Airing between regular episodes of the VinePair Podcast, “Next Round” explores the ideas and innovations that are helping drinks businesses adapt in a time of unprecedented change. As the coronavirus crisis continues and new challenges arise, VP Pro is in your corner, supporting the drinks community for all the rounds to come. If you have a story or perspective to share, email us at email@example.com.
In this “Next Round,” VinePair CEO and co-founder Adam Teeter talks with Old Elk Distillery CEO Luis Gonzalez about building a brand in the time of Covid, and how Old Elk managed to extend its reach across 50 states in just two years.
Teeter and Gonzalez discuss Old Elk Distillery’s ties to OtterBox products, why former Seagram’s distiller Greg Metze came on as the team’s master distiller, and the brand’s quick climb to international recognition.
OR CHECK OUT OUR CONVERSATION HERE
Adam: From Brooklyn, New York, I’m Adam Teeter. And this is a VinePair “Next Round” conversation. We’re bringing you these conversations between our regular podcast episodes in order to examine how we’re all moving forward as a drinks business during the Covid-19 crisis. Today, I’m talking with Luis Gonzalez, CEO of Old Elk Distillery. Luis, thank you so much for joining me, and where are you right now?
Luis: Thank you for having me, Adam. Happy to be here. Right now, I’m in Fort Collins, Colo., which is the home of our headquarters and our distillery.
A: So, for those that are unfamiliar, what is Old Elk Distillery?
L: Yeah, so Old Elk Distillery, we’ve built our distillery here in Fort Collins, Colo.
And we have a pretty unique story on how we got started. I wouldn’t say it’s the right or the wrong way, it’s just the way that we really felt strong about starting that I’m excited to tell you about. So here at Old Elk Distillery, we’ve built our distillery as a house of brands versus a branded house.
That really allows us to expand our portfolio, not only for the products that are critical in the market today, but the products that are also critical and important to a lot of our customers and our distributor partners across the country. When we first started, we started this business back in 2012 and 2013.
And how we started is pretty unique. Our ownership is a family, we’re privately owned, and they’re the Richardson family here in Colorado. And we’re also the founders of the OtterBox cell phone case company, Otter products. So we’ve got a lot of history in manufacturing and growing global brands in different industries, not only in consumer electronics, but obviously now in the spirits industry, which has been incredibly fun for us.
So when we started, when we looked at the business we said, there’s really two ways that we could go about this. Do we want to contract the manufacturer? Do we want to buy already aged inventory and really launch the brands right away?
A: Which is basically how a lot of people start, right? A lot of people buy brands and buy liquid that already exists.
L: Yeah, absolutely. I think it’s, there’s a lot of good partners out there that do a good job in supplying the liquid to a lot of craft distilleries. And there’s a lot of great brands out there that have taken that strategy and have been very successful with it. For us, it was a little bit of a different approach.
We really wanted to be organic in how we were creating our products and really give the respect and the time that it takes behind delivering an award-winning lineup of whiskeys to the market and to our consumers. And so when we set up the table, we said, OK, how do we want to do this? And what we decided was we do want to make our own custom mash bills.
We do want to start from scratch. But we want to put the money behind the inventory and build the brands and the culture before we build the big glomerate distillery, if you will. And so what we focused on was building our initial distillery. We’re here in Fort Collins, Colo., and really going to the drawing boards to develop our mash bills and our brands within the business that we wanted to put focus and investments behind.
And when it came particularly to the Browns, to the whiskey line, we wanted to start really at the top. We wanted to start with the best expertise that we felt we can get, the best expertise that we had really noticed through doing all of our due diligence in the industry. And it was that time that we went to MGP and we met with master distiller Greg Metze.
And we sat down with Greg and it was really about, “Hey, we want to create our whiskeys, but we don’t really want to buy aged whiskeys. We’re committed to the industry. We’re committed to the investments, and we’re committed to our consumers to produce the best whiskeys we can. So what are we going to do together?”
And it was that time around 2012, 2013, that we decided that we were going to create several different mash bills. Starting with our flagship mash bill, which is 34 percent malted, barley, 51 percent corn and 13 percent rye. And it’s, it’s, it’s a really untraditional mash bill, if you will, that really has a different type of flavor profile.
So that’s where we wanted to start. We wanted to start with. 51 percent corn, 34 percent malted barley, which is really four times the amount of malted barley and the balance being rye. And from there, we expanded our scope into delivering and developing our wheat bourbon, our rye whiskey, and our wheat whiskey as well.
And within our portfolio. And all within 2013, 2012 to 2014, I would say we laid down over 17,000 barrels of whiskey.
A: All in your own facility?
L: Well, we leveraged the MGP facility, but it was really more about being able to scale the inventory. To be ready for a national launch down the road. So we made some products here at our distillery, but our distillery could not handle the capacity that we really wanted to lay down to rest for the country to really hit the country hard five years later. So we made a significant investment in some custom mash bills, and several different mash bills. And we were very patient. We waited five years to launch the business.
A: Luis, can I interrupt you for a second? Because I’m very curious, and I’ve got tons of questions. So first, I’m just curious about your perspective.
So a lot of listeners probably have heard of MGP before, but don’t really know that much about it. And since you’ve been in partnership with them, if you could just explain who they are. I know they have their own products as well, but they do a lot of contract distilling for lots of different brands, correct?
L: They do for a lot of brands and our master distiller now, who is Greg Metze, was the master distiller for MGP for several years and has been distilling for 40 years. And they do a great job of providing the opportunity for crafts and other businesses to really fill the gaps within their portfolio and or spot buy some inventory.
For us it was a little bit of a different relationship. It was a one-time deal where we were laying a significant amount of whiskey down to really give us the opportunity to then go focus on building this path, the market strategy, as well as our culture within our brands.
A: And so you laid a ton of stuff down, we chatted obviously before we started the interview.
So I know you’ve been with the brand for three and a half years. So this was before your time when they were doing this. What was it like for them to take that risk? Because laying that amount of barrels down that you quoted the figure of which I can’t remember now, you say 17,000?
L: Yeah, over 17,000.
A: To take that kind of financial investment, and probably hit, has gotta be crazy. Especially because you know what the distillate tastes like, but you kind of have no idea what it could taste like in five years. What gave them the confidence to do that?
Was it just based on Greg’s background as a master, knowing he had created other great whiskeys in the past? How did you know those were the right mash bills? I’ve got so many questions about that. For people who think about business, it’s such a risk to know that you’re not going to see the fruits of your labors for five years and it could suck. But now yours doesn’t, but it could, right? So how does that work? What goes through your mind when that’s happening?
L: It’s a great question, Adam. I think it really starts with our ownership, the DNA of our ownership and the DNA of all of our executive leaders across all of our businesses are very entrepreneurial.
And they’re very dedicated to whatever it is that we want to do. It’s one of those things where, when we decide, hey, this is our next big opportunity. This is where we want to create jobs. This is where we want to create opportunity for others. This is where we want to put world-class products to market. We go all in.
And for us being organic is very important as well as it ties to the innovation strategy within our business and really the DNA of entrepreneurship that we have throughout all of our organizations. And it’s really led by our ownership. And so, there were lengthy conversations on this isn’t a significant investment, but we also know that this industry is one that if you do it right, and you deliver the quality products, the consumers are very loyal to your brands and they’re very accepting of new items.
What other industry do you have the opportunity to create a really significant product that’s great and quality, and it’s got a great story behind it and it can last for a hundred years? That’s really the industry that we’re in. And so our dedication to the industry, and our dedication to our customers, was to be organic and was to put the investment behind the brands and really deliver something that could stand on its own. And not only stand on its own, but also scale across the country with depth and with velocity.
And so that was the approach we took. We laid down the bourbon and we went back to work on our Otter products business. And five years later came back to really start our hunt across the country.
A: OK, cool. So you were with Otter before coming over to Old Elk then?
L: That’s correct.
A: Oh, OK cool. That makes more sense, then, when you tell me your history. Where you’ve been with the family and the business the whole time. So you were aware of what was happening with the whiskey and then you came into the whiskey business once that was ready. So that makes a lot of sense.
A: So then you brought over the master distiller from MGP, and now he’s just with the Old Elk brand.
L: That’s right. Around 2016, early 2017, we were getting ready to really launch our brands. We have several brands under our umbrella.
We have Old Elk bourbon, we have Dry Town gin, we have new Cooper B Cream. We have PBW, we have Whiskey Smith. And it was getting time to really start our distribution and our drive across the country. And we went to meet with Greg and we just put a phone call out there and met with him for a lunch and said, “Hey, you had a big hand in developing all of our products, and you laid down all of our products for us, so we’re here to talk about having the opportunity to join the Old Elk family and be our exclusive master distiller.”
And he was so excited. I don’t want to speak for Greg Metze. He’s a wonderful master distiller, a great professional, and a great human being, but he was incredibly excited to join our company and join our team to really round out his career.
He’s been part of building several products for brands, but really always kind of behind the curtain. And this was an opportunity for him to really round out his career as the face of our whiskeys and the face of our distillery, and really continue to push the envelope around innovation and quality and craftsmanship — and also integrity.
And it was, as he says, it was a no-brainer for him to join our team knowing the past interactions that we had had and all the barrels that we had laid down and the opportunity that we had to truly be successful. But it takes a lot of people to be successful. Our distribution partners and our customers.
A: Totally. So, obviously, the spirits business is insanely competitive. And then in a lot of these businesses, to become these massive brands it takes a lot of capital investment and you’re competing against the Brown-Formans, the Diageos, and Heaven Hills of the world.
Why go into spirits? What was the desire? And then why go so big into spirits? Why not just be a small — OtterBox I assume is doing really well — why not be just a small neighborhood distillery that can maybe service Colorado, maybe a few of the surrounding states? What is the desire to be this national brand?
L: Well I think the desire for us is to really deliver global premium brands. And the spirits industry is one that you can deliver innovation, you can deliver speed, you can deliver quality and you can really deliver the things that you feel may resonate well with a consumer and put it out there and try it.
There’s several great brands and there’s tons of great products and it is highly competitive. But for us, our niche is behind innovation and speed. I get asked a lot of times, how do you feel so comfortable competing against the big guys? And the big guys do a phenomenal job, that’s why they are who they are.
And bigger a lot of times beats smaller, but faster will always beat slower. And for us, we focus a lot on being nimble, being disciplined, but never rigid, being very innovative-forward, listening to the voice of the customer and not being really afraid to stretch our limits and stress our opportunities and the product lines that are important.
So, it was one of those industries that we felt has a lot of history, a lot of proven history. Has a lot of great players and we truly felt that the way that we can approach a strategic operational plan and a portfolio plan really could add value, not only to our distributors and our customers, but really deliver a quality product across the country — one that resonates with our consumers.
A: Yeah, because when you say speed, I get speed. Right. But it’s hard to be fast with whiskey, right? Or with good whiskey, right? So that’s one of the things that you saw, I’m curious about what speed means for you?
Because one of the biggest knocks that you hear from spirits aficionados — I hear a lot from beverage directors — is one of the reasons that craft whiskey especially hasn’t really become beloved in the U.S. in the same way that craft beer has, et cetera, is because a lot of these whiskey producers are trying to take shortcuts in order to get their products to market faster. When the Heaven Hills and Brown-Formans of the world just have barrels and barrels and barrels of aged juice that they can call upon whenever they want to create an amazing 9-year-old or to create a really interesting, unique blend that might have some whiskeys that are 25 years old, some whiskeys they’re 2 years old, et cetera. And they’re not taking those shortcuts because they just have the history and the inventory, so they don’t need to.
And so I’m curious what speed means in that regard when it comes to making whiskey?
L: That’s a great question. And for us, it’s really about not cutting corners and our strategy early on about our significant barrel investment is what allows us to really get to that point of speed. So when we laid down all of our barrels and we launched our business really in November of 2018 is when our first bourbon expression was available.
From 2018 to 2020, we’ve become available in all 50 states. And that allows us to really do a lot of things in the on-premise trade and do a lot of things on the off-premise and connect nationally. And because we laid down several mash bills and an incredible amount of volume, it allows us to launch our first whiskey in November of 2018.
And then we quickly followed up with another one towards the end of 2019. And then at the beginning of this year, we launched our other three.
Our wheat whiskey, our wheat bourbon, and our rye. All of which are award-winning products. So it really allowed us to have the runway to move quickly while we’re continuing to lay barrels down, to fill the gaps in the pipelines of the future.
So you will see some older expressions come out from us, because we’ve planned for it. You will see the traditional aging happening because we don’t believe in rapid aging and we don’t believe in cutting corners, but the investment strategy early on is what has allowed us to move fast with our browns and our whiskeys.
If you switch gears a little bit into some of our other product brands that have nothing to do with bourbon, completely separate product strategy, completely separate profile strategy. If you take it that way, it is moving with speed behind the development of products and brands. So for example, we have a flavored whiskey line coming out that we’re able to put together and deliver a quality flavored whiskey that really resonates with a whiskey drinker, but also has the opportunity for education and cocktails on the on-premise trade and deliver it with speed.
So, for example, we launched Whiskey Smith roughly three weeks ago, and we’ve already started to get it into about 27 States. That doesn’t happen without a very strong distribution partner and a very strong distribution network in which all of our distributors are incredibly great partners to us.
And we wouldn’t be where we’re at today without them. And so I think it’s about instilling the confidence around being able to develop quality products and bring them to market quickly, have a great branding team that can really pull the true story together and show the story from a hearts and minds perspective, and really being disciplined, but not rigid in how and what you’re doing and what market you’re working on or where you’re focusing.
So speed to us, very similar to innovation, isn’t just tied around a product. It’s around a philosophy, it’s around strategy and a path to market and a culture.
A: So let’s talk a little about introducing products, especially new products, right in the lens of Covid. So you’re saying you have this new product Whisky Smith, and you mentioned a lot about on-trade.
Well, for most of the country, on-trade barely exists. It’s barely hanging on. So how are you building brand awareness right now when one of the main channels for new brands to gain exposure — which is great bars across the country — are barely surviving?
L: Yeah. It’s been a tough time.
Not only for several brands out there, but the on-premise trade and what we’ve done to really try to stay connected like a lot of people, is we’ve really driven a very heavy virtual strategy. So we have a great beverage director. Her name is Melinda. She runs our tasting room.
She’s got national beverage experience. So she’s really focused on education virtually for USBG groups, for a lot of the on-premise national accounts who are looking for cocktail activation opportunities or cocktail-on-the-go opportunities. She’s really leading the charge behind education.
And then on the other side, we have Greg Metze, who’s been incredibly involved in connecting with all of our bourbon groups and our customers and our distributors through virtual barrel picks and virtual tastings. And it’s one of those things where when the travel’s stopped, more time was available.
So now we’re able to actually reach and connect more people, connect with more people around our brands and the education around our brands, and deliver something of value to them. A lot of times, they’re at home and they can’t go to work, but they want to start to try to create cocktails.
They want to try to gain some more education. They want to still pick a barrel. They want to be part of that process, and connecting with them through video and virtual opportunities really allows us to stay close to that connection and provide education and provide opportunities for those.
So we do a lot of game nights, social media game nights, we do a series called “On the Bar.” That’s really kind of just starting where we’ll invite mixologists to do a virtual happy hour for our platform on Instagram or on Facebook. And then we’ll connect virtually for tastings, large group tastings or single- barrel picks.
And then Melinda will host a series of videos that’s on our YouTube channel as well as a series of live videos around mixology and creating cocktails with our different products. So that’s how we’ve been trying to really drive the connection during this time.
A: Had you thought at all, since I assume the whiskey business was in planning prior to Covid, obviously, had you thought when all this happened maybe we don’t launch the brand, maybe we hold back or were you just like look, this is the plan we’re going to adapt and just keep going forward.
L: Yeah, as I said earlier, once we really find, and if there’s an opportunity and a gap in the market and something can really be successful — we go all in. We’re very good at adapting and changing some of the strategy that we need to change. We’re very nimble and fast on our feet.
So we never had a doubt about launching it. It just became more focused about “how do we connect even deeper virtually?” And “how do we continue to drive education with these new products coming to market?”
A: Very interesting. And so I assume you guys are looking at tons of data all the time, always talking to customers. What is it that you guys are doing that’s going into how you’re coming up with what to do next?
L: So it’s a little bit of data. Data is always king, obviously. To understand whether where you’re going is where there’s opportunities. And a lot of it is leaning on the experience of Greg Metze and our team as well.
And then a lot of it is in partnership with our distributors. Having the open conversation around where do they see the gaps? Where do they see the constraints? Where do they see the trends going? And us being the partner that’s willing to step up and deliver that product that makes sense for everyone.
And so, yeah education’s a big thing. And for us, not being afraid to fail is another thing. We have a saying around here that if you fail you fall forward, and as long as you’re failing and falling forward and learning, we can make something of it. And then as far as our product strategy goes, I always tell the team we’re going to shoot directional bullets.
And when we hear it hit the target, we’re going to load the cannon and shoot it in the same direction. And so we’re very aggressive when it comes to working with our partners and finding opportunities to deliver products that make sense and are adding value. If it’s adding value, and if it’s driving innovation, we want to go there.
If it’s not adding value, then we want to stay away from that.
A: And so now at this point are the majority of products or all the products produced at the facility in Fort Collins.
L: We have a majority of them there produced. We do use a couple of co-packers across the country to help us with the volume.
I mean we’ve gone from 2018 selling 8,000 cases, to now over 40,000 cases a year. In only a year and a half. So, the systems and processes that we had put in place 12 months ago are already outgrown, and we’re really looking at how we can continue to leverage our facility, and also some great partners around the country who were there to help.
So we do have plans in the near future to bring everything in-house, but right now, we’re really making sure that the dollars are going behind the quality of the brands and the culture of the business and the outreach of our community consumers.
A: Are you in every state yet, or no?
L: We are. We are across the country. We became a brand in all 50 states in about 19 months.
A: Wow. And so is there one brand that maybe is more easy to find than another? If people listening want to go out and have them try something, what would you recommend?
L: I mean our Old Elk whiskeys, all of our whiskey lineups are really performing well and have really been adopted by all states across the country. So our consumers will find our blended straight bourbon whiskey, which was named Best Colorado Whiskey of 2020, and also has a gold medal from the New York Spirits Competition.
They’ll find our straight rye, which had scored a 96 in our ultimate spirits, and was named best international rye whiskey — best American rye whiskey. They’ll find our straight wheat whiskey that scored 94 points in the Beverage Tasting Institute and 92 in ultimate spirits.
And then finally they’ll find our wheated bourbon, or wheat-straight bourbon whiskey that scored a 93 and a gold in the New York Spirits Competition. So a lot of these products have started to hit the shelves along with our single barrels. We’ve done several hundred single barrels across the country, not only with retail outlets, but a lot of bourbon influencers and a lot of bourbon groups as well.
So a lot of our single barrels are out there and it’s encouraging to hear a lot of the feedback that’s coming back and our consumers should be able to find those bottles really spread out across the country.
A: Well, awesome. Well, Luis, thank you so much for taking the time to chat with me today.
This has been really interesting to learn about you guys, and the business, and what you’re doing now and what you did prior to Covid. And yeah, thanks for taking the time and I wish you all the best of luck.
L: My pleasure. Thank you for having us. And, we’ll continue to do our best out there for all of our customers and partners.
A: Thanks so much for listening to the VinePair Podcast. If you enjoy listening to us every week, please leave us a review or rating on iTunes, Stitcher, Spotify, or wherever it is that you get your podcasts. It really helps everyone else discover the show. Now, for the credits. VinePair is produced and hosted by Zach Geballe, Erica Duecy, and me: Adam Teeter. Our engineer is Nick Patri and Keith Beavers. I’d also like to give a special shout-out to my VinePair co-founder Josh Malin and the rest of the VinePair team for their support. Thanks so much for listening and we’ll see you again right here next week.
Ed. note: This episode has been edited for length and clarity.