Welcome to our live show!

Sick and offy.

Sick and offy. So such a pleasure to have you on the podcast. I've had the pleasure to meet you a few times, and I know you have a very close working relationship with my partner, Alicia Vargo. So before we get started, we always call out our sponsors. One is Bev Assets with Alicia Vargo. So Alicia, thanks for being here today. Thanks for sponsoring us as well as thank you, our friends at Freebird. Jaybird just got into Florida, which is great, and just conquered Walmart, and, uh, he's in NASCAR. And what's amazing about this, Chris, is that word Freebird, he owns the rights to it. You know what that's from? A song from what band?

Lynyrd Skynyrd. Come on, man.

Lynyrd Skynyrd. So, uh, uh, this is, uh, I'm earning my water, Jay Freebird. So hopefully you join us in the, um The chat. Also, I have to call Adam Smith, which we were talking about earlier, Chris. You had a chance to continue to have some conversations with him. He can't be here today. He's celebrating a birthday with his better half, his spouse. So congratulations, enjoy the birthday. But Alias Advising, Adam does everything operations. So if you want to put that product in the can or get that lid on the can formulation, he knows everything. Great, great background. And then Rocks Advising with our friend Ryan Hellermann, which if you're looking for, you know, to connect with various people in industry, Ryan's group, which we're part of, helps you do that. But hey, thanks for joining us on this Saturday. Chris, thanks for joining me. This is super easy.

You're welcome.

We're live, raw, and real, so all kinds of things happen here. I could have dogs barking at any second. The computer could crash. Um, anything can happen, kind of like our industry right now. You don't know what you're going to get when you open up the news, correct?

There's a lot of crashing right now. There is. Yeah. Well, tell—

before we get into that, I would love to get into the subject of what's happening in industry, but tell us a little bit about yourself, about Pour Proof. Um, and, uh, you know, I, I mean, you're bigger than life. Your, your background, we certainly Appreciate you as a partner, but tell us a little bit about you and, and your company.

Yeah. So I've been on the BevAlc side for 26 years, spent 8 years running restaurants as managing partner with Outback and what is now Hillstone, used to be Houston's, and then got into the distributor side in California. What, in 2000, both Young's Market and Southern Glazers started their fine wine divisions. And so I joined Young's Market as VP of on-premise. But Sam, after 2 years of distributing wine and spirits, there's a lot of those 2:00 AM party buses that really wasn't in my DNA. So— All right, and, uh, partnering with Joel Gott, Napa Cellars, they brought me in— oops— they brought me in to run their, uh, on-premise and then was with them for 9 years, went to Moët Hennessy for 7, um, then went to parent company Stella Rosa for 3. So for my 25 years working with brands. I was with 3 brands for almost 20 years combined, and that's pretty rare in an industry where turnover is every 18 to 24 months. And with all the transition of our industry post-COVID, I thought I'd give a shot bringing my relationships, my data analytics skills, who I learned from some of the best in my development of route to market and see if I could help small emerging startup and brands that might need a fresh set of eyes. And when I wear my glasses, I bring 4 of them. And we've been in business at Pour Proof for 14 months, and all the great brands behind me are our clients where we help them with everything from Market expansion, again, data analytics by channel, by sub-channel, by tier. Commercial 360-degree commercial execution programs. We put them in contact with fractional, fractional sales, fractional sales execution companies like Frontline and BevAssets, and then we can pretty much do Anything that the owners would like our help with. Right. So, Sam, we bring a full tool— a full toolbox.

Right.

Fractional CMOs, fractional CFOs, fractional CTOs, fractional CIOs, fractional regional managers. Sometimes brands need some of those. Sometimes they just need me. Sometimes they just need people on the team. But what's been exciting for me, Sam, is in our business, net employment is down. So there's only— there's been more layoffs than hirings. So the great people on the Poor Proof website are all industry veterans, at least 15 years, Sam, high performers, high integrity, good people who unfortunately Their jobs were eliminated over the last 6 years, and some of them are doing their own thing. Some of them are— have found another W-2 gig, but they like the fact that you can help out good people who have good brands.

Yeah.

And something I shared with you when we met in Vegas, we have a strict no asshole policy.

I love it, man.

Um, yeah, so it's been great. I gotta tell you, I'm kicking myself I didn't do this 5 years ago.

What's funny, you know, I just turned 61, hence the gray hair and gray beard, right? And, uh, I always tell people this, I say probably weekly, I didn't become an entrepreneur because I wanted to. I became an entrepreneur because I had to. And there's a real distinction about that because I never had the guts to go do it on myself until I was kicked off the cliff and I had to do it. And if I could tell my younger self this, I wish I would have done it, you know, way into my 30s, uh, before now, because it's so refreshing to be able to— I can work as much as I want and I can go for a walk with my dog and I don't have to work with assholes either. And, uh, quite frankly, you know, and everybody's definition of that's different. I'm not calling people out in the world assholes, but You know, I like to work with people that I like and trust and they trust me, right?

Yeah.

So what you just described in your business, that's an incredible value right now in the industry because there's all these brands. We like to bucket the brands in kind of 5 areas, Chris. I call them foundation brands. Those are like, you know, early on they're talking to people like Adam. They might be in that test phase foundation. And that's the hardest part of all this. And we talk to a lot of people and a lot of times these foundation brands will arrive at us and they'll say, we had a failed launch. And I got to tell you, I'm at the point like, no, you didn't. You're just still building. You haven't got to growth yet. And that's the second brands, growth brands, right? And we love those brands because they have a little bit of money. They got distribution, you know, and I know that you've given us a growth brand. And then you have these build brands, which are even more exciting to work with. I like foundation too. I'm not saying I don't like working with anyone. But again, it's just a different proposition. Then you go to the scale and sustain, right?

Yeah.

And so each brand has a different need. And that's why Alicia and I developed BevAssets is we like to think that like a company like you could plug into us and take advantage of our resources, whatever those resources may be, like frontline with the boots on the ground or being importing, exporting, global duty-free, whatever. That's what we do. So I love the partnership, by the way.

Yeah.

So how do you define or how do you determine who you work with or how do they find out or how they decide to work with you, to be fair to the brand?

Yeah. So I've been very, very blessed in my career that one of my earliest mentors said building, sustaining, and gardening relationships no matter what are going to be the key Because you have more people to reach out for and connect to. And then from then they connect you to others, right? Remember, remember the Prill commercial? You know, I tell 2 friends and then she tells 2 friends.

Yeah.

And so when I started the company, Sam, I set up my website. I canceled that. I hired a great guy to set up my website. I changed my LinkedIn. I added a Calendly invite to the LinkedIn. And within 5 days started to get calendar requests. Now, a big part of that, Sam, was timing, right? This was within the first 60 days of RNDC announcing they're leaving California.

Got it.

So there were a lot of brands in the, in the buckets that you just described that didn't and still don't have a home, right? So they— a bunch of them reached out. And then what I started to do, Sam, Once I got a couple core clients like the one that we work with together on Bev Assets, the setting one, Yeah. I started to dig deep into the data and look at the trends over the last year and projected the next 3 to 5 years. Right. So once I saw the subcategories that have been and are projected to grow, I started to outreach for brands in those subcategories, and those are ultra-premium wine, so $80+ on the shelf, sparkling wine, New Zealand wine over $15, gin over $40, and THC showing positive growth the last year. And are projected to grow over the next 3 to 5 years. So, you know, I'll talk to any brand, right?

Yeah.

But if it's a vodka, if it's a Chardonnay at $14.99 from California, right? If it's a tequila, I'll talk to them and then I'll refer them to other people who are good people.

Yeah.

But I'm trying to really focus and use the data to work with the subcategories to try to get a little leg up, right?

Yeah. Where do you get your data? Are you buying Nielsen data? Are you invested in that?

Well, my main data partner is 3 Tier Beverages, which was founded by Danny Rager. So everyone knows Danny. He started the BevAl category for Nielsen 30 years ago, and he's one of my mentors on the data side. So what I do— and so I'll get, I'll get my base data from Danny. He's a rock star, by the way.

I think you and I talked about that.

So yeah, he's the best. And then when I talk to clients, right, what I tell them is, or what I recommend to them, is you have to buy one data report, right? In our working agreement, they buy one data report, which is like the, the Bible, Old plus New Testament.

Right.

But that's all they have to buy. And then I take that report, I filter it down, filter it down, filter it down, and I find the needle in the haystack, which will help tell the story, build the line of communication, open up the door for their brand in conversation for distribution. Getting distributors, right? Getting fractional execution companies like Frontline and Bev Assets, etc., etc. Because even though I'm not chasing vodka, for example, there are two brands. I'm not going to mention them. There are two brands that are bringing the spotlight back to ultra-premium vodka based on their. Very strategic spending in some key markets. So vodka for the last 12 years was being carried by Tito's, right? Tito's was the only reason vodka hasn't been down double digits for 12 years, right? But there are a couple of the brands that are positioning themselves because they see that luxury is recovering quicker than value. And same thing with tequila. And so you take that and then you kind of run with it. And then if you partner with the right distributors and you have a brand that sees the value in working with VIP for daily depletion tracking, you can get all the data ongoing through your distributor partners.

Right.

Because every— most every distributor buys Nielsen, IRI, SipSource, which is the on-premise tracking. And it sounds nerdy because people think BevAlc is an amazingly sexy career, right? It might be. It might be when you're a sales rep and it definitely— you want to enjoy it in your 20s. But when you're— when you've been doing it like you and I have, it all starts with the data. Right. It all starts with the data.

Yeah. You're starting to get me to geek out here, man. So just— I'm biting my tongue. I mean, it's— you're right. It does start with the data. And people should definitely understand, you know, always, you know, what the category is doing, because that'll tell you what the opportunity is, who your competitive set is, which the data will tell you who that is, who the consumer is, which the data again tells you who that is. That'll determine your price, right? And that'll determine your budget. So it all does start with the data. I'm absolutely with you on that, which is amazing.

So yeah. And then it's also interesting, Sam, you know, when you and I were in school, we learned math a certain way, right?

Yeah.

My daughter, who's a freshman in high school, she's learning math a totally different way. We learned it left to right. She's learning it right to left. Same answer.

Yeah.

How you get there, there, you know, my daughter has to take 2 extra steps to get to the same answer that you and I learned in high school in 1 step, right?

Yeah.

And the thing about— it's funny you mentioned about the, the who your customer is. So my My biggest challenge with some former clients, Sam, is they say our target consumer is X, right? And they've been around for X amount of years. So then you do a data dive and you find out that only 29% of the people buying their product fit into who they think.

Yeah. Sometimes they don't want to admit who their real customer is. I don't know. It could be like a personality thing. Like, I'm like, I'm going for, you know, Gen Z, but your customer's really baby boomers. Sometimes they just don't want to admit who their customer is.

Yeah. And then that's why opinions you have to set aside because the data doesn't lie.

Yeah.

People lie about the data. And the best example I can use, because it was probably the most successful wine growth brand from 2018 till what, '22 or '23? You know, for 3 years I worked, I ran half the US for Stella Rosa.

Mm-hmm.

Right. That brand was selling a million cases just in California, just in California.

Right?

Yeah. Third-generation family, still family-run to this day. And huge majority of their business was from California to Texas. And so they brought me in, created a new role. I managed a great team that did the other 24 states. And you realize that East, North, Of Texas, it's a different consumer, right? That half of the U.S. is much, much more Caucasian, right? Texas West is most has a larger Hispanic multicultural. So you have to have different comms platforms, different marketing strategies, and all credit to the Riboli family. They listened. So they created— they kept their strategy Texas West. They created a new strategy east of Texas, and they create— then they evolved their multicultural strategy because, you know, Hispanics from Mexico are different than people from the Caribbean, from Europe, etc. Right?

Right.

Multicultural consumers from Certain countries are different than other geographies, and there are other things that are important to them. And that brand went from, what, under 3 million cases? I think they topped out at 8.5 million. And you had Georgia and Florida doing over— went from 100,000 cases to 500,000 cases in 3 years.

Amazing. That's a huge success story, by the way. And that was all data-driven because they were targeted about what they were doing based on the data.

Well, it was— I dug into the data and the demographic data. And one of the first things, Sam, that I share with brands is a free report you can get is from every city's Chamber of Commerce, from every state's Chamber of Commerce. It'll tell you— and census data, those are all free. You just got to know where to find them. Right.

Yeah.

And so again, I live in North— I live in Frisco, Texas. I moved here in 2018. All right. The— at the time, the school district, which has what, 40-something schools from elementary to middle to high school, was high 40s— the kids, high 40s Caucasian, high 20s each Southeast Asian, which is Indian India, Pakistan, and high 20s Hispanic. This school year, Caucasian down to 41%, Southeast Asian up to 38%. So the influx of people from India, Pakistan to North Texas driven by the tech boom here, that's the population growth. So you have to learn what do they like to eat? What do they like to drink, right? What are their— what are their beer preferences, wine preferences, spirit preferences, RTD preferences. And if you're doing this, if you think your customer is the same as it was in 2018, you're probably one of the brands that's scratching their head saying, why am I continuing to lose share?

So does Pour Proof get into those? So you talk about the data. Do you actually say, okay, I got this brand and you just based on census data, based on You know, demographics based on, you know, what the takeaway is, and you build like a kind of like, this is what your target is, you reposition it or get them—

Yeah, we make all those recommendations and we give all that advice, but it all starts with the data. The example I'll give is my first client, The Setting Wine, right? Their winemaker, Jesse Katz, wine— he just was named the Wine Enthusiast Winemaker of the Year. Right.

Wow.

So knowing that, knowing that was coming, we did an analysis of what states is the brand in at that time, which was September 25th. Right. Who are the distributors that they're with? What you mentioned at the beginning of this, who is the competitive set? Right. And the analysis showed that every single state they were with the wrong distributor.

And how did you determine they were the wrong distributor? I'm just curious. Yeah, but keep on going. You come back to that.

Yeah, I'll come back to that. So then we looked at the analysis and said, what, what are the 10 states that are growing the most in luxury wine, which is 80+ on shelf?

Okay.

Right. And then We were at the time, they were only in 5 of those 10.

Okay.

So in addition to distributor changes, we— the brand went through doubling their market footprint. All right. So they added, got into Nevada, got into Louisiana, got into South Carolina. All right. And then switched distributors everywhere else. And then the only 2 states that were missing were Hawaii and Colorado.

Yeah.

And as of July 1st, that's going to change. So the brand as of July 1st will be in 12 states, all 10 of the highest indexing luxury wine states, plus Tennessee where one of the owners lives. So He wanted to be able to get his wine where he lives. And then Oklahoma, because there's a lot of wine club members in Oklahoma. So, and that brand is gonna go from, they're gonna 3x, projected to 3x revenue this year, just by realigning and expanding.

Wow.

During a time where everyone is, Oh, still, you kind of look—

you looked at the, the chessboard, so to speak, and you said, okay, here's where you're currently sitting, this is where you want to go, but this is how you're going to do it. So, so I'm gonna go back to the earlier question. Is you determined that they weren't with the right distribution? Can you tell me, A, what— why weren't— is it right? And then what is the right distribution?

Maybe it changes by brand, but I'm just curious what your scorecard is on that and how you Well, I'll give you the cleanest example without mentioning the former distributor, because the former distributor is a good distributor for what they do. Right. Okay. That's fair. State of Texas. In the state of Texas. Right. State of Texas, one of the 3 fastest growing states from population over the last 15 years. Right.

Like 35 million or almost 40 million people or something crazy.

Crazy. You know, Jerry Jones can't win a Super Bowl, but he can bring businesses and people to North Texas. The brand was with a distributor that 60-something percent of their SKUs were tequila.

Okay.

So you have a wine brand that's 93 to 98 from Parker Dunnick enthusiast being sold and distributed by a distributor that 3 out of their 5 brands are tequila.

That's a great— that's a great call out. So the first question you probably ask is, tell me what's in your book.

Yeah, no, the cool thing about it, Sam, is most everything you need is free online if you know where to look. All right, so I went to the distributor, I hit Texas, I hit their brands, and they only had— actually, they had no other fine wine brands that were over $50 on the shelf.

So you're thinking probably the skill set of the reps isn't there either, right? To actually sell the product.

I'll even dumb it down more, Sam. Square peg, round hole.

Yeah.

No matter how hard you pound, the square peg ain't gonna fit. So what we did is we looked at and said, in these states, what states, what distributors have either dedicated fine wine divisions or educated, let's say, overlays? whose job it is for— there's 3 people who all they do is focus on the fine wine brands in the book.

Yeah.

And there's one of them aligned with every team. So let's see, let's say there are 3 on-premise teams for North Texas. They have 3 fine wine specialists. Did their, their WSET Level 1 or 2 train? A lot of them SOMMs. Right? Some of them advanced, some— and so that's what we did. So in— and then in California, they had a broker model who just acted as a middleman, but the winery shipped everything directly. There was just a bunch of incremental costs aligned with that. So when RNDC left California, you had Breakthrough and Southern who both have— dedicated fine wine divisions, right? But we ended up on behalf of The Setting, we got connected with a distributor called Serendipity. All they sell is wine. They really focused on craft and volumetric brands that are under 10,000 cases.

Right.

And The Setting's about 6,500, high scores. And so the brand went with them in California and it's been a great partnership so far. And then you looked it up, you kind of took every state on its own because as we've seen the last 2 years, there's really no benefit to distributor alignment like there was in the aughts and the 2010s. Right. You know, Southern and RNDC and Young's and Breakthrough, everyone would say you want to go with us in all of our states because—

Right.

Right. National accounts, on-premise national accounts. You know, we have the ear of the Kroger buyer, Sam's buyer, Walmart. But all of my clients are startup, emerging, or under 10,000 cases, or all the above.

So there's not really any value to what they're trying to bring to these clients at all.

Yeah. And so one of the things I share with my with them is, you know, because a lot of times they'll come to me, Sam, and they're like, yeah, you know, we're talking to people and they think we should go with, you know, you know, Southern is the biggest, so everyone, everyone says Southern Glazers, right? And the Chaplin family I've worked with for 15 years, they're great people. Um, their region presidents are outstanding, right? They, they're the biggest because they do it the best.

Yeah.

You know, that's, you know, Coca-Cola is Coca-Cola because they continue to win. Do they win every time? No, but they win more than they lose. And so—

That's true. I worked for the Coca-Cola Company.

Yeah. But, you know, Sam, the last 24 months in our business, 24 months ago, Southern had, what, 40 42-state footprint, zero beer partnerships. RNDC was what, almost 40 states? You know, Breakthrough was mid-high teens, etc. And Reyes was a beer company. Yeah. Flash forward to July of this year, or latest January of '27, RNDC is going to be renamed to NDC. They're going to have between 2 and 4 markets. Southern's bought a handful of beer distributors and they're not done yet. Martinetti bought Control States. For 3 generations they were in 2 states. Now they're going to be the 3rd largest distributor. Breakthrough went into California. Reyes is— Reyes got into California, Hawaii, and now 10 more states in, in 24 months, Sam.

Yeah. So what do you— it's just interesting. You know, I saw that O-Pee-Chee, RNDC just sold to Manhattan Beer also. So Columbia basically is buying the Northwest from RNDC. And then you said NDC is going to be 3 states. What 3 states are they going to be left in?

Well, the only 4 states that have not been agreed to be purchased.

Yeah.

Are Georgia, New Mexico, Illinois, and Indiana. Okay. Right? My gut tells me, my gut tells me someone will buy Indiana and Illinois from them.

Yeah.

I wonder.

I think Breakthrough is probably going to buy those guys.

Johnson Brothers.

I think Johnson will. Okay. Well, Johnson's already in Indiana.

Yeah, they're in Indiana. Yeah, yeah, they can just gobble up, gobble up, right?

Yeah.

So the Manhattan Beer thing, Sam, is the thing that's interesting, right? You've seen Southern buy beer houses. Yeah, right now you're seeing a beer house buy RNDC. Yeah, you're seeing Reyes, the largest beer distributor in the U.S. Buy 10 states from R&D.

So how viable is MBWA and WSWA, what we're describing here? Because I always think it's like there's such blurring now. They're, you know, for instance, Reyes, you know, they hired Brian Albenzi, great guy by the way. He's going to 10 states. And, uh, you know, so they're gonna— don't— these guys are gonna bring in professionals that understand beer, wine, spirits. They're not a beer company. They've already started. What's that?

They've already started to bring in some industry veterans of wine and spirits, Sam.

Yeah.

And what's been interesting, and I'm not going to mention people's names, but the one that's been announced is Patty Signorelli, right? So Patty was VP of Wine for RNDC California. Then when they exited, she became VP of Wine focused on fine wine.

Yeah.

corporate.

Yeah, right.

So they bring her over, they have— they bring Albenzi over, who his role was running the Moët Hennessy Diageo dedicated division, right? So he's got how many years of fine wine and fine, fine spirits background?

Yeah, and he was president of Connecticut Distributors too, man. He has a great background.

And a couple years ago, they brought over my former colleague Dan Mucciolo, who worked with Moët Hennessy, who ran multiple markets for Breakthrough's dedicated division. They've got a GM of spirits for California and Hawaii, a guy named Brian Citron. He used to be president of Belvedere Vodka when we worked together, SVP for Heineken. Right. And the other thing, when you talk about data, Sam, when people say that I'm full of you know what, What I tell them is, why do you think of the 40 markets that RNDC had, why do you think Reyes chose these 10? 9 of the 10, Sam, over-indexed in the market. So if RNDC had 23% of the brands, they had more than 20% of the market penetration. So they, so 9 of this, they targeted 9 states. RNC pushed the 10th on them, which was Texas, because the biggest value was Texas. That's going to get them the biggest check, right? So data, Reyes must, Reyes had to have spent X amount of time and X amount of money identifying specific— like, why didn't— why wasn't Reyes interested in New York? You know, why did they say you take Illinois back, you take Washington back, you take Indiana, we don't want Indiana, all right? We don't want Oklahoma, we don't want Arkansas, because they weren't indexing, they weren't over-delivering. And then you look at those states Sam, look at the GMs of each of those states. High-quality, high-integrity people, industry veterans, servant leadership, all the buzzwords we hear about.

Yeah, right.

Tim Moore in Hawaii, Chip Stevens in Florida, Bill Campy in South Carolina, Joel Pennachine, who overlooks D.C., Maryland, Virginia. There's a common thread of leadership qualities, which must have trickled down because they're executing better than they should be.

Yeah, I follow Tim more. He seems like a super, super good dude, man, in terms of what he does.

Yeah, he's a good man.

That's amazing. So what— so what is kind of stepping back? A lot of change. Don't think it's over. Why do you see distributors laying off all these sales reps? It seems like every other day there's 500 laid off here, another 100 here. Are they going for more brands that are truck fillers orders? Are they moving to more like, uh, telco? Like, what is going on? So I'm a brand and I'll arrive at this distributor. I was talking to a brand yesterday that we're bringing on in California, tequila. I won't name it, but they're with a distributor in California. You can guess, starts with a of C, but this distributor laid off 80% of their sales force. Now they're trying to reinvent themselves and hire back, but it seems like everybody's cutting back versus adding.

Well, it's funny, you know, let's go back to the data piece, right? So, you know, when traditionally when companies lay off, they lay off to a dollar amount, not a headcount. Right, you know, because it's, it's a formula, it's a formulaic P&L.

Okay, right.

So during, sorry, 2014 to 2019, mainly driven, mainly driven by RTDs and sparkling wine, tequila and cognac, this is what our business was doing, right? And then during COVID you had all the stimulus checks and people People were pantry loading. So then you saw this growth.

Mm-hmm.

And then the stimulus checks stopped. You had a new generation, Gen ZA, which is my son's generation, which is after Gen Z, becoming 18. And even though no brand in the history of our business has ever started to soft market to people between 18 and 21, no one could ever have done that. You have those people being drawn to the brands that are engaging with them or that are appreciating the new forms of communication. Because, you know, these kids that are now in college or just out of college were at home studying for a couple of years, had a lot of time to be on TikTok and Snapchat and Instagram. So post-COVID, you have the traditional way of doing business has been failing, right?

Mm-hmm.

And so your sales force headcount of 15 to 20, your business is down 10 to 15%. So therefore you have to cut 10 to 15% dollar amount to try to keep your bottom line as close to zero or positive, right? It's like, look, it's— again, Southern Glazers is the biggest for a reason, right? They're not perfect at all. No distributor is. But what they did post-COVID, Sam, is they said, we have too many layers of middle management. So in one week they eliminated 2,200 division manager roles. The entire layer went away because you had, you know, in a state you had the GM, channel VPs, under each channel you had senior directors, then you had DMs, then you had assistant DMs, then you had wine specialists, spirit specialists. So they just eliminated the whole layer. They promoted assistant DMs up a layer At their existing salary.

Yeah. Hey, congratulations, you made the cut. You're going to get more responsibility and a title. No more money.

And then you look at it, Sam, and, you know, you mentioned telesales, right? Go back 15 years. You know, traditionally telesales were accounts that would be considered the cream of the crop, right? They weren't ordering your items that were on goal. Their orders were minimal. Sales rep walks in, it's usually 20 to 30 minutes, right? And so they moved them all to telesales. You look at Southern, they took one of their longest-tenured VPs, had him build that team for the Western US.

Yeah.

People saw it as a— what's called being put out to pasture. He looked at it totally different.

Yeah.

And then you have all the distributors now, Breakthrough Southern, RNDC, everybody going to the online ordering, right? So you don't need a salesperson to go from— you don't need a salesperson to see 12 accounts a day.

No, you don't need, you don't need order takers at the end of the day, right? So getting into this, and again, there's some great salespeople out there and I'm not attacking distributors. I love distributors. I want to be on record that I say this. And look, I managed the P&L for 7 of my 10 years at Breakthrough, you know, about a $500 million business. And, uh, you know, everybody thinks distributors make a lot of money. They don't. It doesn't matter. This is a, you know, after you pay your logistics, your warehouse, your union fees, Man, there's, there's slim margins, so they have to make tough decisions in the industry. But now that you know that and what Chris is sharing here, it's really important to determine, like you said, is that distributor the right stop for you? I mean, that's one of the reasons that we developed Frontline, Chris, is because, you know, we want to enhance what that distributor does. We're— we want to be partners with the distributor. Like, it's tough out there.

Yeah.

So utilize our reps as an extension of your sales team to work with your reps to go open up those markets, which helps pay attention to those long-tail suppliers. Like, I know Southern, and you can qualify this, but they basically made a decision to take a lot of their suppliers to Case One, right? They said, look, there's no deals, we're going to Case One and, and a minimum mark. They took some price increases. Well, all those suppliers could use Chris and Frontline's help to reposition. I would say don't pull from Southern, maybe, maybe, you know, until you have another opportunity. But look at them as they're going to get your product from point A to point Z and on the shelf and utilize someone like Chris and us to help you get into, you know, help activate that brand. Or like you said, you'll set the strategy. Let's talk about where your brand is at, what your competitive set is. Let's look at the data, which I love. Do you ever, when you go back to the data piece, so this is a great conversation about what's happening. But I want to go back to the data. Something kept on coming up is demand creation. Are you familiar with that term, demand creation?

Demand creation is the phrase of the year.

So tell me, so what is your take on demand creation? How do you look at that?

Well, again, I look at it— again, I like to simplify things, right? You know, how do you— you know, we want to create more demand For our product. Okay. Yeah, that's great. Everyone does. How are you going to do it?

Yeah.

How are you going to do it?

Yeah.

Right. So let's look at, you know, again, I'll use this setting. They were my first client, so I'll give them the most plugs here. All right. Um, cab— they're the 3 of their 6 SKUs are cabs. 93 to 98 points. SRPs 99 to 179. Okay, so how do we get the brand in front of more people to help with that demand creation? Right. And then you, then you do a dive. Who— what's the largest percentage of consumers who buy cabs 99+?

Right.

College-educated, higher than average household income, you know, tend to be more, you know, married more than single, live in certain zip codes, right? Daily, if not multiple times a week, Amazon users, they spend 1.8 hours a day on social media platforms, right? Where do those people shop? Where do those people live? All right. How do those people get their news? How do other people learn about new things? And then I, then I have 2 THC brands, Sam, typically skew younger, right? Typically skew more certain demographics than others. Okay, how do they, how do they engage? How do they learn? How do they get their news? What platforms do they visit multiple times a day?

Right.

And then the other part of it, Sam, is there's the, there's the customer who grabs your bottle off the shelf, then there's the consumer who pours it, who pours it in their glass to drink it. They tend to be different people. Right. Single malt scotch is the example I always use. 64 to 66% of the customers who grab the bottle off the shelf are female.

Right.

70-ish percent of the consumers who pour it in their glass over a rock are male. So your packaging has to be attractive to a feminine eye. But, and so then I always use the example of the Macallan, right? The Macallan isn't the biggest single malt Scotch sold in the US, but 10 years ago they softened their label. They went soft white, they went an attractive blue and gold, attractive blue and gold lettering. Then they started to grow, take more share from everyone else. So what are the 3 bigger single malt scotches? You know, look at Glenfiddich, dark label, masculine. They started to lose share. Glenmorangie, I sold it for 7 years until 2 years ago. Dark labels, dark red, dark black, dark green. Very masculine. They start to lose share. What's Macallan doing? By the way, the quality is really good too, right? Then you have to keep that in mind, right? You know, look at La Marca, Tiffany Blue. That was their whole idea. Get as close to Tiffany Blue as we can.

Mm-hmm.

Right. You know, Tito's American. Right. Tito's was MAGA before, 20 years before MAGA.

That's, that is true.

There's a million things you have to do and you have to think about. But a lot of people just say, hey, I got a brand, I got money, I got an idea. I hear tequila's hot. I'll launch a tequila. Okay. Right.

Yeah, that's amazing. That's amazing what you share. See, I look at demand creation from a commercial lens, and I know you're a commercial guy too. But every time I meet a brand, I always ask this. Tell me, how many accounts are you in right now? Number one. Number 2, tell me your volume. Number 2, what is your reorder rate and what is your velocity? Right. So, and most of them don't know their reorder rate. Most of them don't know their velocity. They don't. I'm like, give me the data. I will tell you what your reorder rate is and your velocity. And I'll rank your accounts by platinum, gold, silver, and bronze. And I'll tell you exactly where to go. Like, I have a brand, or we have— Alicia and I have a brand, and they're in 400 accounts in Colorado. Love them, right? And they're like, we need to get into more accounts. And I said, send me your data first. Send me the data. Their reorder rate was what? What do you think it was, Chris?

Under 20%.

No, it's 52% reorder rate.

Oh, hello.

Yeah. So what that told me is you don't have to open up new accounts. You have 200 accounts right now that you can go get that are warm and that we got to go figure out why they are not reordering. And then, then based on the ranking, how often did the accounts that reordered reorder? Because we start to bucket those too. They order every month, every 6 months, every 2 months, every 3 months, because those are even warmer. Because if you can get your reorder rate From 10 accounts to 20, you make your year. So that's how I look at the data. So that's what front— that's where frontline comes in, right? We're going to send that boot in there. We're going to go sit on that bar stool and we're like, look, you've done business with us 4 months ago, but in the last 90 days we haven't done anything and that bottle is sitting there and we call that ghost distribution. So for me, for demand creation, you know, so I'm trying to create the demand creation. For me is the story is definitely important. That's probably number one, what you're talking about. Like who your competitive set is, where do you go, what distributors, the whole bit. But how we create demand from a, from a boots on the ground raw, we're just like, look, let's go on that account, let's get on the menu and let's activate. The best story I can share with you is, do you know who Carbless is?

Yes.

Adam Corner. And I always call him out and I'm hoping because I mentioned him enough times, he'll actually come on here. I consider him a friend. I've done some business with him on the tech side of the business. But Adam, I literally asked him to meet a client of mine, Tequila Copa Cocktails out of New Jersey. And he meets Nico and he says, Nico, nice to meet you. Where are you at? And Nico goes, I'm in Jersey. He goes, Nico, how many accounts are you in? Nico goes, 150. Then he goes, Nico, what is your total opportunity in Jersey? Nico goes, 1,000. Now we're sitting at MBW, mind you, in October. MBW, hey, right? He looks at Nico and he says, why are you here? Really important. He goes, you can go to Georgia or Florida and fill up a truckload, but your P&L is not going to thank you a year from now because you haven't met demand. You haven't created any following or proof of concept for your brand. And Nico goes, well, it's, you know, in the winter my cocktails don't sell. Most people go down to Florida. And he stopped him, Adam, and said to Nico, do you sell on-premise? And Nico goes, no. And Adam goes, it's always sunny and 70 on-premise.

Yeah, yeah.

Which is a— so it was a masterclass in the conversation. But what he's talking about was what Adam did is in Wisconsin, he outsells Tito's 2 to 1, 2 to 1, because he goes in an account He does not put that product in the account unless they put a piece of point of sale in there, something on the menu, a coaster or something. Because he says, if I'm just in that account, I'm a ghost distribution, right? So for me, that's demand creation to me. But what you're saying, I just wanted to get it out there.

Yeah.

Because that's what we try to share with clients and just being honest with them. Like, everybody thinks they're going to land a distributor with Southern Glacier Wine and Spirits and that they're going to be in 1,000 accounts a year from now. and they're gonna make their year. Does that work like that, Chris?

No, and you know, not at all. Again, maybe if you're a top 10 supplier and you're an anchor supplier in one of their dedicated divisions. But one of the things that I look at, and remember what most brands, small, medium, or large, don't understand is your distributor spends Spends millions of dollars a year for data, right? Read, read the contract you signed. You have access to that data. You have to ask, right? So you mentioned about that, that brand in New Jersey that's in 100 accounts, right?

Yeah.

I always ask distributors, what are your top 100, top 200 ACV accounts for this category or subcategory. ACV means average cumulative volume or value, right? So I'll use an example. When I was at Moët Hennessy, we were trying to grow Belvedere vodka. The distributor also carried Grey Goose, which from a distribution footprint was 3 to 1 versus Belvedere, right? Well, so I said, what are your top 200 ACV accounts? And we found out on-premise in Northern Cal, we found out that Belvedere was only in 60-something of them.

Right, right.

A placement at a W Hotel in San Francisco is worth a lot more than a placement at an Applebee's in San Bruno. True, right?

Yeah.

Look, you look at the velocity, the volume, etc. And so the strategy that I use for all my clients, Sam, is California's got 13,000 beer and wine and spirits licenses. Here are the 150 that matter.

It's funny because we'll do like— and happy to share with you what we do, Chris, But like I did for a client in Los Angeles, just a Los Angeles plan. So I showed them every account and opportunity. I also indexed it based on demographics a little bit. So I like, boom, this is where you want to go, where you're at, you're a modifier, blah, blah, blah. I'm like, this year our goal is to open up 75 accounts. They're like, 75? I'm like, yeah, 75 accounts. They didn't like to hear that, by the way. They were thinking, yeah, we're going to open up 200, you may, but I'm like, a realistic goal, 75 accounts. Those are reordering, we're activated, we're on the menu. And that's the rep hitting 25 to 30 accounts every week with a lot of nos. Yeah, right. And that's you investing with a lot of tastings and activations. Now, you may have a different lens on it. I'm just coming from my perspective. Yeah. So.

No, the, you know, utilizing everything from ACV to just walking stores.

Yeah.

To the SIP source.

That's a novel concept, walking stores, getting out in the wild.

God forbid. But if you look at it again, I'll go back to the setting, right? What we did is we identified by zip code for the on-premise, what were the 2 or 3 highest indexing restaurants per zip code in the state of Texas?

Is that based on the VIP data you had for them or distributed data?

No, that was based on the SIP source data.

Oh, got it. Okay.

Right. So what are the accounts that buy the most wine that on their menu is at $80 or higher? Right.

Oh, wow. You can get that from SIP source, huh? Oh, wow.

Yeah. And so what we did is we went through There were 168 of those accounts. So while we're talking, while we're engaging with distributors, you know, the distributor that the brand went with appreciated, agreed that those are the right accounts. And so those— are you going to sell to all 168?

No. Yeah.

But though you want to fish where the fish are, right?

So you identified the opportunity for the distributor. You said, hey, look, here's the opportunity based on these factors. This is where we're going to hunt. And that probably gave you a path into the distributor because you've done your homework, correct?

Yeah, exactly. And then, you know, when the brand switched distributors in Texas, the first 90 days, let's say, were underwhelming. Right.

Yeah.

So we kind of— we put together a planning meeting and we invited— that distributor has a master sommelier on their staff.

Yeah.

So we invited him into the meeting, which was a godsend because he's there saying, you're right, these are the right accounts. And so he took it upon himself to take take my report, create— and now create a tracker to hold the division managers accountable to make sure that their team members were presenting the brand to these accounts and then giving feedback. Did they buy, yes or no? What did they buy? How much did they buy? Will it be by the glass? Will it be by the bottle? Right. After doing that for about 6 weeks, there were— we were starting to get some success, but we're also starting to get some feedback on a couple SKUs that they were priced— they were priced not in the best spot versus the competitive set.

Got it.

Right. So then we tweaked the pricing on the multi-case buys So now they can present a better value for an account that's going to pour it by the glass. Right. You don't lower your price for a listing.

Yeah.

You lower your price for a cocktail, for a feature, for a by the glass. And then what we did is we realized a lot of these accounts, Sam, do flights, right? Instead of a 6-ounce pour, maybe do a 3-ounce pour. So a former colleague of mine who I met, who I ran into at WSWA, is the global head of sales for Coravin.

Yep.

So we, we developed a relationship and we developed an agreement that The Setting would buy Coravins from them at a friends and family rate. And now every, every boots-on-the-ground broker including the Frontline Bev Assets broker in Texas, has 3 or 4 Corvins in his or her bag.

Oh, great.

So that when Patrick goes to meet with Mastro's in Highland Park and presents the Alexander Valley Cab, he can say, hey, you can be able to pour this by the glass, feature this by the glass. But I'm gonna let you use— I'm gonna loan you a Coravin to use.

Yeah.

Which, from a— those of you who don't know what Coravins are, they are tools that drill cleanly through the cork and you pour, you pour it out, but the cork stays intact. The cork maintains integrity and the bottle still thinks it's unopened.

So— Yeah, it puts a little bit of, uh, what is it, CO2 or whatever in there?

Yeah.

Just the gas back in the bottle or whatever. Yeah, and that's the thing. So everybody knows, like, what's the big expensive wine that they always— oh, it's, uh, from, um, Treasury, the one that they, um, always—

uh, Grange.

Yeah, so they— people take like their Grange bottles and have them redone, by the way. They'll recork them a little bit. Yes.

Yeah, you know, but then there's also— there's also a romance by— you bring it to the table and it's got the Coravin cork stopper. Corkscrew in it, you're pouring it in front of them. It's that kind of— it makes them feel good about spending $40 to $50 for a glass of wine.

Yeah, yeah. Well, let's do this, Chris. We're— I'm sorry to cut you short because I want to be— I want to say there's— so we want to wrap up here. Is there anything that we didn't discuss today that you want to— I've been flashing— I hope I got it right— pourproofllc.com, how people Yeah, thank you. But, and then is there anything you wanna convey to everybody this morning that maybe we didn't get to that you wanna share?

Well, again, just to do a little quick promoting of PourProof is with everything going on in the business for the next 5 years, Sam, the needs for brands for what Frontline and BevAssets do have never been more important. And from a just financially responsible view, if your brand is losing share year on year and you're losing value and you're losing money, does a brand really need a full-time C-level of anything? Right. What PourProof provides is on a contract fractional 1099 basis, any C-level leadership, any sales leadership, any analytical leadership, You need no payroll taxes, no T&E, no nothing. You know, we do it for you. And hopefully if we do it right, you work with us for 6 to 12 months, we get you right, and then you move on, which creates more space for the next swath of brands.

Right.

And, you know, we, we build the playbook. Frontline and Bev Assets team executes the playbook. The brand is involved in every step but can do it in a more financially, fiscally responsible way, which limits investment but maximizes exposure.

I love it.

I love it.

I mean, if everybody's listening today, please reach out to Chris. How do they find you on LinkedIn? Do you have an email? Do you want to share? You do share your email?

You know what? If you can reach me Chris Iaconolfi on LinkedIn. You can send it, you can email me directly from the Pour Proof website. You can request a meeting through the Pour Proof website. You can request a meeting through my LinkedIn.

Got it. So if you go to Pour Proof or find you on LinkedIn, you're out there. You even said that you can actually book an appointment right on LinkedIn, book time, so which is amazing. Uh, someone said I was crazy. I put my phone number out there, like, with a sign, like, just call me. I mean, you know, I don't— I need, I need another meeting like a hole in my head, man. Like, if you want to talk to me, best way to call is just call me. Uh, you know, I may not pick up right away, and, and if you're spamming me to go sell me, uh, financing, which I get a lot of those, uh, nowadays, I'm probably not going to pick up, so I apologize.

Yeah.

But if you're here to sell me, absolutely. Tell me what you're selling because I'm always interested, um, because to collaborate too. Well, what I learned from this, Chris, first of all, I'm sorry it took so long. So now you're an alumni with us, so you're always welcome to come back.

Thank you.

So we do ask you to do that. But I really learned that, you know, uh, when you talk about data, I don't think a lot of people talk about data enough. We're always running to like, I need a distributor, but we don't slow down enough to say, well, to ask why. And I think the data helps you determine why, right? So when you start to break down, you said it and it rang with me, is you determine with, uh, the one, uh, uh, Riboli, Riboli, whatever. I think Riboli, was it?

Uh, yeah, uh, Riboli. Yeah, they're the family that owns Stella Rosa.

Yeah, yeah. So, so, but, uh, you know, Stella Rosa, that you, you know, how you went about it, then also your your, some of your current clients where you looked at, they had the wrong distribution based on these factors. And you used the example of there was a distributor that had 98% of the portfolio was tequila, but they were trying to sell 90, 93-point, 100-point wines. There was a disconnect, right? So I think you did that supplier an incredible service. And the other thing that rang with me is there's a lot of data out there, folks, that's free. It's available. Go look at it. Like, as simple as you said, I went online and I saw what that distributor was carrying, and I can make a really quick decision. So it doesn't have to be hard in order to get the decision. That was amazing, man, in terms of just stepping back a little bit and saying, you know, why do you want to be with Southern? Or why, you know, maybe you want to be over here because they're going to give you more focus here. So, but thank you so much, uh, for joining.

Awesome, I appreciate it.

Any other closing thoughts, Chris? And then we'll wrap it up.

No, I appreciate— Sam, appreciate you bringing me on and for the conversation. And, you know, the only parting thoughts are I don't care what brand you are in today's climate and for the next 3 to 5 years, you must take ownership of your brand in all 3 tiers. The middle tiers, Continuing to contract, continuing to disappear. So take ownership in your distribution. Do not, do not rely on a distributor. Work with them and lead them. Used to be the other way.

And that's the difference between success and failure. I believe we always ask that question, but would you agree that's the difference between success and failure?

100%. From, from your mouth to God's ears, right?

Yeah. And take ownership of your brand because no one's going to do it better than you. And I promise you, if you do that, like Chris said, you're not going to fail. Well, thank you so much, Chris. Please remain on the line. Everybody else have a great, uh, Saturday. And until next week, uh, thank you for joining us on Drink Up Life Podcast.

Bye-bye.