He Sold Pickle Shots Out Of His Trunk. Now He Runs The Co-Packer That Won't Bury You In MOQs.

Good afternoon, everybody. Welcome to a weekday edition of Drink Up. We're already getting platforms dropping. Good. We don't want to be on those places. Anyway, it says we're connected to LinkedIn and YouTube and Facebook. So fuck it. That's all we need.

That's the main thing.

We'll figure it out. Today we've got, uh, Dan Graves with ScaleAway and Dirty Dill. We'll get into both of those, but welcome, Dan.

It's an honor. I'm a big fan. I've been listening to this for a while, you guys. So this is cool.

That's awesome, man. It's, uh, Sam, I think the day is coming. We're getting close. Well, let me get through the, the the sponsors first. So, uh, before I fucking start rambling, 'cause I'm punch drunk at this point.

And, and, and, and by the way, we are live. We, we couldn't get live last weekend, so we actually somehow it worked today.

Right.

So we gotta shout out, uh, Sam and Alicia at Bev of Assets, Ryan Hallinan and On the Rocks Advisors. He and I have so much shit going on. Myself and Alias Advising, Jay Williams and Freebird. Sam, do we have our obligatory Freebird can?

I do not have, I'm, I'm, I'm—

You son of a bitch.

When he comes out with, he's, he's exploring different opportunities. So when he comes out with his new flavors, maybe he'll just, maybe he'll decide to, uh, bring it off to me.

So.

Right.

Beautiful. Well, no, what I was getting at was, uh, yeah, I feel like we're, we're approaching, we're not there yet, but like I've had people on LinkedIn reach out and be like, hey, I saw you on the podcast.

I'm like, really?

Cool. Right. So I think, Sam, your dream of the media pass at Expo West is, is growing more realistic. We're not there yet, but we're getting there.

Maybe, uh, maybe Josh Wan will invite us to Founderland and we can be media there.

Right.

Walk around one day.

Yeah.

No shit.

We can take Dan. Well, Dan, he can go work, work his—

Give us— so you're a brand owner and a facility owner. You pick your poison. I know which one came first, but you decide which one you want to talk about first. We're probably going to ask you questions about both.

Yeah. I mean, it wouldn't be justice to Dirty Dill without starting there because that's where we started. So yeah, we, we started with the idea back in probably 2018, 2019. There was pickle shots being served at bars around Denver. It was a good shot. Pickles and vodka go well together. People slam at those bars and I like alcohol. I like to drink. And I noticed that nobody was selling them at the liquor stores at the time. And, uh, so that was, that was kind of where the idea came from. You know, you look at the alcohol industry, you think, man, that's a beast. How would I ever do that? So I didn't really know where to start. And I had a seltzery. It was actually the nation's first seltzer on-premise, uh, that they were brewing. And I would go there. And so I started talking to the founder of that. And it was called Elevated Seltzer. And, you know, I noticed he, like I said, I noticed he was the founder. He was always on his computer sitting there. So I figured there was something there and I just started talking to him. I said, hey man, I'm kind of interested in getting into the industry. I have no idea where I would start. And, you know, he, he kind of walked me through some things. He said, let's go play some golf. And we went out, we golfed, we kept kind of working through some ideas. He said, I actually have a guy that makes a really good pickle shot recipe, actually like makes his own brine and all that stuff. And so we brought him in and, uh, and we were off to the races. We, like I said, we had no idea what we were doing. We went and raised a little bit of money and I mean a little bit of money and we all put in a very little bit of money as well. Since now there's only 2 of us, me and that, that guy that, that golfed with me that day. But yeah, we started that probably 2 years into it. Decided to start to either upgrade our equipment. I mean, we were hand pumping shooters and hand filling bottles, selling out of the back of our car.

Sure.

We all had full-time jobs or other businesses we were working on. So yeah. And then we went, we raised a little bit more money and we said, hey, do we go to a co-packer or do we buy our own equipment? At the time I wanted to buy, uh, go to a co-packer because I didn't want to sit in a facility. I like to sell, but They voted, let's buy the equipment. We did it. We bought a bottling line. And, uh, so we've always done all our own manufacturing. We've always done our own production. Uh, you know, we've made our own batches, all that stuff. We obviously went from doing 50-gallon batches to 250-gallon batches to 2,000-gallon batches. And one of the reasons we did sway away from the co-packing business was we shopped it around. And a lot of the MOQs just were unrealistic. They didn't make any sense. We didn't have the money to do it.

And— Wait a minute, you were doing this in your bathtub inside your house or?

Basically, man, that's, it was, you would not wanna see our facility. It was embarrassing when we showed people. It was, it was basically a garage. But yeah, I mean, that's kind of, uh, why we didn't go the co-packing route originally. We bought the bottling line and, uh, I don't know how much you want me to ramble, but I, I could keep kind of giving you the story on how this, uh, But, but back up for a second.

So you have this product and it's called Dirty Deal.

Dirty Deal. Yeah.

And, um, and I've seen it obviously, but how, so how long have you been in existence?

Our first sale was March of 2022. So we're going in on, you know, 5 years here.

5 years on this. And then just curious, I, we ask every founder this, how many accounts did you open up in your first year?

We were in less than 100.

Thanks for being transparent about that. I love it that you said that, by the way.

Yeah. Well, it was self-distribution. Luckily Colorado allows that. So we didn't need a distributor. We were literally going into stores, making the sale, giving them the product then and there, and then collecting a check.

But 100 accounts. So another 100 accounts, did those all reorder though? Like, like, did you get, do you get any reorders out of the 100 accounts? It's just called 100. That year.

Yeah, we were, you know, we made what I would say was a mistake. Uh, we had 12-pack 750s and 144-count 50mls. So the, the reorder rate was a little slower than I think we would've liked. But the beauty of starting in 100 accounts and being the brand owner, they, they root for you. They give you good placement. They push your product. At the time, I mean, it was priced well. And people root for you in that way, right? Now, I know, Sam, you preach a lot of, you know, uh, inch wide, mile deep, right? Not that allowed us to do that. So yes, we were getting pretty significant. I mean, we were getting like 10-case orders from some of these accounts.

Uh, so you said, right, I'd rather be in 100 accounts than 1,000 that they're actually supporting you, rooting for you, and you're building that business and you and your partners could get out there and see those accounts. So you did this yourself outta the trunk of your car?

Yeah. Yeah. All 3 of us did. I did a lot of the sales. I, yeah, but we were, that was, that was the whole operation. And then it was one at a time. I mean, Colorado's a good place to start a brand, to be honest, in my opinion, because it's independent heavy. And so you're so much in control of each individual sales pitch. Yeah. So I could, you know, it was like I say, I, I, I would literally go on Google Maps and I would type liquor store and I would just go One at a time and give them a pitch. And we had a little CRM, like, hey, I haven't been here in a month. I'm going to go check in. And so we were doing tastings all the time too. So.

I got to interrupt there. 'Cause, 'cause what you just described is not the way most, and you know this and Sam knows this and I know this, but I'm gonna make you say it anyway. Why was that your default? Or maybe it wasn't your default and you got there, but like, you know what I'm talking about? Like every brand comes in and is like, well, I'm going to sell at Total Wine, or I'm going to sell at Target, or I'm going to like, they, they start with thinking that like the liquor store they're familiar with is the one that they're going to start with. Right. And so like, what was it about just you being different, your brain working differently, your experience? Like what made you go, I'm going to Google liquor stores and make my list based on the results that come up? Because that's different than what most people think. Right. Yeah.

A little bit of his, his ignorance is bliss. I mean, I, when you don't know what you don't know, I never even, I never even had a thought about anything outside of Colorado. Yeah. That's why I say it was that it was a perfect fit for us because they don't sell, especially at the time. Now some grocery and, and C-stores do sell liquor. Yeah. At the time there was none. And so how else would you go sell? You just go to each corner and—

Sure.

We have so many little tiny Liquor stores here. Yeah. It's on every corner. Uh, so I was like, what, what else are we gonna go do but sell brick by brick? And, right. Yeah, that was, that was why we did that.

Huh. No, it's, I, again, you guys have both heard me ramble about it in different ways, whether it was on this show or elsewhere, like the number of, of the number of people that are just like, yeah, I'm gonna start here. And like, you're gonna get laughed outta the building, best case scenario. Right? Like, that's not, you know, like, well, who should I go talk to? And I'm like, the guy down the street you get your gas from. Like, well, I don't know him.

Great.

Go make a fucking friend. Like, so yeah. Okay. So I'm really curious and I love that. Like, do you know, Dan, do you know Tim and the Arties guys in Wisconsin? You'd like them. I'll put you guys in touch. Kind of a similar thing. So they're, I mean, they're Wisconsin, so they're big drinkers, right?

Yeah.

And, uh, and it's Tim and some of his nephews, family members, right? We gotta get Tim on too. That'd be a fun episode. Uh, but basically they were like, we were making cocktails, like supper club style cocktails, old fashions and shit.

Right.

And we couldn't get, like, there was no easy way to get 'em on the boat in the summer. Right. 'Cause it's an old fashion, like you gotta do some shit. And so he's like, very similar, which is why you guys get along. They just said, fuck it, we're going to make it ourselves because they couldn't find any small volume facility that would work with them. And at the time, I think they started in glass. Don't quote me on that, but they started in glass. And over the last, I think they've been around now, they're approaching 10 years. I want to say it's like 8. They've just iteratively continued updating their equipment and their process. But it was very, even to this day, you go to their facility in Wisconsin, there's 2 doors side by side and a brick wall in between. The left side is the production facility. The right side is the supper club. And I'm like, I fucking love you guys. Right? Like it's just Wisconsin through and through. But I asked them the same question. At what point in kind of the evolution of Dirty Dill did you guys go, all right, fuck it. We're going to help other brands. Cause that's a big step. Right?

Yeah.

Well, that came a few years down the road. Again, we got that new bottling line. It was It was strictly for 50 mLs.

Okay.

And, uh, all of a sudden, I mean, this is probably 2024, 2023, 2024. We had some other local brands that started reaching out to us saying, hey, we would like to do 50 mLs, but they were running into the same issue.

Right.

You know, a lot of these brands are, it's, it's husband and wife or it's 2 brothers or whatever it is. They're like, they don't want to, Buy their own equipment, have their own facility. That's just not how they're built.

Yeah.

And so, uh, we started doing bottling for, for some local brands back then. And we've done, we've since done bottling.

So you, you, you just didn't open up a co-packer overnight. You've been doing it for a while.

Yeah. Yeah. I mean, we liked the, uh, we liked the general idea of the co-packing business. It was a way to fill the line time. You know, at the time we've, we had hired a warehouse guy, so he was able to work the equipment, but it was always a vision to build a legitimate co-packing business. It's just one of those things. It's a, it's a beast. So it took, it took a while to actually put the plan together, raise the money. I'm sure we'll get there, but yeah.

Square feet do you have? What's, what's it take to build a co-packer that's like a viable co-packer? Is it like, is it have to be like a million square feet, several can lines? Like, what is it? What does your facility consist of?

Yeah. Well, where we want to be versus where we are currently at is very different. I mean, we've got like 15,000 square feet and, you know, we got tall ceilings. It's enough to store a couple hundred pallets and we've got, you know, 5 or 6 big 2,000-gallon tanks and, and our couple of lines. Uh, but we're packed. We're really packed, to be honest.

You do general, you do tunnel pasteurization too, don't you?

We do.

Yeah.

Yeah.

Which is amazing. A lot of people don't offer that. I think that's a real differentiator, right, Adam, or not?

There's, so he shall remain nameless because I don't want to totally, you know, throw his idea to the wolves, but, uh, a gentleman who I've known of for several years who, you know, used to run a large brewery. We got put in touch again through a mutual friend and he essentially was like, hey, like, do you think there's a market for You know, small volume kind of pilot to smaller midsize production facility. Like, is there a need for that in the market? Just very generally. Right. And I was like, dude, you're asking the guy that used to run a pilot facility. Fucking yeah. Right. And he's like, okay. And so, you know, he had a bunch of questions and he's like, well, you know, what would it look like? And blah, blah, blah. And I'm happy to talk about it. I love doing it. And he goes, well, what would it need equipment-wise? And one of the things I said was pasteurizer. And he goes, well, couldn't you get by with, you know, flash or Valcryn or things like that? And I'm like, oh, by all means, have those options. I'm not saying that there's not play in those spaces, but I can tell you right now, tunnel still holds fucking sway in natural product processing.

Right.

And so, and Dan knows this, but literally, uh, today I scheduled a call with him and a brand of mine next week because he is one of the few facilities that can do high acid beverage, that can do cans, that could do small volumes. And has a tunnel on, I mean, even approaching the West Coast, right? Like obviously Denver's not coastal, but it's getting there, right?

Yeah.

Yeah.

I don't know. The tunnel pasteurizer was a no-brainer to me. I mean, I don't know why people— it slows down the process a little bit. We've got other pasteurizing options. I mean, we, we could do batch pasteurizing in the tanks, right? We've got a couple of kettle tanks. But I don't know. I mean, I don't, it was a no-brainer to buy one of those. I'm surprised more people die. Everybody's getting into the Velcro and it's like, I'm not paying $200 grand for a piece of equipment that I don't even, I don't think is that necessary yet. So.

Yeah, it's, I don't know my, and I told this guy the same thing. Like I think from like a nerding out on shit perspective and just the mechanism that it works by, I think Velcro's interesting. I think for some products, obviously if you're doing a higher CO2 level or, or, you know, it's really heat sensitive, cool. Like having another option, great. But even at the lab, and this, I'm getting really nerdy, but even at the lab back in the day, like we invited Lanxess on site and had them look to see if we could offer Velcro and they were like, guys, you don't have the square footage. You don't have the ventilation. Like it's in its natural state, Velcro's some pretty heinous shit and you gotta really be careful how you handle it. And so from a safety perspective, pasteurizer's so much easier. So, yeah. So Dan, I mean, how do you, how do you keep a foot in both worlds?

Well, the beauty is that they kind of complement each other. I mean, when you've been running the brand for 5 years, we've got pretty good systems in place. We've got the softwares, we've got people. So it's all, they work right hand in hand. I mean, it, uh, again, it benefits the brand to have the co-packer because we're in control of our production. We know our unit economics. The co-packing business has all of the overhead and the Payroll basically. And we do prioritize Dirty Deal, of course. Uh, it, it, it, it's running the line probably half the time right now.

Sure.

But there is, uh, it is a lot, I'll be honest. I mean, the, the, to be clear, the co-packing business is pretty new, right? We're probably 6 months old. So we're still doing a lot of building. We're still building our client base. We're still building the facility out. And it is a lot. It, sometimes I feel like, uh, my head's gonna explode, but it's worth it. You build systems and that's, that's called being an entrepreneur. You, you jump out of a plane and you build your parachute as you're jumping out of it, right? That's, that's what we're doing. So.

For sure.

So for, and again, I, I know a little bit of this, I'm being selfish. Like one of the things I tell I'm jumping to the end a little bit, but like one of the things I tell brand owners constantly, and I told the group that, that you and I are going to talk to, like the first page of Google isn't for you, right? Like you type in beverage co-packing facility, all the first people that show up don't want to talk to you, right? Like maybe if the AI is doing a specific search on like Reddit or something like that, like maybe they can return you some useful results, but for the most part, like sip manufacturing, Does not want to talk to a startup. Right. So, um, my question to you is, as you guys are, cause every facility handles this a little bit differently, as you guys are new into this co-packing space, like I know word of mouth is bringing business your way and you and I have talked about that, but like, how are you approaching going out and generating new business? Is it truly just your focus on word of mouth? You're keeping the advertising budget low, or is there somewhere that you're specifically trying to shout it from the rooftops?

Yeah. The, the canning side of it, to be honest, has been coming at us. Like, I, it's, it's a little overwhelming cuz everybody and their mother is trying to come out with whether it is an RTD or it's the functional beverages or the energy drinks or whatever it might be. Uh, there's been a lot of canning companies and like, it's the same shit. Like these people are having to go, they go ask these other big canning co-packers and it's like, oh yeah, you know. We could start you out with 16,000 cases. Hey, I haven't even sold a fricking case yet. What do you mean you want me to do 12,000 or 16,000?

No, they bust their bank before they begin.

Yeah. And then you, that, that could be 2 years of inventory.

Like, yeah, I gotta get rid of, uh, I got 5,000 cases I gotta get rid of. And I'm like, why do you have 5,000 cases?

Yeah. They didn't have a choice. Right. And that's at least where we're at in the business is the goal is to give these people the choices. Granted, our, our, we still have MOQs, but they're, they're Pretty much about 25% of what the other co-packers are. And again, I've just seen brands get way over their head on, on inventory. That's what happens with inventory. A, it could go bad. B, you gotta have somewhere to store it.

Well, then they arrive with someone like me and they're like, well, yeah, can we work on straight commission? Because I paid, I paid Dan to make all the cases. I'm like, like, you're a new-to-market brand. No. Like, I mean, you know how hard it is to bring a new-to-market brand to market, but I think you're doing an incredible service. So name a company, where you're located, how do people find you?

So it's Scale Away Co-Packing. We're in Denver, Colorado. Uh, you can find me on LinkedIn, Dan Graves.

Dude, come on.

Easy. dan@scaleawaypacking.com, dan@dirtybill.com. We are looking—

there goes Adam, but, uh, That's how it works when you run live broad and well. So you scared him off because you told him where he could find you.

No, but he did. I want to answer his question too on where we're shouting from the rooftops to get clients. It's been surprising that the small format side of the business has been the slower one, the harder one to find. And, uh, I, to me, I think that's how Dirty Dale was built. I think the small format, there's so much power in the 50 mLs, the 100 mLs, if you're doing pouches, whatever, but We wanna find more, more clients that wanna do 15 mLs, whether they wanna just get, you know, our MOQ can be like 15,000 units. Sounds like a lot, but use those for samples. You know, some stores will buy that, right?

Right. That's what steak guys were talking about. They're like, yeah, these guys do like small sizes. I'm like, oh, that's Dan.

Yeah. So now that's what I'm looking for. I mean, like, again, we, the canning clients are coming in droves. But the, the bottling, we love the bottle. We have bought, we have 2 bottling lines. One is we can pump out about 5,000 units an hour on the 50.

Before I forget, I won't say the name because this is about you, but you'll know who I'm talking about. Uh, we have an opportunity to sell 3,000 50 mLs, but Ryan won't give us, he needs to give a quote. So you're holding him up or what?

I need to get a quote. Oh no, I just got off the phone with him before this actually. So he's, I think, uh, He was surprised when I told him it's not that big of an investment. Let's, let's rock and roll.

Yeah. So I mean, Rosa down in Tampa, which was with Paradise Craft.

Yeah.

She's like, yeah, I can sell 3,000 bottles. But Ryan's like, he needs to, we need a quote. I need at least the cost of goods and I can work up the price, you know, whatever.

But yeah, I mean, I, I think I convinced him to at least do his, uh, his whiskey and his vodka and the 50 mLs. Again, it's not a huge commitment, but that's the perfect Example of a brand that needs to have 50 mLs.

It— Right. Well, 'cause he doesn't, we're building from nothing, man. You know? Yeah. So for the trial, and we get 3,000 people to consume a 50 mL, that's 3,000 points of impressions.

Exactly. And it's, it's kind of what the consumer's looking at right now. It's kind of what retailers, a lot of 'em are looking at too. That's small format, it's accessible price point. That's what, that's what the news is coming out with. That's what people want. And why wouldn't they? Instead of having to buy a 750 for $25 just to try it, especially when it's, you know, niche products, call it a liqueur, a coffee liqueur or a limoncello or pickle product, whatever it is, like do it in a 50ml.

I'll make sure you guys reconnect or we're connecting your VPSLs, but You could absolutely help them from a trial standpoint, cuz they're bringing the 750s to— they don't have a 375. They're bringing 'em to, you know, they're trying to open up Miami and they got this guy named Agave Greg in Tampa.

Right.

But if we had the 50 mLs from you guys, I think that'd have been a really impact in terms of how to help 'em.

So. Yeah, the 50 mLs are awesome. So, I mean, I, I'm biased. Colorado again is a big 50 mL state, but, uh, I think you're gonna see more and more brands again. That's what it scared 'em away. They call a co-packer, they go, oh shit, I don't need I don't need 150,000 of them. So I guess, uh, I guess that door's closed. So we're trying to solve that problem.

That's amazing. I mean, you had, if you had you and you founded your brand, would that have made a difference?

It would've made a big, I think it would've absolutely made a difference. Yeah.

In what way?

Well, it allowed me to get out and sell more and focus more on the distribution and, and taking care of accounts. Because once we got really busy and once we were in You know, 200 plus accounts and we were getting reorders. It became more of I was a manufacturer. I was in the facility, and same with one of my partners. We're sales guys, and we weren't able to get out and actually sell, learn the distribution landscape, travel. We opened up some states. We didn't know how to handle them. We didn't even we couldn't. We didn't we didn't have time. We were in the facility filling. So if we could have found somebody that said, "Hey man, I'll do 20,000 units at a time." We would've been doing that instead.

Hey, so Tracy Drinkers, uh, on the line, he has a question. Can I ask you? Says, as a new co-packing company building your reputation, uh, what have you learned that emerging beverage founders often overlook when choosing a production partner? And how are you working to build trust as you grow?

Well, I think they need to, to do a better job at shopping. I think people find, they go, they Maybe the general rule of thumb is I'm gonna find 2 or 3 co-packers and they base their entire production around that. I think that regional co-packing should be more common. I see brands that say, oh yeah, like, you know, these are brands doing $5 million and they're doing it all out of one co-packer on the East Coast, even though they got a bunch of business on the West Coast. Why haven't you called us? Because you're gonna save 2, 3 bucks a case. On freight, you know, coming over here.

We got, we got a brand that's coming on board with us. We're doing like, you know, we do consulting at Bev Assets, right? We got a brand that, uh, that basically, uh, is, uh, hold on one second. Uh, one second, guys. Go ahead, Adam. Are you there?

I can hear you.

I'm here. Can you guys see me?

It's not good. Well, yeah, the other, you know, the other thing now that I'm talking to so many brands, uh, cause I have, I talked to, it seems like 1 to 2 new brands a week. It is constantly, hey, can you get me new distribution? Where can I, you know, can you get me into Kansas? Can you get me Nebraska? And the chain thing, it's funny. I talked to some of these brand owners and it's like, oh, I'm submitting to Costco and I'm submitting this to Kroger. And I'm like, like we talked about earlier, it's like, dude, go to the store down the street and sell to them. Like, you're gonna get kicked in the teeth the moment that you sell to Costco and it doesn't sell out. That could be a, brain-killing. So that, that is a mistake I see people make that we, we probably made in the past too.

Did we lose Adam again?

Yeah.

Your camera's not on. I just want to let you know that you're not— you know, it's funny. I mean, you go live, raw and real. That's the fun of this thing and things happen and we're chasing things around. That's what keeps it real. So we can prove that we're not AI here actually talking, Dan. It's actually real, which is amazing. You know, back to, you know, The question of regional co-packers, I think there is something really there because we have a brand that the found— 2 of the founders live in California and then one lives in Atlanta and they're co-packing the brand in Atlanta, but he wants to launch in California. And I'm like, I think Denver would be a better option for them, for the brand.

Yeah.

Right.

Yeah, absolutely. I think people wait until they're at some crazy scale. I mean, I won't, you Name drop, but one of the fastest growing RTD brands in the world. Uh, we all know he's got 5 co-packers. They're West Coast, Middle East Coast. Yeah. Yeah. So, uh, they're doing it right. That's how you should be doing it. And you, you take a little less risk. What if that co-packer screws something up? I mean, at least you got the other 4 to, to back up on. Right. So.

Yeah, I think it's, I think you, I think as you scale your business, one, start with a co-packer that has reasonable MOQs so that you don't bust your bank. Right. And then even if you want to like test it out, right? Like, is this, is this brand going to go or no-go? Right. But like, if you're like, we have another brand in Florida and they had it initially co-packed in California, but all the founders lived in Florida. Right. So we're like, you got to launch Florida. All you guys live in Florida. Right. So they had to pay that shipping cost to get it to Florida. Then the minimum, even They had the maximums. The cost per can was ridiculous. Like an RTD, like I've talked to clients that their cost per can's like $2.50, but yet they're trying to compete at a 4-pack at like $14.99, $12.99. And they're like, well, we gotta be at $24.99. I'm like, the category's at $14.99. And they, they try to justify the price based on, you know, what's in the can or proof. And I don't think the consumer cares.

Well, the consumer, uh, even if they do care, they don't spend enough time to look at it.

So maybe they don't really know in the can what, uh, what's there, right? They're just like $14.99, $14.99, $25.99. The $25.99 may be worth $25.99 based on what the proof is, but they're not slowing down to understand that.

They weren't going to go look at every single can in the refrigerator or every single bottle on the shelf. They don't have time. They don't. Yeah. I mean, I saw a fascinating study. This was probably 2 or 3 years ago, but it was like the average, it was a, Uh, it was the average consumer spent less than a minute and a half or something like that in their liquor store. You know, it's, they're not going and shopping and can searching. They're just going and they do look at price point. They look at whatever the brand recognition is. I mean, you're naturally gonna go grab a Cutwater because you think Cutwater's cool. That's what other people are drinking.

Yeah.

So that's where the going deep in the accounts is. You, you gotta get somebody to taste your product. You gotta get some signage up. You gotta get the cashier. the cashier to push your brand. Hey, I see you looking at Cutwater. You should try this other brand, right? That's your— the cashier's your best friend as a brand.

How did you get people to pick up? So like, you know, back to your brand, how did you— like, you built to this 100, eventually got to 200. There was a tipping point, but what did you do actually to get people to find you? Like, what were the— what's the secret sauce to success?

Well, every brand's different. I mean, ours is the The 50 mLs. And we, we learned counter— I mean, it's no secret. We learned counter dispensers early on. We started just stuffing our cases with counter dispensers.

Okay.

And at one point that we were spending $4 on a piece, so our, our, it was killing us on our margins. We've since shopped and shopped and shopped and figured out now we pay 60 cents, which is beautiful. But that, that was the brand recognition right there. That's how you force people. You, It's a nice looking piece that sits on the counter. These people open up a case, they're likely just gonna put it somewhere that people can see it. That's how we caught people's attention.

Gotcha. So trial the 50 mLs to get 'em to try it.

That's why I love the 50 mLs.

Yeah. And like, and then what's the sweet spot for a price for 50 mLs?

That's another common misconception. And it depends on the market, right? It's some market, every market's difference to me, as long as it's under $1.50. You'll hear some of these, some of these distributors and retailers, I'll never be able to sell a 50 ml under 99 or over 99 cents. Well, then you can drink shit. People that like to drink shit like that.

That's right.

But you know, I mean, again, it depends on the market. I can go and see, there's a really, really good new green tea shot called Komodi. I'm gonna give 'em a shout out cuz we're gonna package for 'em. But it's actually a really, really good product. It's $2.50 here. I'm trying to get them to get their costs down. We're figuring that out.

I mean, a gallon of gas is $4.19, so $2.50 is a great deal.

Consumer— consumers, I don't believe, will for the most part make it— make a— or say no over 50 cents, right? I mean, that's what's— it's like if they want to try something, to buy something, look, One of the biggest, one of the biggest pickle shot out there. They do a great job.

Yeah.

They, they did a great job at like $1.99. They were selling thousands and thousands of cases. So the new, the whole, uh, notion that everything has to be 99 cents or under, that's, it's not 2005 anymore. Like people, everything, you know, what's really interesting about the alcohol industry is every industry rises in cost, right? Every, a bag of chips, a gallon of gas, uh, eggs, milk, whatever it is, everything's way up. Year over year over year. Everybody wants alcohol to stay the same. When I say everybody, it's the distributors, the retailers. Consumer would expect the price to go up. You know, I wish the industry would adapt to the rest of the economy. That would, that would make everybody's life a little easier.

Yeah. Well, if you saw that in the news, I think Diageo is starting to happen as they're starting, all these bigger companies are starting to compress their pricing, which is wild. So they're getting rid of their sales forces and they're reducing their price and they're putting pressure on the distributors to sell their stuff. So the people that they were, all these street teams, all this stuff they were doing, they're getting rid of all of it and they're just like price and you, the distributor, are gonna go sell it.

Yeah. That, you know, it's, uh, there's a local, I don't know if you've heard of Tivoli Brewing out here. They've got a, a brand called Outlaw Light. They're trying to disrupt the light beer industry, which is crazy, right? Nobody's done it hardly in the last 100 years. And I mean that 20 and under 24 case price point. They said, and their CEO Ari, smart dude, he says, instead of spending all this money on marketing, you know, Miller and Coors and Bud, they're spending $200, $400+ million on marketing. He said, Instead of that, we're just gonna cut our price so you can get a case of their stuff for like $14.99, same quality as Coors Light or a Miller Lite, $5 cheaper. I, I kind of, I kind of dig what they're doing, to be honest.

I think Diageo's going there, quite frankly. I think they're cutting all the, all the stuff and going for price because consumer, well, let's call it what it is. I might've seen it all, but in the economy, how it is right now, consumers are, they're gonna look for value, right? And if you can get good value, that's where they're gonna shop. Right now anyway, maybe that'll change as the economy improves, but I'm not trying to say this is all about price because I think people look for the value of price getting charged, but you know.

But you need a good product too. And that's, you know, going back on what do I see founders doing wrong? Because I'm getting sent samples all the time. I think people rush their formula and it's just not very good. And I'll try stuff and I'm like, Yeah, I'm not gonna tell you this, but it's just not a very good product.

Yeah. Without the product, there was a product called, we, Adam had talked about it a couple last couple weeks, Unwell.

Mm-hmm.

It had celebrity backing, it had Nestlé behind it, but I, I evidently, and Adam chime in, but I don't think it was in the product, right? That's why it fell maybe.

Yeah. I mean, it was a, and, and, you know, shout out to a group that I still, you know, remember fondly, but like Kill Cliff. Back in the day, right? Tried to be, they tried to launch a brand called Kilcliff Endure. It was a Gatorade competitor, fell on its ass after a year and a half. Unwell, celebrity endorsement, podcaster, all sorts of bullshit. Gatorade competitor fell on its ass after a few years. Prime. My wife was at TJ Maxx the other day and, you know, TJ's got their like island of misfit products that they sell, right? Fucking bottles of Prime beverages sitting right there. I'm like, If you're gonna take down the king, you can't cut, like, ain't no half-stepping, right? Like, it's gotta taste good. It's gotta be priced right. Like, quit fucking around thinking that like, because there's a celebrity endorsement or because it's got monk fruit that anybody gives a fuck, right? Crazy.

It is crazy. Priced worth goods charged. If it's not, if the quality isn't there, they're not coming back. So where's, where's Dirty Deal today? How many states are you in, Dan?

We're in, uh, 24, 25.

Fuck yeah.

Yeah.

Yeah.

And it's, we're seeing month over month, it keeps growing. The distributors are, are taking it in and, and they're actually selling it and, and taking pride in it for the most part. I mean, we, we've chosen to go with some of the more mid-sized distributors that we'll get attention from, you know, the ones that are really big. They got a job to do, and that's to sell the large, the large brands. And I don't blame them. That's where their money's being made. But there still is a middle market. And so that's, those are the distributors we're doing well with. We're doing really good in control states. You get a broker in some of these control states like Iowa or Wyoming or Montana. We're doing really good in some of them. Surprisingly, we do, we're doing some of the most volume across the country in Wyoming. Believe it or not, I don't even know that there's 300 liquor stores in that whole state. And that's about how many cases they're selling a month. I shit you not. So.

That's crazy.

It is crazy. Uh, but, uh, again, I just attest a lot of this to the small format, man. I mean, that, that's 75% of our business. That, uh, that's what people are looking for right now. So.

That's amazing. Um, and you're continuing to grow distribution then across the US? We are.

You know, we were with RNDC here in Colorado and in a couple other states. Reyes took them over, as we all know, in the, in the 3 states we were with them. And, uh, they took us on and they want to bring us to, I think, about 4 more markets. Um, we're supposed to be launching Tennessee Q1. It'd be, it's about 4 or 5 more markets we'll be launching Q1.

Reyes is in Tennessee?

No, that's, uh, Lippmann Brothers is who we're on. Gonna be working with there. Reyes will be in Florida, California, and Indiana. And MGB just took over Ohio's R&D/C operations. So we're gonna be with them. That's Mexcorp. So we did, we're with Mexcorp in Texas.

Amazing that they've been growing this, this R&D/C going out. It's helped the midsize wholesalers, I think, quite frankly.

Yeah, there's a, there's a place for it still. I, I mean, hey, look, the liquor industry should be fun. There should be innovation. There should be fun new brands coming out and it requires a distributor that'll give you some attention. It requires the brand, as you guys know, to put effort and to put money in. I mean, I'm, it, it was a hard pill to swallow when I started it that you actually have to pay your distributors to sell your brand. Like, that was like, what are you talking about? You're already taking your 35%. But it's the harsh reality of the business. And some of these brands that I talked to, I'm like, hey, what are you doing in some of these new markets or even in your one market? And you should run a $2,000 incentive. It's not going to break your bank. And they just can't wrap their head around it. It's a pay-to-play business. It's the sad reality. Yeah.

Wait a minute. I've— so the margin I gave you, that's not enough? No, you need to do samples. You need to do incentives. You need to do, uh, bar buybacks. You need to do tastings. Like what? I'm like, yeah. I mean, I mean, this is the price of poker, man. When you enter the game, that's what it takes.

Sales reps wanna make money. That's what they have a business. That's what they have a job doing is to make money. Right? So the more money you can put in their pockets, the more they're gonna love your brand.

Yes. Uh, that's amazing. Uh, so Adam has to ask the most important question we ask everybody that comes on. Uh, maybe you've heard it, so maybe you're prepared, but, uh, drum roll, Adam, you wanna ask, uh, Dan the question?

Absolutely, Dan. What's the difference between success and failure?

Yeah, you do always ask that, huh? You know, I think failure is, uh, to me, especially as an entrepreneur, is giving up. Uh, I think the difference is success is you just keep punching and punching and punching it. Look, sometimes it might make the most sense to pivot and do something else or close your doors, but I've always had this, uh, Kind of idea in my head is the business is not the smartest man in the room. It's the last man standing is the one who wins, you know? So to me, that's, that's definition of success is, is endurance and never, just never quitting and being smart, pivoting where you need to pivot, being, being flexible, but, uh, just keep punching, man. That's what we're doing.

What, what keeps you keep punching?

That's a good question. I mean, I got a vision for my, my life and my family's life. I've always, Been extremely competitive. I, I've always wanted to win so that, that drive to want to win and not lose. I wanna, I wanna give my family a good life. I wanna make an impact. And I don't know, I have, I just feel like there's something burning inside of me to, uh, not give up. Uh, and that's, that's what most entrepreneurs, they just don't wanna quit.

Well, have you woken up in the middle of the night in a dark sweat going, how am I gonna pay my bills ever?

Almost every night. Yeah. I was gonna say what, uh, given, I mean, I mentioned Artie's, right?

Like you're not the only person that I know who's, who's got a foot in both worlds as far as being a brand owner and a service provider to brand owners. But there is a, a small list of you out there, right? Not a lot of people are willing to wear both those hats consistently. If you could go back in time and, and talk to the Dan that was slinging Dirty Dill out of his car, Right. Is there anything you would've done differently? And, and the answer might be no. So is there anything that you would've said, hey, you're gonna get punched in the fucking mouth, just know it's coming, but like, you're gonna be fine. Like, what would you have given? What advice would you have given your younger self?

Yeah. I mean, I, I tell myself that, and I've thought through that, that if, if I would've known, if I would've been able to say, hey, look, this is where you're gonna be in, you know, 5, 6 years, and here's what it's gonna take to get there. I don't know. I probably would've talked myself out of it. Let's put it that way. Yeah. And that's the beauty of it is you just, if you take it one day and one month at a time, I was sure I was always saying, hey, I'm going to build this thing in 5 years to a, you know, $50 million company. And it's that, well, we're not, we're not even close and that's okay. But yeah, I don't know what advice would I have given myself? I probably would have still told myself to do it. It's going to be harder, but you got to do it.

Yeah. It's funny. It takes a lot of resilience and courage and perseverance to do what you do.

So high, high respect, man.

Because I always say this, I didn't become an entrepreneur because I wanted to. I became one because I had to, you know, and it's just, it's a matter of just putting food on my table. So I was pushed off the cliff where many people like you yourself, you jump off the cliff, right? And that's amazing, by the way. You said it earlier, like you jump out of the plane and you're building a parachute while you're falling, which is an amazing comparison. Tracy's back. He's busy asking questions. He said, how do you find the right people to assist in the day-to-day administration and facility operations starting your brand, trusting yourself with everything at first. So like, obviously you can't do, you haven't built this yourself, right?

I mean, Dave, get good people at the table. That's, you don't know what you don't know till you know. And the reality is you can't remove all risk. There's not, if there was a perfect playbook that you could play by and predict where you're going to be, it'd be easier if more people would do it.

Yeah.

You know, and so you just kind of have to figure it out as you go, but put good people around you and trust what other people are saying. And don't be scared to take good advice. Don't, you know, to me, I took, we've taken a lot of investments in Dirty Deal over the years, especially from good people too. And same thing with ScaleAway. And we weren't, we're not scared to get diluted because I'd rather have a company that's worth a lot more money. in the long run and have less of it and have had good people around that made it easier. So that's, that's my philosophy. I love it.

And then Tracy, you got all those questions out here. For pre-revenue spirits founder preparing an initial production run, what evidence of market demand would you want to see before committing cash to inventory, particularly a distributor interest or account commitments?

Again, I think that would depend on if you were allowed to go out and sell yourself. I mean, I I'd go sell it to 20 accounts and go deep and see if people are actually willing to buy it.

Well, that's the beauty of your operation though, as a co-packer, you don't have to like, like do a test and like bust your bank. You can, you could go into Denver, work with you, make enough product, and then go out there and work the market with your brand to see if you have something.

Exactly. And how long—

so the message for everybody is, if you're gonna build a brand, just build a co-packer too. Easy days.

What I'm saying is, okay, so I'm a brand, right? So we know a couple people, Adam, but I'm a brand. I want to go to market. Realistically, a test is a test a year. I tell brands, if you don't have 36 months of runway, don't do it.

Yeah.

Well, and I could be wrong. Tell me.

Yeah. When you say 36 months of runway, you mean with cash? Oh man. If I had 36 months of runway, I'd be, I'd be sleeping good.

Dan's like, I would love to have 36 days of runway.

Yeah.

No, I mean, I was so in a hurry, like, hey man, I gotta sell these cases to pay my bills. Is this how this works?

Yeah. Again, I just think that there's no removing— you could remove risk by trying to do things the right way, but that's the essence of entrepreneurship. That's why it's valuable because you gotta take the risk and do it. You know, I will say on runway, I'm always happy if I've got You know, up to like 10 months. I think that's a fine place. You can recover and there's always more selling to do, right? It's a huge market. It's a huge industry. So there's, you get scared, man. You know what you should do? Get your ass out on the streets and start selling. That'll solve some problems.

If you get scared, get your ass on the streets and start selling. That is the quote of the day, by the way. And that'll be in the, um, by the way, I'll put that into the, uh, Daily pour. I'm gonna quote you.

There you go, Dan.

Uh, before we go, because I gotta call it— it's fucking been busy days. I gotta call it 5. Where can people find you, whether for Dirty Dill or for Scale Away?

Oh, we lost you when he asked. Yeah, find me on LinkedIn, Dan Graves. Uh, dan@scaleawaypacking.com, dan@dirtydill.com. Reach out, man. We'd love to work with small brands. We'd love to help emerging brands and, uh, That's what we're here for. So, and talk with guys like yourself. That's, it's important. It's important again, to, to be in the right room with the right people.

Well, thank you. It's been a pleasure catching up, dude. I'm really, I'm, there's one other group. I'll, I'll, again, they shall remain nameless, but this, uh, this project I'm trying to bring your way, there's one other group in California. And of course, because the brand, as we talked about, is in California, they're like, well, we would love to work with them. I'm like, maybe. I will maybe sign off on this. And they're like, what do you mean? I'm like, you're gonna fly me out to look at this place cuz I don't know. And they're like, well, what about the place in Colorado? Have you seen it? I'm like, no, but the CEO of Icon Foods referred me to them after I already knew Dan. They come a little better recommended, right? So like, do what you will with that information, right? Anyway, cool. Dan, anything with the last few minutes we have, anything we didn't ask, uh, that you wanna share with everybody?

And now again, if you wanna explore small formats, Stuff. Let's talk. I'd love to work with you guys and be a good person. Good things, good things come to good people. It'll all come around. If you're out screwing people over, you're gonna, you're gonna get screwed because it's a small industry. So think twice on that. That'd be my advice, man. Do things the right way. Good things will come to you. That's how, that's our, that's our philosophy.

That's great. That's great advice. I mean, what was the quote I need to— I already forgot the quote. If you want, if you're—

Something about if you're afraid, get your ass out on the street and go sell.

If you're feeling scared, get your ass on the street, start selling. Yeah. Yes.

If you're feeling scared, get your ass on the street and start selling. That resonates with me for the day. I'll ask the two of you to remain on the line, by the way, because, so do not hang up because last week our guests hung up, but somehow miraculously it works. But I'll hit pause now early since Adam, you have to drop at 5. I wanna thank everybody for joining us at Drink Up Live. Forever an alumni now. So please join us on Saturdays and anytime we'll invite you to our Drink Up Podcast group. And we love it that you finally got here, brother. It's great, man.

No. So, and my CFO, our CFO came from you guys, Cash. So thank you for having this. That's how we got her. Cool. Yeah. Yeah.

Cash actually, she just picked up another client, by the way, today, one of our other clients. So like, gosh, I mean, so Cash is, she's fantastic. Yeah.

She's amazing.

That's awesome.

That's fucking cool. Awesome. Thank you, everybody. Enjoy the rest of your night.

Cheers.

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