114 | Bootstrapping Global Brands While Keeping 100% Ownership: Steve Perez on What Rally Driving Can Teach You About Focused Business
This is Maffeo Drinks. Welcome, welcome to Casa. Mi Casa, Tu Casa.
Chris Maffeo:Fantastic, Steve. Thanks for having me. It's a nice cooperation, you know, like you are a guest on the podcast and I'm a guest in your Casa. So thanks for having me, Steve.
Steve Perez:Yeah, very welcome. I'm glad you enjoy your dinner last night
Chris Maffeo:It's fantastic. It's an incredible venue. I'm trying to get my head around all the things you do because it's such a fantastic, you know, we were discussing last night, you know, vertical integration of like from different sorts of businesses and we will start to talk and I want to get as much knowledge from you as possible because you are a man full of resources. Let's start by saying that you are a rally driver.
Steve Perez:If you Google me, it'll come up steeper as he's a professional rally driver. Then he'll say, Oh, by the way, he's also a businessman. I've become better known for being a rally driver than a businessman. Although I used to rally when I was young as a hobby, and then I found it was a good way of promoting the business. And then I found I was surprised myself, and I found I was pretty good at it.
Steve Perez:And I won four British championships.
Chris Maffeo:Wow.
Steve Perez:And, you know, I suppose it was a distraction from, you know, from the everyday joys of running a little business.
Chris Maffeo:Well we'll talk about you know being in focus so I guess that being a rally driver helps you in being focused than not lose focus on distractions.
Steve Perez:Yeah, 100% when you're driving the car 100 miles an hour through a forest, know, you can't be thinking, oh, I wanna have our productions working out. But you've got to be focused. But actually, it's quite a good thing just to take your mind completely away from the business and do something else. You'll probably find, I know you talk to a lot of entrepreneurs and the problem is being an entrepreneur. You get it's very difficult to be focused.
Steve Perez:You tend to be distracted like if you're watching a movie or something like that, get ideas and it's hard to, you know, drive my wife crazy because I can never sit still. You know, I'm always thinking of other stuff. Whereas, yeah, if I'm in a rally car, I'm rallying. Nothing else.
Chris Maffeo:Fantastic. So tell me how did you start? Where were the beginning of everything of this global brands business?
Steve Perez:Well, not I'm a kind of I always think I'm an accidental entrepreneur. I didn't sort of, you know, grow up sort thinking, although I do remember when I was young saying I was going to have a chain of hotels. I don't know why. My was in the restaurant business and the hotel I now own was his restaurant and I came to Red Lion and the Peak Edge Hotel back in the seventies which is a famous place and I worked there as a chef, Hawaiian, as a head waiter and as a barman. So I kind of got my love for the industry.
Steve Perez:My father he drinks wine. My father died you know one time he had an untimely death he was just 48 and then my father was in partnership but it all sort of fell apart so I ended up working for the corporate. I worked for Joshua Tetley as a pub manager and one day my boss said to me he said you're doing a great job Steve and how do you see your future? I said well I want to be an area manager one day just like you. He said I'm sorry Steve you've got no chance.
Steve Perez:I said why is that? I said because you're not you're not you don't have a degree. You know you don't have a degree. I said well I understand the business I work hard and I'm a figure. He said it doesn't matter.
Steve Perez:I said well what do I have to do? You need to go to university, to night school, a degree, maybe you can get on a programme. And so I thought I don't to do this I don't want to go to a nice school. And I said to the guy well have you got a degree? He said oh yeah I've got a degree.
Steve Perez:So what do you get a degree in? He says Greek mythology which I don't think is a lot of use when you're running pubs and bars. So he didn't know what kind of degree you get just to get a degree but I thought it's pretty stupid so anyway so I left I just left fairly suddenly and I thought well what am I going to do? You know what and I thought well if I you know if I can I could earn just the same kind of money so I can pay my rent and stuff like that then I'll be happy? So I went and bought a little van because I'd noticed just at that time this was in the mid-80s these premium imported beers were becoming, you know, very popular.
Steve Perez:People had never heard of things like Grolsch or Budweiser, Sol, Caroni, was like that. But these fun pubs which I was managing I managed to get them selling, we sold them and marketed and we got quite a good market and I had to explain to people well you don't pour these drinks into glass you know you walk around in a bottle because the bottle is expensive. I used to say sometimes I don't sell beer, I sell sex. Because the guy drinking an expensive bottle of imported beer looked more trendy than the guy drinking, you know, pint of bitter. So he felt more attractive like he got a nice can of beer.
Chris Maffeo:Like a lifestyle
Steve Perez:Yeah. Lifestyle Yeah. And at that time, very few people heard of Budweiser from America in the eighties. And then initially, with a lot of lime in the bottle, and the business grew quite quickly. But the mistake I made is that I didn't really have any contracts.
Steve Perez:We were importing beer like Budweiser and Grolsch but we didn't have any contracts. And then what happened was with drinks it's of fashion led. Sometimes we sell sex but also we sell fashion. In the fashion business imported beers became very very fashionable. And like I'm seeing now with RDDs, you have the big drinks companies jump on the bandwagon and they see the trend and they get into it.
Steve Perez:And what they then did was started to import you know for example I think Whitbread at the time took the agency for Budweiser. Mhmm. So we so we then had to buy from Whitbread and you know the same sort of thing happened you know with Saal and Gropp. And then what happened there was a change of market whereby you could bring in vans into UK full of you know boost cruise cruise. So
Chris Maffeo:there was
Steve Perez:vans full of booze coming into The UK and there was lots of illegal star duty paid. A number of reasons, usually when you have difficulties in business it's not just one reason, was
Chris Maffeo:a
Steve Perez:number of factors. And then we had a lot of bad debts and in 1996 Global Beer went bust. I remember looking at myself in the mirror and saying failed businessman, you're a failure. And it is a worse feeling out, you get that all. I had a £10,000,000 turnover business for a while.
Steve Perez:I bought a house, I wasn't a millionaire or But had a nice business. I enjoyed the business. I just thought, well, that's it. I'm a failure. I said, that's it.
Steve Perez:I'm never gonna have it. I managed to bring on to my house, had a small farm, a very small farm. I thought I'm gonna live off the land, grow some vegetables. Yeah I kind of got this idea and I don't want to go into business and then I just started to think well maybe I can just sell a bit of do a bit of trading you know buying and selling you know beer out of your contacts and stuff. And then we started to buy at that time at sort of mid to late 90s these what they call then Alkapops became very popular.
Steve Perez:But then they got a lot of negative publicity.
Chris Maffeo:Yes.
Steve Perez:So a lot of the big companies you know such as Bass with Hooch you know got into ready to drink and then just got out and we found there was a lot of residual stock around when I was buying and selling stock. It was actually good fun yeah so you to grow and it was more exciting than growing vegetables And you know we were buying containers from abroad and started but the problem was I had no money. I had absolutely no money. Was a real problem because I had to sort of blag a bit of credit of my suppliers and then trying to get cash from the people who I was selling it to just to keep my cash flow going. I built up a nice steady business and then as people got out of the market I just saw oh is there an opportunity now for at that time Red Bull was the next trend you know in the late 90s people drinking vodka red bulls and think well could we make it an RTD and a red bull type?
Steve Perez:There was nothing like that on the market. So my idea was we have an energy drink with vodka. So I thought well guys make it simple because all the best brands I'd see when I was selling beer were single syllable basically sol, begs, bud, pills. It needed to be one or two syllables. I think right so let's call it v for vodka.
Steve Perez:V, I've got v a, v b, there's v b bitty, v c, v d. I'm gonna copy that. And eventually I kind of got to v k. I like VK, it looks nice. Thought it was right.
Steve Perez:Yeah, this didn't take a lot. Was no focus there. Focus there. And then I think I was talking to Mark James, one of the directors who joined the business at the time and he said yeah but why is it called VK? Well vodka, vodka is what?
Steve Perez:It's vodka with a kick, isn't it? Kick from the energy drinks. And we were called VK Vodka Kick. And then we work but because I had the previous business and everything you do in your life you know, I always say to people who want to get into business, don't try to go into something new because you know the grass is you know you see somebody like me and say you're in engineering. Well I want to create a drinks brand just like you and you know make millions.
Steve Perez:It's never that easy but I'd spent ten years prior to that learning you know, getting contacts so I knew where we could get production. I got a network of customers where I could sell the product. Prior to that working in bars and pubs I knew how retailers think and what they want and how to promote drinks brands and stuff. So yeah, I've got sort of fifteen-twenty years behind me from working Lou to kind of talking earlier about knowledge and you build up that foundation of your knowledge. So yeah, I'd say if anybody wants to be an entrepreneur stick to what you know and also really important what you
Chris Maffeo:love because you work really hard because it's easy because you love doing what you're doing. You mentioned knowledge. Is the first interesting thing for me because you know you challenged because you didn't have a university degree you know, which is knowledge, but, you know, it's about being useful knowledge, And you this is the interesting thing that people get wrong sometimes, you know, like they get either, you know, they tick the boxes like, okay, need to go to college, I need to go here, I need to do that, I need to do that. But they don't focus on stocking that learning of what you say, you know, like the prior ten years, twenty years, looking at things, curiosity driven that you can be able to spot interesting gaps in the market or patterns of how things work and so on.
Steve Perez:Yeah, lots of people, know, they go to university, they do biology or whatever end up being you know an estate agent. And I know it's difficult for young people deciding if you're 18 you want to go to college what do you want to do? I know everybody wants to be rich. That shouldn't be the driver. The driver should be do what you love doing, what interests you rather than doing what you know thinks I'm going make a lot of money because you won't put the time in, you won't understand it in the same way as it is something you love.
Steve Perez:And so of course when I started with you I got this great network of customers who knew me from the beers. Trusted me and said look I've got this brand called VK, Vodka Kick. Yeah it's vodka like Red Bull. Red Bull yeah this is an RTD so it saves having to pour into a glass of ice. From my background of practical operational problems if you've a busy nightclub you're going get half a can of Red Bull, get vodka, get your eye put it into a glass or you go £2.
Steve Perez:So the ready to drink worked really well when you got these busy nightclubs. And it was nightclubs really started with the first flavour but it was called VK Energy to start with. Then the Portland Group got involved and they said we couldn't call an alcoholic product an energy drink so we had to call it VK Blue. Because it was in the blue bottle. But the liquid initially wasn't blue.
Steve Perez:Then we came up with other flavours like watermelon and stuff like that. And what we found is, and it's got a point of difference because the biggest product at that time was Bacardi Brieza. Brieza but it was Bacardi and a lot of people said well I don't like rum but everybody likes vodka. And even though it didn't really taste of rum. So something with vodka and all was better and also we most of the products at that time were at 5.5% ABV.
Steve Perez:Mhmm. We decided to go up to 4% ABV because it was a fairly considerable duty saving. And actually, you know, the consumers didn't really care. Yeah. In fact, it was a benefit because you you get a lot of particularly that time, people used to do circuits of bars.
Steve Perez:They'd have one drink in every bar. Mhmm. Especially for females, they could have one VK, and it wasn't too strong. And they go for another bar, then another VK, and another VK. Whereas, you know, the something like Bacardi's were a bigger bottle and they were stronger.
Steve Perez:So it kind of worked for the operator as well because you know people didn't get as messy in the bars and stuff. Yes. And it's so so as soon as we launched VK it just went ballistic. I mean we you know we I say we had we had this bit I was turning over £200,000 a year myself you know a guy driving a van and a small warehouse. The following year we turned over 2,000,000 as soon as we came up with VK.
Steve Perez:The next year we turned over 16,000,000. The next year we turned over 30,000,000 and the following year we doubled the turnover again of about 65,000,000 year after year after year. 2002 we were the fourth fastest growing business in The UK according to Sunday Times fast track. I was the CBI Confederation of British Industry Entrepreneur of the Year and you know what it was the best time. Having gone from a business that I failed and saying
Chris Maffeo:That's failing what I was thinking because you know like how was that mental transition from looking yourself in the mirror and calling yourself a failure to becoming the entrepreneur of the year out of not even ten years apart?
Steve Perez:It was so much fun. Imagine if we turned over £1,000,000 in a year. I've done that easy. Imagine you turn over million pounds in a month. We'd never turn over 5,000,000 more.
Steve Perez:And we were also making good profit. But the biggest problem we had of course at that time because it had been a failure when I went to speak to any banks they'd say yeah but you had a failure before. No and at best they thought I was just incompetent. At worst they thought I was a crook and neither of which. How do you fund the business particularly when
Chris Maffeo:you're Yes, that's the thing because a lot of my conversations are about bootstrapping route versus the funding route and when I read LinkedIn, there's a lot of companies that are, we are fundraising, we are fundraising, we are fundraising. And obviously there's no right or wrong, but there's different approaches. But how do you do it in, when it's really a bootstrapping thing?
Steve Perez:I I think in the nineties, I'd I'd never heard of crowdfunding or anything like that.
Chris Maffeo:Seed enterprise? Wasn't an option.
Steve Perez:Yeah. The banks were the option and things like invoice factoring and discounting, which we did actually. That was what you you know how that works where you invoice you get like 70% you can draw down 70% of the invoice. That's one way we funded the business. But the main way I funded the business was through my suppliers.
Steve Perez:The key thing is working closely with your suppliers. So my blast suppliers was a big expense and we outsourced everything, all the production as we still do today. I sat down with my suppliers and said look this isn't my business, this is my plan, this is how well we're doing but we don't have enough cash to support the business. If he looked at my credit limit, my credit limit came up as virtually zero and I was wanting maybe a £100,000 a month credit. I will give you any information you want.
Steve Perez:Send your FD down to see me. You can have my bank statements, and you can have my management accounts, can have anything you want. But just please give me the credit because I need the credit to keep this growth as a business. And actually my suppliers continued to support the business and give us credit which really made the business. But also looking back some of our suppliers now if thirty years later almost are people like Thomas Hardy who do our bottling now were the ones that trusted me in the early days some of our label suppliers and people like that.
Steve Perez:Some of the top suppliers they trusted me and actually it's good for them as well. Yeah I'd also say if you were a supplier don't ignore the little guy who's started his business. Don't just say well he's got a zero credit limit. Go and talk to them. Go and talk to your suppliers and also talk to your customers.
Steve Perez:Because a lot of my customers would say oh yeah well we want blah blah blah blah. We can't give you sixty days credit. I can't even give you thirty days credit. I can give you fourteen days credit. Oh well we don't work this way look we've got a great product look at the margin you're going to make.
Steve Perez:And actually most people went along with it and the great thing was as well if you got a growing business we couldn't make it fast enough we couldn't supply enough the business would grow. So if people wanted sixty days credit we say okay we'll go and sell it to somewhere else we'll go and sell it to your competitor down the road. But it is possible to own your business, have a 100% of your business without giving away. You know, your problem is if you you know take on investors you have to think very very carefully before you sell part of your soul. Your business is your soul, your heart.
Steve Perez:Don't give it away too easily. People always have these ridiculous overvaluations of businesses when people come to me all the time and show me oh it could be valued because they look at some chart. What they should be doing is you know people often do when they're showing me sort of business plans and investment opportunities you look at the projections and they'll say look at wages and paying the founders a $100 a year to start with. You know what? Yeah my yeah my salary was zero.
Steve Perez:What I could make in that day you know you've got to put you've got to put founder's salary zero. Exactly. Zero until you reach a certain amount. You've got to be prepared to well actually when I first started businesses at the weekend I was working as a waiter. Yeah I worked as a restaurant just around the corner and I'd work you know because I couldn't afford to keep you know I worked Saturday nights as a waiter and sometimes on Saturday daytime I worked on a market stand just because I need, hang on, I needed a business wasn't making know making enough money.
Chris Maffeo:And what goes through the mind of an entrepreneur when you're in that situation now because you need money to scale. So, before you realize how you could do it with payment terms and credits, it is alluring now when somebody sees a young guy and is like, hey, I can give you a million or 10,000,000 or, you know, like, let's give me 50% of your company or let's do it together, I'll fund you and
Steve Perez:I've had all of that, but the problem is all they will do is, a, you'll take things out and b, if you're an entrepreneur, mean, you take risks. And sometimes you've got to be prepared to fail. You've got to accept that sometimes you fail. We still fail now and we fail all the time because we're prepared to sometimes launch a brand and we were talking about stuff yesterday we were doing. We were too early and sometimes it's not necessarily a bad idea but it's a great idea at the wrong time.
Steve Perez:You have to somehow A lot of it is about look as well. Yeah. You look at these currency traders and you think they're brilliant, but actually, you just buy the Bitcoins or whatever at right time. Yeah. Yeah.
Steve Perez:It's not necessarily and most businesses are like that. Do you think
Chris Maffeo:that there's a lot of, let's say, I mean, like, the misused term, misinformation, but about this thing that, you know, when I read industry media, when I read articles online, you know, like there's always this, you know, this man sold for, you know, there's a lot of talking about exits, there's a lot of talks about like raising, you know, company X raised £50,000,000, company X was sold for £10,000,000,000. Is it this kind of clickbathing thing that is driving this mindset that things are
Steve Perez:I've never talked about exit strategy. I've never said we're going to do this and sell. It's never been And why can't you just build a business you to say I'm going to build a business and build a successful business and have a great lifestyle. I've built a great business and I have a great lifestyle what would I want to sell it for? I really love what I'm doing.
Steve Perez:I've got a great team of people, it's intellectually challenging, it's creative. I can afford to buy nice cars, live in a nice house. Drinks is what a great business drinks is. Know you can travel the world, go to these great places. Our customers are really nice people to deal with.
Steve Perez:Yeah. Is there anything wrong with that? I don't want to go. I just want to get out of it. And then what am going to do?
Steve Perez:You know? So, I think your mindset, your first thing you should say, how can I build a successful and profitable business rather than how can I build something that I can get out of and sell to the next guy?
Chris Maffeo:We were talking earlier about the legacy, like the family, your family heritage, my family heritage, John. You know, the fact that that's a very short term focus nowadays. What I like about your business and what we're discussing is the fact that it's a business meant to last. You know. And then regardless if your kids are going to stay in the business or not, but you want to make a business that lasts decades.
Chris Maffeo:While very often, and that's the short circuit of the system of funding, you know, that people look for investors by explaining to them how much they're going to get if we exit. So, it's kind of like, I want you to come to my family and to convince you to enter my family by explaining to you how you can leave my family. Yeah.
Steve Perez:Yeah. Yeah. Yeah. You
Chris Maffeo:know? Yeah. By making more money by leaving my family. It's like, okay, if I want to marry in your family, I want to stay
Steve Perez:in your Definitely, yeah, yeah.
Chris Maffeo:Why should I marry you to And divorce this is the kind of short circuit of business that I see that drives short term decisions, wrong or right decisions in the business?
Steve Perez:I say we're a family business. My son works in the business some of the time. That's kind of not what I mean. My wife works in part of the business, in the hotels. But when I say we're a family business, the differences between a family business and a PLC business is because I have no shareholders to satisfy.
Steve Perez:Have no shareholders to sell than me to say, 'Day we need more money'. What I do, we have a family of people here and I generally want everyone here to have a better life. I employ 400 people. I want people to enjoy coming to work. I want them to be here throughout their career.
Steve Perez:It's wonderful we have some people who have been got now they've got the kids working for us and some of the grandfathers working. We think business in the old days used to be family businesses. Most of the businesses we know started off as family businesses And I understand particularly in The UK the government have been very anti family businesses because they say if you have businesses passed down to family members who have never worked or never worked in the business. I understand that principle but the business itself whether a family member is involved or not shouldn't just be dependent on the founder. It should be the family just because the grandfather dies, the cousins or whatever and I look at my staff as cousins, second cousins, third cousins, we're all part of the family and I want this to carry on beyond me yeah for my legacy and yeah I've had a wonderful life out of it and let's hope you know people can earn if we're really successful people earn good money or people can develop their careers and move on to maybe other businesses or whatever.
Steve Perez:As a business owner you know we've got a great responsibility for the people that work for us. Know it's not just about making money. You know that's far too shallow. Yeah and that's why I'm in the drugs business. I'm not on the stock market or anything like that.
Steve Perez:Yes. And it's different. Yes.
Chris Maffeo:I was writing a post on LinkedIn a couple of days ago that I remember one of my lessons at university. There was a professor that was a big, big shot back in the days, and he was working with banks. He had even government positions and so on. It was from my father hometown, by the way. And he asked the class, it was one of the first classes that I took, and he said like, what's the goal of a business?
Chris Maffeo:And then everybody imagined like 200, you know, 20 year old kids, you know, like raising their hands and starting like, make money and make profit. And, you know, like they started we all went went with the yappy mentality of the nineties. It was like, make money, make profit, maximize profit. And he was like, it's survival. And the room went silent.
Chris Maffeo:And he was like, the objective of a business is survival, is to survive for as long as possible, year after year. That's ultimately what you do with it, why the money is kind of like a byproduct, but the ultimate goal is that you don't want this business to die, because you can even kill a business by being too successful. You know? Like you mentioned, cash flow. If you get that wrong, you get a big order and then you go bust by fulfilling a huge order for a supermarket chain.
Chris Maffeo:As the payment term aren't right.
Steve Perez:Well, the profit, we need to make lots of profit because the profit is a fuel for my rally car. The more profit I make, the more fuel I can put into my rally car, the bigger engine I can get, the faster we can go. That's why we need to make lots of profit. And we can all go faster, and we can all win. That's my analogy.
Chris Maffeo:So, me ask you about, like you mentioned, you've got 400 employees now. How do you delegate? Because one of the challenges of being an entrepreneur is you scale the business up to a point where you need to put people in certain places of the business because you can't do it all by yourself.
Steve Perez:Yeah. And what you've to do, you've got to recognize that you're not great at everything. Yeah I've got to recognize that I'm not the best accountant. I'm not the best salesman. I'm not the best marketeer.
Steve Perez:So you have to bring in this. I am pretty good at most of it but I'm not brilliant. Say you've got to be a little bit of a jack of all trades. You've got to bring in better people than yourself at their skill level. If you employ better people and actually it makes you better.
Steve Perez:I'm a better salesman because I've employed better sales. I'm a better marketeer. I'm better. So you always get better people and trust them. You've got to trust people and accept.
Steve Perez:I see friends of mine who have got businesses and they are control freaks and won't let anybody do anything. It just slows the business down. You've to trust people and accept. I don't get it right all the time. They don't get it right all the time.
Steve Perez:We all make mistakes. So, you've to be quite pragmatic in And that
Chris Maffeo:this is, let's say, the big challenge, because it's easier to get a yes man you know, employed, then you can pretend they are doing things, but actually you are moving, you know, like But it's very interesting what you're saying, you know, like about hiring people that are better than you. And there's always this friction and this kind of balance, that people are like, I want to get them just good enough, but they still have to listen to what I tell them.
Steve Perez:Yeah. I suppose the difficulty for anybody having a growing business is the transition between when you've got yeah two or three employees and you're doing everything yourself. But as you get more people you get a management structure And you have to become more corporate. You can't just have a meeting now, can schedule a meeting, can have those people in the meetings. So you have to work very differently and you have to delegate.
Steve Perez:It's impossible to do everything. You'll go crazy if you try and everything. Or you'll either go crazy or you'll just slow the whole process down. You know in the old days where we used to sign cheques and you know we've got to go the boss has to sign every cheque and what that just slows everything down people don't get paid. You know if we're coming out with a new brand or anything like that I've got you know great you know guy Matt Bullcroft marketing director super creative comes out with some great ideas Yeah, and I trust him and sometimes I think, Are you sure about him?
Steve Perez:Okay. Or I might say, Are you sure about this? Yeah, we all have dialogues but you've got to yeah. Whereas before, in the old days, I did everything. I had all the ideas.
Steve Perez:But, yeah, I can't have all the ideas always. And the good thing is, of course, as you get bigger business, you get more people, and and then it gets more interesting because you're sharing ideas. You know sometimes when you come up with an idea or say a new brand or something like that, those things aren't actually black and white. It's gonna win. I think it's gonna work.
Steve Perez:I'm not sure. Should it be red? Should it be black? It can be. And there's no clear way.
Steve Perez:Otherwise, everybody will be doing it.
Chris Maffeo:Absolutely.
Steve Perez:Yeah. You know, I always say we should do things which are difficult because if you're doing things which are a little bit difficult, then it's difficult for everybody. But if we can get all those challenges Mhmm. Then we can beat our competitors. Because very often, know, we're thinking of ideas and stuff like that.
Steve Perez:There's another office 100 miles away. Somebody's thinking about exactly the same thing, looking at the trends.
Chris Maffeo:And how do you navigate this risk taking when you delegate something and then it's like, okay, it's Yeah. There is a loss of It can be a loss of money, it can be a loss of opportunities, it can be It's like, how do you navigate that balance?
Steve Perez:Yeah, you're to say, well what's the cost of failure? Cost of failure, it was a monetary cost. So we produce this stock. If it's 100,000, we can afford to lose that. If it's a million, it's a hurt.
Steve Perez:Then you've got to say well is that going to be a distraction to the business? Is it going to distract from what? You've got your credibility to think about if the brand fails what will your customers think? Those are the But you do have to take the risks. You do have to take those risks in order to create new brands, new ideas and to some extent follow those trends.
Chris Maffeo:How, you mentioned the distraction because that's one of the biggest things. We started with the focus on while driving. What is the balance? What's your experience on that?
Steve Perez:Yeah. So the problem is if you create more brands, have the salespeople. Because you've only got so much time in front of a customer. And probably more likely to sell the latest brand than forget your existing brand. So it does have a major impact.
Steve Perez:And it's a case you just find it, you know, finding that balance with creating something new. Our customers also want something new. They're looking for new trends. And actually because we are unlike big companies, we are more entrepreneurial. They will look to us for ideas, inspiration because we're probably more likely to do something than Diageo's or Pernod Ricard's of this world.
Steve Perez:And also I think you have to stick to your category.
Chris Maffeo:And how do you manage to bring with you third parties like distributors and customers? How do you bring them on that journey of that vision that you want to bring to the market?
Steve Perez:Yeah, well it's interesting actually because Franklin and Suthers have been incredibly successful internationally because works. People understand and it was all deliberate, people understand London is from London, it was originally from London. Everyone in the world knows where London is, seen as premium. 1886 is heritage. So we spent a lot of time creating the recipes for the brand.
Steve Perez:We have our brand ambassadors who go out working with our distributors who've got real in-depth knowledge of the brand so they then can go on and sell the brands to their customers. So I think the role of the brand ambassadors and the international sales people who are ambassadors and sales people are very important and it's really important our distributors have the same knowledge as we do. And hence this week we've got our distributors from all around the world here. We've got about 47 distributors here for an international conference getting together looking at Franklin's and other brands. The difficulty is internationally because a lot of our brands don't translate as well.
Steve Perez:You know for example ready to drink aren't as popular in you know places like you know Italy or as they are in The UK. Some of our brands are very UK centric. So it was kind of two strings to our bow in that way.
Chris Maffeo:That's true. And that's I guess also like the what I've noticed from my heritage with being Italian, a lot of the drinks innovations, they actually come from the Anglo Saxon world somehow. The US, UK. So, a lot of these trends need to be able to be translated into local markets that may not be that familiar with that culture. So, it's about trying to find the gap and trying to find how to adapt that.
Steve Perez:Yeah, and I think it's changed. I think it's changed because English is an international language and it's very easy to translate great new brands in English speaking countries now because you've got US and everybody. Whereas yeah but if you look back in history a lot of the great brands Martini and Campari and always were invented in Italy. So yeah it was seen as quality coming from it and it was quality. Yes.
Steve Perez:Whereas now, yeah, you could say it's probably more about marketing. Yeah. That's true. You don't see as many sort of brands coming from Italy or France or but having having said that, people do look for heritage. Yeah.
Steve Perez:Because heritage gives that feeling of equality. It's something that's been around for a 100 years or so. You're gonna trust it rather than something that's been around for a couple of years.
Chris Maffeo:Yes. Absolutely. Yesterday and I, we were talking about this, you know, I call the vertical integration. Yes. You have hotels, you have a farm, you have the drinks business.
Chris Maffeo:How does that shape you in your mindset? Because sometimes you are the buyer and the seller of your own product in your mind. When you develop something, you look at it from when you were working behind the bar, when you were working in the kitchen, when It must be so fascinating what's going on in your head at the same time.
Steve Perez:I've got this hotel, the Cass Hotel, where we are now. It's always an accident why I built this hotel because we had to move the offices from where we were and I bought a site in a great location and it needed more than just an office. And I thought wouldn't it be great if we could have a bar where we could try different drinks and we could bring our customers, we could develop and then we could sort of see the operational issues and it's given me great insight to the issues operators have. They often have to speak on radio or TV and stuff like that. From the operators side you're talking about some of the issues we have right now in The UK with tax Asia and stuff like that particularly hospitality.
Steve Perez:Hospitality is having a really hard time and I can see that all the time in my hotels. I can see how tough it is trying to make money. We've got a great hotel, we're very busy but making money is very very difficult and it's a really tough time for hospitality here in The UK. So it just gives me the insight. But yeah I sort of ended up building this hotel because I thought yeah there's an opportunity.
Steve Perez:I'm an opportunist rather than a strategist. So I didn't come up with this great strategy to have a hotel but yeah when I was saying earlier I had a farm I ended up with a bigger farm. So I thought well actually if I build a hotel wouldn't it be nice with my farm which is now about 400 acres to supply my meat to the hotel. So I know I've got the provenance of the food and also I would supply my own drinks in the hotel. So they are all integrated in that way.
Steve Perez:And actually it's a great story but also I think it's great for the local area because we're a big employer here
Chris Maffeo:in Yes, if you imagine.
Steve Perez:We've got people on the farm who we employ. We've got local produce, they've a few food miles. We're very concerned about the environment and our environmental footprint. These days most hotels and businesses kind of again what I was saying earlier was are tend to be corporates. Yeah.
Steve Perez:This this could be a Hilton hotel or Radisson, but it's not. It's an individual hotel supplied by one guy supplying food from his farm which saves food, saves money and means we can give great local produce at great quality. Yes. I know you had the meat last night.
Chris Maffeo:No, and I was just about to say that I was impressed when I came here because I didn't know what to expect, know, when I said, okay, like, you know, Steve is also a hotel and you're gonna stay there. And I was like, okay. And then I checked and the level of the restaurant, the level of the bar is not like a hotel bar or like a random, you know, like if I entered without knowing where I am, I would think I'm in the center of London in a super cool restaurant with a super cool bar, you know, inspired by Spain and, you know, and then like, you know, when I said, okay, like, we're gonna have some steaks and then you came over and it's like, you know, these are our cows. You know, it's like, wow, you know, like this is incredible. That's why we were having this conversation.
Chris Maffeo:It's so fascinating what you can do and especially bringing a different angle to the usual narrative of the media, you know, because it's always like how do you launch brands, you know, you go to London, you go to New York, you go to Paris. There is a world out there of smaller cities in the middle of the country where you can make businesses thrive and you can launch brands, you can work with brands. There is too much focus nowadays on these big cosmopolitan cities. It's like Rome, Milan, Paris, Vienna. But what happens in between the cities?
Chris Maffeo:There is a world, there is people, there are companies, there are workers.
Steve Perez:It means that if you're somewhere like where we are here in Chesterfield, we're not in London or Manchester, it means that people move here, live here. It's relatively competitive for big cities. You can buy nicer houses, good scores, and people stay in the business a long time. All my senior team have been with me, all of them over fifteen years. Whereas if you go to London it's always it's changed.
Steve Perez:Yeah the business is changing all the time because you know what you're going to move to London. I know some of the younger people obviously, people don't always stay here forever. But what it does, it does breed that loyalty being in a smaller town. And actually where we are here, we've got great communication. We're one hour forty five from London on the train, lots of airports.
Steve Perez:So you don't have to go to that, you know, expense of these fancy offices, expensive offices in London. Although we do have an office.
Chris Maffeo:You're getting deal of your own.
Steve Perez:Yeah. Yeah. Build my own office. Yeah. And it's great because we bring our customers here and we can have meeting, we have fantastic meeting rooms, we can bring our suppliers here, our sales teams, our teams because they're all over the country, all over the world, they can come here for meetings and we can spend the night here rather than having to go home or stay in a Premier Inn or something like that.
Steve Perez:It's called Casa, it's called home. So it's their home, it's our family home.
Chris Maffeo:That's fantastic. Thanks a lot for having me and for making me feel at home in your Casa. That's fantastic. Let listeners know how they can find you. Again, they reach out to you if they want to get in touch.
Steve Perez:Yeah. The best way is on LinkedIn. You can find me on LinkedIn and you can write out. I also have some other accounts, but mainly to do with rallying on my Instagram, and it's hugely political. So, yeah,
Chris Maffeo:you have a good segmentation.
Steve Perez:Yeah. Instagram and Facebook is motorsport. LinkedIn is business.
Chris Maffeo:Fantastic. So thanks a lot, Stevie. Was a great pleasure. Let's go and get some lunch.
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