Episode Description
In this episode of the Profits on Purpose podcast, host Nate Littlewood interviews Alex Hildebrandt, co-founder of Suyo Pisco. They discuss Alex's journey from investment banking to the spirits industry, the cultural significance of Pisco, and the entrepreneurial spirit that drives his business. Alex shares insights on navigating the challenges of the spirits industry, building sustainable partnerships with producers, and the importance of focusing on specific markets for distribution. He also emphasizes the need for direct consumer engagement and the strategies Suyo Pisco employs to connect with its audience. The conversation touches on fundraising, financial strategies, and the long-term vision for the brand, highlighting the importance of community and cultural heritage in business.
Key Takeaways
- Alex's journey reflects a deep connection to his Peruvian roots.
- Pisco is largely unknown outside of Peru, presenting a unique opportunity.
- Navigating the spirits industry requires adaptability and resilience.
- Building sustainable partnerships is crucial for success.
- Focusing on specific markets can lead to better brand penetration.
- Direct consumer engagement is essential for introducing new products.
- Fundraising should align with long-term business goals.
- Community involvement enhances brand authenticity and trust.
- Cultural heritage can be a powerful motivator for entrepreneurs.
- Success in business often requires a long-term perspective.
See More from Alex and Suyo Pisco
Listen to the full episode to discover how Alex's experiences can inspire and guide you on your entrepreneurial journey. Don't forget to subscribe for more insightful conversations!
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– Nate and the Profits on Purpose podcast team
Transcript
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00:00 The Journey to Suyo Pisco
02:07 Cultural Connection and Entrepreneurial Spirit
06:34 Skills from Investment Banking to Spirits
10:43 Navigating Consumer Behavior in the Spirits Industry
13:58 Maintaining Authenticity While Scaling
21:03 Innovative Partnerships and Operational Stability
27:33 Strategic Distribution: Going Deep vs. Wide
29:44 Market Focus and Strategic Priorities
33:54 Engagement and Sales Strategies
41:10 Fundraising Decisions and Perspectives
46:28 Advice for Aspiring Entrepreneurs
49:49 Connecting with the Brand
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Nate (00:06)
Welcome to the Profits on Purpose podcast, where we explore the journeys of purpose-driven founders and the financial strategies that have helped them survive and thrive. I'm your host, Nate Littlewood. Today's guest is Alex Hildebrandt, the Peruvian-American co-founder of Suyo Pisco. After a career in investment banking and corporate development, Alex felt a pull back to his roots.
And in 2019, he and his friend, now co-founder, Ian Leggett, visited remote vineyards in Peru and were captivated by the artisanal Pisco makers, whose spirits rarely leave their villages. So they quit their jobs and created Suyo, a B Corp certified brand that shares revenue with partner producers and introduces single origin Pisco.
Alex's story is one of bridging cultures, learning an entirely new industry from scratch and navigating the tension between purpose and profitability. Today we'll be discussing bootstrapping versus raising capital, the challenges of regulated distribution and how he's building a brand meant to last. Alex, welcome to the show. It's great to have you here.
Alex Hildebrandt (01:29)
Thanks for having me, Nate. Happy to be here.
Nate (01:32)
Of course. So want to start off talking about the backstory here, Alex. Suyo aims to empower artisanal producers and really showcase Peru's terroir. As a first generation immigrant, what was it that drew you to wanting to build the Pisco brand? And how does kind of representing your culture and origins really shape the way that you're running the company today?
Alex Hildebrandt (02:00)
Well, first of all, Nate, would say your intros was very comprehensive. So I think you touched on a lot of the main points already. So thank you for that. I'll use those maybe as building blocks for a little bit more behind what caused us to start Suyo. So before it was PeaceCo, mean, obviously PeaceCo wound up being what we decided to bring to the US and serve as the bridge, if you will, for us. It was more about wanting to do something that celebrated our culture as Peruvian Americans, myself and my friend and now business partner, Ian, we wanted to create a business that allowed us to celebrate something that was uniquely Peruvian in the US and cause more interest in this place that we came from, but also really to bring people together.
What started off really as more than an idea than anything else wound up becoming Pisco because we couldn't really think of anything that was more uniquely Peruvian than Pisco, to be honest with you. Pisco is the flagship spirit of Peru. Any Peruvian knows about Pisco and or has tried Pisco. What we found was that outside of Peru, it was a spirit, is a spirit still to this day that remains largely unknown.
We felt a lot of pride and a lot of, a lot of passion behind uncovering something new, I think to most, consumers to maybe give you a little bit more, more detail on, how personally I was inspired by it. As you mentioned, I'm a first generation immigrant, who moved to the US when I was young. And I, I think there's sort of like two things that really drove me from the beginning. one I would say is my, my father, who moved us along with my mother at a young age to the US is an entrepreneur himself. And I don't know if it's genetics or just growing up around that environment. I think there was always this desire to build a business and that only became stronger as I was sort of...
I think growing within corporate America, sort of climbing the ladder, I had this drawback to creating my own business. Then, arguably, I think more strongly growing within me was this feeling of, for those out there who are first or second generation immigrants or even more than that, think this may be relatable to them that as you grow up in the US, I think there's often this strong pressure to to assimilate.
Right. Like we want to prove that we belong here. And in order to do so, let's act as American as we possibly can. And I think with that comes some, you know, sadly, some some shame associated with with where you come from. It's the don't speak Spanish at home. Let's not be loud and proud about Peru. Let's make sure that people understand that we're we're here to fit in, you know, and that's
I think that can be quite toxic really. And I think it's, it's, it's too bad. And I felt that as I was growing in my adulthood, was losing a lot of that Peruvian heritage and culture. My, the majority of my, my family still lived in Peru. So it's kind of odd that I was traveling there all the time and seeing them, but still felt like I was becoming less Peruvian as I was growing older. So I really, I really felt like creating Suyo, and to this very day, I find that every single day it just,
it brings me closer to my roots, was sort of that reconnection from the beginning. You know, we we everything that we do now at Suyo is with the mission of celebrating Peruvian culture. Every single event that we do, we want to make sure that we're loud and proud about being a 100 percent Latino in business. And we want people to know all these things. Then, you know, many years ago, I wouldn't have been as, as loud and proud about. I think from a personal note, it's kind of that, that entrepreneurial bug combined with that, pride to, reconnect with my roots.
Nate (06:10)
So interesting. I hadn't appreciated that. I guess you'd call it a cultural dilution perspective as a first generation immigrant. I guess doing this enables you to still feel connected to your roots. But at the same time, I gather you're introducing something quite new and novel to a lot of the US market, right?
And so I assume this is kind of a way for you to help spread something that's culturally significant to you with a much wider audience and would otherwise be exposed to it. So that's a really cool way of framing it. So from what I understand, Alex, you went from a career in investment banking and corporate development into the world of spirits.
I'm curious as someone coming from that background, what were some of the skills or competencies that you think were most helpful to you as an entrepreneur? And were there perhaps others that were less helpful? And were there maybe some skills that you had to unlearn or learn how to rely on your instinct?
Alex Hildebrandt (07:23)
Yeah, this is definitely a two-sided coin. They're pros in content. I think that the ones that come to mind right away are, I'm not going to call it multitasking because I do think that multitasking is something that very few people in this world are actually good at. And I actually have found that I am not one of them. I think multitasking is extremely difficult. I'm going to call it a made up term that I'm sure has a real term called multi-projecting.
At any given time, I'm, you know, I'm trying to manage perhaps dozens of different projects. And this was the norm coming from the investment banking world where you're, you're having to work on many deals at a time. And, know, it's really a volume business. The only way that the model works. was working in mergers and acquisitions. So we had to have a lot of live deals in the market at once, because you know, that many of them are not actually going to transact, you're compensated largely based on success fees.
So if you don't have dozens of deals in the market, you're not going to be successful. So you have to be willing and able to manage multiple projects and multiple clients at the same time. And that really carried through into the corporate development world where corporate development in my role was sort of a, there were two parts to it. Was corporate strategy, which was working on a lot of internal reorg,
organic growth strategies, strategy initiatives. Inorganically was more the mergers and acquisitions, which was a lot of what I was doing in investment banking. But, we're actually looking at how we can grow the business by acquiring other businesses. In many cases, we're investing in other businesses. And again, a lot of different projects happening at one time. So that's that being the norm for me for my career, I think has definitely been helpful in starting a business that can be quite, quite crazy and never really a dull moment.
So, you know, I think a lot of other people who didn't necessarily have that exposure might find it a little bit more challenging. That's the first thing that comes to mind. And then I would say, maybe just like being organized in general. I think I've always been a pretty organized person. I don't know that that was something that necessarily I learned in my, my, my prior life, as I referred to it. I think that helped me thrive in my previous career.
If you're just sort of flying by the seat of your pants, you're probably not going to be successful. There are some people out there who can figure it out. I'm not one of those. I think you have to make sure that you're, keeping good notes and keeping a calendar that's very relevant for what we're doing now.
We have to plan production very far in advance. We have to set up a commercial calendar, a launch calendar, a social media calendar, an email calendar. These are types of things that I think seem like second nature, even though I don't come from the marketing world or the social media world or anything, but the actual planning and execution of it, I think all stems from that some level of organization. And I would say the same thing about, thankfully, my business partner, Ian, as well. I think we're both pretty organized people.
All that said, you can't plan for actually probably 90% of the things that happen in our, our day to day. And that's the reality of the world that I came from to, have to be able to roll with the punches. You have to be able to, to pivot on a dime. You know, as I said, most of the deals actually you're working on when I was working in, in banking are not going to, to close and you have to be willing to accept that failure and move on to, to the next one.
A bit of an athlete's mentality. It's the next play. It's always the next play. Our days are up and down like this. And, you know, I find it helpful to turn my days into quarters. Sometimes, you know, I lost the first quarter. You know, fortunately I got beat up and today is actually a perfect example of that. Before I hopped onto this podcast, I felt like I felt like I lost the first quarter today. So I need to make up for it in the second, third and fourth quarter.
You know, that, that tends to be Mondays for me to be honest with you, but as long as we can come out on top at the end of the day, think that's, that's the most important part. yeah. Does that, does that answer kind of answer the question?
Nate (11:45)
No, I get that. Tell me about the flip side though. Are there any parts of running an e-commerce business where you think your background may actually be hindering you in some way?
Alex Hildebrandt (12:01)
Yes, and I'll touch on this a little bit later too.
I would say, I don't know that I can accurately call us an e-commerce business, even though we do do e-commerce. That's one of our, I think, multiple revenue streams. E-commerce is, is, is a very unique thing in the beverage alcohol space. But so I'll answer it from a, I'll say D to C perspective, even though again, nuance with when you're beverage alcohol, you're technically not allowed to sell direct to the consumer. But in my mind, the consumer is my ultimate end buyer. So that's who I am wanting to pitch to and to sell to.
Yeah, I mean, this is a bit of a generic response that I think would apply to other industries as well, but nothing will ever prepare you for the way that the consumer behaves. And I was operating more in a B2B world where the buyer tends to be more sophisticated, knows what they're looking for and or, you know, behaves in a certain type of way that if you've worked in the corporate world, you know, it's just sort of table stakes.
You receive an email, it's generally accepted that you respond within 24 hours. You don't say rude or inappropriate things via email. You know, a lot of things that are just sort of second nature. And I think having grown up in a, in a corporate environment got me accustomed to that when the reality was you're coming into not only a startup world, but then also in an industry that I would say no shade here, but I think tends to behave a lot differently.
Nate (13:50)
Interesting, So true. So true. So the other day, Alex, when we were catching up and getting to know each other, we spoke a little bit about the way that you are kind of highlighting the producers. And I think you're actually including the producer names on the bottles, which is fantastic from a connectivity perspective to the customer.
But I understand that that sort of strategy and approach is probably going to be very difficult to maintain as you kind of scale up the business. Could you talk a little bit about how you are planning around that and how you kind of maintain the mission of connectivity to the origins as you're also juggling the need to scale and build a profitable business? I think you might.
You mentioned the other day that there's actually been a couple of interesting case studies that you looked at as well here.
Alex Hildebrandt (14:56)
Yeah, great question. There are two elements of our business that I think at first glance may look to, whether it be looking at it through a financial lens or through a general business lens may seem like, are you doing that? And that's one of them. The first one I'll just touch on real quickly, which is not that, is our revenue sharing program that we have with our producers.
This is something that we believe is mission critical for us. And we believe that we have, we have a responsibility to the industry to show the family, particularly small independent family producers who have mostly made Pisco historically as a hobby or they could not sustain themselves. A lot of our, quick side note. would say in fact, the majority of Pisco producers in the US are, are also growing avocados or dates or apples or Mandarin or all of the above as their primary source of income.
Then Pisco is a secondary source of income slash maybe a passion project. We feel like it's largely our responsibility to show them that there is a sustainable path to dependence on the Pisco category. We feel like there's a strong enough global demand to support many, if not all of you.
And we're sort of leading that, that charge until we, you know, we have a lot of work to do. These are still a very unknown category. We feel like a good way to bridge that gap is our revenue sharing program. So a percentage of every single bottle we sell is going directly back to our producers. That's a sign of faith, but also a, a sign of we are doing this together. We are on the same team.
What's more are one of our primary producers who now is serving as our central hub for bottling and really all things production is now actually an equity holder in our business. truly brought him on as a business partner. So we put an agreement in place at the beginning of this year where we have visibility into there's a max amount of, there's this cap on price increases every single year for his services for access to his space. He's promising to do certain things that give us the operational stability that we need and that we now have in exchange for, we have full access to his facility. We do vineyard tours there. We do lunches there. We truly are able to behave as if his distillery and vineyard is ours.
And also we have not gifted because it is an exchange for services. We've granted him access to equity in our business. So that's super duper exciting. So that's kind of one piece. The second piece that you asked about, which is a totally, totally valid point, and one that we think about truly probably every single day, is the sustainability of this single origin model we have, which for the viewers and listeners who are not familiar, just to be concise about it.
All of our Pisco comes from one vineyard, one grape varietal and from one vintage. So when you look at one of our bottles, which, which I have here, I'll hold up for you. You see that it's a 2018 vintage, and then you see exactly where on the map it comes from. And then you see the detail of the producer, the altitude, the soil type, the average annual rainfall. These things that in the wine world, they refer to as terrible. This time and place we think is very compelling.
And it's on brand for us in our journey to elevate the way Pisco is viewed around the world. The trade-off is, you hit on the head is how scalable is that model? You know, thankfully we're still small enough where it's very, very feasible for us. It's caused a lot of pain points for us. mean, just as simple as labeling, can only buy, know, every label is different. So we don't have the economies of scale of buying, you know, tens of thousands of labels at a time. It's like two to 5,000 labels at a time, depending on the size of our batch. The ABV changes every single time we do that because we're not mixing years to get to a normalized proof. The truth is Nate, we believe that long-term we likely are going to have to have a product in the market that gives us more stability in terms of our volume and in our growth trajectory.
We're very close to that point and what that product is is still still TBD. But for those out there who have been following the studio story, you know, I think it's probably something along the lines of like a Solera style, which is combining different vintages, to give us some, some more uniformity, if you will, and allow us to get these economies of scale. But, you know, also give the, perhaps the mixologist out there who is looking for Pisco that's always going to taste exactly the same every single time. You know, maybe, maybe it fulfills that demand, but I just want to be clear that right now that is, that is not what we stand for. Part of what we think is so exciting about the Pisco category is that every single, every single year gives you something different. made for Pisco is made from grapes. So much like a wine, each vintage is giving you a different product. We're celebrating that by leaning even further into it and only using one year and only comes from one plot of land, you can see exactly where it comes from and you can try two different vintage is side by side.
And it's going to have a slightly, slightly different flavor profile. You put it in a cocktail. I promise you, you're not going to notice. And a lot of people probably won't even notice when you try it side by side, but to a discerning consumer, think you're going to notice some subtle differences. that's, that's, I think we think that's a beautiful thing. And we also think that not, and I think we know that this is happening in other categories and it's super exciting to see say take tequila.
For instance, there's a lot of brands out there who are really celebrating the terroir of tequila, there's lowland agave, there's highland agave. What's more, I think you see it more in the mezcal category, because it's a larger denomination of origin where it comes from. So this is not a foreign concept that we're introducing. We do believe we're the first in the US to be doing it in the Pisco category. But yeah, as we look to grow, there's no doubt we're going to have to modify the way we're doing things.
I will just end that point with saying that our single origin series that we have now that are two flagship expressions, I'll hold them up here. These are the two first products we launched. These are kind of the two heroes. These will never go anywhere. So even if we were to theoretically launch a new line that is more scalable, this line will always exist because we want to be known as a single origin Pisco, even if we're putting something out there that needs to be done a little bit differently to allow us to scale further.
Nate (22:11)
Interesting, Alex, you said something really interesting a moment ago that I want to circle back to, which is your partnership model with your co-packer. So I hear from founders of brands all the time about the struggles and problems that they have, finding advertising agencies, co-packers that they trust. Trust and reliability is a...
huge obstacle for a lot of brands in kind of getting the support that they need. What you just described was a really interesting approach to that in that you have aligned interests by basically giving this party access to equity in your business. So that essentially means they're going to think like a shareholder because they will be a shareholder. Can you talk a little bit more about why you decided to take that approach with this partner?
And are there any other parts of the business that you've potentially ruled out from taking a similar approach?
Alex Hildebrandt (23:14)
I would never, I would never tell another founder out there to lead the conversation with your co packer with, can we, can we do some sort of revenue sharing and or equity arrangement to get started? Um, I would say find the cash to make sure that you don't do that right off the bat. That that's not the way to lead. So I don't want to make it sound like I'm advocating for that. This is a relationship that we built over five years and we finally decided that we felt like the best thing for both parties was to, you know, it gives us a lot of operational stability. was a no-brainer for us.
We now can use his bodega, which we helped him finance as well during the build out, which was just completed last year. Because of what is in place now, we can use it as our centralized bottling facility. He, when I say he, by the way, his name is Romulo Del Carpio. His family has become good friends with us and, he doesn't need to be, they don't need to be there.
You know, we have, have literal keys to the facility. So it really is like we're, we're doing this together. And, more than anything was about the alignment of, of incentives. We are also working with other producers and for him and for his family to feel confident and excited about bottling other producers, Pisco in his facility.
We want to make sure that there's financial upside for them to do that. So there should be no, you know, there should be no jealousy or any type of, of adversarial type feeling because we're bringing other piece, go in through here. You, you have the exact same incentive we have to put the best product out there. So I guess the bottom line there is I would tell people never enter that arrangement at the very beginning. This is something that was developed, this relationship was developed over a long period of time and ultimately, we decided as a brand who didn't own our own facility, rather than investing hundreds of thousands, if not millions of dollars and actually building an entire distillery, we can gain access to one via this arrangement. It's much more approachable for us at our scale. Every situation is definitely unique, but this one without it, I mean, it doesn't make for us.
Nate (25:36)
Okay, that makes sense. So I guess what I'm hearing is this is absolutely not something that you rushed into. This was five plus years in the making and you guys already knew each other very, very well. I guess reading between the lines, there might've been a financing need for it. Perhaps you got some discounts on services by providing equity instead. Is that accurate?
Alex Hildebrandt (26:04)
Yeah, don't if the way the dollars net out, guess it probably does end up potentially being a discount, but the one I would say financial term that's the most tangible that I can point to is the cap on price increases year over year. Yeah. So the way that, you know, to be super tactical about it, the way that we're set up is we're physically purchasing Pisco, completed Pisco from him.
And we have either finance or help finance these initiatives. So, you know, we really feel like we've contributed a lot here and we'll continue to do so as they've contributed a lot to our journey. And we just really feel like we're on the same team. the idea. And with all that sudden aid, mean, we do work with other producers too. So I don't want to make it sound like we're leaving them out. It's just that everything runs through this one facility. We're getting Pisco from other producers as well, which is very, very beautiful liquid.
Nate (26:47)
Interesting, interesting.
Alex Hildebrandt (27:03)
It's just all the bottling is now happening in one place, which was a huge operational, a huge stamp of operational stability approval.
Nate (27:14)
I bet, I bet. Yeah, no, it's certainly smart to do what you can to instill or build stability in into your supply chain. You know, one less thing to worry about.
And, you know, as well, or better than most people that how, you know, ridiculously busy it can be running a business like this. I, I find the strategy you've taken, they're really interesting. Tell me a little bit about distribution and distribution strategy. My understanding is that you've chosen to go deep in a few markets rather than chase national distribution at this stage. How did you come to your strategy on distribution and is there any particularly good or bad advice that you have received on this topic along the way?
Alex Hildebrandt (28:08)
Yeah, I can work backwards here and say the, this stage in the, in the life cycle of CEO, would say bad advice we've heard is anybody who has told us get national distribution. That to me is just automatically bad advice for us and for most people. This is not for everybody. If you are a, an industry veteran.
Nate (28:22)
Okay.
Alex Hildebrandt (28:36)
who is very well capitalized, who has a product who that has been product market fit has been very validated and or maybe you have a celebrity on board. The approach may be different. National distribution may make sense for you. But I would say for the vast majority of founders out there who are looking to build something in the beverage alcohol space, the one of the best pieces of advice we've ever heard was to go narrow and deep.
So we have been very deliberate with our approach there. We focus on, know, where I sit now is I'm in Boston, Massachusetts. And because I'm here, it's a market that's made a lot of sense for us to, to focus on, but it was not our first, and it's not our strongest market. New York was where we launched the brand in 2022.
And where I spend a lot of my time, we feel like that's, that's proving ground for, for a brand. If you can, you know, if you can cut your teeth there, you can, you can be successful anywhere else. So that's kind of the, the, the playbook that we follow it is get as much penetration as you possibly can in New York, get into the top bars. And in theory, there should be a bit of a trickle down effect.
Other bartenders and industry people around the city will see that, you know, bar X, which is very well known, is working with it. You know, that that's a bit of validation. and, so, so driving engagement awareness velocity for us has been priority number one since, since day one, what that's turned into is, you know, I'm going to count, when I say our top three markets here, I'll count Lima, Peru, because that's where Ian, my business partner is, obviously is an extremely critical part of the story.
Peru is the, because it's a denomination, because Pisco is a denomination of origin controlled spirit, it has to be made in Peru. That is the production hub. But at the same time, Lima Peru is a really large market, bit saturated in the Pisco space because there's so many other Pisco brands, but we do have a strong presence there too. And we always will. We feel like we really have to, to really be, to be authentic.
So I'm including Lima in our top three markets as well. So our top three markets are New York, Massachusetts, Boston in particular, where I live, and then Lima, Peru. Those three markets are 80 plus percent of our revenue, of our sales depletions, probably more like 85. And that's where we want to be. We're no shade toward the other eight states that we're in in the US. So we have distribution in 10 states, technically, but we're really focusing 95% of our efforts into two of those states, which are New York and Massachusetts.
Kind of like 80-20 rule, guess, but we just feel like before we go spend dollars traveling to California, for instance, awesome market, a lot of opportunity for us there via our first distributor on the East Coast, we are able to sell in California. We got into Total Wine there, which was super exciting for us, really great validation.
Nate (31:42)
Okay.
Alex Hildebrandt (32:05)
But at this stage in our, in our brand, we don't really have the resources to hire someone full time out there. Nor do we think that that's the best use of our time and energy and funds. So we're kind of developing the playbook in New York and in Boston. And once we feel like we really have that solidified, let's go transport that in California because we're there. Let's look at expanding into new distribution markets that we feel like are culturally similar to where we've proven ourselves.
And who also have large markets of, affluential people and, and, or Latinos, I'll say DC is a really exciting market for us because it's relatively easy to get to as well. you know, probably next on that stage of evolution is going to be going to be Florida. Florida might as well be a different country. It's crazy. for a number of different reasons, but you know, as long as it's something that basically we can get on, you know,
two to three hour flight to and maybe do a two day trip to think that that makes sense for us. But until then, it's mile deep and inch wide. We don't have any other states planned in our 2025 growth plan. We came into 2025, was no, let's absolutely rip the cover off the ball in our existing markets before we even start talking to other distributors. And that's what they want to see too. If you come to a distributor with a, look, this is what we've done in this market.
Nate (33:27)
Yeah.
Alex Hildebrandt (33:32)
It's way more exciting than, we have this really cool brand. think it will do well. So like, can you give us a shot that doesn't really move the knee, at least in our experience, doesn't really move the needle for a distributor. want to see, they want to see numbers and they want to see plans of action.
Nate (33:46)
Yeah, very smart, very smart. I do want to ask you a question about that. I just need a quick break to turn on the AC. It's timered out and I'm having to get very hot here.
Alex Hildebrandt (33:55)
That's-
Nate (34:03)
Okay.
So yeah, I want to ask you a question about this distribution stuff. So I appreciate the strategy and focusing on New York makes sense because it's kind of the place to be, a very influential part of the country, I guess. Massachusetts, I understand, is where you live and so you've got geographic proximity there.
I guess the fact that you are focusing in your own backyard like that kind of implies to me that there's a very strong relationship component to the sales process here. I gather it's actually, it must be extremely important for you to physically be able to meet and greet, shake hands, and see people face to face.
Aside from that one-to-one contact, which I'm inferring is quite important here, what are some of the efforts that go into replacing, scaling and growing the brand? Like what are you doing digitally? What are the forms of marketing or accompanying this? And can you tell us a little bit more about, you know, the state level strategy and what that looks like?
Alex Hildebrandt (35:18)
Yeah, great question. The first thing I would say, which is the least scalable, I think growth channel is the people, at least at the sales level. I'm very much of the belief that, that selling something that is largely new to the consumer is a contact sport.
So we have taken the view that every opportunity that we have to show up physically to talk to you about it, we will take. We're going to do staff educations. We're going to do tastings, getting liquid to lips. We need you to interact with the product and we want you to hear. I'll talk to you for hours.
Unfortunately, probably for you about how excited I am about our story and our product and Terroir, but the consumer doesn't have that time. So we need to have our one to two bullet points ready to go that you're hearing. And there's some adaptability to, okay, what do we think this consumer is going to be most interested in based on, you know, we're going to have to pretty quickly, we go through trainings with this with our team. What are these cues that you're seeing? Where are you? What part are you in the suburbs? Are you in the city?
You know, like what other bottle are they holding in their hand when they come up to talk to you at the liquor store? All these things that you're going to, you you have to, there's some judgment that comes with it, but you have to, you have to try your best to read your cues. but liquid to lips is, is by far, we think at this stage, the most important thing that can happen, trying the product, engaging with it, understanding what our story is beyond that.
There is a successful digital strategy out there that we haven't found yet. We've tried a little bit of everything and...
We are not the, obviously the be all end all. Just because I'm saying that it works doesn't mean it works for you and vice versa. For instance, we've found social media to be particularly challenging.
I fully recognize how powerful of a tool social media is and can be. I find for something that's not a DTC product, or if it's, it is a DTC, which we are, we technically do sell on our website. alcohol purchasing tends to be more of an impulse by, so like, Hey, I'm going to walk to the liquor store on the corner Friday after work to grab a bottle for the party on Friday night or you know maybe on Saturday but it's not as common that you're buying a bottle today you know today on Monday which it is for a party this weekend.
Consumers are less likely to they're not they're not really accustomed to waiting five to six days which is what it takes in alcohol shipping because there's different states have different compliance laws so to pass through each one of those states you have to check those boxes and it takes time unfortunately.
So my point there is, you know, social media is certainly an important leg of the marketing stool, but I don't think, is the be all end all for a brand like ours. It's good for education and awareness, but not for driving actual purchasing behavior.
One thing that we're sort of rolling out actually right now, you've us at a really interesting time that I'm extremely excited about is, we feel like we have a very engaged listserv, those who sign up for email newsletter. It's not that large of a newsletter because we don't really advertise it, but those who actually come and sign up on our newsletter, they email us back and ask questions, ask when our next release is going to be available.
So what we've done is, and what's actually hilarious, Nate, and it's kind of intuitive if you think about it, I haven't really gone through and actually done the math because I think this would take a long time, but I'd be willing to bet that over 50% of the people on our, on our mailing list, which has between probably four and 500 people on it now, I'd be willing to bet that over 50% of them don't have any social media whatsoever. So we're communicating with an audience that that's their, that's their interaction with us. They're not seeing that I posted the exact same thing yesterday on Instagram.
These are people who are consuming content differently. And tend to be more engaged consumers, at least in our experience so far. So I give you that context because what we've done and are rolling out in real time is a more defined strategy with this is we have this product line called our exploratory series, which I just showed you our two core products. We have this entirely different line that we launched last year, which is basically a, it's a really great storytelling mechanism for us. The short version of it is.
We're so often out there, Ian and I, where we're traveling around Peru and these really remote, obscure regions. And we come across some Pisco that someone made in 2015 that we just think is beautiful. We want to bring it to market, but there's not going to be continuity in that product. This is, this allows us to finally bring that to the table. So these are extremely limited releases. So we do limited drops of them.
To date, we've just announced it on social media or like sent an email around to our, our, our listserv and like, we're talking such small amounts. Thankfully they sell out pretty quickly. We're going to lean further into that and we're going to say, again, we haven't technically done this yet. We're, launching a new website literally this week. A lot, a lot of moving parts right now, as there always are with the growing, you know, new kind of young growing brand. But our goal is to start doing, you know, lottery type drops with this product.
And we think that's an exciting way for consumers to really feel, and it gamifies it a little bit like, this is cool. So you have this new, new, new release and they only made 180 bottles and they're only making 50 available on e-commerce. Like you have to sign up to potentially get access to it. and we're not, I don't believe in creating exclusivity that doesn't exist. I think that's kind of BS. That's not what we're trying to do. We're just trying to make sure that the rare bottles that we're bringing are finding the people who will appreciate them the most. That's my goal with our exploratory series.
So that's just a long-winded way of kind of answering that there is a digital strategy that we feel like is extremely important that we're still kind of playing around with a little bit to be honest with you. We feel good about this one. I think we're going to see exciting results.
Nate (42:09)
Interesting, That's really cool. I understand, all right, you've given me a new appreciation for the importance of getting people to just engage with the product and sample this stuff. You know, like...
Blasting Meta or Google with ads and talking about how wonderful Pisco is, it's probably not going to get you far. If most people, you know, haven't encountered the product before, they don't know what it tastes like. You know, there's...
Alex Hildebrandt (42:39)
Maybe they can't even find it in their state. Maybe it's not even available in the liquor store or we can't ship to their state. These are real pain points to their strategy.
Nate (42:47)
Interesting, interesting. I want to change gears a little bit and talk about your attitudes and approaches to capital, cashflow and fundraising. So you're from the finance world and I understand you bootstrap this business initially for the first few years to get it off the ground. But then in 2024, if I'm not mistaken, I think you did a friends and family round.
How did you decide that that was the right time to do a fundraising and what does the fundraising future look like for this business?
Alex Hildebrandt (43:26)
You think we reached a point of operational stability and commercial clarity that we felt was sufficient to go around and actually bring on investment. We had been hamstrung for quite a while, with initiatives that we wanted to execute and our reluctance to go do a capital raise was because we didn't
And I think, truthfully, there's a little bit of,
What's the word that whennpeople are not confident in what they're doing because they think that other people know more than them, it's a very common term. I don't know why I'm not thinking what it is. Imposter syndrome. You. That's such a commonly used one.
I forgot what it was. You know, I think there was, an element of that being people who felt like at the beginning that we, felt like validation for us was, was getting institutional money from some of the smart money in the industry. there's very few, very few players in this space who, you know, beverage, alcohol investors who are looking to invest in early stage businesses.
We kind of looked past the friends and family to be honest with you. We were like, no, we feel like we can do that, but we want to get the smart money. And we didn't feel like we were prepared.
To be honest with you, without naming any names, I started interacting with a lot of those and I was like, no, that's not, that's not actually what's going to make us successful. Cause you know, I think there's, there's some fallacies out there that, we're going to come in and we're going to be, you we're going to be advisors and we're going to be very hands on. We're going to roll up our sleeves and easy.
Nate (45:20)
Thanks. So you started interacting with some of these investors and if I'm hearing that correctly, you didn't feel like you were going to get value out of them for lack of a better word in terms of advice and support.
Alex Hildebrandt (45:46)
That's, that's very much a part of it. Yes. But then also with, you know, some conversations with people I'm very close with about how could you this isn't you're not asking for charity. This is a this is an exciting opportunity that you should include your friends and family. Yeah. You know what mean? I think we had a bit of we feel weird looping in our friends and family on this. But yeah, it was just flipping the script that
No, it would be extremely disrespectful not to give them the opportunity to be included in this.
Nate (46:20)
That's such a really important reframing you've done there. I think a lot of founders, you know, might feel guilt and they might not feel comfortable asking the people around them for money. But what you're describing there is it would almost be a disservice not to ask them for money because, Hey, I'm building this amazing company. I love and respect you and you're part of my friend or family network. And I want you to be part of this journey with me. think that's a really interesting perspective change. You've gone through that.
Alex Hildebrandt (46:52)
Yeah, and it took us a little bit of time to get over that too. And I do think it's important to acknowledge that.
Of course, every single industry is unique. What's more, the way that you want to build a business within an industry, way you want it remembered, is going to vary based on the founder and the team who's doing it. We've taken a very, very long-term approach. So it was important for us to go to our, when we spoke to our investors.
Nate (47:05)
Yeah.
Alex Hildebrandt (47:25)
Like we want to be very clear with you about what the investment horizon is here. don't, you know, I'm not going to tell you exactly what it is, but this is not a, you know, three to five year private equity flip. This may not be a seven to 10 year investment where you're going to see monetization. We hope so. Trust me. That's what we're striving toward, but we believe that this investment is only right for you. If you are going into it with a 10 plus year mental investment horizon.
That's, that's just the lens that needs to be viewed through simply because it is a category that has so few viable players in the U S at this moment. Again, we wouldn't be doing this if we didn't think there will be more, but we feel like we're still pretty early in the game and we're actively trying to get other Fisco brands brought to the U S and other founders to launch them.
It needs to be viewed through a long-term lens. the parallel I'll draw, I think Nate, you and I spoke about a couple of weeks ago, is Mezcal. Of course, it's totally different product. Mexico is, Mexican culture is a more culturally relevant one to the average American consumer, seeing as how it's just over the border. And of course, it's a much larger country. But we do see a lot of parallels in the way that cocktail bars and consumers are enjoying Pisco and Mezcal.
And that category was a very slow build that was much aided by Tequila. But if you look at the growth trajectory of Mezcal, 20, 15, 10 years ago, it looks a lot like where Pisco is now. We think the next 10 years are going to look, maybe not absolute dollars wise, but in terms of growth trajectory, we think are going to look much like the previous 10 years looked like in the Mezcal category.
Nate (49:06)
Okay.
Alex Hildebrandt (49:19)
That's our, that's our bet. Nice. Hence the longterm, longterm lens.
Nate (49:24)
Excellent. So I'm gonna ask you two more questions. One will be about advice that you would give a younger version of yourself. And the final question is just where can people find you if they wanna learn more about what you're up to and the brand, okay?
So Alex, you've obviously learned a lot over this period. There's been some wins, there's been some losses, and you've done some really interesting stuff over the last few years. If you could turn back the clock now and speak with a younger version of yourself, a version of yourself who was just starting off his entrepreneurial journey, what is the advice that you would give him?
Alex Hildebrandt (50:15)
Hmm. Tough one. There are a lot, I think. What comes to mind right away, I think is, is a bit of a generic response, but it couldn't be more true. was just, to be patient. I, in particularly having spent a lot of time in the healthcare and tech sectors and maybe some more kind of more high flying CPG industries.
And then I've just said generally American culture, think tends to really expect results very, very quickly.
I've always placed those expectations on myself and on any, anything that I've been involved with, but I've learned firsthand that these things take a very long time and success certainly is not built overnight. It's not built in a year and in many cases is not built in several years. So to look at things for a long-term lens and just stay true to what you're trying, trying to do. Don't let external influences.
Don't compare yourself to the tech founder in Silicon Valley who just sold his or her business for 50 X revenue in under three years. That's not a comparison for me. That's it. I congratulate them, but that's not a comparison. And instead stay true to what you believe. I'll leave with, I think, I don't have no idea who said this quote or if it even is a quote, but I heard someone say this one time that, it's important to, to build your business as if you're going to own it forever.
Otherwise you might. So that's, that's really been something that we think of every single day. We're building a business for the longterm. We want to make sure we're building a business and a sustainable and not just environmentally, we're talking socially and economically sustainable way that allows us to feel good about the way this, the business is longterm prospects. If someone comes along and you know,
Alex Hildebrandt (52:18)
Once I have that discussion, we're here for it, but we're not building a business to sell it. We're building a business for long-term success.
Nate (52:24)
I love that, yeah. That's a great perspective and it's certainly a very, very big long-term undertaking to build a business like this in physical products where you have inventory and you've got to finance inventory and you've got to win and open up sales channels. So yeah, very good advice there.
So Alex, I've really enjoyed this conversation. You have opened my eyes to all parts of the Pisco industry and the spirits industry that I hadn't really thought about before. But it's clear to me that you've had a fascinating journey thus far and you're taking a really, really thoughtful approach to building this business. And so I commend you on that.
If folks are interested in learning a little bit more about you personally, the business, the product, what are some of the places that they should go? And I'll include all of these links in the show notes for anyone who's interested, by the way. Thank you again, Alex. I really enjoyed the conversation today. Thank you everyone for tuning in and we will catch you next time.
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