This is our 28th episode of the Brain Brew Whisk(e)y Academy. We will discuss the math of whiskey and the craft cocktail recipe - Rum Runner Beach. This podcast episode features Whiskey Maker - Doug Hall and Whiskey Drinker - Tripp Babbitt.

Show Notes

[00:00:04] Brain Brew Whisk(e)y Academy

[00:00:26] Episode #28 - Whisk(e)y Math is Hard

[00:01:16] 3 Ways to Make Money with a Distillery

[00:08:00] Brain Brew Update

[00:10:54] Craft Cocktail Recipe - The Rum Runner Beach

[00:11:47] Step 1

[00:11:51] Step 2

[00:11:54] Step 3

[00:11:56] Step 4

[00:12:04] Step 5

[00:12:05] Step 6

 

 

Transcript

Tripp: [00:00:04] This is the Brain Brew Whisk(e)y Academy podcasts where we're going to take you behind the scenes on what it takes to build a whisk(e)y distillery business. The Eureka ranch team led by Doug Hall are creating a craft whisk(e)y company like has never been done before.

 

Tripp: [00:00:26] All right well watch go ahead and move on to the Brain Brew Whisk(e)y Academy. And you know there were some nuances last week that you talked about with that whisk(e)y was a little bit more difficult when you're trying to put the numbers together for investors but it looks like he kind of had the same problem with math and whisk(e)y.

 

Doug: [00:00:46] Oh it's a disaster. It is so hard. I mean think about every state province country different taxes and rules. The yield in a barrel. Will vary depending upon where it's been stored.

 

Doug: [00:01:00] The proof The Angel's Share what they talk about leaks in the dam things. The three tier system results in variable dips into who takes what profitability. Marketing distribution expenses capital expenses.

 

Doug: [00:01:16] I mean you start building and then the building inspector says I've thought about this. I've changed my view. I mean and and barrel aging requires high capitalization to fund the inventory. And without this math it's almost impossible to make smart investment decisions on a craft distillery. The good news is is that when you do sort it out there are a number of clear pathways for making very good profits. OK so I thought what I do is I would explain if there's some approaches to doing this this kind of three ways that you can make money as in a distillery. The first one is a retail focused distillery. In here you stay focused on creating experience for your customers. Got to be awesome at cocktails food and consumer service. And if the regulatory environment allows it some states allow you have two or three of these but you're basically a restaurant that happens to have a distillery and these things are cranking it. If you if you really state now if you don't care about food and the rest of stuff forget it. Don't try this but you're creating just a wonderful experience for people to come have some food has some drink. And it works it works. And if you stay constrained you can make a decent income from this and do well.

 

Tripp: [00:02:40] Ok.

 

Doug: [00:02:41] The second one is cost efficiently create wild products and brands and in this case here what I would tell you to do is very clear which is by an iStill to make vodka and gin. And then work with our brain brew team to create your own line of to for award winning whisk(e)y brands. Okay. Cause this is gonna get you going with great product really fast.

 

Tripp: [00:03:05] Okay so I'm a little. Let me get some clarity on this because you're saying you get an iStill and start making vodka and gin and then you mentioned whisk(e)y. I see a progression here as are you saying that you need to make a vodka engine first before you start making whisk(e)y it.

 

Doug: [00:03:23] No it just as it's craft spirits person for most craft spirits people getting going. It just gives you a nice blend of stuff that you're making versus stuff that you're buying that's been customized just to your Woodbill and stuff. And so it just gets you in the game in a very inexpensive way. I mean literally for like 10 percent of the cost it would normally be OK. So it's. And it gets you some cash flow and learning.

 

Tripp: [00:03:50] Ok so vodka and gin is just easier to make and lower overhead coste.

 

Doug: [00:03:57] No aging.

 

Tripp: [00:03:57] OK.

 

Doug: [00:03:58] Especially if you do it with an eye still OK. No computer controlled. Very simple goof proof they have incredibly good education.

 

Doug: [00:04:07] And we don't get anything from them might by just I'm just really a big fan of them. They've got I mean that's what we use to go. So I love them. And then you know you got to remember that when you're a craft distiller and you going to market. So in this case here we're going to go to market in our local market.

 

Doug: [00:04:25] And we're gonna do cycles of learning and until we get ourselves a winner in the city and you got to remember that that first flood of sales are souvenirs. People are buying souvenirs of their local whisk(e)y or whatever it is that you get. And so don't overthink this because you're going to have a surge and then it's gonna die. You got to get yourself in a repeat purchase where people are really buying it and drinking it.

 

Doug: [00:04:49] Now when you get this done go to another market. We are not a local legend. The goal here is to validate that your brand and product has the potential to be scaled up. At this point you know you can use some initial investors to get started at this point. You might do another round of funding because now you've got proof that not only in your market but in a market where you aren't there. You've got something reliable and reproducible you can go. And that's how you do it. That's that's how you do it. If you're gonna do it with wild products and brands.

 

Tripp: [00:05:22] So vodka gin are lower cost things to do that you can do in the iStill so you can start to generate those products that generate some cash flow then you can start in to the whisk(e)y portion.

 

Doug: [00:05:37] And I do them at the same time I look at the same time.

 

Tripp: [00:05:40] Okay so I'm doing. So you have whisk(e)y vodka and gin and then you're saying they're souvenirs meaning that they're not good or what do you get.

 

Doug: [00:05:49] Most. Mostly in the beginning. You just I just want to caution people because I talked to craft guys they go Oh I just opened it I'm selling as much as I can do. That's right. You're filling a whole bunch of people buying souvenirs of you. I don't want to hear about the first sale I want to hear about the repeat sales. Is your product awesome. And it probably won't be except I mean the stuff that you get from us will be awesome because we'll make sure it is we'll work with you to help you get it awesome.

 

Tripp: [00:06:16] Ok. But it gives you a starting point. I guess I was always kind of under the impression and I know there. You know you guys work on you know continually innovating the products that you have that you would want to get it to a certain point where you're kind of. It's not a souvenir that you're getting a product where people want to continue to buy it.

 

Doug: [00:06:37] You need money You need money. I got a ship. OK ship.

 

Tripp: [00:06:42] All right. All right. And then that the third pathway here is something that you've actually talked about the previous episode which is if you're going to age it the old fashioned way that it's going to cost you millions of dollars to do billions of dollars decades of time.

 

Doug: [00:07:02] So if you've got a whole lot of money. You can deal with the big companies do to still your own whisk(e)y. Putting it away for years. First couple batches won't be very good but after about 10 to 30 years you'll be able to create a successful classic whisk(e)y company like the big corporate brands. So that's the other option. Now what you're not going to do is take your whisk(e)y distill it put it in little barrels put it in barrels with the inserts and have world class whisk(e)y it's just not going to happen. You're gonna have a new make spirit the taste Woody. And so you've got to decide are you're going to use something like us. With time compression.

 

Doug: [00:07:41] Are you going to or are you going to stay in white spirits where you don't have to head to aging. Or are you going to buy aged stock that can be extremely expensive just ridiculously expensive. Or are you going to just sit there and pray and let it go for a long time. OK. That's it. That's it.

 

Tripp: [00:08:00] Ok. Doug we haven't talked very much about the Brain Brew how it's come in and what's up with it today and what's been going on.

 

Doug: [00:08:11] We are in production. We are making it as fast as we possibly can. The DSP we have our license. And that's that's that's cranking. I am actually in route to Scotland right now to meet with Edrington who is our partner for a couple of products that we do for them and in discussions about expansion because the volume is 100 times bigger than we had anticipated it would be. And that's good and bad 100X in sales is is spectacular but it's also a very very stressful on our system and so and and we just tested some more new products some really high end high end stuff that was interested. Amazing. So the business is outstanding but we need to expand already and it sets the tale of Distillers is that we we tend to have not enough space we build just what we need.

 

Doug: [00:09:09] So we're about two way overbuild so that we can literally do a 10 another 10 x on our sales this year which are going to be significant but we're we're building for another 10x increase in sales with automated bottling lines and stuff like that. So it's it's pretty exciting pretty crazy actually.

 

Tripp: [00:09:31] Well you have talked about this and one of the previous episodes too about the scalability of things and having to kind of keep the quality as you go or you kind of step on yourself.

 

Doug: [00:09:45] Yeah. So we've got I mean the compression aging that kind stuff we're fine with all of that thing that's our problem. Right now it's packaging. We have like most people in manual packaging system and we really need a full automated line to be able to do it at the speed that we use. It's a packaging issue right now. We're fine with capacity. We've got plenty of equipment and systems are really good in that case it's the packaging that's. OK. All right. The other thing the other thing Tripp that you're going to get and if you're thinking about starting one of these things. You need warehouse space. I mean even though we don't have to store barrels. When you start to get to the flow that we're at sending pallets out every week you need warehouse space for empty bottles filled bottles caps late. I mean it's just amazing how much pallets. When you start selling pallets and pallets of product it just takes up room and you get forklifts and stuff. It's amazing.

 

Tripp: [00:10:42] So this is the reason that you're trying to get ahead of it with with additional space then it's in anticipation of how you're growing presently.

 

Doug: [00:10:53] Yep.

 

Tripp: [00:10:54] Interesting. Ok well let's go to our craft cocktail recipe. The Rum Runner Beach.

 

Doug: [00:11:01] Yes I thought. I'm thinking summer. OK I'm ready. We have a brain brew beach bar in Prince Edward Island and a new London Bay where I have a home and I am I will go up there somewhere around June and I am a great fan of tiki drinks.

 

Doug: [00:11:20] So this summer you're going to get a bunch of tiki drinks but tiki drinks instead of made with rum. I like to use our Relativity which is the easy drinking whisk(e)y up in the Boston area. And and so it just gives more depth and character to it. And so the Rum Runner Beach it's choosing ones. I mean make it simple because after you've had a few you've got to keep the measurements then you do it. And that is the truth.

 

Doug: [00:11:47] And so two ounces of relativity easy drinking whisk(e)y.

 

Doug: [00:11:51] One ounce of coconut cream.

 

Doug: [00:11:54] Two ounces of pineapple juice.

 

Doug: [00:11:56] And an ounce of orange juice. So two whisk(e)y and to pineapple one coconut cream one OJ.

 

Doug: [00:12:04] Shake it with ice.

 

Doug: [00:12:05] And then put some nutmeg sprinkle some nutmeg on top and umbrellas optional.

 

Tripp: [00:12:13] Okay there's there's something missing from the rum runner beach ingredients Doug.

 

Doug: [00:12:19] I know I know I know.

 

Tripp: [00:12:23] So I'm still looking to see where. Okay. So you replace the rum with whiskey.

 

Doug: [00:12:28] You can use rum if you have to but no use of the relativity.

 

Tripp: [00:12:34] All right. Well you got your mind on on summer already. So I'm still flip 50 degrees right now in rainy. So OK. Well that closes out r Brain Brew Whisk(e)y Academy final comments. Doug.

 

Doug: [00:12:53] Now I'm off to England and Scotland and all places beyond in Geneva as were we're doing things so I'll I'll have some stories for you when I get back of some some of these cool adventures I'm going to be seeing a whole lot of really cool people talking about trends but it is kind of crazy and that I'm kind of you know coming from the colonies over to the old country to teach them a little bit about whisk(e)y. So that's always humorous.

 

Tripp: [00:13:21] You probably didn't want it you'd probably want to say that hopefully this episode will come out after your back.

 

Doug: [00:13:27] I tell them. I tell them.

 

Doug: [00:13:29] I think my family came from Perth Scotland up on the north end of Scotland and I always do it with a good sense of humor with them and I just say well I'm gonna give you a little lesson today in whisk(e)y. Of course they all laugh but got a lot of laughter just a ton of meetings.

 

Doug: [00:13:49] I mean I think I maybe 12 to 15 different meetings over basically a week's time and it should be exciting. It's going to be exciting to see because we're we're you know I've got some products with me as always that kind of push the envelope on things and so it can be interesting to see what people do and to learn. I've got some really cool people that I'm excited to get with because they're interested in helping us and being part of it and I'm interested to hear their ideas as to what they've got to be good.

 

Tripp: [00:14:20] So so these meetings are gonna be all over Scotland and England then is that I got that.

 

Doug: [00:14:26] Switzerland. And Switzerland. Oh I'm going to be in Switzerland. Yeah yeah. We've got a potential thing in Geneva. We may be doing. We may be bringing brain brew to Switzerland and so I'm having a meeting there with some people too.

 

Doug: [00:14:40] So it's some Eureka! Ranch work I'm to us some of that too. So it's like kind of a hodgepodge of things and lots of miles is travel.

 

Tripp: [00:14:50] Right. Well a lot of planes and a lot of trains especially going around England and Scotland. All right. Very good. All right. Well have a safe trip. Doug and we look forward to talking to you and get back about your adventures.

 

Doug: [00:15:03] Thanks a bunch.

 

Tripp: [00:15:09] Brain Brew whisk(e)y is looking for pioneers like existing distillers or entrepreneurs interested in our custom whisk(e)y and craft cocktail experiences. These experiences provide consumers bartenders corporations nonprofits and celebrities the ability to craft whisk(e)y to their taste and preferences. Our system also enables the creation of limited edition prestige whisk(e)y for weddings birthdays or other celebratory events. If you'd like to learn more go to brain Brew whisk(e)y dot com and share with us what you are interested in. In the form provided.