash
flow properly.

I feel good about giving them
$1,000,000.

Yesterday we closed on
$1,000,000 investment in 10 to

one rum.
I don't know if you saw that

12:50 rum is a rum that Mark
Farrell is the supplier.

We're in it with Diageo and
Froghorn and we're the third big

in there.
Mark is a incredibly smart

Harvard graduate operator.
No extra expense, no extra

fluff, no extra bullshit.
He's running his company like

every day is the last day.
The suppliers that come to us

and run it like, oh, we'll be
just fine, We're just going to

increase sales, and then if we
can, we'll raise more money.

It's not real.
It is not real.

Has that been inflated by the
market, by the economy in the

last years pre code?
Inflated by the interest rates

that are so low, that high net
worth individuals and people can

borrow money from their
portfolios or get money to the

brand somehow, someway.
And it's not a big deal because

it's only costing them 2% of
money.

Now money's 8%.
So if I give you $50,000 for an

investment a year ago, I'm
paying 1000 bucks a year for it.

Or two years ago, 1000 bucks a
year.

Now, if I'm giving you $50,000
for investment, I'm paying 4500

for it, yeah.
So why would I possibly want to

do that?
I think that the industry got

too weak in a way.
It's just like things were

moving.
Relax.

They believe their own bullshit.
Yeah, yeah, suppliers.

They go to this supplier.
That supplier.

Hey, who'd you raise money from?
Who you raise money from?

Who's your partner here?
Who's your partner here as an

investor?
Couple things are turnoffs.

If you don't know your numbers,
don't come to me.

If you put George Clooney your
deck, don't come to me right?

Because saying to me that
tequila is $100 billion market,

just look at what Casa Amigos
did is bullshit because you're

not George Clooney.
And the last time I checked, you

didn't do Oceans 1112 or 13.
So that's two And three is

saying I'm going to burn money
in sales until that income

catches up.
Those three things will turn me

away because it's not real that
you're living in the past, it's

those days are over Now you have
to create a business that runs

on its own gas.
Nice, nice.

This is a great advice and and
what do you think like being

based in the US and you are
working with Sony Ranzan here

from Europe like whoever I'm
talking to, they always like

this here the US as the as they
would see the US from every.

Person who left Europe and went
to the US know the El Dorado and

I'm gonna make it and and yeah I
need I can make it anywhere.

Yeah, and I need to go to the
USI just hired a director, says

director for the US, export
director for the US market.

And I'm always smiling when they
tell me that because it's just

be careful what you wish for.
Yeah, so the US is a good

market, but everyone says the
same thing.

You have to be in the US so
everyone that is coming here

feels they need to be here,
which just makes the competition

here a lot more frothy, right?
Couple On top of that, the the

three tier system you take out,
the ability to go right to your

end consumer.
You can't go to the market.

You have to go through your
importer, your distributor, your

account, your consumer, 3 tiers.
You have to be well over

capitalized.
For every dollar you think you

need in sales, you need to add
$10 in marketing.

Then you need to add depletion
allowance on top of that for

distributors.
Then you need to Co fund a

depletion bank at the
distributor.

It's very expensive.
If you come here and you're not

well capitalized and you think
it's just going to go, you're

wrong.
If you come here and you go

through a 3P L like Lib Dib or
MHW or Park Street, you're going

to be in market but you're going
to be undercapitalized as well

because in those models you
don't get paid until someone

buys your goods and established
earlier here.

No one's going to buy your goods
because no one knows you exist.

And the same way I started
yesterday's seminar at Sprout,

no one needs your product.
No one.

So using America as make you
laugh the Pollyanna like the the

end of the road that the way it
needs to be.

Own your backyard.
If you're the best thing in your

region, own it and bankroll all
that cash.

And when you get to a certain
level, come to the US and you

get guidance on how to do it the
right way.

But it's not a 40 foot container
coming into La Jolla or coming

into New Jersey and saying I
hope it works.

It's airlifting 100 cases here,
overpaying for it and seeing if

it works before you take on that
massive expense.

Yeah.
Why do you think they do the US

likes when it's talking to
people entering the market.

Do they use it as a kind of like
I want to?

I want to show that I'm in the
US so that I can get into other

markets.
Or do they really, truly believe

that they're going to make it in
the USI think everyone, I think

everyone believes what's the
point, Otherwise the people make

the mistake.
There's a lot of people that I

used to deal with way back in
the day, Eastern European brands

and Czech and Croatia and
Sylvania, all these kind of

Eastern European type brands
that would come over.

And so these guys would say to
me, I want to be in Brooklyn.

And I would and I would say, OK,
tell me the Eastern European

population in Brooklyn, oh, I
don't know.

Once you want to be in the place
where the most checks are or the

most Romanians are, that's where
you want to be.

Because they want to flavor from
their whole country.

Conquer the backyard, Conquer
the low barrier of entry.

Do the hurdle jump on the
shortest hurdle going.

Wanting to be in Cipriani in
midtown Manhattan with a drink

no one's ever heard of, Where
your core demographic doesn't

go, no or plan to go to said
restaurant is suicide for your

brand.
I'm not giving you any kind of

hey, here's the secret advice.
I'm giving you common sense and

you have to put you, not you,
the royal you, the listening

universe, the watching universe.
Put away the ego.

Think logically.
Don't fall in love with your own

brand.
Know your consumer.

Know what they drink.
Know how much they drink.

Know what price point they're
going to drink at.

Know what retailer will favor
your brand.

Know what off premise and on
premise accounts will favor your

brand.
Those 10 things.

Know them and you'll have a
degree of success.

If you just throw the goods in
the US and say we're here,

you're totally fucked.
Yeah, there's a few element

there because.
One thing is that a lot of

people think too highly of their
brands in a way that that they

say.
For example to your previous

example is I don't want to be
where Polish people are.

I have a Polish brand.
I don't want to be be where

Polish people are because they
used to drink mainstream shit in

the country.
I'm a premium brand.

There is that element of not
understanding how the basic

occasion can be used to actually
subsidize the growth of the

fancy occasional I have an
Italian brand.

Let me go to an Italian basic
restaurant that wants my brand

and then I'll go to Chipriani
because then I've got some

budget to actually discuss with
100%.

And I work with a brand called
Hirosaki HIRO.

Great brand, great brand.
They want to be in Japanese

restaurants.
Let me think for a second.

Let's just pause on that.
Hero Sake did not want to be in

Japanese restaurants where
people drink sake.

They wanted to be in high end
hotels and create a new drink

called the Saketini Sake market.
Sake martini.

Less calories, less hangover.
Of course that part's great, but

your layup is in the Japanese
restaurants.

Take your layup, get your cash
flow going.

It gives you the leash and the
latitude to experiment, to grow,

to think, to market.
I've had no problem with the

Sakatini being at The Four
Seasons or the Peninsula in New

York.
No problem.

It's great.
It's lower calorie, it's better

for you, less hangover.
Fine.

To negate the core group of
people that know sake is

foolish.
And so that's to your point.

Embrace what you are and then
pivot to who you want to become.

To be honest, like it's it's a
little bit like when I started

writing on LinkedIn.
You know, I'm following a lot of

these creators and they tell you
like what are the things you

should do, how you should write
and so on.

And there is a paradox there now
and I remember my early days, I

used to post something on
LinkedIn and my friends and my

ex colleagues would write to me
and say, what the fuck are you

writing?
Is you crazy?

Like you're saying this stuff
online to the world.

But also I was scared of
pressing post because like.

Shit, everybody's going to read
this and sometimes I would

delete the post just after
posting it now.

And The funny thing is that it's
a paradox because you don't want

to write because you are scared
that master would will go out

virally.
If you are a celebrity, who's

going to read my post?
My first post is going to be

read by 100 people that probably
98 of I don't even know.

So what the big deal?
Two are your parents.

Yeah.
And what exactly?

And what, what's the big deal
around that?

And there is the same element on
brands.

You know, it's like, no, my
brand cannot be in a cheap

Italian restaurant.
Cannot do that.

Yeah, but that cheap Italian
restaurant is doing 5 kegs per

night.
My audience, which is global and

substantial, and your audience,
which is getting there, they

want the truth.
They want the truth.

They don't want to be
bullshitted to.

They want the truth.
And I don't give a shit from the

marketing side what I post
because it's the truth.

The suppliers know it.
The distributors know it.

If I went on LinkedIn or
Instagram and I said

distributors don't give a shit
about your brainer, that's the

truth.
That's the truth.

I've heard it from the
distributors.

They say it at WSWA or Bar
Convent or Discus Convention or

whatever.
These shows, they say it,

they've got. 3000 brands and
they've got 20 salespeople.

If they don't say the words, I
don't give a shit about your

brand.
The actions surely do.

Yeah, that's true.
The public needs people like us

to give them the workaround on
how to be better at what they

do.
Because the liquor business in

general is shrouded in this.
Not secrecy, not necessarily,

but this kind of three tier
mystery.

Yes, and that's very true
because.

Last year, for example, when I
was at Bar Convent in Berlin,

I'm going again this year and I
walk around and you could see

their different kind of buckets
of brands.

Now there's the big brands and
everybody's there, like with all

the fancy bartenders, everybody
hanging around and and drinking.

Then there's some up and coming
brands that people actually

looking for and so on because
they build demand before going

to the show.
And then there's the, the, the

weirdos kind of thing.
Now it's just like there's some.

Brands that are there, like they
bought a stand, there is a

person there on their mobile,
but it's just like a random bar

down the street like when nobody
building in.

And the waiter and the barman,
they're just on their Instagram

just because there's no
customers now.

And I feel pity for that, for
them now, because I think like

shit like that.
They spend lots of money but

they don't know what to do.
They don't know how to interact

with the people.
They don't know what.

And I and I stopped last year.
Too many of them just to talk to

them because I.
I was.

I want to give them a chance.
Poor guy.

Like this guy is not talking to
anyone all day.

But even their approach was so
cocky to me that I was like, the

hell is wrong, man.
I remember going, I'm going to,

I remember going to bar Convent
and walk it as with Bev Strat

and walk here which is sales
company for the US and getting

countless business cards And
then coming back to Chicago and

emailing everyone, oh, we don't
need a sales force because we're

with Southern.
We don't need a sales force

because we're with RNDC or
Breakthrough or Works or Opchy

or the Wine Group or whatever.
Then they come back to me in six

months and say we're dying here.
So the business is tailor made

for people that want to support
each other.

We're never going to you and I
and others are never going to

have a sliver of the top 500
sellers in the country.

That's what Real Distribution
cares about.

Bar, Convent Berlin and Brooklyn
and others is a way for the top

500 brands to keep top of mind
to bartenders globally, and it's

a way for the other 40,000
brands to get a minuscule share

of mind.
But no one should ever think

they are in the same boat,
because they're not.

As that.
That's the hard truth on that.

And let's talk a little bit
about the one of the the quotes

that that you mentioned that
I've learned this word from you.

I must say OMD, October,
November, December.

You know, I I love listening to
you.

I, I'm waiting for October just
to watch your videos of when

when you shout everyone that
that it's OMD tell us about is

OMD because I I'm sure that many
listeners are not familiar with

the.
So October and November,

December is the peak buying time
of the year and 43% of liquor,

beer, wine sales happen during
OMD.

And obviously you've got
October, you got Halloween,

you've got Thanksgiving here in
the States.

You've got Thanksgiving Eve and
Thanksgiving Day.

You've got all the holidays,
whether it's Hanukkah, Kwanzaa,

Christmas or in December.
You've got New Year's Eve.

There's four major drinking
holidays in the last 66 selling

days of the year, which is OND.
Here's a problem with that.

The sales in OND have been made
already.

The retailers that are making
shelf sets and cooler sets and

planograms and all of those
things, that's already happened.

So if you're waiting till
October 1st to get your head out

of your ass, that is already
gone right now.

You're playing catch up because
the buds, the Millers, the

Southerns, the others, they've
already secured their shelf

position and their orders for
the end of the year for

accounts, brands.
If you're if you don't have a PO

from the bigs right now in the
US, you're also out of luck.

So you put that all in a bucket.
Now you say, OK, in the US

you've got terms when you buy
Blues, you've got 30 day terms,

net terms to pay the bill.
That means that no one is buying

anything of substance after
December 17th because that bill

comes due January 17th and
there's no money coming in

January 1st to the 17th.
So everything that they pay the

bill with is going to be
accumulated from the 17th to the

31st and Thanksgiving.
November is a four week month,

but take away holiday,
Thanksgiving break and vacation

and family time.
It's really only a three-week

months Halloween.
Huge holiday.

But it's a bar holiday.
It's not an at home holiday,

it's a bar holiday.
Thanksgiving Eve is a bar

holiday.
Thanksgiving Day is an at home

holiday right with fam.
So put all of this bullshit in a

bucket and that's OMD.
And to be able to navigate it

starts at the beginning of the
summer.

And if you haven't started yet,
just hang on to your pants and

try and muscle through this
thing.

But you need to have an 0 ND
plan.

It's critical.
I'll give you one more thing

that's going to make you want to
put a bullet in your gun too.

Distributors aren't taking new
brands for the first eight weeks

of the year because they're
recovering from the holiday.

No one will take anything till
after WSWA this year to

reimagine WSWA in Vegas.
That's all real stuff.

So you likely, if you're not
with big distribution in the US

right now, you're likely not
going to get picked up till

March, April.
So all these pipe dreams of I'm

going to go to WSWA and find a
distributor.

It's bullshit.
You're going to get a business

card and that's going to be
started a six month process.

This business is about
preparation.

This business is about doing
what's right for the brand six

months ago, not today.
And so SOND or OND is really the

culmination of all the work you
did.

January, February, March, April,
May.

That's OND.
So that's the moment of truth of

what you've done.
That's the moment of truth of

the realization of the
activities you did months ago.

And if you haven't done them
yet, tough shit.

And and what's the, what's the
biggest thing that prevents

people?
Is it just like timing that

they're just late to the show,
They're focusing in their

business, they're not focusing
on their business, right?

There's sales and marketing and
there's planning.

The real good brands are
planning.

When you and I are sleeping, the
real good brands are planning.

Why someone else is selling.
If the same guy who's planning

for the business is also selling
for the business, you're not

going to have a ton of a ton of
longterm success.

That's the hard truth.
Now I'll tell you this.

In closing, I will tell you
this.

This is the best business in the
world.

This is the most fun business in
the world.

You can make a shit ton of money
and you can be globally

recognized as a beverage person.
And those are all really great

things.
If you go into it blindly,

you're not going to have great
success.

Neither you or myself or George
Clooney, right?

Hello.
I think I am it sometimes, but

everyone will disagree.
And if you are smart and

diligent and find the right
partnerships and the right

educators to help you along the
way, it'll be just fine.

This is a nice way to to close
this because I think that's what

a lot of the listeners need in
this business like to a little

bit of a kind of like
understanding where to go and

what to focus on while doing
their show.

I speak to a lot of people and
and they say I'm sending your

post and your podcast episode to
all my team and you help us

navigate through the hard times
because.

It's sometimes it's also like a
lonely game if you're a founder,

like it's you're there by
yourself and you have a team

that may.
Arca Lonely Rd.

Yeah.
And it's also because like you

may have people, you may have
colleagues, but they may not get

it.
So you are carrying on the

burden of the show and then
people are just like whoever you

hired or like brand managers or
sales people and strong, but

they don't feel the the burden
that you are carrying now.

So in they need to have this
kind of.

Realizations now that we all on
the same bowl, people are

struggling, brands are
struggling, some of the things

are fine, like you're selling
one case in one bar.

That's a great result.
It's 100% improvement, right?

I mean, look, small wings, if
they didn't, if they did not

have your brand last week and
now they have your brand this

week, that's 100% growth.
That's that's very true.

That's very true.
So Brian, tell us how to find

you online and how to find your
companies and how can you help

people.
Thank you.

I've really enjoyed it and I
appreciate it.

So I run a company called Growth
Beverage.

We're the largest private equity
firm in the US that invests in

adult beverages.
That company is called Invest

Bev.
I run a that's about 1/4 billion

dollar fund that goes for brands
all over the world.

I have another company called
that Goma cap.com, Algoma

cap.com and that is $100 million
debt facility for distilleries

only that have barrels.
I have a company called Bevstrat

which is my most well known
company, which is not my most

well known, my first company
sales and marketing.

So bodies on the ground, boots
on the ground for brands all

over the country.
And then finally Sprout Beverage

which is another really good
company of ours which is

incubator and accelerator
programming.

So right now in Chicago, we had
20 brands come in yesterday and

Wednesday and they sat there for
two days for Bird for boot camp.

That boot camp goes for three
months and then at the end I

award $100,000 to them in cash
and prizes to get their brand

off the ground and supported.
So I am very much embedded in

the startup ecosystem and I've
made great financial strides in

this business and I want to
share that success with brands

so they don't suffer the fate
that so many of them invariably

do.
Nice.

Thanks a lot Brian.
I'm.

I'm sure many of the listener
will contact you and find your

approach very one person.
That's all.

If I can say what if I can save
one life, I will.

Of course.
Thanks for having me.

I'm glad we finally got this
done.

You and I have been dancing for
a long time.

I'm watching your rise into the
kind of beverage ecosystem.

I'm super proud of you and I'm
here for you whenever you need

me.
Thanks a lot, Brian.

I really appreciate it.
You got it.

Thanks.
That's all for today.

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come back next week for more
insights about building brands

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