014 | Nordic drinks conquering the world: how to build a local category beyond its borders, bottom-up | with Marcus Pedersen from O.P. Anderson Aquavit (Malmö, Sweden)

Hi, and welcome to the Maffeiro Drinks Podcast. I'm Chris Maffeiro, founder of Maffeiro Drinks, where we provide a non nonsense approach to building drinks brands from the bottom up. I will be your host, and in each episode I will interview a drinks builder from the drinks and hospitality ecosystem. In this episode I had the pleasure to interview Markus Pedersen. We worked together in SEB Miller and Asahi, we built together the Peroni Nasratzuru brand in Sweden and Dubai and the Pilsen and Rucor brand in the Nordic region.

Marcus has an extensive experience in the drinks industry having worked with beer and spirits brands. He has been a bartender, a brand ambassador, a brand manager in a country, in a region and now in his global remit. I hope you will enjoy our conversation. Hi, Markus.

How are doing? Hey, Chris. I'm great. Thank you very much. Excited.

So where

are you? Are you in Stockholm or where?

I'm not in Stockholm, actually. I'm currently based out of Malmo, close to Copenhagen.

So there's been some changes since I last spoke to you. Must have been a few years back.

Used to be Stockholm. Yes.

So let's give an intro about why are we speaking today apart from the fact that we used to work together and we are friends, But there has been a message on LinkedIn some time ago in which you reached out to me and it was a very pleasant surprise. Tell me about it.

As you're now starting out as a consultant then, divis and proof of concept in regards to this Build Your Brand bottom up. We have basically applied it quite recently in our brand ambassador universe. So build your brands bottom up from the bar backwards. It's very straightforward to have a simple and consistent message to our brand managers out there.

Nice. Thank you. Thank you. You know that this part of the episode is going to be mainly about hunting. So the beginning of the journey for drinks brands in the market.

How do you create demand and how do you get to sell in the first bottle and then we'll deep dive in the next episode more on to the how do you go from one bottle to one case. So we both share common history in the beer world. And now that you are in the spirits world, like what do you think is the main difference after working with beer?

After working with beer where you calculate more in hectoliters rather than cases, bottles, drinks, or sometimes nine liter cases, it's quite a huge difference to be honest. But also here you see that going from bar to bar, how it's key to be on the menu, to have a bartender, a bar team, restaurant owner or service person to actually talk about your brand for it to be visible because you are on a back bar. You might be in a menu or not. With beer, you were front of house, so to speak, because you were lit up straight in your face as a customer.

Do you also see that there is difference, at least from my perspective, on the focus on the rotation? I feel that in beer, there's much more focus on the rotation of the product while on the spirits categories, some of the spirits categories are more fast moving. If you think like gin or some other categories, but then when you go into very premium products like an aged whiskey or an aged rum, the rotation is much slower and it makes a bit of a difference in mindset when you are there to sell it and to talk about it.

Definitely. The rotation is not the same as in beer. Also, some products might have the only visibility to be on shelf not to rotate, then how to get it to rotate, even if you have one bottle on shelf or maybe you have six or seven bottles on shelf just to get the shelf space. There you have the brand visible. But yes, the rotation is also key.

Nice. So you've been working for experienced brands, but also you've been behind the bar. You've been doing brand ambassador roles. You've been doing brand manager role. You built your career from the bottom up.

And so I'm very interested in hearing your perspective on different things, especially on how you work on the hunting part. So, Markus, tell me, how do you create demand for your brand? Because Aquavit is a very specific category, which is very interesting because it's very known in a wider region, so the Nordic countries, but then when you go outside the Nordic countries, it starts to be very, you know, somebody has heard about it visiting The Nordics, but it's not really something that connects directly, like that they can connect directly to a consumption occasion, so to say. So do you talk about your brand or do you talk about your category or do you tap on a wider kind of category?

Yeah. So Chris, for AquaElite as a category, we need to build the category and we need to build it internationally. As I say, it's quite niched and unknown in certain countries around the globe. So we don't go brand specific. We rather build the category talking about the brand stories and also heritage, for instance, for us.

But there are also specific moments with Acrobat where you have this togetherness. So you have the traditional serves, which are normally short occasion paired with food for around Christmas, mid summer solstice and Easter. And then you have the modern moments where you also can use it as an ingredient in cocktails, for instance. We also see an extended usage where we currently are tapping into trends as in low ABV, for instance. We cannot say Aquavit since it's below 37.5 ABV.

However, it's a snaps as we call it. That's the four main occasions where you have and you can build the category, not the brand specific.

That's very interesting because it's very similar to what I see on other categories in which the demand was not that established, at least in the beginning, and now they are becoming more known. You mentioned the target occasion, which is very interesting for me, a clear moment that is top of mind in terms of deciding what to have. So you can have, let's say, a Prosecco, can have an aperitivo, you can have something different. And then for Aquavit, it sounds like Snaps and the togetherness on Christmas and the Danish way, Norwegian way. I remember all these kind of like moments.

Who basically are you competing with? Are you competing with shots or more white spirits overall, like unaged kind of spirit like Tell Me More and also for our readers because they may not be that familiar with Aquavit in general.

We are having multiple comp sets, of course, the start, from the traditional service, it's other attributes in the region, of course. And then when you go internationally, we lose market share because the Aquabelt or the heavy user is quite old. So we need to modernize and premiumize the category, not the brands itself, but also to have a wider audience.

It sounds very similar to what has happened with Amaro and the bitters category in Italy and all around the world. There's always this traditional consumption occasion and modern. I love like the way you said it's very much in line with my thinking that there's always some traditional way of drinking a product that goes back to the roots of the product. So similarly, for example, in Amaro as a digestive spirit to have after dinner, but then also the modern way. And you can tap on to this modern cocktail that you may not think of having with Aquavit, but then you actually can And you can use it like the mezcal of the Nordics.

I love that. I will I will write this down. In terms of, you know, you can you can make a twist, for example, on a Negroni, like a Nordic Negroni or a Swedish Negroni. You also need to rejuvenate the category. Part of that success for the Amaro category has been engaging with bartenders all around the world.

So how are you doing that? Or do you see a trend happening? Or tell me about how you think this can work in the global sphere.

It's a battlefield out there. We are using brand ambassadors. We need to start relationships continuously in order not only to be top of mind for bartenders or bar owners, bar managers, but also for the product itself. It's very versatile, but also how to use it and also talk about the heritage so they know about the ancient history, how it was from the beginning.

How do you select the bars in which you want to go and in which you would like to be sold? And how do you explain that to your importers, distributors, the ecosystem that you actually interact with daily?

I think we all have our goal where we want to be and what we want to achieve. So nowadays when we are selecting our bars, areas, cities, we are targeting quite high end bars in order to be featured in the menu at some point of time. But we start off with one period to sell one drink at a time.

How is the trade reacting to this in terms of category, like something that I always talk about on LinkedIn, on other episodes of the Muffield Drinks podcast? Let's say category is a broad term now. So you can make it very niche and specific or you can widen it as you want it to be, you know? So how do you explain it to, for example, a bartender or your brand ambassadors? Like how do they do it?

I can imagine going into a bar in Milan, people would say, actually, I don't need an Aquavit. I know that AquaVita is a category, but it's not really a category for Milan.

No. And they haven't tried the actual product before since it's a niche product and it's caraway and or dill seed. So it is a fantastic liquid and it's very spicy and fruitful. When you get it into a drink, when you get the bartenders to actually work with the product, you find this symbios and great taste and flavors within it. So most of the bartenders as they now currently, we have a gin trend, we have this tequila mezcal trend.

Here when you have something new internationally and if you go wide, this is very interesting and exciting for them to use. So we use brand ambassadors, for instance, to walk into bars to have these master classes, bar stuff trainings.

Do you use other categories to help you explain what it is? So you do use, for example, gin and mezcal, as you mentioned, to explain it to somebody that hasn't actually tasted it yet. You are tapping other categories to build your own categories, if I understand what you're saying.

Yes, that is correct. So it's easier explained that way and also not to create too many new cocktails. You're tapping into already worldwide cocktails, let's say the margarita, you do the Swedish margarita or the Norwegian margarita. Just tapping into these known it's a signature cocktail, but it's more category specific rather than brand specific.

I like that approach that in which basically you're not reinventing the wheel because what I see a lot of brands doing wrong is that they come up with a cocktail with a signature cocktail top down, like it's usually built in an advertising agency rather than from actual bartenders and actual bar people. And it becomes, okay, you have to push this and they give a toolkit to the trade marketing and to the brand ambassador and the sales guys. And it becomes a bit of a battle now because it's just like, oh, can you please do put this on the menu? And then it's just like, yeah, but it doesn't make any sense. But if you make it effortless for them to actually say, you just have to switch gin or you just have to switch mezcal or tequila or whatever from that current drink, then it makes the foot in the door much, much easier.

It reminds me when we used to sell pepperoni together and it was much easier to put the bottle of pepperoni into a bar because maybe it was not available on keg, but nobody was saying no to a bottle because it was effortless for them because we were not asking them to remove a tap of a competitor and putting our bottle in. So how do you work? You mentioned like cities and the approach, I guess, that you're not in a stage in which you are national distribution in the countries where you're not in focus. So how do you build distribution when you enter a country?

So what we do is basically we apply this what we call a local business area. So we choose of course a city or we choose an area of a city or we use bars of an area of a city. So small, go big and go local. So you can have a small area where you want your audience and you know that your audience after inside studies where they actually go and you build it from there. Again, drink by drink, bottle by bottle.

Based on my experience in The Nordics, I remember on trade plays a huge role there in terms of brand building. Do you see that everywhere or do you see that it's much more important in the Nordic countries being a dark market than Italy or Spain or Germany or any other market where you may sell to.

So you mentioned dark markets as monopoly markets in The Nordics. It's very different from open markets, Denmark, for instance, where you have an open market. But the on trade place, I would say it's key because in monopoly markets, dark markets, you cannot operate with any ATL or anything like that. What you actually bring to the table and what you see in an outlet, in a restaurant, in a bar, that's where you build your brands. It's very important.

If you move outside and here, let's say you have the ratio of eightytwenty, monopoly 80 entree 20% in volume, not value. And then you operate, for instance, in Italy, where I work with some other brands or in The Middle East where you have on trade is like 90%. So it's totally reversed. So it's 90% and off trade basically zero. I was working at one point of time in Middle East and that was a total turning point twist in my head.

Yeah, on trade is important for every market. However, for different reasons.

I didn't realize it earlier that you living in Malmo, is actually across the bridge from Copenhagen, you're basically experiencing a dark market and a non dark market in a train trip over a bridge. I get challenged a lot by people who don't know the on trade and are not, let's say, so on trade driven like me or probably you in terms of what is the actual importance of on trade while building brands. There's a lot of people that can say actually like the job that the on trade does is not that crucial in terms of building a brand. And they always refer to Nordic markets as an example in which like when it's a dark market, then on trade is much more important, but not when you go outside of those dark markets kind of thing.

I would say on trade is still key. As you said, I'm based in Malmo. It's twenty minutes from door to door to a new country, but also there you have the opposite. There you also have promo. So, in Denmark, the consumers, they buy their alcohol during promo periods, more or less.

So, it's I don't know exactly the ratio, so forgive me Denmark, but it's like 70% of all spirits in off trade is through promo. But also hence the more importance in the on trade where you actually can talk about the products. Have the more premiumized Kavista stores. So consumers are there, they are in their own trade. They need to be educated, trained, not only the bars, but the consumers that visits the bars and everybody does that.

Absolutely. And building on what you're saying now about the consumer, it leads to my next question, which is what do you think about target consumer and target occasion? To clarify the question, when I grew up in the marketing world, like I was used to think in terms of consumer, when you have a target consumer, you have a demographic, you know, twenty to forty, whatever legal drinking age to 36 or, you know, 40 50 or whatever that bracket is like a male, female and so on, like income and ABCD, ABC1, AB1 and so on. And developing my career and my understanding of the drinks world, I've faded away from that thinking in terms of consumer and the target occasion, which has always been part of my, let's say, upbringing, but it has reached a much higher focus. For me, it doesn't really matter how old you are or who you are.

It's all about the occasion. And there are certain occasions that may be more skewed towards party, high energy, low energy or or whatever, like a calmer night or like a romantic night or a date or a group of friends kind of thing. But for me, I could actually remove almost totally the target consumer in a way and really focus on the target location. What's your take on this?

I think it's very interesting if you take the acrobat category for instance. In Sweden, it's well known in its heritage that all the universities, they have these dinner parties where they usually in the past had acrobates for cheering, which is the occasion, the tequila occasion, the shot. That still remains. However, what we now see is that the target audience or the younger group, the aspirational audience, we normally say, they now still shot during these fraternity dinners, but they shot in a different way and they also go low. So the occasion is still there.

However, the liquid and the ABV amount is different.

Okay. Which is very interesting to see like a shot of a no alcohol shot. Like that is a bit of a challenge to think about it, but probably that's what happens.

Yeah, you're right. But also not only no alcohol, but also low. So they go to different categories. So they started out having these accolades, dinners or big cheers, and then now moving to liquors because they want to have a fruity notes, still low ABV. And not that they drink more or less, they might have one or they might have two, but they want to experience something else in their taste buds, some apple notes or elderflower notes or whatnot.

So, me start with my usual challenging and polarizing thoughts that one case in one bar is better than six bottles in six bars. What do you think about this? What's your take?

It's a very interesting mindset. I have to go with this one. It's of course better with for me, I would say one case in one bar rather than six bottles and six bars. Because we want to work very localized and then expand out from that. So if we choose a city, an area or one bar, it's very important for us as the category to work with it and also to get rid of the case.

You passed the test. That was what I wanted to hear. No, I'm just kidding. And when I hear what you're saying, it's very interesting because I see a lot of brands wanting to expand distribution too quickly and going more into kind of like a hunting mode rather than a But farming what it sounds from me, what you're saying is that you want to consolidate that piece of sale. Is that because of the peculiarity of your category that you are thinking that way?

I think it's what we have learned back in the days as well. Also working with other brands, you need to start out small and you need to be able to walk before you can run, also to adjust and to apply certain changes and revisions before you head on to the next stage, so to speak. And also to work with the bar in this case in order to actually get the spillover effect. Hopefully this is what you aim for as a credible, even if that is a high end bar, if it's a mainstream bar, but this is the bar where you want to be. Then you work from that bar, from the drink, cocktail and backwards.

For me, the very important factor is that being acquavit such a niche category, are at very high risk of basically being on the back bar and collecting dust, because the awareness or the share of mind may be strong in the first week or so of the listing. But then if you don't get them to really work it out and really work the product, then it basically becomes one of the tens of bottles that are staying there behind the bar. So how do you try to get the bar from one bottle to one case?

So what we do is basically we work with them, not only brand ambassadors, but also the sales force and the marketing department could be there supporting their own trade outlet full on because we need to be not only, as you say, in the back bar or for Aquavits, sometimes in the freezer or fridge. So the visibility is very low. So no one is even wondering what bottle do you have in the back bar over there because we need to be on the menu. So we need to work with the bar and we need to constantly having the relation and being close to the outlet that we are working with in order to actually get the rotation going.

That's actually very interesting what you're saying because I didn't think about it earlier is that especially a brand that as a key occasion or as a key traditional occasion, the shot, then of course you want to have it cold and then it's probably in the fridge or in the freezer, which makes it invisible on the back bar. Right? Correct. So what is the practice that you see, not specifically for your brand, but in general? Are these bottles kind of like a double bottle so that there is one in the freezer and one in the back bar or you get the curse and the blessing at the same time and you're just in the fridge and then you are invisible on the back bar?

Yeah, so it's a very crowded space. So that would of course always be the aim to be pouring akavik or not so you can actually have a few cocktails on the menu. But also, yes, to have it visible on the back bar is that is golden for us. So what we do try is that yes, please keep your one or two bottles as a stock on the back bar. And then of course you can have one in the freezer fridge for short occasion and then for your menu.

And

do you see like whatever company I work for and consulted for, there's always this focus on the back bar and on the menu. Any brand and any company is basically playing on the same field, which is very funny at the same time because it basically becomes a zero sum game, no? Because everybody thinks they have the competitive advantage towards their competitors, but ultimately, everyone wants to be in the back bar. Everyone wants to be in the menu. Everyone wants to be in the cocktail list.

Right? So how do you convince them to put you on the cocktail menu?

So it's very relevant and I fully agree with you in regards to the cocktail list and whatnot. We also have one additional thing that we are using in The Nordics, for instance, since Aufwit is also consumed a lot food pairings. You have on the tables because you also have to work with the waiters and not only bars. So you have these glass holders, so to speak. So you can have that already set on the table for people to have their snaps or their shot, not the actual product, but you can show like a glass windup.

So you have a collection of six or four glasses in a glass holder already set on the table. That is also one key thing for us to be visible, not for brand perspective, but as a aquavit category perspective. Because in The Nordics, then you know this place they do sell aquavit.

That's very interesting because I mean you are creating the awareness of the availability kind of thing.

Correct.

That's because, I mean, if I enter the bar if I enter the restaurant, I'm sitting at the table, I'm with my friends, I probably never look at the back bar or at least I would, but the average Joe wouldn't. And then you create the link to the moment and the reminder of, oh, by the way, they've got Aquavit here and we can order a round of Aquavit during the meal. And how let's say, what do you think is the main driver for sales to actually go from one bottle to one case if you had to pick the most important one? I know it's many different ones, but what's the most important one for you?

Depending on the venue, let's say for a cocktail bar, that would be of course a referral from the bartender. Not only that you are checking the menu, maybe you don't even see the menu because the barman has already approached you and you say okay make me something really tasty. And then an Acrobat cocktail is what you get because you get it from his referral. And then the other hand is of course if you visit a restaurant it's with the menu. So it's also paired with.

So you have this salad or whatnot and then you have the additional to up your salad. This is really tasty to go to complement for your dish. It's very easy selling.

That makes very much sense. I think that is very category specific because not all categories can have the luxury of the pairing menu. In most categories, would probably be wine in most restaurants, I would say. And what is the role for distributors? Because let's say sell out is built bottom up.

So it comes from the bartender that recommends the product or the menu and the consumer has seen it there. But then at some point you basically get to a stage in which you are engaging with a wholesaler or distributor without going too much into specific of each country. But in your experience, what's the level of importance of working with distributors and do you work with distributors?

Yes, we work with distributors. And I would say it's the relationship that you create, not seeing them as distributors, but they are partners. You need to be very close and need to hold their hand and really show them the product, the categories, the brands that we are having in the portfolio. You need to constantly update and be there for your partners.

Have you seen like a lot of interaction between the sales team or the brand ambassadors that you work with and their wholesaler sales team or not? Definitely. Not

only from the partner side, but also from our side. We are constantly again working on this as we are operating in the NordicsEurope. It's not global, it's under control so to speak. The traveling has started post COVID. They are traveling a bit nowadays.

And what would you say is the challenge on working with distributors and how to get them on board?

The challenge is for Aquavit. It's challenging since this is not their main focus. Maybe they got the Aquavit category when they actually signed the contract and the partnership with the brand owners. So as we are a big company with more brands and more categories, this for most markets comes with the contract. Yeah.

And that's a very, that's a very great point. They get it almost as a gift as part of the portfolio. Fantastic. But then, but then it's up to you to really do the legwork and make it a priority, even though it's not a priority for them.

Exactly.

And how do you manage? Because that's an interesting thing that probably like listeners would like to know more of, like without telling your secret, of course. But how do you manage to actually build the share of mind? Because what I'm thinking, like from my experience, is that they get their target top down. So they say, we want you to sell X cases of this brand, X cases of this brand, and then X cases of kind of like others.

So in the markets in which Aquavit falls between the others, then it's a challenge, right?

It is a challenge. However, that being said, if we go back to what we said earlier about the traditional moments, we do have a season for Aquavit where you can make a proper selling because it's credible in the right context since you are selling it in for, if you do Turzial or the quarters, you do it around Christmas or before Christmas. Since this is mainly sold around Christmas, We try to deseasonalize it, of course, cocktails and whatnot. But in the end, if you're working with distributors, then you set up a calendar where you have the acrobat season will still be where it's the most credible one because you have these Nordic people as myself living abroad, living internationally, living around the entire world. And for them, the Akkavit is consumed as a short location around Christmas.

So, basically what the Americans call OND, so October, November, December becomes the make it or break it of the target.

You can say that, yes, in a very short and snappy way. Very point.

And which must be a very stressful way because I don't know what your financial year is if it ends in December 31, but then you have to go a step further during the year to avoid that you're just waiting for that OND season, right?

Yeah, but I try to see it on the other hand. So I see it, yes, OND is highly important for the category, but also for us to actually steal share of mind during summer period, for instance, is easier because no one is thinking of Afrobit at this point of time. So for us to steal some share of minds and some volumes during that period, is for us FOC.

You've got midsummer in summer anyway.

Exactly. But you need to prolong it.

Yeah. You can still find an excuse to to do that. And how do you convince bars to put you on the cocktail list when it's not really a priority for them to sell Aquavit as a category?

Again, it's a very niche product and nowadays with the mezcal trend and also that tequila is booming in most of the world, it's getting easier to get it on the menu than it was a few years ago, to be honest. It's seen as very exciting product. I wouldn't say it sells itself. However, the selling is much easier nowadays as the trend is for these niched products more or less.

And you mentioned earlier that there are pouring Aquavit. How do you manage to become the pouring akwa vitae in a bar?

It's very interesting. It's about how the outlet is pushing for it. So you have these Norwegian aquavit, you have the Danish ones, then you have the Swedish aquavit. It's basically what is right for my venue, for instance. The Norwegians, they have a lot of barrel aged aquavids where Denmark has the more toughened akowitz, which is very clear and liquid, quite high ABV and very caraway.

It's only caraway to be honest. So it really gives you the punch. So if you want to go in that direction or the other one direction. Also for some brands, we do a lot of collaborations. So cask finish collaborations with different brand houses around the world.

Now that you mentioned like the different nationalities of Aquavit, is it linked to the bar manager or the bartender that are working there? Are they trying to steer the conversation towards their home Aquavit? You have a, let's say, Swedish bartenders in Norway or Swedish bartenders in Denmark, in Copenhagen, like the diaspora of the on trade scene across the Nordics. Do you see that happening somehow?

Definitely. For instance, let's take the Norwegians. In Norway, it's very localized what is your favorite and what you push for as a pouring acrylic. In Sweden, that's where you also take the national pride, right? So the Swedish aquavit, this is premium, this is fantastic liquid.

I didn't say that, but we did some insights. And then you have the Danes and how it's served, for instance. They drink it a lot for lunchtime. We also talked earlier, we used to work with beer, right? So in The UK, you love your beer up to the rim and hold the foam.

Danes, they love their agfiltas as a shot up to the rim. No foe.

So, little bit like a sake.

Yeah, exactly. But it's how it's consumed as well.

Fantastic. Fantastic, Markus. So, I think we can wrap it up here and really thanks a lot for your time. I will let you plug in your details here. If somebody wants to get in touch with you or find out more about Aquavit and about what you do.

So please take a few seconds to introduce yourself and your contacts.

So feel free to just reach out to me on LinkedIn or read more for the Swedish original Aquavit at opanderson dot com.

Fantastic. So thanks a lot for your time, Markus. I don't want to steal more of it and I hope to see you soon and enjoy some Aquavit together somewhere in Europe.

Sounds great. Thanks, Chris.

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