WEBVTT - Reshaping the Spirits Industry

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<v Speaker 1>You're listening to Bloomberg Business Week with Carol Messer and

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<v Speaker 1>Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Very rough week,

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<v Speaker 1>another one, So we're gonna shift gears for you all

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<v Speaker 1>a little bit as we wrap up are week here

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<v Speaker 1>on Bloomberg Business Week. Brett Berish is founder and CEO

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<v Speaker 1>as Sovereign Brands, a family owned wine and spirits company.

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<v Speaker 1>He's joining us via zoom in Connecticut, and it is

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<v Speaker 1>really great to have you here, although I've got to

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<v Speaker 1>say it would be even better. What's going to happen?

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<v Speaker 1>What do you say, Carol? If we were all together

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<v Speaker 1>and we were sharing a glass of McQueen and the

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<v Speaker 1>Violet Fog, it would be a lot sweeter, That's all

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<v Speaker 1>I'm gonna say. When when's going to happen? Brett? How

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<v Speaker 1>are you? Yeah? Well, for me, it already started. I'm drinking.

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<v Speaker 1>Well that makes one of us. Yeah, I get for

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<v Speaker 1>the three of us. So we'll happy Friday. We'll talk

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<v Speaker 1>to us about the business because I think, you know,

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<v Speaker 1>we cover a lot. We talked with a lot in

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<v Speaker 1>the wine industry, with the spirits industry, talked to us

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<v Speaker 1>about you know, we saw a lot of buying during

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<v Speaker 1>the pandemic. So where are we in terms of the

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<v Speaker 1>business right now? Uh, pre pandemic level is today, And

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<v Speaker 1>I'm curious about what kind of supply chain difficulties you

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<v Speaker 1>might have, if any business. Well, business was pretty wild

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<v Speaker 1>with during COVID, just because it was changing in consumer habits,

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<v Speaker 1>where with the shutting down of bars and restaurants and

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<v Speaker 1>consumers going to stores. I think what you're now seeing

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<v Speaker 1>is is, uh, there's life back in the in the streets. Um.

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<v Speaker 1>I was talking to I mean not just in the US,

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<v Speaker 1>but everywhere. I was talking to one of our colleagues

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<v Speaker 1>in the UK, UM, and they're celebrating the Queen's jubileeem

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<v Speaker 1>and it's is it's the most vibrant it's ever been

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<v Speaker 1>right now. So you're almost you're almost sitting a tilt

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<v Speaker 1>back to the center hopefully and that that's that's everyone's goal. Brett.

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<v Speaker 1>How are you? How are your costs? How are your

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<v Speaker 1>input costs? Supply chain stuff challenges, getting ingredients, employee paying

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<v Speaker 1>employees to attract and retain them. It's tim everything's going up,

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<v Speaker 1>um question. And I think it all you know, it

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<v Speaker 1>all started this. It's a global issue, and it all

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<v Speaker 1>started with uh. Once that chain stops, ever, there's pent

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<v Speaker 1>up all of a sudden, there's so much demand and

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<v Speaker 1>now you know, we're all playing catchup. So we went

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<v Speaker 1>months and months without inventory and because we just couldn't

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<v Speaker 1>get it, and then we're ordering more and more so

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<v Speaker 1>we can play catch up for the future. So we

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<v Speaker 1>personally on our side with our brands bell Air, Bamboo, McQueen,

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<v Speaker 1>um and our new brand Vonne. Now we're in a

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<v Speaker 1>good position because we've over ordered, if that makes sense.

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<v Speaker 1>Now we've actually heard that from a lot of the

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<v Speaker 1>retailers where they did over because their inventory levels were

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<v Speaker 1>up because they were over ordering to make sure that

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<v Speaker 1>they had, um, you know, what they needed for their consumers. Um. So,

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<v Speaker 1>based on what you're seeing, what kind of field do

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<v Speaker 1>you have on the economic outlook? And I do feel

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<v Speaker 1>like to some extent, alcohol might be a little bit

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<v Speaker 1>recession proof, but that's not true. Like when you're spending

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<v Speaker 1>to fill up your tank, you might not have as

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<v Speaker 1>much money to spend on some other things. So how

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<v Speaker 1>do you see it? Yeah, I think, you know, when

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<v Speaker 1>I think back to two thousand six and seven, I

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<v Speaker 1>think there's always gonna be When people talk about recession,

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<v Speaker 1>it's basically, ah, you're trading down in some cases, you

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<v Speaker 1>know which you maybe we're drinking. Uh, you'll you'll drink,

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<v Speaker 1>You'll continue to drink, but maybe you'll trade down to

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<v Speaker 1>something else. Um. So I can see that happening. But

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<v Speaker 1>for us, I don't know. I think I think this

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<v Speaker 1>is one of the reason why I love our industry

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<v Speaker 1>is you know, it's it is true in good times

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<v Speaker 1>people drink and bad times people drink. So um uh,

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<v Speaker 1>it's a very very resilient industry. So they used to

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<v Speaker 1>prove it. What are people drinking? What do they like

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<v Speaker 1>most of all? Just my brands? No, no, no, that's

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<v Speaker 1>not true, Brett, Sorry no, but really is it? Is it?

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<v Speaker 1>Gen's is it? RUMs? Is it? You know? We talked

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<v Speaker 1>to people in the in the brewery business, like what

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<v Speaker 1>what do you think? What are you getting? And and

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<v Speaker 1>who is your demo? I'm curious, Well, you're asking the

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<v Speaker 1>wrong person because I'm I'm not a trend follower. Um.

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<v Speaker 1>We like to build on my side. We like to

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<v Speaker 1>build brands that that uh, and we do it based

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<v Speaker 1>on no advertising where it's that organic brand building. It's

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<v Speaker 1>almost like when a when a TV show is hot

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<v Speaker 1>on Netflix or Hulu and they're not advertising, people are

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<v Speaker 1>just talking about it. So to me, you know, our

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<v Speaker 1>brands do well, but they're they're in different categories. So

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<v Speaker 1>my bel Air brand is in the champagne sparkling category.

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<v Speaker 1>It's now the number one brand the United States. Are

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<v Speaker 1>Rum Bamboo, that's hot, that's the number one premium rum

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<v Speaker 1>and the fastest growing. That's a great segment for us.

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<v Speaker 1>But as an example, Carol is an example. You know,

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<v Speaker 1>when we launched that brand, everyone told us, don't do

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<v Speaker 1>it because it's not hot. So I just don't like

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<v Speaker 1>to follow trends. So what we like to do, what

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<v Speaker 1>we're doing. I'm wondering about you more of your history here,

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<v Speaker 1>because years ago you sold Ace of Spades to Jay Z.

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<v Speaker 1>How do you build? How do you when you know,

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<v Speaker 1>to sell a brand versus to keep holding onto it

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<v Speaker 1>and to connnia build it? Good question. Well, I think

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<v Speaker 1>it all depends in the situation. So in my case,

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<v Speaker 1>I didn't have any money. Uh that's a good answer.

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<v Speaker 1>And I had lots of ideas and no money, and uh,

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<v Speaker 1>it was the most difficult decision I could ever make

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<v Speaker 1>in my life. It's like selling a child. Um. But

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<v Speaker 1>but what it did is it made us bigger and stronger,

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<v Speaker 1>and now I get to do these other brands. So

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<v Speaker 1>I think everyone's position is different and the reason you

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<v Speaker 1>do it and why for me, it gave me capital

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<v Speaker 1>to do all these other brands. Um my team has

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<v Speaker 1>grown sixfold, sevenfold. Um, we're in a hundred plus countries.

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<v Speaker 1>So it's the way I get up the ladder is Uh,

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<v Speaker 1>it's allowed me to get up the ladder. Are you

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<v Speaker 1>always thinking about the breadth of developing your brand, cultivating it,

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<v Speaker 1>you know, and then eventually selling it off or that's

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<v Speaker 1>not necessarily the end game? Always? No, it's funny, and

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<v Speaker 1>I may be it comes from just a reality check,

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<v Speaker 1>you know. I get those presentations that that that uh

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<v Speaker 1>for a pitch book on a brand and you know,

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<v Speaker 1>in five years, if I could get one percent or

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<v Speaker 1>two percent of the category and that there's a multiple

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<v Speaker 1>of acts, and I'll sell it. Um. I was that

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<v Speaker 1>that guy twenty plus years ago. And if you're thinking

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<v Speaker 1>like that, to me, brand building never works. It just

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<v Speaker 1>doesn't work that way. Um, you gotta be patient, you've

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<v Speaker 1>gotta be long term. I don't think like that. Uh.

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<v Speaker 1>If it happens. It happens. But to me it's you're

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<v Speaker 1>you're thinking too narrow and uh and to me it's

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<v Speaker 1>I've learned my lesson. It's not about the money. It's

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<v Speaker 1>about building something special and good things come when you build.

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<v Speaker 1>When you think like that, how do you compete as

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<v Speaker 1>a small player, relatively small player for shelf space and

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<v Speaker 1>for the district distribution. Just in the last minute that

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<v Speaker 1>we have with you, it's everything to mean, it's everything

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<v Speaker 1>from we gotta be we gotta work harder. Um, we've

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<v Speaker 1>gotta be different, we gotta be more creative. We've got

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<v Speaker 1>to constantly try to reinvent ourselves. Um. You know, I've

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<v Speaker 1>got this brand Bamboo, which, as I said, as our rum,

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<v Speaker 1>we have more followers on Instagram than Captain Morgan and

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<v Speaker 1>McCarty and they have hundreds of millions of dollars in advertising.

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<v Speaker 1>That's hard, but it's it shows. I'm the I'm the

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<v Speaker 1>the example of you work real hard, you put everything

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<v Speaker 1>into it and you can get there. And Uh. Just

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<v Speaker 1>the key is don't think you can. Don't don't compete

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<v Speaker 1>with them the way they do business, because you can't.

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<v Speaker 1>You've got to compete. You do business and then you

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<v Speaker 1>can well bottoms up. Next time come in studio and

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<v Speaker 1>next time bring a bottle and we'll talk to there's

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<v Speaker 1>two of using three. Cheers, Cheers, bread, have a good weekend,

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<v Speaker 1>Bred Barrows. He's found in seat at Sovereign Brands, joining

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<v Speaker 1>us via zoom in Connecticut. Great way to wrap up

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<v Speaker 1>this week