013 | The 80/20 rule in export: how to focus on winning on a couple of markets first | Part 2/2 of the Interview with Philip Duff, Founder of Old Duff Genever and Liquid Solutions (NYC, NY, USA)

I'm Chris Maffeo, a drinks industry adviser and founder

of Maffeo Drinks, host of the Maffeo Drinks podcast. This is the second part of the chat that I had the pleasure to have with Philip Duff during the Philip Duff show. I selected some bits and pieces that I thought could be more interesting for you as, they really help you build the brand from the bottom up. So let's dive in into the second part of the conversation and I hope you will enjoy it.

What I noticed that a lot of people do is that they tend to get deal with deals with importers. The first slide I see every deck I get sent to me is always we are sold in 12 countries. We are sold in 15 countries. And I said, but I don't care how many countries you're sold into because I know that you're selling very few cases and I don't care that you got a deal with an importer that may have done a favor to you or whatever you got through connections, but I know that 80 to 90% of your sales are actually coming from one country anyway in the initial stage of the brand. And then the further you go, it still gets to Pareto.

You can go to eightytwenty, sixtyforty. We're always there anyway. So why do you enlarge your distribution into different countries that you cannot control while actually it's only you, one single person, go out in the street, be in the trade and don't bureaucratize your processes so that basically you are forced to stay in the distillery or in your office sending a person out that doesn't have a clue of what they're doing, and you lose control of the markets.

Yeah. So many people get obsessed by expanding to extra states in The USA, exporting, and I had one place in particular. They hired an export manager. He was very good. And he opened all these markets.

He sent a container everywhere, but he had no time to follow-up. So there was nobody in the market explaining what the product was. And years later, I would visit a lot of these markets and there was one particular aspect of the brand that was very often misunderstood. And in every single market, every single person misunderstood it. So I had bartenders explaining what it meant, and it was completely wrong because all that happened was they sold the container.

That's it. Like, selling a container is not the end. It's the beginning.

Yes. And I spent a lot of time in analyzing this, that it doesn't really matter if you're talking bars, if you're talking wholesalers or you're talking importers or countries. The issue is always the same. I may give you another example that is a sales rep in a city that has 50 bars, but then cannot follow-up. You made the example of 50 states, or I can say 50 countries in Europe and Middle East and Asia, but it's always the same thing.

And if you cannot, don't get yourself into something, don't spread yourself too thin because that's what's going to happen. And then you're going to under deliver, not service them enough and so on. And a lot of people are want to enter markets, but then it's so do you have any A and P advertising promotion budgets? No. Do you have a person here that can walk the street and do some legwork?

No. So what do you want? You want me to sell a pallet here to do what? Like, to sit in the importer, then if you like it, it sits in the wholesaler, and then if you like it sits in some bars around the city.

You the about Ketel One, Chris? It's a lovely story. I lived in Holland for seventeen years, and I know the Nolet family that own Ketel One. And I had met all of them, Carolla senior, his son, Bob, but I hadn't met Carl. And Carl is the guy who built Kettle One in America.

Okay.

Because I wasn't living in America at the time. And I was asked to do some stuff. I'm pretty sure it was Diageo World Class, actually, in Vancouver, somewhere I've been many times. And we were gonna do some seminars, go around some bars, talk to a lot of bartenders, and then we're gonna wind up at one bar and all the other bartenders would come there. That was the general idea.

And the lady who hired me said, oh yeah, Carl Nolet's gonna come with you. He's skiing in Whistler, which is nearby. It's very fancy. He lives in California. And he's gonna drive up and he'll come out and hang out with you.

Now Carl is the most charming man in the world. I'm pretty good, but he's on another level. He's really cool. Right? And we we drove around Vancouver all night, hanging out all night, and he told a story that he is in New York.

He's trying to sell Kettle One vodka. Now you gotta know nobody gives a shit about vodka from Holland. No one's ever had vodka from Holland. He's sleeping on the pullout couch of the distributor's son in his apartment. Right?

And he's going around all day trying to sell kettle one vodka, which is quite expensive, and no one's ever thought about vodka from Holland. There was a big place somewhere downtown in New York, an Italian bar restaurant, and he really wanted to be listening there. It was big. It was busy. And every week, he would go in and have a drink and ask if he could give them a tasting of Kettle One because that's what they did.

If he wanted to order kettle one, he insisted on coming in to give you a tasting, him personally from the family, so you would have a story to tell people. Very clever, but a little different. Anyway, every week, no. This one week, goes in, has a drink, and I do a tasting. No.

Walks out. And he's crossing the street, and an older lady falls down in the middle of the crosswalk. So it's New York, so everyone ignores her. He helps her up and he says, hey. Are you okay?

Can I take you anywhere? And she goes, oh, in there. Of course, it was the owner's mother. No way. And the owner said to Carl, oh my god.

Thank you so much. I wanna order 10 cases. And Carl said no. But if you don't mind, I would love to give a tasting, like, tomorrow. And if you like it, you can order, like, three bottles.

And tomorrow was Saturday. So he comes in on Saturday, does a tasting. They ordered three bottles. He gets a call on Sunday. Like, we need 10 cases.

We sold all the bottles. He said, no. I'll bring you three more bottles. So it got to the stage where he's bringing three bottles twice a day, and then he let them order a case and two cases and stuff. But his logic was he could have quickly sold 10 cases, but they would have sat there in the liquor room and every member of staff would walk past it twice a day, the owner, the bar manager, the bartenders, and see those 10 cases sitting there instead of constantly selling out of this vodka.

Yes. That's very true.

It requires a lot of self confidence to do that, doesn't it?

That's a great story. There's a there is a post that I wrote some time ago that I was saying don't sell them one case if they can only sell out a bottle. Yeah. Which is pretty similar. Like, you know, what you told me.

And it's easy to say, okay, oh, we want to have a container, but it's just, yeah, but what are you going to do with this container? It doesn't it, it fixed my month in sales. I make the budget, but if I don't know what's gonna happen afterwards that you are going to call me next month or not next month, but in a couple of months, like saying basically that this beer in that case is expiring and we need to do a promotion to get rid of it. So what is the consumer going to see? They're going to see like a product at 50%, 40% off just because like it's due to expire kind of thing.

So you never create this FOMO that help retaining the share of mind, as you said, like among the staff and among the consumer as well, which is basically like what makes people order at the end of the day.

Yeah. I think it's very hard for the little guys to get in, especially in beer. Supposing you make a nice beer, right? Let's say you make a nice Pilsner really good. There's so many of them out there.

Like how do you get rotation in a bar without a big fat budget?

In my old time, and what I always advise is that first start with packaged. You want to start with bottles because it's much easier to sneak in a bottle of beer in a fridge than a keg blocking one tap because depending on the market, but I imagine people have three or four taps on average, apart from the bigger ones that have 10 or 15 taps. So you are asking them a lot to switch because they need to switch. And that's also another big difference between beer and spirits. If you sell a bottle of whiskey, you're not asking the bartender to switch.

You're not asking them, give me that bottle and take it away. With beer, you're basically saying, okay, I I'm bringing you a Pilsen Uruquel. You were selling Heineken. Call the Heineken people and tell them that you're not going to order next month. That's what you're asking them.

You're asking them for an explicit, you know, breakup.

But a bottle,

you can sneak it in. And then the moment that it starts to sell, then you can start having a conversation. And then similarly to your Kedal One story, and I had many of those with Peroni. At some point I was asked, when are you going to launch draft? It's not the right time yet.

Keep selling bottles and at some point we'll sell draft. And I wasn't playing cool. It was just like the business case didn't make sense to me because kegs also has the rotation and returns and it's quite a big logistic hassle to fix. And then once you get in, if you have done your homework right, going back the commercial proposition, then you know that you're selling to certain bars where it makes sense. I'm having an example here.

For example, there's some beer companies that are asking me for advice here in Prague. And of course this is pilsner land, no? And I'm like, cannot go to a pilsner pub to sell your keg. It doesn't make any sense, no matter how much money you have, or if you're the cousin of the owner, it doesn't make sense. So you have to go to places for which selling that particular brand is not strategic.

So if you go to a Pilsner Urkel original restaurant kind of place, you cannot sell them because they live out of that beer. It's part of the proposition. But if you go to a burger place, if you go to a sushi restaurant, if you go to another type of venue, they don't really care what beer they've got. They may sell a Czech beer, but they don't really care because the occasion is not about Czech beer. They don't go there for beer sessions.

They go there for sushi. They may have a glass of wine, a Prosecco or a beer that could be in bottle or on tap. So it makes a totally different story and that's why it's so important and crucially important to understand where you're going to sell because if you haven't done that homework, you're basically setting yourself up for disaster because you're going to sell to the people that don't want to buy and don't want to buy your brand specifically.

But also with a bottle or a can, you maintain control over the branding right into the hand of the consumer. It's really hard to brand draft beer. Yeah. I mean, you can have a tap handle. You can get a branded glass maybe.

There are some iconic looks of beer like, like Guinness, but with a bottle, you literally put it into the consumer's hand.

Going back also like to spirits where a gin and tonic is a gin and tonic. Unless you can play with a garnish or something that can differentiate yourself, but that also used to work much better in the past before the proliferation of all this gene and all this gene fatigue where now bartenders are getting very eclectically creative with all sorts of plants and fruits to put in the in a gin and tonic that makes it very difficult to understand, like, what actually people are drinking.

I remember I was still bartending in Europe when Hendrix began making waves, primarily actually in The US and then The UK. Yes. But people would come in, and I ran the first cocktail bar in Holland to get in the world's 50 best bars.

Okay.

And they would come in, and they'd say, oh, cucumber gin and tonic. And they meant Hendrix. Yes. They didn't even know the name of it, but they knew that. And that's a win for the Hendrix brand team.

And that's

I used to do that as well.

If you're clever, there are ways around it. Bullet Bourbon having been founded by the entrepreneur Tom Bullet and then acquired by Seagram's and then acquired by Diageo in the implosion of Seagram's. A guy called Steve Beal created a strategy for California based on the entree, which is quite revolutionary. And they did a lot of outreach to bartenders. And one bartender created a cocktail, John Sanser, and it was called a revolver.

Okay.

It's a great cocktail, but obviously you have to use bullet bourbon in a revolver cocktail. You have to put a bullet in the revolver. So I think that there is still ways to do this, to really associate yourself and stand out. And it's obviously been a part of beer marketing for a long time. Like, the lime in the neck of a bottle of Corona is the reason Corona is Corona, I feel.

Yes. And you have to be able to own it. So when you create it, you have to, as you said, like on the bullet and the revolver, like you have to be able to own it and to ring fence it because otherwise, if you're just like creating something that anybody can come in and steal from you, then all of a sudden it doesn't make sense. Like, you can be making money because you are the first one to do it. But if you're not fast enough to capitalize on it, the newcomer comes in and basically steals it from you anyway.

Yeah. After Hendrix launched, Martin Miller's gin launched as well, and they also famously had the secret ingredient of cucumber. But for whatever reason, it just didn't take off in the same way.

Yes.

And I think that's something else that we have to recognize despite our experience and qualifications. For me, in the spirits industry, I don't think anybody knows anything. Nobody creates consistent successes. What they do is they try to get their finger on as many projects as they can. And if one of them becomes successful, they're like, I was part of that.

And also like that that has got to do with, in general, with companies about the rotation of staff. Because I've seen it myself in my in the companies I've been working for. All of a sudden, I may have been one year in a role and I was the oldest guy. Because honestly, that's how it works. A guy gets promoted, a guy gets fired, a girl gets moved on and whatever.

Like all of a sudden you had four marketing manager in a team and you're the only one. And then the new boss comes in and can you tell me the story about this unit? And I'm like, I've been here like a year and a half or even worse, I've been here four months. And all those documents are lost in the ether. I'm sure I know some stories of launches and failures and successes.

You know, they can only stay in PowerPoint in a OneDrive. And, but the reality is different than PowerPoints. So I know exactly what happens, who takes over from me may heard it because I did it in the transition, but five changes onwards, the

reason As though it's that's situational memory.

And you can put in place all the measures that you want for succession planning and safeguarding documents. But in real, the word-of-mouth of the real story, it's just a legend that goes around bars more than around headquarters kind of thing.

Well, an interesting thing, which brings it back to compliance both in The US and everywhere else is, if you're a little brand, you can get away with so much bullshit. You can lie. You can say it's pan made internally. You can be very loose with your staff. But as soon as you get acquired by a big company, they send in two auditing teams.

They send in a production auditing team to make sure everything's fine, but the other team audits the marketing. So if you set your handmade, you better be fucking handmade. And they make sure that everything is above board legal and compliant. And that leads to the greatest sort of dilemma of spirits and beer and wine marketing, which is big companies don't innovate anymore. They just buy innovative little companies because the big companies can get cheap money from the public markets because they're on the stock exchange.

They buy these little successful upstarts, but the upstarts are successful because they're rebels and they're rebels because they're not staying to the rules. Then the big company buys them and makes them stick to the rules. And suddenly the brand has nothing anymore. How idiotic is that though? These companies stuffed full of MBAs from the best schools in the world, can't take a successful brand and make it more successful.

Is there an example of a good acquisition in any of those fields? There are, but

There are, but it depends at which stage you made the example of the twenty three years. When, when we met during Clubhouse, I heard this quote from Paul Letko from Few Spirits, and I love that it takes twenty years to make an overnight cycle. I made it mine. And so it always depends. Brands are living organisms.

So it depends. You can be a success because you're two years into the acquisition. And then at year seven, it's gone. Or it takes seven years of bad things. And then the eighth year is the year of rebirth.

So you cannot really say yes or no in terms of successes. What is interesting is exactly what you said like that. What I've noticed is that brands rely too much on the previous existence of that brand. But when a big company buys a brand. They know that brand because they are from the industry.

They're looking to the future.

This brand, let's say it's the tenth year and it's starting to do really well. Everybody's drinking it. Everybody's talking about it, but everybody means everybody in the industry. It doesn't mean everybody because they are still too small to be mainstream. So what they miss out is that if they start to make it mainstream out of a very shallow floor, then it doesn't really hockey stick.

And that's the situation. The previous owner made it a good brand because they were the people going to bars and restaurants, spending nights at the bar. But now if that team is gone and the new company doesn't have a team that does that and only want to capitalize on supermarkets deal, you're basically burning it. And then it could be two, three, ten, fifteen years. It doesn't really matter.

But you are basically like eroding that brand that was created by founders. So when the less bad examples are where the management stays in and keep and retain some sort of control. But as you rightfully said, it's always very tough to continue going through that trajectory.

We only ask the winners to write books. And that's a problem. We need to study the losers as well because so much of success is literally just luck and timing. And no one wants to admit to that.

And that goes back to what I was saying about PowerPoint presentation within the company. It's like it's always one term I really hate in the business world or spirits is best practices. Can you share some best practice with me as I would share practices with you? I don't share best practices because it's only best because it's written best Did

you on the PowerPoint see that one too?

No, you never see them, but I know them. That's the thing. And I know like how to write a good one from a bad one. That's why that's part of what I am doing on LinkedIn. Talk about the naked emperor.

We should talk about the bad parts.

Because we should talk about that. And that should, that will drive. I wrote a post about this. Like I should, I will post it again. Let's be honest.

Let's let's endorse honesty and then let me say, okay, actually, you know that launch that I did, I messed up here and here. So watch out now that you're doing it. And if you incentivize that behavior, it could be like, okay, if Philip's launch is successful, Chris is getting a promotion because he made the company save so much money that Phillip was about to waste just reading a BS PowerPoint presentation from previous experiences that actually he deserves a promotion. But otherwise I would just hide all the waste of money just to keep my job. And it doesn't how much it happens as long as you learn from it and you get a course correct.

Because that's also the thing. If I take it from a business perspective, like we tend to overthink about things like budget, you know, when you do targets and budgets are living organisms. If I take the budget for May, it's probably already in jeopardy. Let's course correct and let's reassess because all things are living organisms. And of course you need to be accountable.

It's not about, okay, whatever we just did it for fun, budgeting and targeting. But as soon as we know this, let's reassess things. And we are living in a culture in which it's all about hustling and scaling and growth hacks and shortcuts and all these kinds of things while it's about actually doing the right things and improving one percent of the time every single day.

It's something that gets lost. Hey. Let me ask you a question. When people want to get to know the spirits industry, the beer industry, the wine industry, the on trade, Do you give your clients a reading list? Because I have a list for my clients.

Occasionally, yes. I actually have a lot of the books that you recommended to me on on Twitter a couple of months ago. So I've got a few out there. And but I do. I'm a I'm an avid reader, so I I love reading.

So I'm I'm mixed industry books and, like, history history books. I love to connect the two worlds, but yeah, I don't have a list that I give to people, but my actual favorite nowadays that I'm recommending very often is Brand Mysticism by Stephen Grass.

Very good book.

That's the one I really, I devoured it over Christmas Eve and Christmas, you know, just like he was talking about brands I work with. I've been following his journey for a while. It was interesting for me and it was very easy to read.

And then it's very easy. Brand Mysticism by Stephen Grass and Aaron Boldfarb is excellent. And I actually had just bought it, and I was at the Christmas party of the New York Times drinks writer, Robert Simonson, and Aaron was there. So I got to hang out with him and ask him what was it like? Like, go down to Philadelphia or call up Steve, and Steve would just talk and do all this.

But it's to me, everyone should read it. But a large part of it is, if you haven't read it yet, is the creation of a brand universe. And as Steve Grass says in the book, if you create a brand universe, a 200 page, everything who the brand is, who it's for, where it's for, where the people who drink it live, the clothes they wear, their hairstyles, the cars they drive, where they take a vacation, no one can ever take that away from you. No one can ever argue with you. No brand manager, no brand director, no importer.

Have you ever read beer blast by Philip von Munching?

No. I haven't.

It's a remarkable book. And I recommend it to everybody in the spirits business. It came up on the podcast with Dale as well. So Philip's grandfather or great grandfather was actually a steward, a bartender on the liners that used to cross from Rotterdam to New York. And there was an executive of the Heineken company on one of those liners going to New York to find an importer for Heineken beer.

And on the trip, which took two or three weeks then, he got to know this bartender who was very nice, knew a lot about beer, charming, spoke English. By the end of the journey, said, look, why don't you get off the boat here? I'll give you some money and you be my importer. And that's exactly what happened. The porters the bartender's day was Van Munching, and the Van Munching family were the exclusive importers of Heineken into America until six years ago.

Wow.

And what's important about that isn't the beer. They didn't just invent imported beer in America. They did. They invented premium beer. Yes.

And this book written by the grandson or great grandson is remarkable because it's the book's more than ten, twelve years old, but it details the development of the beer industry, the rise of craft. If you wanna know what's happening in spirits for the next twenty years, read beer blast by Philip von Munching. It's spectacular. I reread it every now and then I've got my copy over there and it's it sends shivers down my spine. It's forward looking.

I will, I will definitely read it. It's it's very fascinating for me because I'm a really big believer that you can really study trends from the past and foresee the future. I would, of course it's not a crystal ball, but you can see patterns and you can see things. It's a little bit like, well, like categories now, like rum goes down, gin goes up, scotch goes down, Irish whiskey goes up. It's there are phases.

It's just, I don't know if it's ten years or twenty years or like recurring phases, but the categories are what they are at the end of the day. Like now nobody talks about vodka and now vodka will come back in, I don't know, ten, twelve years.

Every time there's a decline, there's an opportunity. But maybe we're looking at it wrong, Chris. Maybe that's the cycle it takes to throw up marketing geniuses.

I think it's very similar to what happens in football. No? Like, when this kind of like football teams are dying and then all of a sudden fifteen years in, it's just like champions league champions because they invest if you if you look at the teams, like they invest in the youth team. So it takes a generation to to restart from scratch and basically say, okay, national team that it's gone forever. And if you look at it, we got it for whatever Ajax and Barcelona and Bayern Munich and Manchester United.

Like all all like football teams go through that phase that at some point it just, they don't win a title for fifteen years. And then all of a sudden, like they win for five years in a row because they've got a team that is so cohesively speaking the same language.

What spirits category is interesting to you right now, Chris?

I'm always looking at the Italian spirits with a bit of love and history. And there were always these strange bottles of the getting dust in the cabinet of my father when I grew up. My family has not been big drinkers apart from wine over lunch and dinner. So we had a fancy mirror like cabinets with fancy glasses that were never used. And I still have back home in Rome.

And I've always been scared of tasting it because I didn't even know if you could drink it after so many Like some of them are like seven years old. Also for me, like all these amatos and vermouth and all these categories that are very crucial to the Italian dining and spirits industry are always the one that are very fascinating for me. So whenever I go back to Italy, I always ask friends in the industry to recommend me some some of these strange, very old school drinks. I'm very interested into the world whiskies now. Really understand like how different countries are starting to develop their own whiskies and their own take on whiskey and so on.

It's a very interesting category, especially because you develop it with an idea, but then you have to wait so many years. And that's what fascinates me a lot because it's very different from when you have the idea talking about cycles. You may be on the wrong cycle and you may need to wait because what you have developed may not be that popular in ten years time. So you may want to wait if you can afford it, or then you are creating something that can survive the test of time in five to ten years time. So it's it's always very interesting how these things develop.

Well, it's like I said, nobody knows anything. You only talk about your successes.

Exactly.

So I think we should wrap this up. Chris, where can people find you on Mateo Drinks? And can you talk a little bit just about the services that you offer people, your newsletter, your video calls, all that kind of thing?

Absolutely. Thank you for for letting me do that. So I'm you can find me at mafeodrinks.com. So mafeo is spelled Mike alpha foxtrot echo Oscar drinks dot com. I have a website called winningwithdrinks.com where you can get newsletters and free articles that are shipping once a week or biweekly.

And I recently launched my own podcast where I will obviously invite you Philip very soon at the Maffei Drinks Podcast. And you find me on LinkedIn, Chris Maffeiro. I speak the truth about the drinks industry, especially when it comes to on trade and how brands should focus on launching and growing sustainably without any hacks or shortcuts.

Yeah. Chris is the best one minute read on all of LinkedIn. If you are in the drinks business or if you are a human who drinks, you should definitely follow Chris on LinkedIn. That's how we actually met, and it's remarkable. Chris, this has been fantastic.

Thank you so much. We're gonna put this up soon. I hope that I can hang out with you and your podcasts. It'd be a lot of fun as well. And let's say this year, we're gonna do it for real as well.

Absolutely. Thank you very much, Philippe.

That's all for today. So thank you for joining me on the Mafir Drinks podcast. I hope you have gained valuable insights in these episodes. If you have enjoyed the content, please review it and share it with friends and colleagues. I would really appreciate it.

Don't forget to subscribe and follow the Mafir Drinks podcast on Spotify, Apple Podcasts or your favorite podcast platform. By doing so, you'll never miss an episode and you'll stay up to date with the latest interviews, stories and strategies shared by industry experts. I truly appreciate your feedback and suggestions. So feel free to reach out to me on social media at maffeirdrinks or through our website mafjordrinks.com to share your thoughts, guest recommendations or topics you'd like to explore in future episodes. Until next time, cheers from the Maffeiro Drinks Podcast and remember that brands are built bottom up.