Welcome to our live show!

Welcome to Drink Up Podcast. I'm Samuel Anderson, the host of Drink Up. Emily, welcome to Drink Up. Glad to have you.

Well, thank you so much for having me, Sam.

Oh, 100%. So before we get started, I just— we always talk about who our sponsors are and letting— calling them out. So first of all, Alias Advising, Adam Smith, which he's playing hooky today. You were trading messages with Adam. He helps beverages go to market, spent a lot of time at BevSource, has his own entity now, and he'll help new-to-market brands think of things that go on a can. And if you need to find a good flavor house or a co-packer or people that make those cans and lids and labels, he can help with that. He's a great operator. Also, Ryan Hellermann for Rocks Advising. So they actually, as a group of individuals, we're part of it as well, that if a brand comes to market and they're looking for different services, Ryan's able to bring that group of folks together so that they can take advantage of it to bring their brand to market. Jay Williams, we always start with him, but I don't know if you're familiar with Jay Williams with his water. But Jay, thank you very much. Called Freebird Water.

Yeah.

So, which is pretty amazing that he was able to use that word Freebird and get his water flowing literally across the Southeast and seems to be going nationwide. He's in NASCAR. Heck, I think he's had the band Freebird in his, his truck cruising around Georgia. So, Jay, thank you.

Oh, that's pretty rad.

Yeah, it's very rad. And then Alicia Vargo, my partner at Bev Assets, as a sponsor and we help brands from all shapes and sizes. I mentioned to you earlier, foundation, build, grow, scale, and sustain type of brands go to market. We work with brands from all over the globe. We have partners across every entity you could think of from PR firms to recruiters to people that'll help you ship your product, import, export, global duty-free. But we do commercial strategy. which informs our route to market and go-to-market plans. But with all that, Emily, thank you so much. I know we had to work through— it's like, what is DrinkUp and why am I coming here and who are you and what's going on? So welcome to DrinkUp.

Thank you. Thank you so much for having me. I'm looking forward to seeing where the conversation takes us.

Well, tell me a little bit about what you're doing with the American Crafts Spirits Association. You're the CEO of this organization. So obviously there's a lot of noise about craft and spirits and the whole bit. So we'll certainly get into that. But tell me a little bit about the organization and you.

Yeah, yeah, of course. So I've been the CEO for about— check Swatch— about 5 months now. So I still feel like I have a lot to learn and I'm still settling in. But I've been with the organization for about a year and a half. And frankly, even beyond that, when it started 13 years ago, I back then I was a journalist covering the alcohol industry. And so I felt like I was sort of tangentially involved. I was doing a lot of, you know, interviews and covering the creation of this really exciting new trade association. So I have worked with ACSA since its inception. I've had a really soft spot. Bought for this group, uh, for a long time. So what do we do at ACSA? So American Craft Spirits Association is the trade association that gives voice to all of the independent craft distillers and brands in, in the United States. And our— I like to think of like our 3 main pillars of, of what we provide is going to be advocacy. So at the state and federal level, we are advocating for laws and regulations that are beneficial, or at least not a barrier to small businesses in this industry. We provide education and resources, and we build community and networking. I don't know your involvement in the craft spirit space, but I think one of the things that's really special about craft spirits ACSA is that there is— you don't find as much standoffishness. It's a more collaborative community. And because 90% of craft distillers are selling in their home market, maybe regionally, there isn't as much competition. They're more willing to problem solve and collaborate and help each other because a lot of them are not directly competing. And even the ones that are, there's still a sense of community. They would rather, they would rather work together. And I think that's really special. So I like to think of ACSA as sort of a hub. If you're in that space or you want to reach that space, ACSA is the place where you can come and you can send me or my team an email and you say, hey, I have this problem, or hey, I'm trying to reach this person, et cetera. Maybe I don't know them, but I guarantee you one of our 500 different you know, members probably knows how to reach someone. So I like to think of us as a hub.

Do you have a Slack channel and all that that people can participate in and find one another?

We don't. So this is an ongoing topic of conversation if people would want a Slack or a Discord channel from ACSA because there are so many out there. It would probably be more efficient for our team, but we, as of right now, we don't have one. But I'm open to it.

Yeah. And then is it just craft spirit producers, or can someone like me, a service provider, join the association?

Absolutely. That's what we call an affiliate member. So essentially a supporter. Now we have sponsors too, but that's, that's, that's a different thing, right? There are different ways to get involved. But yeah, you do not have to be a craft distiller. You could just be a craft supporter and There's a, there's a level for you as well.

What's a level 3?

A level for you as well as an affiliate.

Oh, I thought you said level 3. That's great. Yeah. So that's really interesting. We'd love to obviously support those craft producers out there. So how did you get involved in this? What was your journey like? How did you arrive? You said 5 months as the CEO. Yeah. What's the journey to get you where you're at today?

Yeah, sure. So, you know, as I sort of mentioned, I started in this business as a journalist and I created a publication— not created. I can't take credit for it. I kind of ran and built a publication called Wine and Spirits Daily. It was a daily newsletter. Is— it still exists. It's a daily newsletter. And I found that as a journalist, you know, you're supposed to be pretty unbiased and just report on what you're observing. But I have always increasingly found myself really attracted to working with small startups and craft. And so the course of my career just sort of led in that direction. You know, I started as a journalist, then I was hired on at Park Street. Do you know Park Street Importing and Distributing? No.

Yes.

So I was hired there to create their education division and content creation. And so I was there for about 5 years creating— we had a whole— it was almost like a media channel is what they had us create. So we did, you know, podcasts, YouTube, Instagram, and Reels. And then we had on-site, we would do partnerships with like Bar Convent Brooklyn, where we would put on their education series for the trade. And so I spent 5 years there building that out, building a network. And I remember I was talking to over the course— so I also consistently worked with— so Margie Lerman is my predecessor at ACSA. She was there for I think over 10 years. And I worked with her consistently because our 2 organizations do the annual Craft Spirits Data Project.

Right.

It is the, it is the only economic report that comes from data directly input from these craft distillers. So it is the most accurate picture that we, that we have of the craft spirits industry. So I worked with Margie every year pretty consistently. And I remember one time we, you know, we were talking about she was ready to bring on, you know, someone new to be sort of a COO. And I just raised my hand. I said, hey, you know, would you, would you consider me? I've always loved this organization. I would love to consider what that looks like. And she said, yes, that's great. And that's how— and that's how it all started from there.

Oh, amazing. So I'm trying to see if I can get this to go live. For some reason it didn't, but that's okay because we'll run it again. But I'm just gonna just do this, see if this, uh, actually, um, runs.

It does say live on my end.

Oh, it does? Are you seeing it live? Okay. Well, maybe it is. I'm just always— sometimes it doesn't, uh, go. But that's the— here's the beauty about going live raw and We, uh, we ride the surfboard every weekend. We don't know what we're gonna get. It's kind of like a box of chocolates, the Forrest Gump, uh, thing.

Yeah, I get that.

As we go into the holidays. So you spent time at Park Street?

I did, yeah.

Yeah, and, and, um, you know, it's funny, they— we— there's one of our partner companies. We certainly recommend a lot of brands over to Park Street. That's a great service, especially if you can't get a distributor and you need to get to market. We have, you know, you know, have a cool brand out of France. It's a tequila, but the producers out of France obviously getting the tequila from Mexico. But we're starting in Miami and we're using Park Street, or he's using Park Street to actually do this. I think it's an incredible service to actually give them a path.

Yeah, it's— I always think of Park Street as a pretty incredible, like, stepping stone solution where it gives you the opportunity to— I think there's a handful of markets. So California, New York, New Jersey. Did I miss Florida where they— you can create your own demand, right? Park Street doesn't have a sales team, so you can go in and you— once you create your own demand, Then potentially you can take that to a distributor who's more full service with their own sales team and whatnot and say like, hey, look, here's what we've done so far. Here's the demand that we have. And you can move up. Now, not everyone uses it that way. Some people stay with Park Street long term because they don't want a traditional distribution model. But I find that that is the more common route that people use. Wow.

So a couple of questions. Where do you see the category sitting today?

Oh, gosh. I mean, I don't think it's any secret that the craft spirits and independent distillery segment is really challenged right now. They are facing the same demand issues that all of the other categories are facing, plus rising costs. But they have less margin and less of a cushion to really absorb all of those blows. So it is a, it is a really hard time to be a small and independent distiller right now. I don't think there's any doubts about that. But what is unique And special about the craft spirit space is that they do what they're inherently better at, which is just adapting, right? They're finding ways to survive in a challenging environment like this.

And you talked earlier when we were— before we went live, is that one of your expertise is you kind of talk about like the, you know, kind of the route they could take or channels that they could consider to help, you know, you know, fight through what's happening here. So can you talk a little bit about that?

Yeah, sure. So one of the things that we see that is most obviously happening since COVID is that sales— we track in our annual data report, we track the sources of craft spirit sales. So we track at their tasting room, their DSP, outside of their tasting room, but still in their home market.

Right.

And then we track outside US markets and exports. Right. So we have 4 channels and we have seen across the board whether people are small, medium, or large craft distillers, they are shifting their resources back to sales at the tasting room. Because that's what they can control, right? They can, they can control and they have better success right now in their tasting rooms because market access and distribution is very challenging right now. The bottleneck for distribution is tighter than I think we've ever seen it. So that, that is one adaptation we see. We see two that I am paying attention to. I wouldn't say they are widespread, but I think they could become more widespread is collaborations and team up and sharing fractional sales forces. Right. You have one of the one of my favorites right now is the Sirens Spirits Group, which is run. As a, you know, women's-owned brand collaborative, basically. And so they share resources on the back end. And it seems to be— it's relatively new, but it seems to be going very well. The other one that I'm paying attention to is more craft-on-craft acquisitions. Right. So what used to be more common was the multinationals and the strategics acquiring craft. But in the last couple of years, I've seen more craft buying craft. Right. You had Middle West bought Old Elk brand. And then more recently, just in my neck of the woods, you know, Cleveland Whiskey bought Sandusky Distillery. So I think there's a good chance that we will see more of those movements.

Where are you based out of again?

Pittsburgh. But Pittsburgh is like on the border of Ohio. So—

Bowling Green State University, and a lot of people from Pittsburgh go to Bowling Green.

Yeah, yeah, they do. There it— we have friends that live in Ohio. So not even, you know, it's very close. So I hear a lot of the Ohio news. Pretty regularly as well.

Bowling Green, which is near Toledo, over to Pittsburgh.

Yes.

And we would— I didn't catch it earlier when we were talking. It's interesting, you know, craft buying craft. And then also the Consortium of Women, which Alicia Marco— sorry, Alicia, we're not streaming live on LinkedIn, but I'll stream this later on. We are streaming on Facebook and YouTube and Substack. though. But, uh, but our LinkedIn friends will have to find us on Riverside, which I did send that link out this morning as well. You can see that.

I didn't even know you could stream video on Substack. Oh yeah, interesting.

We stream every— we stream every week on Substack here. So you're live to the Substack world.

Which— wait, so, so which one is the most popular, if you don't mind me asking? Where do most people tune in from?

LinkedIn is the most popular, and then I'll stream it live again. Obviously we won't be live, but it'll stream like this, like we're talking, and I'll monitor, monitor it. That's for some reason the Riverside connection to, to LinkedIn messes it up. Anyway, back to the show.

Sorry.

No, that's fine. That's what— that's why people like us, because Because we're not, you know, look, I'm a big believer in AI. I use it every day, but I think being raw, live, and real and having real humans talk, I think people very much appreciate it this day and age. Where do you see the Spears business headed in 2027?

Oh gosh, I, I can only, I, let me, I can only speak from a craft perspective for the most part, because that's where my day-to-day focus is, right?

Yeah.

I think, I think things— the environment is going to remain challenging because I don't see any of the challenging factors being removed yet, right? Like, we're still dealing with tariffs on and off. We're still dealing with high, you know, energy prices and gas prices, etc. I don't— that isn't cooling off yet. The distributor bottleneck isn't magically clearing up yet. So none of those macro factors are changing. It's, it's still going to be challenging. But what I see shifting is sort of an attitude. And then as follows, our business models, right? I think 2024 and 2025 were a bit different because both, you know, craft spirits and the industry at large was unclear of whether this downturn was going to be a small blip. Right. And then it was going to course correct and things would be fine and dandy again. And I think by the time we got to 2026, everybody realized, hey, this is what it is now. There is no magic fix for this. There's no silver bullet. This is just is the way the market's going to be for a little while. And they have started making their evolutions and pivots and, you know, however you want to say it. And I think there is less, oh God, the sky is falling, what do we do? And more of just returning to grit and resilience and So that is the major difference that I see. And there are still, even during this industry-wide downturn, I think there are bright spots across every single category. You know, I think that's the story right now is the people who are the businesses and the brands who are focusing in on their niche and what they're really good at and their audience and their occasion, they're all doing quite well. It's more about focus now.

So when you say, well, first of all, let's step back. So you said there are some bright spots. Where are the bright spots?

Sure. I mean, the most obvious one is RTDs. You know, RTDs are like a roller coaster that only goes up basically these days. I mean, they are— I do think they are plateauing a little bit, but when you look, there's still runway for RTDs, especially spirits, right? There are spirits in these, uh, what do they call them, um, not non-premise but, uh, non-traditional channels, right? Festivals, and farmers markets and, you know, concerts, etc., there's still a really long runway for RTDs to continue. Right. So RTDs can't be ignored. They are obviously the largest bright spot in, in the industry. But there's, you know, there's a handful of other brands that we get reported into that are, that are doing well in spite of the downturn. So a couple, a couple that come to mind, I'm sure there are ones that I'm forgetting. So I'm sorry if I leave anyone out. But, you know, I know, you know, our member Lost Lantern is doing quite well. They had that growth in 2025. Still Austin had a great year in 2025. Oxbow down in Louisiana also did well. So we are, we are definitely seeing it's not— I always say craft is not a monolith. There are over 2,000 craft distilleries in the US. I can't speak of them as a, as a monolith for sure. So there are always going to be brands that buck the trends.

Well, all those craft distillers out there that are listening to Emily this morning, if you're not in the association, because it sounds like there's an opportunity for you to join because what she just shared is, first of all, there's the path, there's different channels you can go out to. And some of the bright spots, like, you know, Still Austin sounds like a really cool place. Or what's it, the Lantern? What's it called? Lantern?

Lost Lantern out of Vermont.

Uh, sounds, uh, uh, really cool. And I'd have to obviously shout out to, uh, Grifo Distillery. And I'm going to talk to, uh, Will. I think Will's having, uh, some successes, uh, well, and I'm sure many of you are Which is amazing. Here's a question. Why is supporting craft brands important today?

Oh yeah, no, this is a great question. So I think what makes supporting craft brands so important is that craft brands are part of their communities. The data shows over and over that the— there's different— there's a different like incentive structure for craft brands to be accountable and to give back to their own community. So as I was saying, like the research shows that like dollars spent locally tend to stay in the local economy longer, right? They accumulate wealth in, in those, you know, cities and states rather than being extracted from those cities and states. So to, to me, that is the, the primary reason to support that, right? Like, it is an investment in your own community if you are already an alcohol drinker, right? I'm, I'm never suggesting that you should just just buy alcohol to support your community if you're not already drinking it. But if, if that is something that you enjoy, that's a reason to support craft.

I love, I love that. You know, we have a little— it's not craft, but I guess you could call it craft— a brand called Donavant Tequila. It's a Houston operator. She grew up in Houston. And she decided, hey, I'm going to develop Donovan. And Don means the boss, right? And there's a whole history behind it, but there she's approaching specs, right? And part of the premise of specs is I'm local. I was born in Houston, I was raised in Houston, and I brought my brand to Houston and I'm only focusing against Houston. So what you said really rings with me around that story. And that's how, you know, when Stacy goes into like a restaurant, it's like, look, I'm not Diageo, no offense against Diageo. I'm not Pernod Ricard. I have my brands here. So the money coming here, what you're saying, like I'm gonna spend the money in the marketplace in this economy to build it. You're onto something really important in terms of how a brand should touch base. I go back to Will at Grippo and he said, He would go into like his grocery store, right? And he's shopping around and then he goes to the shelf and he looks at the shelf. He's like, his product's not there. First thing he did is he calls the manager, hey, look, I shop here every week. Why don't you put my product on the shelf? And I think there's a lot to be said about—

Yeah.

About the economy and supporting the local economy. I think that's a— if I'm approaching as a craft spirit, you know, a product, that's Definitely, I'm going to take full advantage of that. I also think the RTD statement that, yeah, there's a lot of growth there. You know, I think I shared earlier, we'll remain nameless, some of the RTDs we're working with. Certainly there is growth, but man, it's competitive and it's price competitive as well.

Yeah.

You know, because people— I believe that. —and High Noon are not going to give up their shelf space or Surfside or Carbless, to name a few. You got to be ready to go in that market and create demand, velocity, and reorders. And let's talk about demand, velocity, and reorders.

Yes.

What are your thoughts on that? When a brand comes to market, how do they create demand, velocity, and reorders? Oh gosh.

Yeah, I mean, I think it's different probably for, for every brand. And this is, you know, ACSA does not typically give this kind of advice, right? Like, we would leave that up to the experts. So I'm going to caveat— I'm going to caveat that by saying, you know, this is Emily Pennington's insight. And So I, I think one of the things we, we see is that it has never been cheaper to create demand for your alcohol with the use of social media. Right. At a very initial table stakes level, after you've made a good product.

Yeah.

The next thing you need to do is make sure that you have consistent imagery and talking points and websites and social media, right? I think that is the first, you know, the first thing you do after creating a good product is making sure that people, they can find it and they understand what it is and they can find you, right?

Yeah.

That's the first way to create demand. And then, you know, for velocity and turnover, there's a lot of There's a lot of value, I think, in consistency. And I, you know, I'm going to— it feels almost trite at this point, but I'm still going to say there's value in, you know, going deep and not wide. Right. And consistently touching base and partnering with those on-premise operators to create demand in them. Right. Doing a, you know, a tasting series or a pairing series with the same, with the same on-premise operator and creating value for them so that you are creating a long-term relationship with them, right? It takes consistency. It's not just one touchpoint, get it sold onto the back bar, and then, and then you're done. You know, the problem that we run into here for small brands is that's really expensive. It's really expensive. And you need to, you need to have the funds to be able to dedicate to someone in sales who can be a consistent contact for them.

It is really expensive. And the payback can take months or years. Absolutely. You know, to build the brand, it's really frustrating for someone like us because we were retain agency. We have over 100 boots on the ground ourselves, and brands will often arrive with us and they expect, you know, performance, you know, within 90 days, which I totally get. But it takes time to build a foundation of a home. Literally right down the street, Pulte Homes has ripped out a farm, right? And they're moving the dirt around right now, right? Well, that dirt's going to move around for several months. Because they got to lay the pipe down, they got to build, they got to get, you know, the city inspectors over there, they got to create each lot, the whole bit. The hardest part of building a home is not building a home, it's the foundation part. And I love what you said, they have to invest in cells. I love the idea of going an inch wide and a mile deep and actually working with those restaurants, doing the tastings, the events, the waitstaff training, and building it one account at a time. I always think, and, you know, Adam, I always call you out here. I don't know if you ever listen to this podcast, but Adam, partner at Carbless, that's how they built their business.

Yeah.

You know, they built one account at a time, which became one community at a time, one city at a time, and eventually one state at a time. And I think they're in 19 states and they're doing very well, and hats off to them. Uh, but they had patience, uh, and perseverance. And I think he said on a podcast that he didn't make money for 5 years.

Yeah, I mean, and to be honest with you, that's a short period of time as far as I'm concerned. The average— I remember back, you know, it's probably a decade ago, so when I was reporting, I remember the average was closer to 10 years. So, you know, if there's anybody out there thinking about starting a brand or who just started one, the thing you need to understand is that it's going to take way longer than you think it is, and it's probably going to be way more expensive than you think it is.

Yeah, I think LinkedIn's done people a disservice, and I'm not picking on LinkedIn, but when the person comes across and said, I scaled it and sold it, sold it in 3 to 5 years, I think they're doing people a disservice by putting that stuff out there. Hey, it's great they did it. And I think you have to have a, you have to have a destination and a goal. But the reality is, if you think brands like Buzz Balls, it took her 20 years. She wrote a thesis.

Oh, I love Mary Lee Kick.

Yeah. Yeah. What do you love about her?

I, well, so I should first say that I'm a Texan. I grew up in Texas. I think we grow up in the same area of Texas. I think we're from North Dallas area, if I recall. So Naturally, that means I have more of an affinity for her. But I remember, I remember meeting her at a WSWA event, probably the year she launched. So maybe 10, 15 years ago at this point. Yeah. And I just, I just thought she was so great. I loved the innovation, you know, and yeah. I, I don't know. I'm just so impressed by her. I think her story is she, you know, she was a teacher first, and then she worked with her son to develop this concept and this innovative little ball. And so I just think it's a really cool story. But yes, it did not happen overnight.

No, they didn't just wake up and sell to Sazerac. Yeah, I remember when Buzz Balls called on us. were new to market and I was at Breakthrough. I was a distributor for 10 years.

Uh-huh.

My boss and I said, nah, this doesn't meet— we were talking about like being socially responsible and stuff and having like this Buzz Ball. We're like, nah, we, we, we're not gonna take it on, right? That was a miss on Breakthrough's part, quite frankly. Uh, maybe Breakthrough has it now through, uh, Sazerac, but there's many brands like Buzz Balls that come to market, have this really innovative idea, but she had the perseverance. She was consistent and she did not give up. And I'm sure there were several losses along the way in her journey to build that brand. I absolutely love the story and I love that you named her, um, because I'd love to have her on the podcast to tell her story with people. The other one is Tito Beverage.

Oh yeah.

Yeah, Bertito Beverage. He, he wasn't an instant success. I mean, 2013, when I told him he could have one meeting a year, his— with Eric Barlin, who worked for him at the time. I don't know if Eric's still there. And you could have one incentive. And if you want to build the brand, you need to hire brokers, you know?

Yeah, yeah. I— well, and to go back to your earlier statement, um, these are good examples of brands that took a long time. And I think In 2026, if you are claiming that you went 3 to 5 years and then sold, there is some sort of anomaly about your business. Either you started with millions of dollars or you partnered with a celebrity, right? The reality is a celebrity can be a fast track. But, but the average You know, brand that's starting up now like that—that's just to compare any of your brands against that is—is not reality anymore. It's not.

I always ask a brand they arrive like the—we have a brand called Tequila Hermano, and I was talking about earlier. So they're launching Miami through Park Street, and they started in France, and they've been in France for two years. And I asked him, I said, how many accounts are you in in France? He said 200. I said, how many have reordered? He said 70. And I said, 70 is the only one that matters. The 200 don't matter. The other 130, they don't matter. That's ghost distribution, right?

Yeah.

So what's good about, you know, Tequila Hermana is they get it right. And they're very specific in how they're going to build that business and they're going to go on-premise. But it's a long road. We're not going to go open up Florida and have 500 accounts overnight.

Yeah.

Look at the France numbers. Like if we can have several touchpoints, but then the year we get to 30 to 100 accounts roughly or whatever that have taken the brand in and they're reordering it, great. I mean, it's a $229 bottle of tequila. That's not cheap. Right. So, but I like what you said, being consistent and showing up. And I also like that what you talked about, the things you can do to build a brand. All right. So to go to distribution, because we can't get brands to market without distribution, or we can use our partners like at Park Street to do those things. What can distributors do to take advantage of these brands?

That's a complicated question.

I tell it how it is, man.

Yeah, I, I think distributors right now— so what's happening right now is a lot of these distributors are under pressure to perform for their biggest brands. Right. That's just the reality of it. We all understand why that is. We all know what's happening. But I think they're sort of in danger of missing out on the value of craft, right, of, of selling the brands with the higher margins or missing out on the next Tito's. Right. Because it's, it's going to, it's going to happen. You know, are we the next Surfside, frankly? Right. Surfside's growth exploded. It wasn't out of nowhere, but it grew very quickly. So I think it is— I think it is short-sighted.

Well, Surfside, by the way, I got to go to that. When I was talking to Adam at Carbalas at WSW, I think it was, or was it NBWA? He had a huge booth, but he looked over at Surfside. He said they spent millions of dollars building their brand. I think that's what he said. Sure. I think it was Surfside. And then he looked at him, he said, we went one community at a time. He said, you can do it both ways. But he said, I validated what you just said, right? Yeah. Go ahead, finish your thought.

Oh, so I just, I, I just, I think it's, I think it's short-sighted. Yeah. Um, to only, to only focus on the biggest brands in the portfolio. And, you know, I get it. I get it. They're, they're getting pressure from, from all sides. Yeah.

I mean, I, I was talking to a distributor to remain unnamed, but the distributor, we, we talked about our program that we do, right? And he's like, that's really super interesting because I got 35 suppliers right now in my portfolio that could use your services because we cannot put our Yes. Don't have time to actually speak the brand, so they're just a price on a spreadsheet inside our reps' computers, nor will they ever get programmed by us.

Yeah.

Right. So if you think about, you know, distributors out there, they want these brands because I don't think they want to miss out on the next Buzz Balls or the next Surfside, to your point, right? So how do I manage my big people to keep my trucks filled, right, to keep my operation moving, right? Because I mean, it's very— I mean, we, we saw what happened to RNDC, right? I don't know why it happened, but I suspect their cost of doing business was much greater than the revenue that they were taking in, right?

Yeah.

So at some point the math didn't work, and I'm— I don't— I didn't look at their cap table. I'm not an accountant. I have no idea their financial situation. But I think distributors are under a lot of pressure because they want to keep the Tito's and the Buzz Balls and the Sazeracs happy. Because they're not happy, we saw what happened with— it just happened in Colorado just recently with the Coors Distributing Company. You know, they just— several brands have pulled from them. The Constellation pulled from them and going to Reyes.

Yeah.

And I think Mark Anthony with White Claw just pulled from them as well. And they're obviously gonna be tied up in litigation, the whole bit. But I mean, distributors do have to keep those big people happy because those big people, the handshake and the way business used to be done in distribution where you would go with the distributor, you would remain loyal to that distributor is gone.

Yeah.

The suppliers are gonna put an RFP together and they're gonna— the distributors that perform, or they're looking for the lowest cost provider, can take advantage of it. So I'm long on this. You're absolutely right that those long-tail suppliers, the Griffos of the world and, uh, Steel Austins of the world, the people that you named earlier, They're so important to the distributor for a couple of reasons. You want to share why they're important to them?

Yeah. Why they're important to the distributor? I mean, sure. I mean, they— the, the— I guess the long answer on this, right, is that the value of craft through the 3-tier system is innovation and pushing the category forward. And really, I— they're, they're valuable to the distributor, right? Because the margins are typically higher. You know, they're— that's just— it is what it is.

Yes.

But at the same time, a distributor's job is to service retailers and on-premise, right? And what craft can offer on-premise at retail is something new and innovative to get your customers coming in to try something else. Right. So there, there are different factors in that. But those are just a couple of the reasons why craft brands are beneficial and matter to distributors. But, you know, I get why that's challenging at the, at the biggest distributors and We find, and this is anecdotal, but I am hearing more and more often that our brands are finding more success with small and medium-sized distributors these days than they were pre-COVID.

Yeah, 100%. I think you nailed it. 3 things you nailed. First of all, the margins are better because if you think about big brands, RFPs, these distributors in some cases are working on single-digit margins.

Yeah.

And it might be even lower because after they have to pay all the headcount and manpower in just to keep the trucks filled, right? Or they have some type of point system they have to achieve by the end of the year to have a payout. And there's a lot of risk and pressure there in order to achieve those points. Or someone, some distributors look at dollars per case and not margin per case, and they look at volume, right? So you have one distributor maybe on the beer side Won't name the distributor. And then you have a wine and spirits wholesaler, traditionally would make the 30-plus margin, right? And this person's like, I'll work at $5 to $8 a case because on beer I'm making $5. If I can make $8 on Tito's, why wouldn't I do it?

Yeah.

And then someone at, you know, the wine and spirits wholesaler is like, we're making, you know, $40 or $50 a case. It's like, so the economics are definitely in to play there. But that's why a large wholesaler can take, or small or mid-tier wholesaler can take advantage of these craft brands. They'll give you a 30 to 40% margin, you know?

Yeah.

I do think that accounts, operators are looking for new and innovative brands. They are, they're looking for solutions. So all these brands that are coming to market, the big guys aren't I think about Drinkmate. You know who they are? You know Chris out of Atlanta, Georgia?

No, not off the top of my head.

I think— I don't know who he's with. I think he's with a relatively large wholesaler, but he's an innovative product. It's a protein RTD bottle.

Oh, okay.

I think it's made out of pea protein is how he's developed that thing. But that's innovation. He made some— he came on the podcast and he said something really interesting. He said, rather than these big folks put millions of dollars into their innovation, find folks like me and purchase me not at the, the Ollipop price, you know, purchase me for— put a couple million dollars in my business. Let's partner up. I've already proven demand and velocity in my market. You know, you know, Diageo, Coca-Cola, Pernod, whatever. Come talk to me. I've already proven that I can win Atlanta, you know, and I'm already in 200 accounts and I can show you my cap table and my demand, right? Come talk to me. And I think there's something there, by the way, as you know, it's not even like, you know, big brands taking advantage of craft brands or seeding them or whatever. A lot to unpack there. All right.

Yeah. Well, I mean, the reality is that small brands will always drive innovation in any industry, frankly, not even just alcohol. You know, small entrepreneurs will always drive progress and innovation. And the acquisitions from major players have drastically slowed. And a lot of them are sort of halting production on a lot of their smaller brands. But that is not going to be forever. Right. They're in protection mode. They're, they're, you know, they're hurting. Wall Street is, you know, has them under a microscope. And so they're in protection mode right now. They're not spending a lot of money to invest in new things. But that part, I do believe, is going to come back at some point. Right. Yeah. That's just the nature of business.

Yeah, I actually think that that definitely will. I'll come back for sure. Here's another question for you. You kind of mentioned them, but like, who are your favorite brands and why?

Oh, I don't think I'm allowed to answer this as a CEO.

You can say categories. When they say, let's make it easier, your favorite categories. You said RTD, but yeah, you know what?

this is a hot take, but I do love an RTD. But I, I like, I like supporting things that are new, right? I mean, RTDs are challenging to get right. I don't, I don't like a sugar bomb.

Yeah.

But I like a good, simple RTD. But, you know, that's certainly not my favorite. I would say my, my go-tos are— I, I am a, I am a gin, rye, And Agave Girl.

Agave Girl. Let's go into the Agave Girl. Why is that? Texas? Why?

Yeah, you know, well, I— so when I was growing up, my very first job, I worked in restaurants from the time I was 16 to 22. And at some point, I transitioned into bartending. So Not to date myself here, but in the, you know, 2010s, right when I was, was bartending, I just, I think agave was sort of starting to become trendy a little bit.

Yeah.

And, and so that's really how I got into agave is my, you know, tequila, my friends in the industry.

Yeah. Tequila is amazing. How— the reason I went down that path is I was the Cuervo Man of the Year in the 1980s. So that's when they only, they only had, I think the competitor was, it was Cuervo and Salsa Comitiva, right?

Yeah.

Those are 2 brands. Cuervo had like a, like a 50-plus share of the marketplace and the rest was probably Salsa. And then you had Montezuma, right? Two Fingers, I think, arrived around that time as well. So, I mean, you look at— if you look at that shelf in the '80s and, you know, late '80s or whatever, and you look at the shelf today, it's amazing the agave type of spirits and tequilas and the whole bit. Yeah, I look at that one. Look at that.

Yeah, tequila bottles are unrivaled. I will, I will say that. They, they really raised the bar on what those bottles look like. But I am actually particularly intrigued, uh, to see where the, uh, American-grown agave category goes. You know, I don't know if you, you know the guys at the, um, what is it, California Agave Council? Am I— oh, I might be misremembering the name of that.

But yeah, but go ahead, finish your thoughts. I was going to mention a brand I talked to the other day. Remind me, I need to call him back.

Yeah, well, I'll introduce you via email afterwards. But yeah, they, they're— they have their own trade association now. They're— it's still a pretty— to my knowledge, it still seems like a pretty fledgling industry and category. They have a lot of research they're doing, but I'm intrigued to see if, if something comes of it long term.

Well, I talked to a brand there out of Seattle. And there was Sasquatch something agave.

Mm-hmm.

The deal, I'm probably getting it wrong. So if you get this, I'll apologize. But, but anyway, he's like, no, we're going up, we're going the opposite of tequila, but it's tequila. We just can't call it tequila because we can get our agave anywhere, you know, to make it. And I was thinking about like, all the like craft distilleries around the country that make really good bourbons and whiskeys and stuff. And I guess technically you can't call it a bourbon unless it's from Kentucky. Is that true?

No, no, that's not true.

So, but you know, just because it's made in Kentucky doesn't make it better, is my point. Just because it's made in Mexico doesn't make it better. And I think what makes it better is the innovation behind it and the story behind it. You know, we have another brand called Daddy-O's Mezcal Oaxaca, and, you know, they don't make a smoky mezcal, right? And it's just a, you know, a different offering and how they're gonna go to market. And I met Edward, you know, the founder, and, you know, he was, you know, grew up in Mexico City, worked for Citibank, and he wanted to bring a product. And he's doing it with his son and some other partners, you know, to bring it to market. I mean, I love what you're doing, you know, as an organization, by the way, because you can bring these people's stories and you can connect, you know, them together to help them get a path to market. So thank you for doing that.

Yeah, absolutely. It's, it's more of a pleasure than it is a job, for sure.

Yeah. Yeah. So what's Next, um, you know, so as we wrap up, um, is there anything we didn't cover that you want to share with everybody here, uh, number one? And then what's next?

Oh gosh, um, there— I could probably go on for another hour. You know, ACSA is— I mean, probably if you could get a peek behind the curtain, you would be amazed at the amount of things this really small nonprofit team works on. I mean, it helps that we have a board and a volunteer community that's easily 20 deep. But, but this small organization takes on so much. I think probably one of the coolest new programs that we have is our Certified Craft Seal that we launched earlier this year. And I consider it— so I guess I don't have anything to show. Oh wait, maybe I do have a sticker. Sorry, I'm gonna make you hold on here. So the Certified Crafts— there it is, Certified Craft Seal.

Oh wow.

So we just launched this seal, um, that all of our members are able to use for free. We're putting together some, um, you know, templates and talking points so that people, uh, who want to use this seal can get out in the market. But I always say that just getting the seal live was the first phase. Now we're going into building out a program around this seal so that we can make it mean something. So in, you know, in my dreams, my long-term vision for the seal is, hey, you know, maybe we can convince some supporting retailers to have this be off-premise, to have like a craft certified seal section in their stores. Or we can have an acrylic plaque for bars that are craft friendly. Maybe they're a certified craft supporter. Or maybe we can have a marketing grant program. Or we can have booths that show all of the brands that are in the craft certified space when we go to consumer programs. So, uh, we just launched this, we're building this up, but I'm really excited about the potential it has, um, for awareness in, in the community. And then we are always, you know, for, for any policy nerds out there, we always have a lot that we are working on. I could talk about this for a long time, but I promise I'll try to keep it short. So the big one we're working on right now is called the SPIRIT Act. We got a bill introduced into the House of Representatives that our policy advisor calls like 90 for 90, and it would be a 90% FET tax cut if you use 90% American-grown ingredients like fermentables in your products. Amazing. Yeah, it would be incredible if we could get it passed. It would be a huge help. Don't quote me on this, but If I remember correctly, I think the average we estimated that a small distiller that makes like 10,000 cases a year would save $17,000, something like that. So it's a decent, it's a decent chunk of change for, for the small guys.

Are you going to tie that with the CBMA too because of the gallons? Because you get a reduction there as well.

Yeah, so it would be on, on top of that.

Oh, amazing. Because the CBMA is just amazing too. They sometimes get the trap of the, like, if they're using like a co-packer or producer, sometimes it's like, it's how you have to apply for it. But we certainly work with our brands that take advantage of that because it makes a difference on profitability.

Oh, absolutely.

It's such a big piece of the—

Yeah. Yeah. I mean, the reality is the CBMA Passage opened the door for hundreds of craft distilleries to be able to afford to go to market. It lowered the— it significantly lowered the barrier of entry. Yeah. To start a distillery in this space. So yeah, it was an incredibly historic piece of legislation.

So you obviously lobbied then, or you were working with people, which is amazing. I don't know if you know Diana Eberlein. She does that for like the cannabis side of the business and with her association. And, you know, they're obviously— that category is going— I think they're 10 weeks or 9 weeks away.

Yeah, that's a whole other can of worms, right?

Happening there. So what's that category the best? I'm certainly a fan of everybody. Most important question we ask everybody in the last couple minutes, and please remain on the line. Don't hang up, Emily, because we got to make sure Sure. And what is the difference between success and failure?

For— I need you to say more. For me personally, for a brand, or for ACSA?

It can be anything you want. We ask everybody that comes on, what is the difference between success and failure? So it can be you personally, it can be about a brand, things that you've seen. It's whatever you think that is.

Okay, I'm gonna, I'm gonna keep it broad. Can you be proud of what you do? If you are proud of it, even if it fails, then it was a success.

I love it. I love you be proud of what you do. That's, you know, sometimes it takes people a long time to get that right. We're always chasing. I'm a chaser. I always want more to give more for my family, or I'm scared of losing, or I want to make the rent, right? So, but man, you can be proud of what you do. And what was the final part of that?

I, I said if you can be proud of, of what you do, even if it's a failure, that's still a success to me, right? Because we all know you can learn something from failure. But were you proud of it? Were you, were you proud of What you did? Were you proud of who you are? Were you proud of what you contribute?

I love that. It's like, you know, you play for the championship and then the reporters ask you, you know, were you a failure? And the person answers, say, absolutely not. I'm proud of everything. I put it on the line today and I'm proud of the performance, right? You know, because oftentimes, I mean, I think we lose more than we win. So I think if you can get into that mindset is absolutely brilliant. Thank you so much, Emily, for joining us today. Thanks everybody that joined us, you know, today. I'm sorry, I don't think we streamed live on LinkedIn, but we did stream live on Riverside to let you know, and I posted that. And we streamed live on Facebook, YouTube, and Substack. With that, everybody have a great weekend. Emily, any closing thoughts before we say goodbye?

Thank you so much for having me. This was a delightful way to start my weekend. Coffee in the chat got my brain working, so I'm happy to have been invited. Thank you.

Well, have a wonderful weekend, Emily. Don't hang up, and everybody else have a wonderful weekend.