Getting a Distributor Is Just the Beginning. Here’s How to Turn It Into Growth.

Melissa Travers [00:05] Hello, and thanks for joining us. I am Melissa Travers, director of community here at Bevnet CPG Media, and this is the How Do I Build this podcast for CPG brands, where we talk with the people building the industry to share practical advice for building stronger businesses. Visit Nambase.com, Bevnet's platform for the CPG community, where you'll find more tactical content to help you grow. Building a brand is hard. Building an alcohol brand from scratch is a first-time founder with limited capital and a product built around an idea that requires some consumer education. Well, that's really hard. Today we are talking to Dana Grant, the founder of Gold Crush, a. Rum RTD brand that she launched last summer. She's bootstrapping it entirely, and she's been building it store by store ever since. She is a former lawyer who grew up in Jamaica, left a legal career to do this full time, and is now navigating one of the most competitive spirits markets in the country. And Scott Rosenbaum is the co-host and partner at Business of Drinks. He is one of the most respected voices in the beverage alcohol industry, and he spent his entire career helping brands solve exactly these kinds of problems. So Dana and Scott, I am so happy to have you here on the Non-base podcast. Thanks so much for joining. I think we're going to have a great conversation here. Thanks,

Speaker 2 [01:32] Melissa. Thanks for having us.

Speaker 3 [01:35] Yeah, real pleasure to be here.

Melissa Travers [01:37] The pleasure is all mine. Um, all right, let's uh. Let's start with some introductions, Dana. Let's start with you. Uh, give us the, you know, give us the story on Gold Crush. What is it? Where did the idea come from, and where are you right now in your journey?

Speaker 2 [01:52] Gold Crush is a brand that is really a love letter to the country where I grew up. I grew up in Jamaica and have had a love of rum. Ever since I could remember, and in the last couple of years there's been this obvious tremendous boom in the ready to drink space, but I noticed that there wasn't anybody who was doing like premium rum RTDs in the way that I grew up with that spirit. And so I wanted to launch what I think is a brand that covers that white space in the market. So we launched last year, as you said, we have 3 skews right now a rum punch classic, a planter's punch, which is a citrusy take on a punch, and a rum mule. We are in about 12 stores in New York. We have a distribution relationship in Atlanta, and we're working on building out that market as well. And really it's just, you know, passion project turned business, so exciting times for us.

Melissa Travers [02:55] Very exciting indeed. Scott, you have spent your career watching alcohol brands, many at this stage, exactly. Can you talk a little bit about your history and what your career in beverage has looked like over the years?

Speaker 3 [03:12] Yeah, absolutely, thanks for asking. I got my start in beverage alcohol, as we so fondly refer to it, more than 20 years ago when, when I was in college, I was working at a liquor store and I found that I was having more fun cashiering and moving boxes than I was doing. What I was studying, I turned that passion into first a career in retail and then later in importing and distribution where I had been afforded the incredible opportunity to start a spirits portfolio that included things like RTDs. So I had the privilege of finding startup brands that sometimes were pre-launch, sometimes were at a few 100 cases and growing them, and some of them are quite big today. And then I got to work at Distilled Ventures where I got to identify other brands to invest and accelerate, so it's been a real pleasure.

Melissa Travers [04:08] Well, you're certainly the perfect person for us to be speaking with today. When a founder like Dana sits down with you, what are some of the first things you're trying to understand about their business so you can give them some advice?

Speaker 3 [04:23] I'm looking along two main themes, vision and execution. So, you know, along the vision, I want to know what the founders' long term goals are for themselves and the brand, and I'm curious, you know, Dana, if you could share a little bit about, you know, is this about building a brand for yourself? Is it about building a brand for acquisition? What does the brand look like in your perfect world in 5 or 10 years from now?

Speaker 2 [04:50] The vision for the brand is tremendous, and I want it to be a real contender in the RTD space. There are so many brands that exist now in the space that don't quite do what this brand does, and I have the sense that It would be beneficial to me and to the company for us to build along, let's say a 5 year track and then get acquired by someone strategic who has the power to really build out a national footprint that makes this a really big player in that market.

Speaker 3 [05:27] So that's a little bit about your vision, and while it is Aggressive. Certainly other brands have been able to achieve that with RTDs. We are starting to see that timeline expand a little bit, um, or they're having extremely successful first years that are having them sell tens of thousands of cases. They're starting from a very high plateau and then scaling from there, but it is possible, um, with, you know, the right funding, the right execution, um. You know, it is important to bear in mind that we are seeing, you know, that timeline expand to 6789 years. A long execution, you know, you have experience, you are an attorney, which probably saves you quite a bit of money in looking at contracts and thinking about intellectual property. But is there anything else in your experience that gives you an unfair advantage over some other founder in the space?

Speaker 2 [06:29] From just a soft skills perspective, one of the great things about being a corporate attorney is that execution is like maybe 40% of the job. Understanding the legal framework is great and you need to do that, but a lot of the job is actually understanding. It's, it's a kind of ops function. And so for me, being able to go in and understand. You know what kinds of production schedule we need to be on, how we need to think about our inventory, it's still really helpful to have that kind of mindset of being able to think through hard problems in a systematic way. And so that's, I think, a huge leg up for me. Especially at the place that we are right now, which is very nebulous.

Speaker 3 [07:25] That though is music to my ears, systems and processes above all.

Melissa Travers [07:29] Dana, as we were preparing for this conversation, we were talking a little bit about distribution, and you were talking about how you've been trying to get the attention of distributors in New York and finding it nearly impossible, which I'm sure is a very common thing for. and operators to encounter. What have you tried distribution wise? What's happened and where are you now? And I know you also have another region that you do have a distributor for, so lay that out for us, please.

Speaker 2 [07:59] I'll start with New York, where we self-distribute, which is what a lot of very new brands do in this market, and that has been Interesting and educational and expensive, which again is, I think, the common complaint for this model. It requires a lot of founder work to do if you're not, if you're not able to hire someone to. go around and be that boot on the ground, so you, the founder, will also be the salesperson for the, for the brand, which is obviously limiting from a, from a time perspective. It has been interesting to talk to distributors about, and I could spend a whole session talking about the distribution model within Bev Alc, but the general sense that I get is that folks are looking for brands to Put in a lot of groundwork before they even get to the table to talk to a distribution partner in New York specifically, but all across the board, I think that is one of the trends that we are seeing come out of the tumult that is uh distribution within the industry. And so there's that side of the equation which is how do we attract folks to the brand and how do we get people to be interested in us. As early as possible at a time when there's so much going on in the industry, you want to be able to get in early enough for you to get the benefit of having a distribution partner, but late enough that you've built some inroads and you have a well thought through strategy within the market.

Speaker 3 [10:03] Yeah, I mean, you've learned, right, that it's not easy to do it yourself, but a distributor typically has 3 jobs, right, to keep the product in stock, to deliver when a customer orders and to hopefully pay their bills within a reasonable amount of time. Anything else you get in terms of brand building or sales is, is extra and um in order to often get those things, it requires support, either time. Or money or a combination of effort as relates to activation, incentives, so forth and so on. So, uh, does that resonate and and what have you found in the other state where you have your distributor?

Speaker 2 [10:45] Yes, that does resonate a lot. I think that just to kind of call to bear some of the stuff that you've had on your podcast recently where I was listening to a distributor talk about what they think their role is, which is not just a glorified. Middleman, but rather, you know, data and providing all of this incredible information about the market and where people should go and accounts and I do find that interesting because to go to, you know, the market where we do have a distributor, I'm not sure that that is the case. I feel that we do spend a lot of time doing that work ourselves and saying, you know, I can go through a list of all these stores. I think these are the people to be called on. I think these are the like insights I can tell you from our experience in New York how I think this will translate because of demographics, where I think we should be putting our energy. I don't think you know the information is flowing to us. I think the information is flowing from us and that is. A, a difficulty.

Speaker 3 [12:03] Yeah, I mean, as, as you've likely discovered, one, not all distributors are, are created equal. Some are better at some functions than others. Often the tension one has to navigate is do they want a larger distributor that will grant them greater access to accounts, or do they want a smaller or mid-sized distributor that might not give them as much access but might give them more attention? You rarely get both. Yes, so defining what good looks like for yourself is important to your point of how to score or land a good distributor, right? Um, the first ingredient that I think folks often overlook is time. This is not something that in many markets, at least not, uh, in this current cycle, is going to happen in 3 months. These are conversations that if you want a distributor. In a year you should start having those conversations now just so they know who you are, just so they know who the brand is, and it's often about giving them something and that something isn't a sales pitch, it's about learning what makes them tick, what's important to them. Is it that you as a brand are low maintenance, that you're not going to be calling them every month asking for something? Is it that they just want dollars in the bank in cases moved, right? Um, because a small brand, uh, often thinks that what I'm going to bring to a distributor is a creative. Even if we only sell a little amount, that's more money they make. A distributor often is thinking that's like, you know, I'm in a rush to get to an appointment. Do I pick up a penny, right? It's probably not worth their time in terms of onboarding, in terms of allocating time and retention and resources to training. So, there is a balance. They have certain desires and different distributors will be different and their thresholds will be different. So finding that out, learning just like you're learning from your accounts is important when it comes to distributors. I'll also add that it isn't always quantitative. Right, there are instances where vibes matter, where social proof, where FOMO comes into play, where there's a psychology. So here it might be a matter of landing, maybe not 300 accounts, but 50 accounts where that distributor has got their eye on what is moving the market and they're wondering why is Gold Crush showing up in all of our top accounts. And that is one way to leverage having fewer resources but being a little more impactful.

Speaker 2 [14:51] Is the suggestion there that potentially one of the things that we could do is work to get some marquee accounts in a location. And then parlay that into hello Mr. or Mrs. Distributor, wouldn't you like to be a part of this because here we are in, you know, 5, 1015 even accounts that are moving products steadily. Is that sort of the advice there?

Speaker 3 [15:23] Yeah, that's part of it, and part of it is going to those accounts and also learning about what distributors they, they like, what distributors, um, uh, make it easy to work with because the last thing you want to be is that all the marquee accounts and land the distributor and then a year, you know, later look back and think I got what I wanted and now I, I regret it because it got me to a certain place, but it's not getting me past where I need to go.

Speaker 2 [15:51] That place, yeah.

Speaker 3 [15:53] All too often folks are happy to land a distributor. In an ideal world, you'd have 1 or 2, sorry, 2 or 3 competing over you, and it is possible, but it requires a longer timeline and more legwork than is typically applied. Got it. That's fair.

Melissa Travers [16:13] All right, Dana, you, you mentioned looking back on your P&L and seeing resources that maybe you wish you hadn't spent, and, you know, certainly without getting into specifics, what did you learn in those early days about spending so far and how are you thinking differently about spending capital moving forward? I'm sure you probably have some questions for Scott in that regard as well.

Speaker 2 [16:36] I think what I thought coming into this as someone who is not from a beverage background was that a lot of other people would have a lot of perspectives that were vastly different from my own and would be able to tell me, you know, the solution to all of my problems, and Obviously that's not the case. Uh, I know the brand better than anybody else, and what I've started to become very, very specific about is, you know, folks who are coming in to help us to do X, Y, thing have to be really, really clear on what it is that that is going to do for the brand. So you know, I'm not going to just hope that the next distributor does what they say they're going to do, and that's something I, you know, again we can talk about kind of figuring out ways to get people to do the things that you want them to do. Uh, but I am very, very specific about benchmarks and time frames and making sure that it's sort of the opposite of like vibes. It's making sure that people are very clear about the deliverables and not just giving vague notions of like things that they can help us to do.

Speaker 3 [18:12] Yeah, it's, it's not uncommon, right? I like to get a little literary. I borrowed from Tolstoy here, so bear with me, but taking him with some liberties, every successful brand is successful in its own way. But the way brands fail tend to follow similar patterns. So, when someone comes in, typically what they're able to do if they're experienced is point out the pitfalls, point out what is a realistic benchmark, but not necessarily guarantee that you're going to be able to capture this buyer's attention or achieve this milestone, that is, you know, if, if they could do that, they'd be. Starting their own, you know, multi-million or billion dollar brands. Yes,

Melissa Travers [18:53] Scott, we talked a little bit about doors and velocity. How should Dana be thinking about that trade-off right now? You know, how do you know you've actually won a market before you expand into the next one and understanding the two regions that Dana is in right now? What would your advice to her be?

Speaker 3 [19:13] Expand cautiously, um, geographic expansion. Without strong velocity, and we can talk about what that means, you know, in very specific terms, it drains capital. It's simply spreading yourself thin, right? If you're only in one market, you typically don't have to get on an airplane to do a ride along or a work with, right, or an activation, and even that plane ticket for a startup brand can be pricey and it eats up time and it's a distraction. So the more you can dig deep. The, the better. Doors can be bought, expansion is, is a hack to, uh, to superficial growth, um, because you can always open up some new doors, but if they are, um, self-sustaining, if they are those accounts that are reordering, um, better to get those closer to home. So, you know, a good place to start to test things. Uh, you know, is just velocity, right? The cases per store per week. And for a spirits-based RTD, right? Various syndicated CPG data, Nielsen IQ Park Street advisory benchmarks, you know, a simple, easy to remember number is 1 to 1.5 cases per store per week. Tells you that you're on a healthy track. If you can do better than that. You're, you're, you're doing something really right. If you're falling below that, you need to figure out how to get there, certainly before expanding, um, even within a market, right? And there are certainly other metrics we can look at, but that is a good simple baseline, um, and I can't tell you how many founders aren't even able to answer or address that metric. Really important.

Melissa Travers [21:05] And Scott, for a bootstrapped RTD alcohol brand like Gold Crush, what are some of the highest return uses of limited capital that you've seen in order to drive that velocity?

Speaker 3 [21:21] There's no one size fits all here for sure, um, because typically what is done with a limited capital is something that another brand with limited capital can do and a brand with a lot of capital can do a lot of, right? So it, it's starting to understand where your brand. Has its again unfair advantage and a few examples here. I know one brand that is in a control state that gets a lot of mileage from meta ads that propels visits to, you know, state-run stores. I know another brand that bundles their product. Uh, with a Prosecco at an end cap, and that's what moves velocity. So it was about spending time finding the right partner. Um, you might discover that it is worth the extra time to figure out how to get into a cold case, for instance, and that might propel, uh, your brand further than spending money, right, to, to do an in-store sampling.

Speaker 2 [22:30] Yeah, no, thank you. I think that's really the kind of thing that we are trying to focus on at this point. Like I said, data collection is a big part of what we are trying to do with the stores that we are in.

Melissa Travers [22:46] Dana, you are fundraising right now. You are working on $500,000 worth of a raise. Can you walk us through what you're hoping that that capital will accomplish and how you're thinking about telling your story to potential investors as a first-time alcohol founder?

Speaker 2 [23:05] What we are hoping to do is collect the information that we've been talking about over the course of this conversation. That allows us to replicate in future markets, so understanding what does help us to drive trial, what does help us to drive repeat purchase, what are the things that are working in the stores that we are in, and that allows us to take those learnings. And obviously there are going to be accommodations, adjustments for different locales, but to replicate those findings in other regions, so that's the first thing. Second thing will be building community. But what I think for a small brand like us is so important is having Followers in a community and people who are rabid fans of the brand. Getting that fan base is part of the initial use of funds in that sort of broader sense. The story that we are telling to investors is, is that. Community is that of heritage and connection to this particular place because that is what accounts for our single spirit focus which itself is an efficiency for us. There are so many other competing RTDs that have So many other spirits that they are working with, we're able to focus on the single spirit. It helps us to simplify our messaging, but it also helps us to simplify our production, and it helps us to really go. Broadly into this category and to really talk to people who are fans of the spirit across a wealth of flavor profiles.

Speaker 3 [24:58] I adore that vision. Um, I, I, I hear the word community bandied about a lot, and I typically see it fall into two categories, what I'll call real community and sometimes purchased or bought community, right? You know, we all know community is not a number of Instagram followers. It is, I heard the word rabbit, I love that. Is, is, show me that on the rum subreddit, folks are talking about Gold Crush. That at this early stage is very compelling because I know you don't have a lot of resources to be in every state, but if I see people coming back and talking about the cocktail online, that tells me something. Um, I will point out in what you shared about You know, your learnings and what drives trial here it's important to differentiate between Uh, what is Good for you in relative terms versus what is good in absolute terms. So here a lot of folks will say, we just need money to get liquid to lips. That phrase, you know, you've probably heard it to the point of being sickened. Well, we, we, we all know in this industry that if people taste it, they tend to buy it. What you want to learn is if they taste it, do they buy it at a Rate that is greater than when they taste other things and buy them, and then do they return, right? That is a really important distinction and the way you're nodding your head, I can tell, right? It is, it is resonating, it is clicking, but that is a way that a lot of founders waste time learning lessons that have already been proven.

Speaker 2 [26:41] When you are in front of someone and telling them about how great the product is and they taste it and you know it's alcohol, it's probably a Thursday or Friday, you can convince people to make a one-time purchase. For us, the really important thing is that that becomes part of people's lifestyles, not just that they buy it. At that tasting, but that they return to the store that they think about us in that context of, oh, it's a Friday night. I am going to my neighborhood store to get Gold Crush cocktails and I'm going to buy again. And again and again. Scott,

Melissa Travers [27:19] can you dive into this a little bit more and help us all understand what investors are looking for when they are talking to brands at this stage of the game in terms of metrics and proof points?

Speaker 3 [27:34] Yeah, the, the good news is at this early stage, the bar isn't as high, right, um, but we're still talking about what I mentioned at the beginning of our conversation, vision and execution. The vision is, you know, that there will be a payday, there will be a return on that investment one day, that this brand has potential, and at this early stage, it's less what the brand has proven and what you as a founder are projecting, right? And, uh, on the execution side, it's that they trust you and that might be as simple as returning an email on time more so than providing a, a simple, you know, revenue number, right? It's you as a founder are accomplishing what you set out to do, what you say you will do. The, the perfect example outside of beverage is, is SpaceX, right? Uh, Elon Musk, love him or hate him, has lots of vision and the company is not yet profitable, right? So, so it's not, right, you can have a lot of vision. Or you can have a lot of execution. Hopefully, you have both, but here it's important to recognize that it's not just about sales at this stage. You do want to be able to show though that you can win where others can't. And right here, I think it is paramount to express to distributors, to investors, uh, to anyone that you are able to win because you don't have to play by the same games that the large players do, right?

Melissa Travers [29:09] Dana, weren't you talking a little bit about the festival circuit and how you were planning on using that as some of your remarks? Can you talk a little bit about that because that seems like it could be a really good example of winning in a place that you could own.

Speaker 2 [29:23] I think for us, there are a handful of places where I think we can show up and where our consumers. is likely to be really happy to find us. Some of that is festival circuits. Some of that is other experiential locations, you know, sporting events, that kind of thing where you are meeting people at a place where that convenience factor is going to be huge. And they're going to be so happy to not have to worry about what to order because they know the brand and they have an affinity for it already. So that is something that we are looking at some combination of either being, you know, working with distributors to get into those places and also sponsoring events where possible.

Melissa Travers [30:22] Scott, is there any strategy that you typically employ when you think about activities like that, like, you know, partnering with festivals for festival circuits, that kind of thing?

Speaker 3 [30:33] Long term and sustained partnerships went out over one-time events which tend to disproportionately drain resources and or attention, um, but really key is when a lot of people land the placement, they think they win and that's when the real work begins is here again, the goal is to learn, uh, what is making the brand tick in these operations, which can sometimes be harder to do because There's a corporate buyer that is, you know, disconnected from the on the floor experience of the person, uh, in the stadium or at the festival, showing up, um, seeing what, you know, how, how it's actually being used, seeing who's ordering, seeing who's not ordering, seeing if the point of sale is being displayed properly, seeing how folks are. Talking about it in the 3 to 5 seconds, they might have to say, it tastes great, it tastes like this. When you buy a can, you're getting 2 cocktails, so you don't have to stand in line again. Um, all those things matter and I don't see enough brands learning. All too often they get in, they get the contract, they land the placement for a year, and then the next year another brand comes in because they didn't capitalize on how to not just sell but improve sales so that you keep that placement.

Melissa Travers [31:50] Dana, I think certainly as we've discussed, your ability to execute is going to be hugely valuable. Your planning abilities also are gonna come into play here. If you think about the next 12 months, what would make you feel like Gold Crush had turned the next corner, gotten to the next level of growth that you're hoping for? You may have this, you know, down to the week, but how are you thinking about tracking progress over the next 12 months to understand How you're growing as opposed to where you, how you want to grow,

Speaker 2 [32:24] it's going to be a combination of two things. One is volume and making sure that we're able to produce at a unit economics number that looks good because that is something that we just have to take into consideration. But then on the other hand, not going so far. Down the road that we are overproducing. So to Scott's point, you don't want to have a store that you onboard that buys one time and then they never buy again. How are we making sure that all the incremental stores that we're opening actually help us to think through that velocity number?

Speaker 3 [33:08] I think it's great to consider things that way. I, I'd urge you to remember that if the goal is to scale at the pace where you might achieve, you know, an exit event down the line, it The problems never are fully solved, they just change in their nature, right? Um, it's what pain do you want because you, the, the unit, the unit economics for any brand aren't solved in. Year 12, or 3, right? Um, the production woes aren't solved in, in the 1st 23 years, right? You're going to need to raise again, even if you are successful beyond your wildest dreams in the next 12 months. So, continuing to learn because the curve gets steeper as you grow faster and faster, uh, is so important.

Melissa Travers [34:05] Well, I can't thank you both enough. Dana Grant, founder of Gold Crush, and Scott Rosenbaum, co-host and partner at Business of Drinks. Everybody should check out your podcast, Business of Drinks. I'm sure on Apple Podcasts, Spotify, everywhere you listen to podcasts. Definitely check it out. There's so much good information in there. Scott and Dana, thank you so much for joining the Non-Base podcast and being so generous with your questions and your answers. It's been a pleasure to have you here for everybody in the audience. Thank you for listening to the Non-Base podcast, and we will see you next time.