Zero Dark Thirty

There was a decade in my life when I curated a consumer experience via an online personal diary. All of the latest happenings were updated in real time, and the goal was to bring customers into the action and make them part of the journey. It was a lot of fun and, for the greater part of my thirties, a very effective sales model.

Today, however, I’m in an entirely different scenario, facing an entirely new challenge with a certain level of restrictions. Whereas before I was a player, today I’m more of a coach. Whereas before I was the marketing face, today I’m more of a behind the scenes operator. Whereas before the brands wanted nothing more than the attention I was able to bring them, today much of what I’m working on is completely off limits for public discussion—both with my work at Pacific Edge, and the other marketing projects I’m still actively writing for on the side.

In order to write an effective blog, you have to tell an engaging story. Due to some of the rules that prohibit distributors from promoting one client over another, I’m legally forbidden from sharing my experiences in LA’s food and drink scene, thus I’m now writing more about business theory and strategy than I am about life. While I enjoy it, it’s not blog fodder. It’s the type of thing you post on LinkedIn and share with other professionals, rather than the general booze-swilling public.

The other issue is that I’m actively participating in the business of others, rather than just my own personal operation. That means my goal is to find success by helping others to be successful, rather than taking the reins myself. So I’m going to try something new (for me). I’m going to go even deeper undercover and see if I can focus my efforts on being an effective producer, rather than a performer. I need to go dark for a while to make that happen because my initial instinct with everything related to alcohol is to write about it. Writing helps me process my own ideas, but it’s a distraction at the moment; plus, it’s not nearly as powerful when it’s restricted.

I will still be writing about the booze business on LinkedIn, as well as for a few other publications here and there. But as for my own interactions, I need to go under the radar right now and figure out a new way forward for booze retail outside the blogosphere. This particular story in the NY Times rattled me, hence why I’m taking a long look at what success looks like now in my career. You can’t rely on speed and strength as you age, or the same tricks that initially brought you to the dance. You have to rely on veteran savvy. Improve your short game. Work on your 12 foot jump shot, rather than your fast break.

You have to adapt to a new identity.

-David Driscoll

Late Nights

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I may not look old yet, but I feel it. Considering I’m often in bed before 10 PM these days, I especially feel it when I try to go out late at night and catch a rock show, something I did relentlessly in my youth. Nevertheless, my wife and I got dolled up and caught a Lyft downtown to the Novo to see my boy David J rip through a furious Bauhaus set with frontman Peter Murphy last night, followed by a swanky private afterparty on the Sunset Strip. We were both dead on our feet around 12:30, but that’s part of the goth look anyway, so we fit right in.

I’m praying for my teenage hero and current neighbor Luke Perry right now. If you didn’t hear, the former 90210 star is in the hospital after suffering a major stroke, so I’m trying to send some positive vibes his way. Dylan McKay is one of my all-time favorite on-screen characters and, with the reboot scheduled, I was hoping he would find his way into a few episodes. If Dylan McKay can survive a brutal car crash, I know he can survive this, too. We’re pulling for you Luke!!

Despite the late night hijinks, I’m hitting the street early this morning with a few cases of Willett whiskies for some of my local accounts. Gotta get my deliveries done before the weekend to make sure thirsty drinkers get their hooch.

-David Driscoll

Punching Holes

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I did manage to rip myself away from the TV yesterday and get some work done, but Michael Cohen’s testimony was so riveting that it wasn’t easy. My favorite story of the day was the one about Donald instructing him to find a fake buyer for the Trump portrait being auctioned in the Hamptons, and then reimbursing him for the $60,000 out of charity funds later on. Why was that particular anecdote my favorite? Mostly because it reminds me of Arrested Development, where Lucille Bluth pays her son Buster to bid on a date with her at the charity auction. However, it’s also a telling look at how the booze business often operates.

We read about a particular brand of whiskey posting sales growth year over year, but what the average consumer doesn’t understand is that those numbers represent distribution sales to bars and restaurants; aka case depletions. What those numbers do not represent are bottles sold to actual customers, or sales rung up over the counter. Why is that important? Because sometimes cajoling an account to buy more whiskey isn’t all that different than the story we heard yesterday about our president. I’ve seen suppliers grease the wheels in all sorts of different ways, often spending more to make the sale than the profit from the deal actually justifies. Later, they’re bragging online about their “growing popularity.”

I have to wonder if the owners of these companies know or care about the artificial “success” of their brands. Because if you’re basing future investments on numbers that may be skewed in terms of their representation, you’re playing with fire. Let’s put it this way: if you’re a rock band out on tour, and you’re paying people to come see you, rather than the other way around, you’re not successful. Yet, imagine that there was a chart that showed the most popular groups by crowd size, using that number to measure popularity, and promoters and tour managers continued to book venues and appearances based on those statistics! That’s kind of the same thing. Actually, better yet: when you see a Twitter account with 50,000 followers, but you notice that almost all of their tweets garner only a handful of likes and retweets. Why would someone with so many admirers get so little social media participation? Could it be because they paid for all those followers?

Data is an important indicator of how one should run their business, but it only provides value when the numbers are pure. Sales numbers only represent demand when they’re based on actual consumer interest. I remember being a kid and having to sell candy bars to help support my little league baseball team. I actually went door to door and sold them by hand, but other kids just had their parents buy the entire box and gave themselves a pat on the back. If you think things like that don’t happen in the booze business, well…

-David Driscoll

Questions I'm Asking Myself

At some point in our lives, whether it’s with our jobs, our relationships, or our once-passionate hobbies, we start getting comfortable doing the minimum. I’ve certainly been guilty of complacency over the course of my 39 years on this planet, and in retrospect I can see exactly how it happened. You start taking things for granted. You assume everything is going to keep coasting along, that things will just work themselves out automatically, and you drop your guard as a result. Then, from out of nowhere: BAM! You get hit with a right hook.

The consequences of complacency generally aren’t the result of one bad decision, however. While the knockout blow may seemingly strike from out of nowhere, the breadcrumb trail of willful ignorance generally paints a different picture in retrospect. Ultimately, the hair bands should have seen the grunge revolution coming, Kodak should have immediately embraced digital photography, and brick and mortar retailers should have paid better attention to online commerce from the start. Sure, hindsight is always 20/20, but if you keep yourself in tip-top shape and you stay on top of your game, you’ll never have to look in the rearview mirror. Laziness, overconfidence, and indifference, on the other hand, are a deadly trio.

Now that I’m back in the booze business, I try to ask myself a series of questions every morning in order to keep my mind sharp and my acumen up to speed. Despite numerous reports of what seems like limitless growth for whiskey, I try to punch holes in those numbers in order to get a look at what might be festering underneath. No matter how bright the future looks, you have to be ready. As an analogy, Slaughter’s debut album Stick It To Ya sold over 2 million copies in 1990, making it one of the biggest rock albums of the year. However, the band’s hotly anticipated 1992 follow up, The Wild Life, only went gold in comparison, eking out just over 500,000 copies despite the short timespan in between records. We all know what happened in between.

In order to be prepared for the next market shift, I’m trying to stay ahead of the curve by interrogating my mind:

  • In a genre where the gold standards have become all but unattainable, what will get the next generation of whiskey drinkers fired up about the category? (HINT: it’s not rum)

  • How will people purchase and take possession of their booze in the year 2020? With an app? With a delivery service? And which online retailer will first solve the interstate shipping logistical puzzle by putting a licensed warehouse in each state?

  • Will 21 year olds even want to drink in five years? Or will they be too busy ingesting other chemicals that speak to their generation’s interests?

  • Bars and restaurants continue to drive creativity in consumption, but how many times can the same concept be reinvented before it becomes stale? How many cocktails can you Instagram before people stop caring?

  • Gin, once heralded as the renaissance spirit, is now such a bloated category that many retailers won’t even taste new expressions for purchase. How will craft whisky distilleries pay their bills if the spirit they’re making in the interim doesn’t sell?

  • How many sommeliers does it take to pay the rent for a one bedroom apartment in San Francisco? Six?

  • Can a community alone support an entire craft distillery? If so, would any craft distillery owner be satisfied with that limited income model?

  • Will the booze industry, with promises of limitless growth, eventually become so crowded and saturated that people have no choice but to go back to brick and mortar retail in order to find an actual human being that can help them navigate it?

-David Driscoll

News & Notes

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Near my place on Ventura Boulevard is a slew of great pubs that offer happy hour every day and live TV every night. Seeing folks decked out in their sports gear, eating burgers and drinking a few beers while watching the screen, you might assume there was a big game on last night. In theory, there was; because in Los Angeles the Oscars are the Super Bowl of games, and people were out and about taking in the show. Here are some of my notes from the weekend:

  • I ended up ordering a glass of Noah’s Mill Bourbon for the first time in years last night, and I was amazed by how mature it tasted and how much it reminded me of the old Jefferson 18 year bottles we used to sell back in the day. It has that deep, resinous, almost oak polish aroma, but it sweetens out on the finish. Willett has done a great job keeping that marriage interesting.

  • I blew through bottles of Launois Cuvée Reserve and Michel Arnould Rose Champagne during our Oscars pregame, and very much enjoyed both: each with laser-like acidity and a freshness on the palate that kept me going back for more. Kudos to the importer for continuing to find such good stuff.

  • Speaking of Willett, there are a few single barrels coming to CA this week: all 100% Willett juice, both Bourbon and rye, so keep an eye out for those. They should be hot, hot, hot.

  • Those of you who dabble in the whiskey auction game might want to check this out: Hart Davis Hart has started what is being called the largest spirits-only auction ever in the U.S. and you can bid on all sorts of things right now.

  • If anyone ever needs any help with tenant law, I am not tenant lawyer, but I am currently brimming with legal knowledge in this area due to countless hours of intense research. I’ve spent so much time pouring over CA Civil and Health & Safety Codes, as well as case histories, that I’m a walking dictionary of potential violations, so please feel free to use that knowledge before it slowly dissipates over the next few weeks. I put it to good use and now I can relax.

-David Driscoll

Why Legal Weed Will Dominate

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As the building inspector walked through my apartment yesterday, checking for signs of water damage after our roof leaked from the recent heavy rains, she noticed a smattering of open alcohol bottles across the living room.

“Do you work in the liquor industry?” she asked, shining a flashlight into an open crack in the ceiling.

“I do,” I replied.

“I can really only drink vodka,” she continued; “It gets me where I want to go without all the sugar.”

I smiled and agreed. Nothing makes me happier than listening to everyday people talk about their alcohol preferences in terms of practicality and feel, rather than flavor. It’s so refreshing and I relish the moment every time it occurs organically. One of the most stupefying aspects of working in wine and spirits retail is the exposure to flavor appreciation culture, or the people who drink alcohol solely to savor the complexity, not to get a buzz. Why not just drink tea? Or coffee? Or juice then? It’s such horseshit that I feel dumb just writing about it now, but nevertheless it’s part of the pageantry that surrounds the genre, no different than the people who try to impress you by claiming they don’t watch TV.

I can’t ever imagine someone saying: “I smoke weed because of the complexity of flavor, not to get high.” But then again, I’ve never worked in the cannabis industry. I am, however, a frequent cannabis customer and I’m absolutely keeping an eye on all of the investments, developments, and happenings that occur on a weekly basis within that market. If you haven’t been paying attention, huge drinks companies like Constellation—the owner of High West and Casa Noble Tequila—are putting big bucks into cannabis, betting large on the future intoxication habits of young consumers. I think it’s a very smart investment. The number one reason I’m so confident stems from how cannabis is marketed and the manner in which consumer expectations extend from that marketing. As exhibit A, I give you Dosist; my preferred brand of marijuana.

Dosist vape pens are not branded with historical accounts of hidden weed plantations, or romantic stories of pirates who smoked huge joints while pillaging and plundering the Caribbean (although I admittedly would love it if someone did that). There’s no push for authenticity here based on antiquity. They have nothing to prove to anyone about their product, other than it works. It’s about feeling good and making sure you have the right product to do so. Hence, why their vape pens are aptly named: Bliss, Sleep, Calm, and Relief. Now, this may seem crazy, but hear me out: when I smoke the Dosist Calm pen, I feel calm. When I smoke the Dosist Relief pen after a long day on my feet, I feel relief. When I smoke the Bliss pen on the weekend, I feel happy. And when I smoke the Sleep pen before bed, it knocks me the FUCK out. What a concept! To market a narcotic by how it makes you feel rather than prestige, authenticity, or flavor.

I know four people who have left the alcohol industry to do commercial marketing in the cannabis world, and I absolutely LOVE catching up with them from time to time to hear about their experiences. Sure, they each have their growing pains, but again I’m confident there’s a serious career path there if you know what you’re doing. Dropping the pretense is step one. The number one reason I hear from young people as to why they don’t drink more wine is snobbery. The number one reason I hear from consumers as to why they don’t go out to drink fancy cocktails is snobbery. When I visit my budtender on Ventura Boulevard, however, I don’t experience even the slightest inkling of hauteur. That’s because no one in the cannabis industry is pretending like they don’t want to get high. It makes buying weed an inspirational purchase, rather than aspirational, and I think there’s a lot of potential revenue in that approach, especially when it comes to millennials who seem to have little interest in aspirational drinking.

An article posted today in The Spirits Business paints a picture of what we can expect moving forward:

Baby boomers – those born between 1946 and 1964 – are likely to be “more alcohol-exclusive,” while millennials prefer to swap between cannabis and alcohol, or just consume marijuana. Millennials make up 45% of “dualists” – people who consume both cannabis and alcohol – which the report notes is a “sobering statistic” for drinks firms that are “trying to capture long-term share of mind and wallet among this important demographic.

Or just listen to Tinashe for more insight. The future is definitely “two on.”

-David Driscoll

You Clearly Don't Care About Your Business

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Why am I showing you a photo of a woman holding a hair dryer? Because that’s Tabatha Coffey, the former host of the hit Bravo TV show Tabatha Takes Over—for me, the best reality show on television while it lasted. If you’re unfamiliar with the premise, Tabatha—a successful and highly professional stylist—would visit a number of struggling salons, identify the issues preventing success, and help the bosses turn their business around. Of course, every now and again Tabatha would run into a lazy or indifferent owner, one that had no real interest in hard work or progress, and give them a stern talking-to. She would invariably tell them:

“You clearly don’t care about your business.”

Being Australian with a thick accent, when Tabatha says the word “business” she pronounces it more like “beeznis,” which I would have a field day with at home. After a long day at work, I’d be telling my wife about all the struggles we were facing and I’d say to her, completely deadpanned: “These people clearly don’t care about their beeznis.”

“And you wonder why no one takes you seriously,” she’d reply with a sigh.

Tabatha has been on my mind lately as I’ve navigated the network of small, independent liquor stores in Los Angeles, talking with a surprising number of corner shop owners who have little to no desire to put any effort into their business whatsoever. Their reluctance to change, think outside the box, or invest in better technology in the face of struggling sales and an evaporating clientele is more tragic than it is frustrating, and with the rise of third-party delivery services like Drizly, Instacart, and Postmates, the writing is on the wall for wine and spirits retail. Namely, if you’re not engaging a new generation of consumers with software and social media, you’d better have the lowest prices, a great selection of products, and the best customer service known to man in return.

Unfortunately, most of the places I’m referring to have a very basic selection of spirits, pricing that’s nowhere near as low as their main competition, and customer service that borders on abusive at best, so I’ve been wondering what they see in their own personal crystal balls. “We need to get more people into the store,” one person told me last week, as we reviewed a very basic strategical playbook. How about an in-store tasting? Meh, they’re hit or miss. How about a website with great content? Meh, that’s expensive to do. How about changing up your inventory with some niche products that attract a different set of passionate consumers? Meh, no one is asking for those brands. So basically you want everything to be like it was before, where customers came to you automatically, and all you had to do was sit there and collect the money? Yes, now that sounds like.a great idea! How do we do that?

Being a successful business owner in the modern age requires one or both of two things: consideration for your customers and passion for the services that you’re offering. You don’t have to care deeply about wine or spirits (in fact, I’ve met at least five store owners that don’t even drink), but you do have to care about the experience of your consumers. At the same time, I’ve met more than a few assholes in my career who have put together a great selection of well-curated bottles and found their niche. The point is: you can be a jerk so long as you’re passionate, and you can be a novice so long as you’re nice. But you absolutely cannot be a passionless prick. I’ll use my current landlord as an example of the latter.

I’ve been emailing and texting my landlord this week about the multitude of repairs my apartment is still in need of, despite the fact that he had advertised the unit as “completely remodeled” in the listing. When I eventually called him a liar and told him that I was bringing in my own safety inspector as evidence, he seemed genuinely upset. “This is a lot of work you’re asking me to do,” he wrote to me in a text message. I responded by writing: “I understand you’re frustrated, but all of this could have been avoided if you had made the necessary repairs before I moved in. This all should have been handled long before we got here.” What I’ve discovered about my landlord is that he neither wants to be a landlord, nor does he give a shit about my experience as a tenant, hence why I’m currently reevaluating my living arrangements. If anything, he resents me for holding him to a reasonable standard, not unlike a retailer who thinks his customers are the problem.

As I was investigating my rights in preparation of a potential suit, I found this wonderful line on a legal site regarding the general responsibilities of a landlord: The theme of the law is not complex. If you intend to make a profit from renting living space, you will have to provide living accommodations that meet certain habitability conditions and if you do not, the tenant may make those repairs or terminate the leasehold. If you have allowed unsafe conditions to exist on premises within your control and foreseeable harm results, you may be liable.

Bingo!

The theme of retail is also not complex. If you intend to make a profit from selling wine and spirits, you will have to provide customers with an experience that meets certain consumer conditions and if you do not, the customer will go elsewhere. If you have allowed for substandard conditions to exist on premises within your control and foreseeable displeasure results, you will be liable and eventually you’ll go out of business.

-David Driscoll

The Reality of Sales

If you’ve been following the booze industry news lately, then you’ve probably already seen the following statistics regarding Bourbon sales in 2018 (all info courtesy of Impact Databank):

  • Maker’s Mark up 9.1%

  • Bulleit up 9.8%

  • Woodford Reserve up 21.3%

  • Knob Creek up 8.3%

  • Basil Haydens up a whopping 39.5%

  • Four Roses up 19%

All together, the super premium Bourbon category (as it’s called) was up 12% in case volume, driven mostly by the aforementioned brands. What may surprise the super geeks, however, is that Buffalo Trace was only up 8% in comparison. Now that could have been due to supply issues, or a lack of inventory in key markets due to allocations, but while Buffalo Trace sold roughly 186,000 cases in 2018, Four Roses sold 250,000. That’s surprising to me because, as much as I love Four Roses, it’s not repped by one of the two major distributors in California, which limits its exposure in certain accounts. Therefore, hitting that number is a pretty big accomplishment.

These figures are also interesting to me because of the somewhat widespread perception among “cultivated” Bourbon drinkers that Buffalo Trace is perhaps the best “super premium” bargain in the business. I’ve certainly preached that mindset during my career in retail, and I’ve long carried a torch for the label, but it’s always interesting to see how much impact the blogosphere and various online chatter has on actual sales. Bulleit Bourbon, for example, grew by almost as many cases as Buffalo Trace sold, up 120,000 to 1.34 million. Ditto for Maker’s Mark, up 150,000 cases to 1.66 million. Yet, most whiskey “influencers” that I know aren’t out there writing blogs about how great Bulleit is, or how you really need to revisit Maker’s Mark. That shows you the power of those brands to do their own influencing.

Thus, if you wonder why your local liquor store has floor stacks of Bulleit and Maker’s Mark in lieu of more interesting, “craft” selections, see the above numbers. Those brands sell—period. And as four separate liquor store owners told me yesterday, “I’m not interested in buying things that don’t sell.”

-David Driscoll