Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: You're listening to Bloomberg Business Week with Carol Masser and
Speaker 2: Tim Stenovek on Bloomberg Radio. I promise some alcohol, Carol,
Speaker 2: So some good news in the world of spirits today
Speaker 2: for those investors who are at least long Davide Campari Milano.
Speaker 1: It's been a week.
Speaker 2: It's been a week. Yeah, this is the barent company
Speaker 2: of Campari Apparol Grandmagnier. While Turkey and More reported better
Speaker 2: than expected profit and revenue for the first half of
Speaker 2: the year, shares rose eight percent. Not out of the
Speaker 2: woods yet though, and it's because of tariffs. The EU
Speaker 2: indicated that wine and spirits will face a fifteen percent
Speaker 2: US tariff starting August seventh. That's on an interim basis.
Speaker 2: We'll talk to continue about an exemption for the sector.
Speaker 2: Can Pari flag today that the impact from tariffs could
Speaker 2: range between four point six million dollars to more than
Speaker 2: fifty million dollars. That's that's a range.
Speaker 1: I was thinking about Grand Monnier in Margarita. I think
Speaker 1: it can make it like a it's just special.
Speaker 2: Sorry, yeah, you're so. You didn't listen to any of
Speaker 2: that all you were thinking about?
Speaker 3: Was that one?
Speaker 1: I know?
Speaker 3: Okay?
Speaker 2: Which fine?
Speaker 1: I know, tariffs and Trader front and center. We're going
Speaker 1: to talk about that.
Speaker 2: I want to bring in Ali Anderson. She's CEO of
Speaker 2: Craft Co. It's a company that has a portfolio that
Speaker 2: includes more than two dozen spirits and liqueurs think Bourbon, Gin,
Speaker 2: Ready to Drink, cocktails and more. The company also does
Speaker 2: co packing for other brands. Ali's back with us from Alexandria, Virginia. Ali,
Speaker 2: how are you.
Speaker 3: I'm doing great today. How are you Caroll and Tim?
Speaker 2: We're doing pretty well. I know Carol wants a drink
Speaker 2: after this week. Hey, I want to start with with tariffs,
Speaker 2: because you're known as a company that doesn't import, and
Speaker 2: you do your own distilling here in the US. As
Speaker 2: a result of the tariffs that have been placed on
Speaker 2: imports of liquor from around the world, have you seen
Speaker 2: an increase in your domestic sales.
Speaker 3: Well, I would like to say that I have, but
Speaker 3: the reality is that when the tariffs, the threat of tariffs,
Speaker 3: especially the back and forth on that, what it did
Speaker 3: was it caused us to distributors to use up that
Speaker 3: budget to purchase those imports out of fear that they
Speaker 3: wouldn't be able to get those going forward or get
Speaker 3: those at a different at a higher price. So that
Speaker 3: didn't leave a whole lot of budget for craft suppliers
Speaker 3: like me to be able to get our products out there.
Speaker 3: So I think it's shaking out right now. I think
Speaker 3: we have lots of signs of hope on the horizon,
Speaker 3: but it definitely constrained things for a long time and
Speaker 3: does continue to you know, affect our suppliers as well.
Speaker 1: Allie, Ellie, Jill, drill down a little bit. What does
Speaker 1: that mean in terms of the restrictions that you guys
Speaker 1: have had or your suppliers what specifically.
Speaker 3: Well, things like packaging bottles which we do get overseas,
Speaker 3: glass bottles. We actually saw this coming and switched up
Speaker 3: our suppliers a little bit, and so imported barrels are
Speaker 3: another one. We actually would like to export more of
Speaker 3: our barrels. That's not going to be as easy to do,
Speaker 3: as you know, but even equipment abroad for us, there's
Speaker 3: some changes to our can line that we'd like to
Speaker 3: make and some of that means we've got to look
Speaker 3: for different suppliers. So you know, we're flexible we're nimble,
Speaker 3: We're able to do that. I recognize that not all
Speaker 3: suppliers are able to do that, but you know, we're
Speaker 3: seeing it and we're feeling it, but we're also adapting
Speaker 3: to it as well.
Speaker 2: So you know, it's funny because I always I don't
Speaker 2: say I always forget, but you know, when I say
Speaker 2: something is actually made in the US, the things that
Speaker 2: you're bringing up are a lot of international products. Whether
Speaker 2: that's barrels, whether it's parts of the machinery that you need,
Speaker 2: whether it's parts of the cans. What is what portion
Speaker 2: is actually made in the US?
Speaker 3: Well, for us, it's it's it's everything is made in
Speaker 3: the US. It's Bourbon we do. We do mainly bourbon.
Speaker 2: And all your ingredients, all your ingredients from the US too.
Speaker 3: The ours are definitely ours are, but that doesn't have
Speaker 3: to be the case, right You could import rye from
Speaker 3: Europe if you wanted. We don't happen to do that,
Speaker 3: but yeah, you absolutely could. Now for us, we're you know,
Speaker 3: we get our labels, we keep as much local as
Speaker 3: we can from our boxes to our labels, our quarks,
Speaker 3: But big things like glass that can be a little tougher.
Speaker 1: I'm also curious about consumer spending. You guys are a
Speaker 1: great window into that, and we've gotten a couple reads,
Speaker 1: certainly on spending this week. We even got some consumer
Speaker 1: sentiment from the Umish University of Michigan. Today. We did
Speaker 1: see sentiment actually go to a five month high. A
Speaker 1: lot of that had to do with the rally that
Speaker 1: we saw recently in stocks. We saw inflation expectations easing.
Speaker 1: What's your read on the consumer right now?
Speaker 3: I think the consumer is fatigued. The consumer, you know,
Speaker 3: they want value, they want bang for the buck. They
Speaker 3: expect us to be very transparent with not just how
Speaker 3: things are made, but you know, they want to know
Speaker 3: if you're selling a four pack, they want to know
Speaker 3: what goes into that. They're very savvy and they're tired.
Speaker 3: I think of you know, we hear a lot about
Speaker 3: shrinkflation as well. I think they're fatigued by that. So
Speaker 3: that's one thing that we definitely try to keep in
Speaker 3: mind when we're developing new products.
Speaker 2: We had this discussion on our editorial call today about
Speaker 2: whether or not we should consider alcohol a staple or
Speaker 2: a consumer discretionary item, and I guess it depends on
Speaker 2: it kind of depends on the way you think about
Speaker 2: a drink after work.
Speaker 3: I don't know.
Speaker 2: I think it's person dependent. How do you view it
Speaker 2: as somebody who creates this product? Do you view it
Speaker 2: as something that especially in the part of the market
Speaker 2: that you play in. Do you view it as something
Speaker 2: that people will buy regardless of how the economy is
Speaker 2: or is it a treat.
Speaker 3: I think it depends on the situation. It depends on
Speaker 3: so many factors, you know, socio political, economic factors. For one.
Speaker 3: It depends on how you're raised, where you come from,
Speaker 3: what your experience is, and how you view something like alcohol.
Speaker 3: Like we're seeing all kinds of trends with the low
Speaker 3: and no proof right people trying to make different lifestyle choices.
Speaker 3: So I think it's definitely situational with with your relationship
Speaker 3: to spirits, to drinking, to alcohol, to how you celebrate,
Speaker 3: to how you mourn, to how you transition through life.
Speaker 2: Are you doing any no or low right now? We are?
Speaker 3: We are. We've got Thatcher's Organic Liqueurs, which we're super
Speaker 3: proud to be organic. That's kind of a hard certification
Speaker 3: to get. So we've got organic liquors that are low
Speaker 3: proof and personally I like, you know, just a seltzer
Speaker 3: like a Lacroix and and a bit of Thatcher's elderflower
Speaker 3: is a great way to just have a little bit
Speaker 3: of spirit but not have to, you know, drink a
Speaker 3: hundred proof whiskey either. Now there's a place for that,
Speaker 3: don't get me wrong, but yeah, we do dabble in that.
Speaker 3: We recently reduce the proof on our cannon cocktails because
Speaker 3: that's what the consumer wanted, right, They're looking to be
Speaker 3: more sessionable, to enjoy for a little bit longer, and
Speaker 3: so we listen to that and delivered.
Speaker 1: Well, that's what I wanted to ask you. Your portfolio,
Speaker 1: as Tim mentioned in the lead to you more than
Speaker 1: two dozen spirits and liqueurs, bourbon gin Rae ready to
Speaker 1: drink a lot. And you are thinking about the lower
Speaker 1: no alcohol market. Where where's the growth? Where are you
Speaker 1: spending time in terms of and you want to spend time,
Speaker 1: not only time, but money and effort. When it comes
Speaker 1: to product development.
Speaker 3: The growth is really in innovation, whatever that, whatever your
Speaker 3: category is. What customers want is to be dazzled. They
Speaker 3: want something new. Like I said, they're fatigued. Sure, they're
Speaker 3: fatigued by price, but they also want something new to try.
Speaker 3: So I think if you're you know, if you're primarily
Speaker 3: into cannon cocktails, I think you should be innovating around flavors.
Speaker 3: What's the culinary scene doing. Are you paying attention to that?
Speaker 3: What are you picking up from that? If you're into
Speaker 3: high end whiskeys, which we very much are, we're looking
Speaker 3: at what kind of different finishes can we do, what
Speaker 3: kind of different blends can we do with higher aged whiskies,
Speaker 3: because the consumers definitely want different, they want to continue
Speaker 3: to be kind of entertained at the shelf by what
Speaker 3: we're doing.
Speaker 2: I mentioned that you do copacking. Can you explain that
Speaker 2: side of the business and what you're hearing from clients?
Speaker 1: If you watch Shark Tank you would know what co
Speaker 1: packers do.
Speaker 2: But I know I know what it is.
Speaker 1: Sorry, go ahead, Well they always do they like, do
Speaker 1: you have a co packer yet? Or I've got a
Speaker 1: co packer? Sr?
Speaker 3: Carol, No, I know she's mine O rough right, yeah,
Speaker 3: go packing. Go packing is Honestly, it's a new part
Speaker 3: of our business. But when we looked at what our
Speaker 3: strengths were, it was in product development. We've developed products
Speaker 3: for the Lions products for the Orlando Magic. We're pretty
Speaker 3: great at being nimble and developing new things for When
Speaker 3: people come to us and say, you know, I'd like
Speaker 3: to do this, we say, great, tell us more. We
Speaker 3: think we can help you out with that, and so
Speaker 3: co packing is our response to utilizing our capacity we
Speaker 3: had a little bit of access capacity and being able
Speaker 3: to say, what do you want to create, we can
Speaker 3: help you navigate that. You know, alcohol is one of
Speaker 3: the most highly regulated industries in the United States. It's
Speaker 3: not easy to navigate that, and so we're able to
Speaker 3: kind of shirpa new brands, New the World brand through
Speaker 3: the process using our experience in our resources as well.
Speaker 1: You mentioned regulatory how what might the come from the
Speaker 1: administration potentially that might help or hurt you guys beyond
Speaker 1: maybe what we've talked about TARFF cent trade.
Speaker 3: Yeah, you know, I'm definitely not a policy expert here.
Speaker 3: What I'm just looking to do is really urge President
Speaker 3: Trump and the negotiators just very quickly resolve the terraffs.
Speaker 3: You know, there's one point seven million workers that depend
Speaker 3: on a very vibrant US spirits industry. That's farmers, that's
Speaker 3: hospitality workers, that's drivers. That's us right, I'm reopening my
Speaker 3: tap room here in September, and I want to be
Speaker 3: able to do that successfully. I want people to come
Speaker 3: through those doors and be able to drink American spirits.
Speaker 1: Well, you mentioned workers on a day where we got
Speaker 1: some weakness in non farm payroll creation. What are you
Speaker 1: seeing when it comes to the US labor market. Are
Speaker 1: you guys hiring, are you holding on to workers? Are
Speaker 1: you trimming back your workforce? What can you tell us?
Speaker 3: I'm hiring right now? Like I said, I'm opening our
Speaker 3: tap room which has been closed now for several months
Speaker 3: by our own decision. We really just wanted to reimagine
Speaker 3: it to be something that was more in line with
Speaker 3: what craft Goo is and who we are. But we're
Speaker 3: definitely looking to hire hourly staff. We just hired a
Speaker 3: tap room manager, We're hiring line cooks, bartenders, so we're
Speaker 3: definitely in a growth mode. But yeah, is it a
Speaker 3: little difficult to find to find that right fit in
Speaker 3: the labor force yet it is just a little bit.
Speaker 2: What kind of pricing power just thirty seconds do you
Speaker 2: have with your product line?
Speaker 3: Well, we're very diverse, so we've got very high end
Speaker 3: Whiskey's one hundred and fifty dollars plus all the way
Speaker 3: down to canned cocktails which are twelve ninety nine for
Speaker 3: a four pack. So you know, there's something for everybody
Speaker 3: in our line, and I think that speaks to where
Speaker 3: everybody is right now economically. You can find something for
Speaker 3: a deal for sure.
Speaker 1: Gonna leave it there, good stuff. Always appreciate getting some
Speaker 1: time with you, Ali. Take care and have a good weekend.
Speaker 1: Ali Anderson, she's CEO of Craftco. As you mentioned, they
Speaker 1: have quite a portfolio spirits and the course, Yeah, fun stuff.
Speaker 1: A great insight into an industry as well as a
Speaker 1: smaller business. She joined us from Alexandria, Virginia,