$500K/Month – Building an Independent Premium Spirits Brand – Umberto Luchini of Wolf Spirit Distillery
INTERVIEW VIDEO (Length – 1:09:12)
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Umberto Luchini, Founder of Wolf Spirit Distillery and a veteran marketer and brand builder in sports and alcohol categories shares the story and motivation behind creating an independent premium spirits brand – a way to do what he loves the most, i.e. build new brands. Umberto shares valuable lessons in brand building as well as insider details on spirits production and alcohol distribution in the United States.
Umberto Luchini, an entrepreneur in the spirits industry, shares his journey and insights in this video. He discusses his background in sports marketing before starting his own spirits company called Wolf Spirit Distillery. Lucini emphasizes the importance of creativity and risk-taking in brand creation and marketing. He believes in creating strong emotional connections with consumers through authentic storytelling and observing cultural trends. Luchini also highlights the significance of product quality, pricing, distribution, and maintaining a core set of passionate consumers. He shares his experiences in setting up a distillery and navigating the complex alcohol industry. Luchini discusses the importance of marketing programs, building a strong team, and managing cash flow as an entrepreneur. He expresses enthusiasm for AI technology and recommends finding balance in life. Luchini also mentions the success of Liquid Death, a brand that has taken a unique approach to selling water.
- 00:00:00 In this section, Umberto Luchini discusses his entrepreneurial journey and the different businesses he has been involved in. He shares his background, including working in sports marketing for Formula One and the Olympic Committee, before transitioning to the business side with Campari. However, he eventually realized that his success was limiting his creativity in brand creation, leading him to start his own spirits company called Wolf Spirit Distillery. The goal of the company is to create and grow independent premium spirits brands and eventually partner with larger organizations to elevate them further.
- 00:05:00 In this section, Umberto Luchini discusses the preference of big companies to buy successful brands rather than create new ones from scratch. He explains that as an entrepreneur creating new things, you are more likely to take risks compared to a publicly traded company. Luchini describes his company, Wolf Spirit, as a brand incubator that takes risks and creates new products in various categories. He also mentions two other separate companies he owns, one in the wine business and one in the celebrity spirits business. He keeps them separate due to the differences in distributor networks. Luchini emphasizes that he does all this for fun and enjoys the work he does. When asked about the secret of creating new brands, he mentions Steve Jobs’ belief that consumers don’t know what they want until they see it, and that the best marketer is the one who can seduce consumers into wanting something they didn’t know they wanted.
- 00:10:00 In this section, Umberto Luchini discusses his approach to marketing and creating brands. He emphasizes the importance of observing cultural trends and identifying gaps in the market to connect with consumers on an emotional level. Luchini gives an example of how he created a bourbon brand, Puncher’s Chance, by drawing inspiration from American culture and the concept of the underdog. He explains that being authentic and true to the brand’s story is crucial for building a compelling narrative that resonates with consumers. Luchini acknowledges that not everyone will like the packaging or branding, but he believes in standing out and eliciting strong reactions rather than being indifferent.
- 00:15:00 In this section, Umberto Luchini discusses the importance of marketing and branding in selling a product. He explains that while having a superior product is valuable, creating a strong emotional connection and telling a compelling story through marketing can often sell a product better. Luchini gives examples of billion-dollar valuation brands in the alcohol industry that, if blind tasted, consumers might not find exceptional, but because of the marketing and brand value, consumers perceive them as phenomenal. He emphasizes that while marketing is crucial, it is essential to also focus on factors like product quality, pricing, and distribution to succeed in the market.
- 00:20:00 In this section, Umberto Luchini discusses the importance of distribution and marketing in scaling a brand. He mentions the example of White Claw, a modest product that gained popularity through strategic marketing and fit perfectly with consumer needs. However, he notes that maintaining popularity is challenging, as consumer preferences change and people move on to other products. Luchini advises covering all bases in terms of pricing, product, and distribution, while also creating an emotional bond with a core set of consumers who are passionate about the brand. He gives examples of brands like Patagonia and Nike that started by focusing on specific core consumers and eventually expanded their target audience. Luchini emphasizes the need for brands to constantly monitor consumer adoption and performance to avoid losing customers and the potential pain that comes with it.
- 00:25:00 In this section, Umberto Luchini discusses his process of learning about marketing and branding. He mentions that although he was not good at school, he enjoys reading books as a way to stimulate his intellect. He is particularly fascinated by human beings and their irrationality, which led him to study anthropology or psychology if given the chance. Luchini differentiates himself from most marketers by spending a lot of time observing and questioning his thoughts and beliefs. He believes that there is always something different and better coming up in the world of brands and marketing. Luchini also explains why America is the powerhouse for consumer-driven trends, while Europe has limitations due to its fragmented realities. He sees potential in China and India as emerging dynamic markets, with India especially poised for economic growth if its infrastructure improves. Luchini then shifts the conversation to his own business, a distillery that he started with a friend who is a potato farmer.
- 00:30:00 In this section, Umberto Luchini discusses the investment required to set up a distillery, explaining that it can cost around a million dollars for equipment such as stills and fermenters. He mentions that they converted a former laundromat in Eugene, Oregon into their distillery because it was more affordable than doing so in San Francisco. Luchini emphasizes the importance of controlling your own story and authenticity by producing your own spirits rather than buying them from the market. He acknowledges that it is more expensive and time-consuming, but believes it is the way to achieve long-term quality and credibility with consumers. Luchini also explains the process of distilling different types of spirits, mentioning that whiskey is the most expensive and time-consuming due to the aging process. However, he highlights that whiskey is currently an exciting and popular category where distillers can experiment with flavors and creativity.
- 00:35:00 In this section, Umberto Luchini discusses the advantages of vodka as a versatile alcohol that can be mixed with anything. He explains that the popularity of cocktails like the espresso martini and margarita is driven by consumer preferences for bitter and flavorful drinks. Luchini shares that their initial focus was on producing vodka to quickly enter the market and generate revenue while he worked on sourcing bourbon and expanding their portfolio to include other spirits like gin and Irish whiskey. He emphasizes the importance of distribution in the alcohol industry, noting that there are thousands of suppliers, a handful of national distributors, and hundreds of thousands of retailers and establishments that sell alcohol in the US. Luchini highlights the challenge of establishing relationships with distributors and competing against larger brands, but also sees it as an opportunity to carve out a space for smaller companies like his.
- 00:40:00 In this section, Umberto Luchini explains the importance of marketing programs in generating interest and ensuring that the distributor continues to support and sell your product. He highlights the financial risk that distributors bear and the need for leverage to secure a second push. Luchini emphasizes the need to show distributors the marketing and awareness programs you already have in place, which primarily involve retail programs and incentives for retailers and consumers. He provides an example of how these programs can work, such as giving discounts or coupons to retailers and consumers. However, he also acknowledges the complexity and varying regulations in different states, which require industry knowledge to navigate effectively. Luchini advises anyone looking to launch a spirits brand to hire someone with industry expertise. He then discusses the importance of getting consumers to test and try the product, which is achieved through sampling and tasting sessions in retailers like Safeway or Whole Foods. Additionally, advertising in flyers and email blasts can also help generate consumer interest.
- 00:45:00 In this section, Umberto Luchini discusses the importance of having a strong team behind a brand. His team consists of salespeople, brokers, accounting and logistics personnel, distillery staff, marketing specialists, and a finance person. He emphasizes the value of hiring experienced individuals who are passionate about the industry and willing to work for equity and a base salary. Luchini mentions that while the team is currently lean and mean, they are raising money to hire more salespeople to ensure top-of-mind awareness in the market. He also talks about the importance of avoiding becoming too big and maintaining a balance between growth and retaining the entrepreneurial spirit. One setback he faced was trying to do too much on his own and realizing the need for a solid team.
- 00:50:00 In this section, Umberto Luchini shares two key learnings from his experience as an entrepreneur. The first lesson was the importance of reducing personal equity and bringing in senior professionals to support the business and ensure its survival. The second lesson was the challenge of cash flow, especially as a small organization. Luchini explains how the three-tier system and upfront costs for inventory put a strain on finances. He emphasizes the significance of cash flow in startup growth and highlights the potential hindrance it poses. Luchini also mentions the book recommendation “The Subtle Art of Not Giving a F*ck” by Mark Manson, which helped him approach business and personal life with a holistic perspective, avoiding unnecessary obsession.
- 00:55:00 In this section, Umberto Luchini expresses his excitement about the advancements in the AI space, particularly in chat GPT technology. He appreciates the control and creativity it offers, allowing him to write back label copy for brands without the need for agencies or copywriters. He acknowledges that AI tools have their limitations and still requires the human touch, especially in design. Luchini also recommends Slack as a great business and creative tool, as it helps him interact with limited people and provides a different world of communication. Additionally, he emphasizes the importance of maintaining a balanced life and champions the idea of taking breaks and engaging in physical activities like ultra marathons, which helps ground him and increase productivity. When asked about a startup or business doing great things, Luchini mentions Liquid Death, a brand that sells water in a can and has found success with its unique approach and consumer-focused mentality.
- 01:00:00 In this section, the speaker discusses the importance of access to clean water and praises Athletic Brewing for creating a non-alcoholic beer that caters to the sports community. They also admire Richard Branson for his ability to create a world around the Virgin brand and explain that marketers can easily fall into the trap of being arrogant about their actions. They mention recent marketing controversies involving Anheuser-Busch and Target, stating that the mistake lies more in their reaction to the backlash rather than the initial marketing decisions. Additionally, they explain that Anheuser-Busch is facing an uphill battle in the beer industry and that there are other product categories where it would have been more difficult to find substitutes.
- 01:05:00 In this section, Umberto discusses the power of social media and how it can amplify both positive and negative experiences for brands and companies. He acknowledges that if something goes viral in a good way, it can make you a superstar, but if it goes viral in a bad way, it can make you a devil. Umberto also highlights the importance of leading the conversation rather than being reactive when dealing with a crisis. He believes that taking control of the dialogue is crucial to maintain the integrity of a brand. Furthermore, Umberto shares his best piece of business advice, which is to not obsess over money, power, and status, but instead focus on being kind to everyone and having fun because life is short and we don’t take material possessions with us to the grave.
People & Resources Mentioned in the Episode
Book: The Subtle Art of Not Giving a F*ck: A Counterintuitive Approach to Living a Good Life by Mark Manson
What You’ll Learn
Interview with Umberto Luchini of Wolf Spirit Distillery
|[00:00:08] Introduction to TrepTalks and Guest Umberto Lucchini|
|[00:01:05] Umberto’s Background and Journey into Entrepreneurship|
|[00:02:47] Transition from Sports Marketing to Campari|
|[00:04:00] Transition to Entrepreneurship and Creating Multiple Brands|
|[00:08:29] The Secret to Creating Successful Brands|
|[00:11:00] Observing Cultural Trends and Identifying Needs|
|[00:12:00] Example: Creating “Puncher’s Chance” Bourbon Brand|
|[00:13:00] Metaphor for America and Authenticity in Branding|
|[00:13:50] Identifying Gaps and Crafting Authentic Stories|
|[00:15:26] The Power of Marketing and Branding in Product Sales|
|[00:17:00] Covering the Basics: Product, Pricing, and Distribution|
|[00:18:00] The Role of Marketing in Brand Value|
|[00:20:00] The Long-Term Perspective of the Spirits Industry|
|[00:22:00] Creating Emotional Bonds and Building Core Fan Base|
|[00:24:00] Monitoring Brand Performance and Consumer Adoption|
|[00:25:26] Learning Process: Observation, Listening, and Questioning|
|[00:28:06] The Potential of the Indian Market|
|[00:28:50] Starting the Distillery Business|
|[00:29:20] Overview of a Distillery and Products|
|[00:29:57] The Decision to Focus on Vodka|
|[00:30:50] The Complexity of Whiskey Production|
|[00:32:08] Distribution Challenges and the Three-Tier System|
|[00:33:00] Importance of Distributor Relationships|
|[00:34:00] Creating Programs and Incentives for Distributors|
|[00:41:59] Introduction to the Complexity of Coupons and Regulations|
|[00:42:24] The Importance of Industry Knowledge in Launching a Spirit Brand|
|[00:43:28] Strategies for Introducing New Products to Consumers|
|[00:44:00] Collaborating with Distributors and Retailers|
|[00:45:00] Marketing Tools and Promotions to Build Brand Awareness|
|[00:45:34] The Value of Sampling and BOGOs|
|[00:46:00] Umberto Luchini’s Team Structure|
|[00:47:43] Challenges Faced and Lessons Learned in Business Growth|
|[00:55:01] Innovative Products or Ideas|
|[00:55:10] AI in Marketing|
|[00:56:38] Productivity Tools and Tips|
|[00:57:51] Balancing Work and Life|
|[01:00:57] Brands Facing Backlash|
|[01:04:00] Handling Controversies|
|[01:07:42] Best Business Advice|
In this segment, the guest will answer a few questions quickly in one or two sentences.
Umberto Luchini of Wolf Spirit
- Book recommendation that you would make to entrepreneurs or business professionals (Response: The Subtle Art of Not Giving a F*ck: A Counterintuitive Approach to Living a Good Life by Mark Manson)
- An innovative product or idea in the current e-commerce retail or tech landscape that you feel excited about (Response: ChatGPT)
- A business or productivity tool that you would recommend (Response: Slack, Life Balance)
- Another startup or business that is currently doing great things. (Response: Liquid Death, Athletic Brewing)
- A peer entrepreneur or business person whom you look up to or someone who inspires you (Response: Richard Branson (British Businessman) for creating an ecosystem of products)
- Best business advice you ever received.
(Response: Live kindly, have fun, avoid creating unnecessary enemies, not obsess over material pursuits like money, power, and status, and cherish your relationship with your mother.)
Sushant Misra of TrepTalks: Hey there entrepreneurs. My name is Sushant and welcome to Trep Talks. This is the show where I interview successful e commerce entrepreneurs, business executives, and thought leaders and ask them questions about their business story and also dive deep into some of the strategies and tactics that they’ve used to start and grow their businesses.
And today I’m really excited to welcome Umberto Lucchini to the show. Umberto is the founder and proprietor of Wolf Spirit Distillery. Wolf Spirit Distillery aims to share the best of independent premium spirits. And today I’m going to ask him to a few questions about his entrepreneur journey and some of the strategies and tactics that he has used to start to grow his business.
So thank you so much for joining me today at TripTalks Umberto really, really appreciate
Umberto Luchini of Wolf Spirit: your time. Thank you for having me. Thank you. Appreciate it.
Sushant Misra of TrepTalks: So I know we were just chatting a little bit and you mentioned that, you know, I mentioned, you know, a business, but you [00:01:00] have a few businesses. So can you share a little bit about your background, your story?
Have you always been an entrepreneur and how do you get started in this? As an entrepreneur and, uh, you know, the different businesses that you
Umberto Luchini of Wolf Spirit: are running right now. Yeah, let me take you through a roller coaster of a journey here. So I was born and raised in Italy. Um, I did my university in the UK in London.
And out of university, I, uh, I joined Ferrari, uh, in Formula 1, so, uh, doing sports marketing. I wasn’t driving cars, I wish. But, uh, doing sports marketing, uh, mainly handling, uh, two of their major sponsors, um, Philip Morris, i. e. Marlboro Cigarettes and Shell. And, um, I never smoked a cigarette, but I, I obviously enjoyed a lot of the brand, the marketing.
I spent, uh, nearly eight years. Uh, traveling the world and going to all the Formula One Grand Prix and, [00:02:00] uh, living, uh, as a first job, that was definitely a phenomenal experience. Uh, from there, I spent a couple of years at the Olympic Committee in Switzerland, working on the Sydney Olympics 2000. Again, mainly focused on brand management of their sponsors, Visa, uh, one of their big ones.
Um, and, um, and then obviously the, the Olympics themselves as a brand. And then. I, I got out of the, let’s say the sports marketing world, which was, um, a choice that I made mainly because of the ethics around it. And, uh, I, I think I’ll stop there and I’m sure a lot of your listeners will understand, but, um, and I moved back into pure business and I joined an Italian company called Campari.
Um, back in Italy, and, uh, after a year there, they, they, uh, they opened, uh, they asked me to come to, to go to America and open their marketing, well, their [00:03:00] actual office here in the U. S. They had bought a, um, a local brand, a vodka brand called Sky Vodka, so they wanted to use the platform here in the U. S. to, to expand the Italian portfolio, which Campari obviously is a big brand, Aperol was another one.
Um, and when I moved here in the early 2000, I, uh, I, I, I’m in San Francisco. I kind of fell in love with the culture of the place, uh, the entrepreneurship of America. And, uh, I never really moved back. I grew, I grew in the organization, became CMO. Uh, the business grew considerably. Uh, the portfolio expanded pretty much every, every spirits category.
Um, I created a tequila brand for them, uh, called Espolon. And, um, and then, uh, towards the end of 2016, I kind of made the jump in entrepreneurship. I, um, I had realized that what the success I [00:04:00] had achieved was also preventing me from doing what I liked, meaning obviously I did a good job on the brands and they promoted me to the point where I was pretty much managing people and not creating brands anymore.
And as much as I love people and it’s obviously a people’s Um, I, I really enjoy creating brands and I wasn’t able to do it anymore. So I, I decided to, to create my own spirits company, uh, an incubator, uh, which is purely set up to create brands, take them to a certain level of distribution and volume. And, and revenue, not necessarily profitability, but definitely get, get some visibility in terms of revenue and, um, and then move them to a bigger organization who can then take them to another level.
Uh, the, the purpose of our business Wolf Spirit is not to become the next [00:05:00] Diageo, Pernod Ricard or, or, uh, Anoush Bush, any of the big companies. It’s really incubate because all these big companies. Prefer to actually buy brands out there that have a track record that have a proposition that seems to be successful rather than spending resources internally, taking risks and trying to create brands.
Um, when, when you’re up out there as an entrepreneur, creating new things. You will take a lot more risks than if you’re a company quoted on the stock market. It’s just the nature of the business while you’re creating these things and taking risks. You may not realize it, you may realize it afterwards when you look back and you say, wow, I was close to going bankrupt.
But along the way, you’re actually bullish. And that’s the nature of the entrepreneurs. It’s that that that feeling of being able to do it. Against all odds. Um, and so that that is really the [00:06:00] purpose of Wolf Spirit. And I have two other companies that are adjacent, um, that are working one in the wine business and, uh, and one in the celebrity spirits business.
And the reason why they are separate from Wolf is. because of the, between distributor networks selling wine and spirits, you would have to double pretty much your sales force. And so rather than, then adding more head counts to wolf spirit, more overhead costs, I decided to keep them separate and, and lead the, and have proof of concept on those separately with two different brands.
very different positioning, but more tactical. Um, while Wolf Spirit is, is your full brand incubator that has pretty much any, every product in, in every category. And, uh, we have a sales team. We have, uh, it’s a lot more structured, like a company. The other two are more, [00:07:00] uh, things that I like to do on the side and see if they, if they can lead to some, some, uh, some successful brands ultimately.
Um, I I do all this for fun. Um, I I’m in a lucky position that in a certain sense, I I don’t need to obsess about work and money. So I really pick and choose the things to do. I’m at a phase in life where where I really want to enjoy the kind of work I do. And, uh, don’t even consider it work. There are moments where I’m wondering why am I doing it, but that’s life, so that’s fine.
But I, um, I would say overall, it’s been a phenomenal journey thus far. Well, I mean, I um…
Sushant Misra of TrepTalks: The ease with which you are talking about creating new brands is definitely different Because you know people are fortunate enough to create like one successful business or one brand [00:08:00] that is, you know Would be considered recognizable In the market, but I mean, it seems like you have created, um, more in a corporate situation, multiple brands.
And now in an entrepreneurial situation, you’re creating multiple businesses and, uh, and, and bringing them to market. And, you know, it seems like they’re successful also. So maybe I’ll talk to you a little bit about that more, because it seems like you do have a certain expertise in, in terms of creating brands.
Um, What what is what is your expertise?
Umberto Luchini of Wolf Spirit: And yeah,
Sushant Misra of TrepTalks: so what is what is the secret of creating a new brand? Well, I’m sure I’m sure so many people would want to know.
Umberto Luchini of Wolf Spirit: Yeah. Well, there’s actually The secret is it’s not really a secret There’s not a secret. If not, I would be definitely making a lot more money Selling this secret.
Now the the way I approach it. Um, I I don’t [00:09:00] have I don’t have like, uh, it, let’s put it this way. I, um, there’s, there’s one person. I mean, everybody quotes him quite a lot. Who’s, uh, Steve jobs and, and, uh, and I’m not big into, into quoting other people, entrepreneurs, although. Obviously, he was very successful and there’s a, there’s a lot of them out there.
But one of the things that struck me when I was younger that he said, and I fully embrace is that the consumer doesn’t know what he wants until he sees it. And um, And for me, that that’s ultimately the, the, the best marketer out there is the one who seduces consumers into something they didn’t know they wanted.
And, uh, and that’s the hardest thing a marketer can do, but it’s what I think a marketer should be. Um, the, if you’re a big organization, your best route [00:10:00] to revenue and profit is to put consumers in a room and ask them what they want. And, uh, and you will hear what you want, uh, you as well as a consumer. If they asked you what pair of shoes, running shoes, would you want to buy?
What do you want from a pair of running shoes? You will give certain criteria which are relevant to you. Um, but would you ever ask, I want a shoe brand that tells me that I can just do it, right? Uh, and that it’s purely driving me to wake up in the morning. When it’s dark and cold and I’ll still go out and do the run because it’s about me pushing myself, right?
You would never say that in a conversation, in a room surrounded by other strangers and pretzels on the table and, and, and, and somebody interviewing that is what marketers are supposed to do is create that emotional bond that a consumer doesn’t know that he needed and wanted he or she [00:11:00] obviously, so.
Where all the brands I create are really driven more, more by observing what culturally is happening in the world, in the market, in the country, in the industry, and trying to identify potential white spaces and needs and gaps that consumers may have and link them to the product that I have. And I’ll give you an example with the bourbon.
That we have, we have a bourbon, which is called puncher’s chance, which is the literal term is, uh, you’re, you’re in boxing is it’s the. It’s the, that, that punch that knocks out your opponent, even if you were the underdog, you just need one punch to make it. And there was a famous boxing fight in 1995 between Tyson and Buster Douglas, where Tyson was by far the favorite, totally hadn’t lost one fight.
And he was winning that whole fight. And then on the 10th round, uh, [00:12:00] Buster Douglas punched him once, knocked him down, changed the course of history. A lot of people, not a lot, a few people made a lot of money because they, the bets were all against him. But that for me was the inspiration to create a bourbon brand.
Now, why did I go that direction? Two reasons. One, America bourbon is an American product, purely American. You can only do bourbon in America, just like you can do champagne only in France. So bourbon is an American staple and the underdog, the, the, the concept of fighting for what you believing I have and believing that you have a shot at it.
Is so inherent American culture, especially business wise. Obviously, you know, all the immigrants who come in, they really believe they have one shot at this in this country more than in most other countries in the world. So I thought that is. That is a great metaphor for America and bourbon is American.
Now within the bourbon space, we are a new company. Uh, [00:13:00] a lot of the bourbon brands are legacy brands, meaning they have decades, if not centuries of history behind it. They have founders, they have families behind it. So to, to pretend that we are one of them would be totally fake. And and not authentic. So we are being very honest, and we are new to the game, and we are an underdog.
But again, a link to the concept of the puncher’s chance is literally the underdog having that shot at it and believing that they can succeed. So it also was a perfect metaphor for what we are trying to achieve, both as a company and as a brand as a brand in the whiskey category. So That gives you really an example how I look at society, how I look at the market and the country I’m in and the culture I’m working with.
And the consumers and then the product I have and trying to identify where is a gap where I can put myself in, tell a compelling story [00:14:00] that is true, authentic and consumers can even if they go and Google it can see that it’s reality and then hope there’s enough of them that they find it appealing. Um, and then it becomes a game of design, creativity and as you as a marketer, I’m used to it.
Uh, that. Everybody has an opinion. Uh, if I was a tech guy, if I was running, writing algorithms. Uh, the majority of people would have no clue what I would be doing and nobody would question me. But if you’re doing a packaging design or a campaign, everybody has an opinion. So you always end up hearing people like it or not.
But what I try to do is to do packaging and branding that stands out. You may not like it. I prefer to be hated than being indifferent. So I, I really take things a bit to the extreme so that I can stimulate a reaction from consumers. [00:15:00] Sometimes that reaction is not positive, totally fine. For everyone who doesn’t like you, there’s always going to be somebody who likes you.
And you can’t please everyone. Uh, pleasing everyone meaning, means that you’re washing so much then you’re becoming irrelevant. Definitely. I mean,
Sushant Misra of TrepTalks: it’s almost like, um, um, you know, you should be teaching a class on branding and creating, you know, this whole idea
Umberto Luchini of Wolf Spirit: of storytelling and for a new product. Um, should,
Sushant Misra of TrepTalks: I mean, I’ve heard, and I kind of agree, believe to a certain point that, you know, there’s, there’s this idea that.
You know, on the one side, there’s this idea that you should create, like, you know, the product should sell itself, right? You know, your product is so great. It’s so increment, not just incrementally different, but it’s so exponentially different, or, you know, it’s kind of one of a kind in the market or solving a problem that has never been solved [00:16:00] before that, you know, that is sufficient.
To, to, to sell it, you know, that, that brings brings in the customer and, and, you know, you can call that apple was kind of that product. It’s a, you know, new product, new category and everything. And on the other side, you know, I think you can also make an argument that.
Umberto Luchini of Wolf Spirit: You have
Sushant Misra of TrepTalks: a category of products and you have, you know, competing products in that category and you bring in a new product and it may not be the most superior product in that category.
But just because you are, you know, you can market that product, you can create that emotional story around that product or create a brand around that product that really resonates with the customers, you know, that will sell a lot more than another product. That’s probably. Um, better in quality or better in performance, uh, but but does not have that great marketing.
Do you do [00:17:00] you consider that to be the case that if you are a great marketer, if you can really tell that great story and create that emotional connection, you can actually sell a work product. Uh, more better than
Umberto Luchini of Wolf Spirit: actually a better product. Yes. Uh, I, I, I have to tell you this. I mean, ultimately there is a reality that this of the industry.
So alcohol heavily regulated 3 tier system. It’s hard to, to, to reach the final consumer, uh, because you have to go through these loops with, between retailer, excuse me, between retailer and distributor. So, um, I, but ultimately where the profit is made and where the value is generated is in the building, the brand above the product.
Uh, you, you need, you need the product, but I’ll tell you something. I mean, without naming brands, but there’s some billion [00:18:00] dollar valuation brands out there. If you blind taste consumers, they would think it’s a crap liquid. But if you tell them you’re drinking this brand, they will think it’s phenomenal.
And that is the pure result of marketing. And it’s not, and most of the time it’s not like a five year marketing. It’s like decades of marketing being behind it that have created. The aura around, you know, brands like, I don’t know, Johnny Walker, Jack Daniels, Guinness, uh, Apple, obviously we, we, we know all those brands that are valued at billions.
Their value sits inherently in the connection they have with consumers. True, there’s a value in the product, especially in the tech space, but in the spirits world, in the alcohol world, it’s really hard to have a liquid that is proprietary. So I worked for a company, which is a Campari, the recipe is secret.
It’s hard to. Replicate. But the reality is a lot of these bitters and Amaris around the [00:19:00] world and mainly coming from Europe, they all have their secret recipe. Fine. Thank you. Coca Cola has its secret recipe, but it’s not that is not going to make the difference that the where Coca Cola has destroyed Pepsi in most of the world.
It’s not in the secret in the drink liquid. They always say that if you drink Pepsi and Coke side by side, most consumers will probably prefer Pepsi, but why is Coke dominating and I again outside America special so the the I do think the marketing ultimately the branding and the the smart branding creates the value of a brand But you, you can’t start with that, assuming you will get there fast.
You, you will get there only if you cover your basis, and your basis are product, obviously pricing, distribution. And in the spirits business, it’s everything about distribution. Because I can have, there’s phenomenal brands out there. But if they can only sell in two or three states for whatever [00:20:00] reason, they can’t scale, uh, they will always remain small, small realities.
While if you have the power of distribution, Even a modest product, and I’ll name a brand that it’s kind of outside my category, but that, that whole hard seltzer world that exploded with white claw, truly, the, the product is average. I mean, ultimately it’s washed, washed spirit, uh, alcohol with some, uh, natural flavors, but because it fit perfectly in a moment.
Uh, of consumption and a need of a consumer with brilliant marketing, it exploded. Now, obviously, now it’s scaling back because the consumer is more, is moving on. And, and then it’s a question of how do you react to that, right? When you get, you get so much popularity that then all of a sudden. People are walking away because it’s not that popular anymore.
So there’s a lot of [00:21:00] industries, right? Electronic cars and everything that are experiencing that moment of excitement. Let’s see how long it is. I mean, we, we, two years ago, I could sell you an NFT for a million dollars. And it’s just a JPEG. Now, the value is probably a hundred bucks. So, it’s, that is always, that’s the beauty of the spirits business is that it, as much as it’s a bit more traditional and conservative, it’s also long, long term.
Um, our industry in the good days, it grows six to eight percent. In the bad days, it grows two or three percent. Uh, during the pandemic, we couldn’t, we couldn’t keep up all the demand. Uh, so, so, so back to your original question, I, I think you need to cover your basis, get, get your pricing, your product and your distribution sorted out.
Uh, being sure that you have access to your consumer and ideally fast track way, which nowadays [00:22:00] you can do a bit more thanks to all the social media out there and you don’t need to buy ads on TV to hope to get seen. It’s still expensive. It’s still cluttered, but you have more access. And then, and then you let the marketing kick in, and then you really hope that you’re creating an emotional bond.
And one thing I’m keen on when I create brands is identifying my, I call them my 1000 lovers. 1000 people, and they don’t need to be numerically 1000, but it gives you the scale. It’s that core set of consumers that love you, uh, because those won’t make your business financially viable at the beginning, but they will fast track your way to success.
You want to get the fans that go crazy. Brands like Vans, Converse, uh, even Nike back in the days. They had their core, they were so focused on, is it runners, is it skateboarders, is it surfers? You go to [00:23:00] a community, you get them excited about your brand, let them do a bit of the legwork. But it helps defining your brand because then what happens is that the rest of the consumers will buy into the lifestyle of the core lovers of your brand.
And the best example, I mean, you have Patagonia is a phenomenal example, right? I mean, who goes and hikes in Patagonia, a handful of people, but you’re buying into that world. But they started by really focusing on that kind of consumer. Um, and, and the same, I mean, North Face has done the same. I mean, we can name a lot of brands that have focused on specific core consumers that would then go to a broader or inspire a broader consumer target.
Lululemon and the yoga movement. It’s really started that way. And then all of a sudden the brand is for everyone and because they buy into that lifestyle. Uh, it’s in Italy. I’ll give you one last anecdote. [00:24:00] Nike faced a crisis, um, in the early 2000 because all these fathers. 50 and 60 year old men were wearing Nike dress or Nike, uh, sportswear.
And, and the kids were like, I’m not buying Nike because it’s like, my dad is buying Nike. That’s not cool. So they had to really reinvent. in certain Southern European markets because they became way too mainstream. So that’s where the market always has to monitor the performance of its brand, but the adoption of consumers, because we as consumers, and that’s all of us.
We like the power and the freedom of making our choices. When we buy things, we, if we fall in love with a brand, we love it. And we can adore it to death, but we need to know. That if that brand screws it up, we can walk away tomorrow and ask Bud Light and they will tell you what happens when the consumer walks away.
It can be very, very painful. [00:25:00]
Sushant Misra of TrepTalks: Definitely. Um, I mean, to me, it seems like you have been a lifelong, um, student of, you know, studying different brands and you know, how the market things and things like that. Um, what has been your process of, you know, um, how have you. Learned about marketing, branding, um, like, do you usually just read books?
Do you like, you know, anytime you see an interesting brand, like you just watch them closely, what they’re doing, how they’re marketing, what’s,
Umberto Luchini of Wolf Spirit: what story they’re telling. I, I was never good at school. So with that preface. I can definitely spend, I like to read books, but I use books more as an intellectual stimuli about human beings.
If I go back, I studied economics, but if I go back, and obviously this was in the 80s and 90s, a lot less flexibility, at [00:26:00] least in Europe. I would have probably started, studied either anthropology or psychology, mainly because I’m fascinated by human beings. and the irrationality of human beings. While in economics, you actually study the opposite.
It’s all about rational expectations and how consumers act rationally. So the, the, the way I, I, I honestly do it and, and it’s, It’s, it’s where I consider myself different from the vast majority of marketers is that I, I observe a lot and, uh, I question my, my thoughts and my beliefs cause constantly and um, and, but I, I spend a lot of time listening and observing and, uh, I, I don’t think when they asked me what’s the best brand you worked or developed, I always say it has to come.
It’s not there yet. Because I always think there’s always going to be consistently, that’s how nature is and how human beings are. [00:27:00] There’s always going to be something different, better maybe, but definitely different coming up consistently. And of all the places in the world where this is so dynamic, America is the place.
Because it’s consumer driven, and consumers like to try and spend money. And there’s a lot of them. While you go in Europe, you have 30 different realities. And it’s hard to scale, create scale when, when you want to start. It’s easier. That’s why the trends always start most of the time they start in America, they go through the UK and then eventually enter mainland Europe, the trends, the big brands, and so on.
Rarely, unless I would point probably to fashion and car making, uh, that things go the opposite direction, but for most consumer goods. America is still the driver, mainly because they have the right consumer and enough of them willing to spend the money. [00:28:00] Uh, China, you have massive consumer, but there’s limited cultural crossover for the moment.
But, uh, India is probably where I see the future a lot more because it’s kind of sitting in between and obviously population wise, no issue. And the economic growth ahead is obviously very big if they’ve sort out the infrastructure. Uh, and especially I can tell you on the Spirit side, it’s really messed up, but if they sort out the infrastructure, they are up for being a phenomenal market, um, to play, play.
Sushant Misra of TrepTalks: Definitely. Um, now I want to shift the conversation a little bit. to the business side itself. Of course, you know, um, you know, you’ve created the story and you know, um, that’s definitely important. But of course, at the end of the day, you need to have the
Umberto Luchini of Wolf Spirit: product. I have to sell. I have to sell.
Sushant Misra of TrepTalks: Yeah. Um, so can you share a little bit about when you started this business?
Was it, was this [00:29:00] something that you started on your own? Did you have co founders and what were some of the first things that you did? So your business, this is actually a distillery, right? Uh, first that you own, that you own, and can you share a little bit about what does a distillery do and, um, what products you’re creating and, um, and what’s like the business structure and business
Umberto Luchini of Wolf Spirit: model around it?
Yeah, so I, I partner with a friend of mine who’s a, a potato farmer in California, uh, who wanted to do a, um, a, a, he wanted to do a vodka for himself as a fun project. And when I left, when I left my, my corporate job, I, I thought I’ll, I’ll help you out in creating it. And, and then it just happened that I, I got so excited that I said, okay, maybe here’s the opportunity of creating the incubator I always wanted.
But, um, so we started together, he, he’s focused on potato, I, I, I’m focused on the spirit side. And, uh, and we decided to, to, [00:30:00] um, actually buy it. Well, rent a place and buy the equipment and, and, and create a distillery and set up a distillery reason being the equipment is not cheap. So you’re talking about net net.
In the end, you’re probably heading to a million dollar investment of equipment between stills and fermenters and all the equipment required. The, the space in itself is, uh, it used to be a laundromat, so we, we, we just converted a laundromat into a distillery. We went into Eugene, Oregon, so Pacific Northwest, which is affordable space wise.
Uh, I would never be able to do it in San Francisco financially, wouldn’t make sense. Um, and then, and then, so, and then the reason of being, of, of entering it with a distillery is that, You control your story is, is, is a lot more genuine and authentic when you’re actually producing the liquid rather than buying from the market [00:31:00] or buying just neutral grain spirits.
Um, it is, it is more expensive, but it is, uh, it is the way to go. If you want to have a long term genuine and control. Controlled your quality because you’re you’re developing it. It takes more time because you can easily buy alcohol in the market and then you just do, you know, a cheap bottle and then you’re done.
You go to a butler and in six months, your product can be in the market. It took us two years to get us up and running nearly two years. Um, but again, this gives us a whole different dimension, a whole different credibility with consumers for sure. But it’s a three tier system. So we do have to interact with distributors and retailers.
And they like to know that there’s, there’s actually effort put behind, that it’s not just somebody in a room creating a brand and then, and then, you know, because one day he’s there and the other day [00:32:00] he’s, he’s left. And while if you invested in, in capital, if you invested in a distillery, you’re in for the long haul.
If not, if not, it’s a painful, painful write off. So that’s, that’s really the reason now a distillery, it varies by what kind of product you have, but ultimately it is about you, you buy your grains, whatever that can be malt, um, barley, it can be barley, corn, wheat, you buy your grains already ready to be produced.
You ferment them for two to three days. And then you let them chill and then you start distilling them, taking all the impurities out and you distill as long as you want. I mean, vodka is famous for being distilled even 20 times if you want, but the more you distill, the more you take flavor out. So you want to balance it and then, and I’m simplifying the process, but basically after that you go two directions.
You [00:33:00] can go the vodka gin route. So it becomes pure alcohol, and then with gin you add botanicals, and then that’s the, obviously that’s the, the, the quality of it. Uh, or you start, you dump them in barrels, and you start aging them, and uh, and that becomes whiskey. Um, if, if it’s corn, wheat, uh, rye, it can become whiskey.
You know, obviously. If you, if you get the agave plant and you get the, then, then you go into the tequila mezcal world. And if you get sugar, you’re going in, in, in the rum world. Um, if you get grapes, you go, obviously you have wine in one end or you go into the cognac brandy world. So depending on your core ingredient, the equipment is similar.
Then you decide which way to go. Capital wise. Whiskey is the most intensive because, because of the rules for four years, you can’t sell a drop. Uh, so you’re, you have to, that’s why a lot of [00:34:00] whiskey. I get that. Oh, sorry, you again. Wow. Siri doesn’t Wow. Amanda Plan. Oh man. Canal, Panama. Sorry about that. Um, so the whiskey is the most expensive because you’re basically for four years, you’re not selling anything.
Um, and all this inventory, but your has value. That’s why a lot of the small whiskey distilleries, they always start with vodka and gin while they age their whiskey so that when their whiskey is ready. They, uh, they can start selling, but whiskey is also the, the, the most exciting category right now, together with tequila in America.
And, uh, and, and it’s the one where you can play with flavors a lot more because you can play with barrel. You can play with the ingredients. You can play with the alcohol proof. Um, and a combination of, and then you can finish in a different barrel to like sherry cask or rum cask. So, as a, if you’re a distiller, that’s where you can get as creative as you want.
[00:35:00] Um, vodka is the easiest, fastest, but consumers may tell you the most boring one. Um, the reality is you, vodka has a great advantage, has a great advantage, which is. You can drink anything. It’s pure alcohol, uh, in the end, and that’s why, for example, the espresso martini right now is a very popular cocktail because it’s not driven by martini, the drink as a concept is driven by the fact that consumers are liking more and more bitter flavors of which coffee is one.
And, uh, and obviously the espresso martini gives you a bit of buzz because it gives you the coffee, gives you a bit of cream and sweetness, but the buzz of vodka. But that’s, that’s one example. But obviously the margarita is the number one cocktail. You have old fashioned Manhattan driving the whiskey. So you, you see a lot of crossover between, between the, what consumers like as flavors and what business-wise makes sense.
[00:36:00] So, back to what we were planning to do, we decided to do vodka immediately fast, easy to produce, get us in the market, start to get, you know, your, your capital, working out and, uh, and getting your return on your capital. While in the meantime, I, I, I tasked myself to find. A bourbon that I could find a source of for bourbon and figure out how to produce bourbon and then look at a gin and then, um, and then now I’m looking at Irish whiskey and, um, and, and hopefully that should compliment pretty much all the portfolio.
Maybe I got it later. Mezcal is, is the other thought, but, uh, it’s also a small organization. So the short term was really focused on making, generating a bit of revenue. Vodka was the fastest way. Um, while I was trying to figure out how to, to get access to bourbon and start creating where I really wanted to play was in, in, in age spirits.
Sushant Misra of TrepTalks: Um, and, [00:37:00] and the key to this business really is distribution, right? Uh, did, did you get the, did you, um,
Umberto Luchini of Wolf Spirit: so I’ll take this. Yeah. To simplify it, it’s very simple in the U S. So you have thousands of suppliers, thousands of companies like mine, uh, even more in the beer world because the eco, the economies of scale or the barriers to entry, sorry, in the beer world are even lower.
But there’s thousands of people like me, there’s three main distributors in the US at a national level, and then there’s 230, no 250,000 retailers in the us. So that can sell alcohol and I’m talking about retailers. Then you add all the restaurants and bars. That number is easily multiplied by 3. So what you’re ending up is that you have massive quantity of suppliers.
A handful in the middle and then massive [00:38:00] up up there, right? Of retailers, then you talk about consumers, obviously, 250 million legal drinking age. So, you need to nail down those, those handful of distributors because that’s the only way you can access retailers and consumers. And that fortunately or unfortunately is based on relationships.
Um, because you, if you call them up on the phone, because you can’t have exclusivity. So that’s the law. So whoever is selling my vodka, for example, is also selling Smirnoff and Absolute. So they, and if you look at the profitability and the volume, I can’t compete with those ones, right? So how do I become a priority to a distributor?
That is the hardest part of my job is to create programs. Because there’s laws, obviously you can’t pay them. Uh, there’s no slotting fees allowed in the U. S. market. So the only way I can do it is creating programs, incentives, and a way that [00:39:00] a consumer pool is being generated so that I make their life easy.
Because they will never push my brand. They barely push the big brands. They, they are a logistic partner that shifts, moves cases from one warehouse to another, but without them, nothing happens because even e commerce needs to go through the three tier system. And that’s the law that was created after prohibition to prevent actually big companies dominating the market.
Because this, in a certain sense, allows me to play against the big companies. Because if I have that relationship and I build it, I can find my way in a Costco, in a Kroger, I can, I can get on the shelf. Next to brands that have been there and 10 times my size or 100 times my size. And that is feasible in America.
It’s not feasible in most of European countries, for example. So a lot of effort at the beginning for me is about really creating the programs. The incentives for the [00:40:00] distributor and being sure because the distributor will make a favor or do a favor and buy your product once, but if it doesn’t move, they’re not going to do it again.
So I need to be sure that then I have marketing programs to generate the pool because I can always get the first push. I won’t get the second push because I don’t have leverage for a second push and you have to think the financial risk. of the product sits with the distributor. Once I ship it to the distributor, I made my money.
That’s it. My, my revenue is made. Then it’s up to the distributor to figure out how to sell that product. And if a retailer defaults, shuts down, uh, the distributor has to figure out how to get its money back. I’m protected. So that’s why distributors don’t like to take too much inventory because. They’re un liable for it.
Ultimately, they can’t come back to me and say, oh, you need to get your product back. I’m not getting it back.
Sushant Misra of TrepTalks: So did you have to show them, [00:41:00] um, beforehand or, you know, on the front end that all the different kind of marketing and awareness programs that you’re absolutely. You already generating and what and what, what, what were those programs like?
What, what do you do? Was it mostly online? Was it. No,
Umberto Luchini of Wolf Spirit: no, no, no be be more. It’s starting to become a online irrelevant, but the majority is a retail programs. So, and they go both ways. They go incentive for retailers, incentive for consumers, and a kicker for the distributor. I’ll give you just an example.
Distributor gets, if you get, if you get me into 50 retailers in Southern California, and obviously needs to be verified, but you get me into 50 retailers. Every account, your distributor guy, your sales guy gets 20. The retailer, we’re gonna get him a 5 coupon. Sorry, a 5 discount on the price of the bottle for them.
And [00:42:00] then I can do a 5 IRC, instant rebate coupon on shelf for the consumer to redeem. So, the complexity, because this sounds manageable, just multiply by 50 with 50 different regulations. Because for example, coupons are not allowed in, uh, in Washington state and, uh, they’re not allowed in Texas, but they’re allowed in California.
They’re not allowed in New York. So MIR, so mail in rebates are allowed in New York. Uh, so, and the pricing is different and the incentives and so that’s where you, you really need to know the industry. If you don’t know the industry and you want to launch a spirits brand. My first. And only advice, get somebody who knows the industry with you, because you will never have enough time to learn about it.
And and be profitable and make money hire somebody who knows that’s why, uh, the rock Dwayne Johnson. Yes, he created a phenomenal [00:43:00] tequila, but he hired experts. Same with George Clooney and his tequila. Uh, Sammy Hager, I worked with him because, uh, Cabo Wabo was brought by my ex company. Uh, he had experts in the industry.
It’s not Sammy Hager going and visiting Costco and and. Deciding, deciding what deals to make. So, um, that, that really is the number one advice. If anybody wants to launch a spirit brand, hire somebody who knows what, what they’re doing. So,
Sushant Misra of TrepTalks: so you, so, you know, initially, you know, you build the relationship with distributors, your product, but on the shelf, if the consumer has never tested your product, uh, even if the packaging looks great, you know, it’s attractive and you have the program there, you know, the rebate discount program.
But they don’t know, they haven’t, they’ve never tasted it. How did you,
Umberto Luchini of Wolf Spirit: um,
Sushant Misra of TrepTalks: was it difficult initially?
Umberto Luchini of Wolf Spirit: Think of it this way, you have, you have a close relationship with distributor and retailer. [00:44:00] They have interest in moving the product just like I have. Because if not, it sits with them. So what you do is you work with them to be sure that the consumer gets visibility and is aware of your product.
So the hardest part is really to get the distributor wanting your product. Because then they have an interest in pushing it as well. So the best way at retail, on premise, meaning bars and restaurants, it’s a different game. But the best way you can do it is by sampling tasting. So you, if you go to a Safeway Vons, uh, your East coast, but you go to a whole foods, even, uh, you will always in any category, you have those little tasting sessions, right?
Occasionally where, Hey, try the cheese or try this wine. And that is the way you get consumers to try. That is one way. Second is if there’s flyers out there that they are public. St. Florida is famous for its flyer. So you get an ad on their flyer. There’s still a lot of consumers who read that. Email, uh, blast that they send [00:45:00] out.
You want to be at the forefront. You want to show that your brand is there. Hey, there’s a promo, uh, get punchers chance 5. It’s a new brand, new bourbon coming from Kentucky. You work on the branding and the messaging, but they will give you the tools. They’re not cheap sometimes, but they will give you the tool.
And then occasionally some states allow it, uh, BOGOs. They’re phenomenally expensive, but if you’re a new brand, buy one, get one free. It’s the best thing that you can do. It’s the best sampling. Because at least one bottle is gonna stay, uh, in somebody’s place, somebody’s house. Definitely.
Sushant Misra of TrepTalks: Um, I’m very curious.
What does your team look like right now?
Umberto Luchini of Wolf Spirit: The team? That’s a very good question. Thanks for asking because they deserve a lot of the credit here. So the team is based, uh, with most of the team is sales. So we have, uh, five full time salespeople and another five brokers, uh, that handle a few other brands, uh, none [00:46:00] in the same categories of ours, but they’re not exclusive.
And they cover, they cover 80% of the volume of the U. S. market, uh, and geographically, they cover 50% of the states. But, you know, when you do California, Texas, Florida, New York, you’re covering a lot of, a lot of ground with just four states. Um, then we have, uh, three accounting, um, between accounting, logistics, operations.
Three people at the distillery running the distillery between gin and vodka. Um, and then marketing, uh, I finally got somebody to help me, but it used to be a one man show, which is fine. Um, and, uh, and then, uh, a finance and, uh, a finance person to oversee the whole thing. And, uh, so the concept is lean and mean, of course.
The, what I decided together with my business partner to invest in is in people [00:47:00] who knew the industry very well. So relatively senior who don’t need a job. Um, I knew most of them. And so that would be okay coming in for equity and a base salary that was, wasn’t bankrolling the company. And that allowed me to really focus on the marketing without having to worry.
Do they know what they’re doing? They know what they’re doing. They’re experts. And, and they want to do it for fun because they don’t need a job, but they, they like the kick. You want to, you want to kick her. We’re all in it eventually to make some money. We all have different objectives. Again, for me, it’s a lot to, I like to make money to create new businesses and opportunities for other people to benefit.
It’s not for me personally. Uh, but other people, obviously they may want to have a, I don’t know, another house move somewhere else, whoever, but the team is lean and mean on purpose. Um, I have to say there’s going to be a point. I mean, we, we are raising a bit of [00:48:00] money now purely to hire more salespeople, uh, because what, what you will realize is that you don’t need our salespeople can’t visit account and sell.
They can only visit merchandise, helping the merchandise and, and be sure that things are happening properly, but they, they are not legally allowed to sell. So we don’t need thousands of salespeople like distributors have, but the, if we have a few more, they can, they can then work with the distributor in the market and being sure that we are top of mind because that, that is the priority.
Um, then, then we’ll see how we scale the business. I mean, the distillery. I don’t want to expand too much. Uh, we have, uh, we are, we are in a joint venture for the bourbon distillery. So we have a few people there dedicated to our brands. Um, but, and I am looking into doing something similar in the Irish whiskey world so that we have a distillery in Dublin that, that we [00:49:00] can play with a bit and a few people dedicated there.
But it’s the fine balance between avoiding becoming too big, where you have to really raise serious money. And then it becomes a job that is goes back to what I used to do in my previous corporate. Which I don’t want to do. And, uh, and that’s how we created this brand incubator was purely to, to get to a point where the brands are going to move out, not, not as scaled up.
That sounds great. Um,
Sushant Misra of TrepTalks: I mean, to me, it seems like, you know, you, you, you’re so experienced and you brought experienced people, everything. I mean, the way you’re describing it, like, was pretty smooth, but, you know, there’s always setback. There’s always mistake and failure. Can you share a little, you know, maybe,
Umberto Luchini of Wolf Spirit: maybe a big one?
I know a few of the setbacks. Yeah. Yeah, for sure. Well, the first one was just believing that I could do a lot by myself. Yeah. And, uh, and I’m a marketer, I’m not a salesperson. And that was the first setback is that I couldn’t [00:50:00] get enough distribution to keep, to keep the lights on basically paying the bills.
So that’s where I reduced both me and my partner, business partner. We reduced our equity and brought in. a few senior people. That’s the learning is like, okay, we, let’s get less greedy on what we want to own and bring in some guys who can really help us because if not, we’re going to shut down. That was the first learning.
And the second one, which is not a learning we all knew getting into it, but it really came up. As we grew the business, as we’re growing the business is, is cash flow and, um, the, the challenges that small organizations, we have good line of credits and all that, but it’s because of the three tier system, when I buy the glass, I have to pay now and I will start selling that product in six months.
And, and when you buy glass, you don’t buy a hundred bottles you buy at least. 10, 000 [00:51:00] bottles and if every bottle is 1. 50 You can easily make the calculation so, um, and that is just glass. I’m not talking about cap, label, the case, the shipping and all that. So that kills you quite a lot because by the time you get the revenue, you’ve already spent that money easily.
And, uh, and that was a big learning in the last year and a half. We, we, we, we were growing so fast on the bourbon. We had to build some inventory. Because out of stock is really hurtful for our industry for our business. So we we bought Nearly half a million of inventory, but that that money wasn’t available.
We, we, we, we weren’t making that money yet. So, uh, that’s where we, we felt very stretched financially. So the, again, I’m saying nothing new. I mean, a lot of your listeners will understand, but when, when you hear cash is king, that it is absolutely king. If you’re, if you’re a public company, [00:52:00] you have your way to, to debt.
But if you’re a startup, there’s only so much that you can take. And it’s, and then you’re, you’re kind of scratch and, and it’s sad because sometimes you have a very strong proposition, you know, you can be successful and it’s purely the cashflow that is squeezing you and preventing you to grow. Yeah, that lesson
Sushant Misra of TrepTalks: has been repeated.
Uh, quite a few times when I’ve spoken with other entrepreneurs as well. Um, now I’m going to move on to our rapid fire segment in this segment. I’m going to ask you a few quick questions and you have to answer them maybe in a word or a sentence or so. So the first question is one book recommendation for entrepreneurs.
Um, and why?
Umberto Luchini of Wolf Spirit: Wow. Um, it’s not just.
Yeah, this is gonna sound very weird, um, but it is who I am, [00:53:00] um, I, I’m just, I just wanna, heh, because, uh, there’s a book out there, um, which is called The Subtle Art of Not Giving a Fuck. Yeah. And the, this goes beyond work, uh, but it kind of always, what I always appreciated about that and I, I put it on the business side is, um, is the fact that again, it’s, it’s not about, it’s obsessing, um, doesn’t get you out of the, the, the, The, if you’re in a bind or if you’re in a moment where it’s like all dark and you can’t figure it out, it’s not obsessing about it.
You find a solution is actually taking a step back and, and look at it a bit more like holistically. And, uh, and then you probably are able to connect the dots. And, um, it really helped me in balancing. [00:54:00] Over all your life. So the, the, the key message, if you’re an entrepreneur, what I realized is that there’s all those barriers that for good or for bad corporate world creates, meaning the office space, the nine to five schedule, whatever that is, uh, meetings, um, holidays or vacation time, all that, that society and corporate world creates, It’s also a protection to your personal life because you’re, it’s easier to, to segment the two.
You’re an entrepreneur, that protection goes away. Your personal life can become your full time job and vice versa. So the, this is where I, as an entrepreneur, I found it very precious because it kind of balanced me without having to obsess because if not, it becomes a 24 seven obsession and And it’s not worth it.
It’s not worth it. You live only once in this [00:55:00] configuration at least for
Sushant Misra of TrepTalks: sure for sure Um an innovative product or idea in the current e commerce retail or tech landscape that you feel excited about
Umberto Luchini of Wolf Spirit: that I feel excited about Yeah, a
Sushant Misra of TrepTalks: product idea, Kren,
Umberto Luchini of Wolf Spirit: that you, that you’re excited about. Oh, I am excited.
I’m definitely excited about everything that is going on in the AI space. Uh, is it chat, GPT or everything? I, I’m a big fan of that because I feel I have a bit more control of the creativity. Um, no technology out there is perfect, obviously constantly evolving. But the fact that I can, I can write a back label copy for any brand without having to ask.
The agency to do it and get a copywriter and so on play around. It, it, it excites me. I’m sure there’s, it freaks out a lot of agencies, but ultimately, when I have to do some cool design, I’m not going to use an AI tool. Still, I need the human touch, but on a lot of things, it makes it so much easier and faster for [00:56:00] us.
So I’m excited about that. I mean, even for
Sushant Misra of TrepTalks: design, I think. It could be, you know, the AI can help you get started. You know, it can give, probably give you so many different variations and things like that.
Umberto Luchini of Wolf Spirit: I think that’s exactly the point. Sometimes the hardest is always get over that first roadblock. Uh, they call it the white sheet, right?
Having a blank sheet of paper and you have to start that sometimes it’s a block, right? And AI can help you go over that. And then you create the human element of it.
Sushant Misra of TrepTalks: Definitely. Um, a business or productivity tools or software that you would recommend or a productivity
Umberto Luchini of Wolf Spirit: tip.
Wow. Um, I like Slack. I really enjoy its facility and it’s a good blend between a business and a creative tool. I like to limit the people I interact with, but it really puts me in a whole [00:57:00] different world. So that I really enjoy because I’m not a creative person per se as a designer. But I like to have that direct link and, uh, and Slack for me works, works the best.
And then in terms of productivity in general, I, uh, I really champion balance your life, balance it. I mean, whatever your priorities are, they can’t be your whole life. I have a very thriving sports life, competitive athlete, and, uh, I, even at my age, I’m still competing, uh, strongly and it’s, it’s so refreshing to know that there’s a, there’s an escape, uh, opportunity doing something else and you want to have that because you’ll be 100% more productive if you, if you take a break, you have systematic breaks in that way.
that engage your body and not necessarily your mind. What is, what is your sport? Oh, I do a lot of, uh, ultra [00:58:00] marathons and, uh, yeah, yeah. So long, long, long graces where I have to use, I have a plenty of time to think, uh, yeah, yeah, it’s, I’ve always done it, but it really helps in grounding me. Plus it makes you a more humble person, which honestly, it’s.
For a marketer, humility is the hardest thing to find because marketers do get a bit arrogant, which is fine. Some of them are very successful, but, but if you’re humble, that’s where you will see the opportunities and learn and may and create the next phenomenal brand. It’s not by you.
Sushant Misra of TrepTalks: Yeah, yeah, for sure.
Are you did you risk or did you run David Goggins
Umberto Luchini of Wolf Spirit: ever? No, I follow him. Uh, I, I’ve done 100 milers. Um, I haven’t done as crazy as he did, but I definitely embraced a lot of his philosophy. Yeah, um,
Sushant Misra of TrepTalks: a startup or business that you [00:59:00] think is currently doing
Umberto Luchini of Wolf Spirit: great things. That’s a very good question. Um, I think because obviously it’s around my world, I think companies like liquid death.
Are going to do phenomenally well, um, a company I, and I don’t know if you know the brand liquid death, but it’s water in a can Which you think Why they are a 70 million dollar business now Well, and it was started by a friend of mine and another of his colleagues and they went totally They said hey, we’re gonna do something ridiculous, but purely let’s see if the consumer is there And I, I think they will do great because they, they have the right mentality.
Um, and, and, and they are just a U. S. phenomenon right now. And the world is out there. And water is the ultimate necessity for a human being. You can go five days without eating. You can’t go five days without [01:00:00] drinking. And you know, access to water is the number one issue in all the world. So I, I think they, they’re also in the right, in the right space.
Yeah. I mean, it’s, uh,
Sushant Misra of TrepTalks: It is, it is a, you know, I think people take water for granted for sure, like drinking water and it’s, it’s, it’s not unlimited.
Umberto Luchini of Wolf Spirit: Um, and the other one I’ll mention it. They need a, they need a good cheer is athletic brewing. Athletic brewing is a non alcoholic beer that is embracing the sports community.
I find them at all my races and events. And it has finally brought a flavorful beer without the alcohol and uh, and you can, it’s socially acceptable finally to have a drink with your buddies, but not taking the alcohol either because you’re training sport or you’re driving and so on and you don’t look awkward and they’ve done a phenomenal job and both on the product and the marketing.
Sushant Misra of TrepTalks: peer entrepreneur or business person [01:01:00] whom you look up to or someone who inspires
Umberto Luchini of Wolf Spirit: you. I, I’ve always been a big fan of Richard Branson, um, because he, he, in a certain sense, he created the Disney world. Uh, because I, I, it’s hard for me to say Walt Disney as a, as somebody that I looked up to. But Richard Branson created.
A world. Uh, and then there’s products around it. Some have succeeded, some have failed. But you buy into that world. And Disney is the same. You buy into the Disney world. And then you decide, you know, are you going to theme park or you’re watching TV or whatever. And, and that’s the hardest thing for a marketer or a brand creator is to create something that is purely emotional, not tied to a product.
And uh, and that is incredibly hard. So I look at Richard Branson and it’s incredible. I mean, he. He, he’s failed in some businesses, but Virgin is just such a cool brand and you [01:02:00] know, you’re going to get that experience, whatever is it a ship, is it an airplane or is it a drink?
Sushant Misra of TrepTalks: Definitely. Um, I’ll ask you, uh, uh, your comments because you know, you’re, you’re, um, and I know they’re kind of running, I mean, we’re over time.
Uh, but what did you. What do you think about the latest, you know, and I think you mentioned also the whole Anheuser Busch fiasco with the, you know, marketing and also what, what happened recently with Target, you know, um, do you think it’s, um, the marketers gone wild or do you think, uh, you know, what are your thoughts?
Umberto Luchini of Wolf Spirit: It’s, it’s, it’s, it’s tricky, um, because I, I could definitely see why the marketers did it. Um, and I can definitely see how they were a bit arrogant about it. Um, how you can fall in the [01:03:00] trap of saying we’re doing something that we feel is good because objectively there was nothing wrong with it. Um, and it’s a local thing.
It’s a small thing and it shouldn’t blow. I mean, there shouldn’t be any issues. Um, I think the mistake is not in what they’ve done it. what they’ve done at all. Actually, I don’t think that I have a brand in my portfolio that is purely targeted at the LGBT community. Um, the mistake has been in the reaction to it.
And, and there’s a lot of backstories out there of, you know, Tylenol back in the days. I mean, brands that had product issues mainly, but sometimes have, they made marketing mistakes and the way you react to them says more than the mistake itself. And I think where they’re missing it and they’re still paying a heavy price.
Um, is, is in the way they reacted to it and they, they, they, [01:04:00] they botched it. Now, if you ask me, what would you have done? I don’t know yet. I have enough issues on my end, but the, their number, their other issue is that they are in the wrong segment within beer. So they are fighting an uphill battle. They would have been fighting it anyway.
And it’s such an easy product to, to, uh, substitute. And, um, It, there’s other categories where it would have been harder. There’s been fashion brands. I know one Italian one made a lot of scandal many years ago. Benetton, when they started advertising like nuns kissing each other and all that stuff, they had backlash, but they’re a fashion brand.
So, you know, you don’t need it, but it’s fashion. So it, the, the, the substitute, the way you can substitute those brands, it’s harder. Honestly, Bud Light, uh, next, next to it, there’s Coors Light. [01:05:00] So, so it’s like, I’m pissed off at them. I just have to just move five feet and I have all the choices I want. So they also have that problem.
And, and, um, what is still shocking to me is how far down they’ve gone. That surprised me, and that is, honestly, that is also the way social media nowadays is able to amplify things. And I’m still navigating that world as well, where if something goes viral in the good way, you’re a superstar. If it goes bad, if it goes viral in the bad way, you become devil.
And that I do think, it’s, it’s… It’s unfair in a certain sense on, on brands and companies, but you have to live with it and it’s, it’s the nature of the beast right now. Um, but they are, they’re in a serious situation. That’s for sure.
Sushant Misra of TrepTalks: Maybe, I mean, I, I think as you were describing it, maybe, maybe the one [01:06:00] approach could have been to just create another product line that’s targeted for the LGBT community.
So that, and, you know, maybe it was the same product, but a different name, different, uh, packaging. And so they’re not taking away from one segment because it to me almost feels like, you know, The product that was, you know, owned by a certain segment in a way, you know, segment 12 that, you know, that’s their product.
They kind of took that away and… You know, that this belongs to something. Yeah,
Umberto Luchini of Wolf Spirit: they, they, if you remember from the moment there was the Kid Rock video, because that exploded the whole thing. Uh, from the moment the Kid Rock video started to, let’s say, go viral to the moment that they sent a press statement and they started doing something.
There were a couple of days that went through and I think they lost, they lost the conversation there. They they you need to lead the conversation, which is a scary thing because you’re being attacked. So it’s hard to you. You go naturally in defense [01:07:00] mode, but they always say the best form of defense or attack.
I’m sorry of defense is the attack. And in this case. They should have taken the lead in the conversation and not let everybody else take that lead because then they lost the argument. They were just being reactive rather than proactive. So those few days, that is the big learning for me is that you see this is falling off, take the lead, embrace it and react to it.
Because if not, somebody else is going to do the talking for you and then you have zero control of the dialogue.
Sushant Misra of TrepTalks: Definitely. Final question. Best business advice you ever received or you would give to other entrepreneurs?
Umberto Luchini of Wolf Spirit: This one will make you smile. But if in the corporate, so for everyone who’s in corporate.
And has big presentation to the board, CEO, whoever my first boss always used to tell me, well, don’t freak out because your CEO goes to the toilet. Just like you just imagine him on a toilet [01:08:00] seat and you’ll realize everything is fine. So that’s an advice for, for, uh, for that and, uh, as, as an entrepreneur or in general, uh, life advice is, uh, yeah.
is you live only once really in this configuration. Be sure that you’re kind to everyone, uh, that you don’t create enemies that you’re aware of, but ultimately have fun, have fun because you don’t want to look back and regret that time. And, uh, don’t, don’t obsess too much about money, power, and status.
Because you won’t take those with you in the grave, um, and, uh, and be kind to your mom for sure.
Sushant Misra of TrepTalks: Great advice. Great advice. Um, well, Umberto, thank you so much. Really appreciate it. Thank you so much for being so generous with your time and for so generously sharing your, um, you know, story and also business lessons.
Uh, so really, really appreciate it. Uh, again, thank you [01:09:00] enough and yeah, definitely wish you and your business all the best and uh, yeah. Thank you so much again.
Umberto Luchini of Wolf Spirit: Yeah. Thank you for having me. I loved it. Thank you.
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