A Guide to Building a Spirits Brand

Elevating a Beverage Alcohol Product to a Brand

Entrepreneur Maximilian Wagner spoke about his experience elevating a beverage alcohol product to a brand. Wagner discussed the difference between a product and a brand and the challenges along the way in this evolution.

818 Tequila’s 3 Pillars of Brand Building Transcript

David Yan Gonzalez (00:03)

I’m very happy to be here for a lot of reasons. I would like to put together three things that tend to be the most important aspects that people often overlook when building a brand.

First, why do most new spirits brands fail? I’ve been in a privileged situation helping a lot of new brands enter the market, especially in the tequila world. This is probably the most often overlooked problem: “Oh, I have great juice! My tequila is incredibly good and extremely well-made.” Well, your brand is not just the product, no matter how good it is. I’ve seen thousands of tequila brands come and go that were excellent, incredibly good tequilas, and still fail. Why? Because there was not the correct brand structure.

There’s also the way the brand communicates—its voice and image. Those are tangible things where sometimes we stick to our own preferences, but don’t do any research about the quality of communications. Sometimes even the name can be offensive in some cultures, or it might generate inadequate responses because it’s either an insult or a funny word. So do some research and think about the markets you’re going to be able to penetrate using that word.

Then, to me—and it has already been spoken about—there is availability. There’s nothing worse than choosing the wrong type or the wrong vehicle for distribution, because after all, no matter how much you talk about it, if you don’t show up and aren’t present, nothing’s going to happen.

David Yan Gonzalez (02:00)

To break it down into something more tangible: we were talking about three pillars, and to me, none is more important than Innovation. You have to be different; you have to think differently, and you have to be better in order to be different. It’s a two-way road. During almost 30 years in the tequila industry, I can tell you that new technology—similar to what happened in wines and many other spirits industries—is the key to innovation. You have to talk about improved products and the way they feel, smell, and taste. This is something that’s going to create a new culture around it.

Sometimes people forget that old guys like me grew up with a notion of what a classic tequila style was. Well, most people—and especially most new consumers—don’t care about the classic tequila profile. This is the reason why there are so many new brands being so successful: because they found ways to connect with audiences thanks to product style differences.

In my professional life, I’ve been fortunate to work with creative minds creating new ideas. That’s the first step, but you also need something that is sometimes very difficult to find: the combination of knowledge and experience. Experience is what really makes you an expert. You may be the creative, but if you don’t have the experience, it’s going to get complicated, because with experience comes skill—knowing how to do things and how to do them correctly. In the spirits industry, especially in tequila, we have a really big book of things to comply with. So skill is always a big plus in your operation: having people who know how to do things, learn, and apply what they have with new technology. For us at 818, it’s been a crucial element to connect creativity with skill and experience.

David Yan Gonzalez (04:24)

When talking about skill and experience, new tools sometimes aren’t really that new—it’s just finding new ways to use them. In our case, that has meant different modifications to distillation or aging vessels, bringing in more exotic ways of treating wood and wood vessels, and putting liquid in differently—whether higher ABV, lower ABV, blending, or aeration. All these technicalities are very important in generating your idea of creativity so your tequila, sotol, or spirit doesn’t taste exactly the same as the others. This is a very important source of innovation that puts you in a different, more competitive position.

One of the phrases that I love about this notion is: “Don’t be afraid to be the first to do it.” In my professional life, I’ve been fortunate to be there for a few of these instances—on organic certification, or blending American and French oak aging. All these things are going to be very important differentiators. If no one else has done it, think about it: maybe you can. Someone else maybe didn’t have the knowledge, resources, tools, or a combination of all of them, but that’s the only way we generate new knowledge, new experiences, and improved or innovative products.

David Yan Gonzalez (05:57)

Then we move into something a bit less tangible, which is Style. Defining style can be a little difficult sometimes. It’s how we perceive things, how we see, smell, and recognize them. But you know when you have created a style when it just takes one look and you know, “Oh, that’s so-and-so.”

In the case of 818, the owner is a very famous person, Kendall Jenner. In some instances, that has been an obstacle, but in most cases, it has been the most crucial component in getting recognition and positive identification from people, clients, buyers, and so on. So style is always going to be a huge attribute in your brand. You may have this level of recognition, but the most important connection here is connecting with the heart. I’m a big believer in emotional branding. We have to separate what’s objective from what’s emotional. The rational and emotional sides of things are something most brands don’t blend correctly. Believe me, most of the time when you create a positive, meaningful emotional connection, the result is going to be what you’re looking for.

David Yan Gonzalez (07:23)

Regarding active communities, you have to build them. Our social media on Instagram, for example, has 1.2 million followers, while our next competitor has 39,000 people. This is a huge platform for connecting and communicating what the brand and product are doing—not just with romanticism and fancy images, but with actual people using the product and having fun with the brand. Don’t overlook this part.

I would summarize this as: multiply the opportunities for positive brand experiences. Tastings, bar takeovers, and cocktail competitions are very important ways to connect the product with the brand and the consumer.

David Yan Gonzalez (08:14)

For me, the pillar that breaks the deal most of the time is Execution. Make sure that everything is working, starting with distribution. If you don’t have a trusted distributor who believes in the brand, knows how to sell the product, and knows how to speak about it, not a lot of things are going to happen. I can assure you one thing: if you don’t do those things, your distributor is not going to do them for you, in spite of paying them money. Don’t rely just on them—do your work and show up.

Pricing is crucial, and sometimes it’s the difference between success and failure. In our case, our brand did a $5 price reduction, and it increased our sales by almost 80% in less than one month. The product wasn’t the problem; the pricing was the problem because our audience was not connecting with that price bracket. So don’t be afraid to adjust it—pricing is exceptionally important in how you end up having success building your brand.

Finally, building your brand is a matter of passion and love, but money talks. You have to plan and forecast as much as you can, because otherwise, you’re going to end up with a lot of debt and a lot of uncollected money. If I could leave you with a final phrase: if you’re thinking about building a brand, think about all the things you have learned today, but focus on capturing their hearts, because their minds will follow. Most of the decisions we make at this level are more emotional than anything else. Thank you for your time, and now over to Max!

Cardenxe Sotol on Succeeding with a New Category Transcript

Nitzan Podowsa (00:04)

Hi, hi everyone! Thank you so much for being here. Thank you, Park Street University, for having us here. My name is Nitzan. I am the founder of Cardenes Sotol. Cardenes is a brand that started two years ago.

Sotol is a new category—I know not many of you know about it, so I’m just going to give you a little bit of background. Sotol is a Mexican distilled spirit from the north of Mexico. Chihuahua, Durango, and Coahuila are the three states that hold the denomination of origin. Sotol is wild-grown and is not made from agave; it’s made from a different plant named the Dasylirion plant, commonly known as the sotol plant. That’s where it gets the name sotol.

Why open a new category? Opening a new category is extremely expensive, right? You have to spend a lot of the money that you would otherwise spend on marketing or sales on educating the consumer. There are a lot of people who don’t know what it is, so you have to educate them not only about your brand, but you have to tell them what sotol is. So why open a new category? There’s less competition, you can be the pioneers of the industry, and you can create the new rituals. There are no stereotypes, right? For us, it was very important to create something that was authentic. In a world full of commoditized spirits, we wanted to create a special spirit that we could relate to more.

Nitzan Podowsa (01:39)

Here is where we’ve messed up and what we’ve learned:

First, don’t doubt the core values of your brand. There are going to be so many people—and it has happened to us—who come and tell us, “Yeah, this is cool, but I don’t get it.” For example, the name Cardenes is such a difficult name, right? We’ve gone around, people cannot pronounce it, and everyone kept telling us, “Change the name, change the name!” But the name is so important to us and so connected to the brand that we’ve decided not to change it. In fact, we’ve made a whole advertising campaign around just people trying to pronounce the name right. Ensure that you have a very strong bottle and a very strong design so that people can look at it from afar and it stands out. Don’t doubt your core values—you know your brand.

Second, don’t overcomplicate the product. Our brand has so many details. We talk about sotol, we talk about terroir, we talk about the story, about the bottle, about art… there are so many things that describe our brand that it became complicated for people to just remember everything. Try to be consistent with the storytelling. Try to understand what consumers resonate most with regarding the brand and keep repeating that—be consistent so everyone remembers.

If something is not working, change it. Test and learn different strategies. “Don’t beat a dead horse,” as my business partner says, right? We are so proud of the brand and so connected to it, and sometimes we have a little bit of ego about it, but simply put: sometimes it just doesn’t work. Don’t be afraid of trying different things, accepting a loss, and taking away the key learnings from that.

Nitzan Podowsa (04:01)

When creating a new category—especially in Mexican distilled spirits—it’s very important to work with your suppliers and everyone within the supply chain, because the more they grow, the more you are going to grow. Usually, when opening a new category, the supply chain is not very structured, right? So it’s good to work hand-in-hand to make sure that they follow the right ways of doing things and build a nice structure.

For us, it’s been very important to get involved with regulatory agencies. For mezcal and tequila, you have the CRT and the CRM, which are the Regulatory Councils of Tequila and Mezcal. For sotol, it’s not yet very well-established, so we are working very hard with the people involved so that we have a council that can protect our denomination of origin, just as mezcal and tequila have councils that do that for them.

Last but not least, work with all of your competitors. Our competitors are our best friends! We’re creating a category together, and what we want is for people to know what sotol is so they can order it whenever they are in a bar or whenever they see it on a shelf. If you don’t work with your competitors and you’re constantly just trying to take away their listings or be the one that stands out the most, you are not creating a category—perhaps a brand, but it’s not going to suffice to make an impact in the industry.

Nitzan Podowsa (05:31)

What we think are the top strategies to approach market entry:

1. Jack of all trades, master the known: Don’t go to all the markets in the world right away. Try to build a small market, learn from that market, and then, once you’ve outgrown it, start applying those lessons in other markets.
2. Form deep relationships with key accounts: For us, 20% of our accounts move 80% of our product. That is super important! They are helping us educate, and they’re helping us tell people what sotol is. That is way more valuable than having 100 accounts that each have one bottle sitting in the back accumulating dust.
3. Galvanize the bar community: Do cocktail contests, engage brand ambassadors, and host industry nights. The cocktail and bar community is the one that is going to educate and tell other people about your product, so they are a big piece of the education effort.
4. Balance entertainment and education: How do we create events and activations that educate people without being boring, keeping them entertaining?

Nitzan Podowsa (06:54)

Some struggles along the way: be careful with brokers. We’ve spoken to so many brokers; some of them have been amazing, but some of them have hurt our budgets. It sounds very appealing to have brokers everywhere, but you have to be very smart when you pick them—making sure that they are aligned with your brand and are actually going to make you grow.

Bars get approached by brands 10 or 15 times a day, so they are going to try to find reasons not to work with us. We try to anticipate their objections, offer solutions, and highlight why working with us is beneficial. We sell the knowledge of how to sell the product—we try to get people to really understand sotol and get motivated by it so that whenever they speak about it, they can get the message across the same way we do.

Nitzan Podowsa (08:09)

Go deep or go home! Work with key accounts to make them spread your brand. For example, we worked with Bar Calico, which is an amazing venue in New York. They’ve opened their own sotolaria through us teaching them about sotol. They don’t only carry our brand—they have a huge selection—but it’s the only sotol-focused bar in the US, and they have helped us spread the message very well. La Beltraneja is also a restaurant in Mexico where they have a dedicated sotol bar, helping us spread the message.

This is us! I hope you guys can pass by the booth, and thank you so much for your time.

Elevating a Beverage Alcohol Product to a Brand Transcript

Maximilian Wagner (00:03)

Cool, so that’s me obviously on the screen! I’m Max, a founder of Belsazar Vermouth, a brand which we founded in 2013 and sold to Diageo in 2018. When I was contacted by Park Street about talking on brand building—because, yes, I did it in the past, and I set up other small brands or guided them and helped them along—I wanted to take a more generic look at what actually is a brand: where does it come from, and how does it come about? As always, it starts with a question: what is a brand?

We have this idea of becoming a brand, which is intangible. The basis is always the product or service—this is where you come from, this is simply what you operate, this is the liquid you fill into a bottle and take to customers to show them. You market the product and bring it into a context: do I want to be in hip, cool bars? Do I want to be in old-school, 35-year Michelin-star restaurants? That will give your product a certain idea and a certain image based on the surroundings. Whether you like it or not, your product will adopt certain market characteristics. If you’re only in places where people above 60 years old go, your brand might adopt an image of being a brand for people who are above 60 years old.

Maximilian Wagner (01:24)

When you go there, you will adopt those intangible assets. I’m not saying you’re a victim—you can always put your own idea into a market as well and form it. We heard this previously with entering new categories: when there is a new category and you’re forming it, you set the standard and set the expectations. When you go through those stages of marketing your product and putting it into a market, the product definitely becomes a brand.

When I say “your product,” obviously it has a name, a design, and all those given, rather tangible assets (because it can look great, or it can look shitty). In the end, everything leads to the brand. Technically, that’s it, to be honest. It’s not the most complex concept—we could go deep and make a week-long university course presentation about this—but as a matter of fact, it’s the transition of a product into something spiritual simply by marketing it. Unfortunately, there’s no bigger secret behind it.

Maximilian Wagner (02:28)

There are, however, some lessons I’ve learned in the past 14 years:

• Focus and pick your key characteristics: You cannot be everybody’s darling. Sometimes all of us have ambitions and anxieties, whatever it is we do. I sometimes like punk music, and I sometimes like country music, but I cannot be a brand making a country-punk mix-up—it’s less focused. Really focus and pick what your brand or product shall stand for to become this brand.
• Product quality matters: I’m going to say it—I’m not allowed to write it—but when your product is shit, it will hardly last. The product is always the basis. You can have millions in budget—I’ve seen it and experienced it myself in past years—you can put literally millions of euros into it, but when the product is just not right, the service is not right, or the price is wrong, it will not work. Definitely, if you’re promising something super nice but whatever you deliver to the market doesn’t stand up to it, it will not work.

Maximilian Wagner (03:37)

As I said, as we take a product into a market, it will grow, and unfortunately—or fortunately—you cannot rush time. A day has 24 hours. You will not grow a brand quicker just because you say, “I already have the idea in mind that my brand stands for values A, B, C, D, E, F, G.” That will not happen.

Now, here is the most crucial thing: you can speed up the spread. I like to refer to time technically as shared moments with others. If I go into one market or one bar, I might have one, two, three, or four bartenders talking to their 50 guests. But if I manage to take my product to 25 bars and multiply this, that is where you can speed up brand building. It’s not speeding up time; it’s speeding up the spread. This is where you make the difference.

Maximilian Wagner (04:28)

Eventually, some of you are founders, entrepreneurs, marketers, or brand owners: be quick. It has to be quick and intensive to make the spread work along the way.

To be honest, that’s pretty much it! Thank you very much for your patience. I think I’ll close up today speaking for everybody: thank you very much for coming, and if you want to grab us, yeah, just reach out.

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