On this special episode of the “VinePair Podcast,” host Joanna Sciarrino speaks with Alisa Marie Beyer, CEO of Spa Girl Cocktails — a line of canned cocktails beloved by women with active lifestyles. With so many ready-to-drink options on supermarket and liquor store shelves, how does one ensure the success of their brand?
Beyer discloses the five steps any budding entrepreneur should follow upon venturing into the alcohol beverage industry. From connecting with consumers to ensuring a stream of revenue, discover more invaluable tips from one of California’s leading premium vodka RTD brands.
Tune in to learn more.
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Joanna Sciarrino: From VinePair’s New York City headquarters, I’m Joanna Sciarrino, and this is a “VinePair Podcast,” special episode. Today, I am joined by Alisa Marie Beyer, CEO of Spa Girl Cocktails, a line of premium canned vodka cocktails. Alisa, thank you for joining me.
Alisa Marie Beyer: Oh my gosh. Thank you, Joanna. I’m so excited to be here.
J: I’m so excited to have you and to get to chat. I thought we could kick it off with a little bit about your background and your career history and how you got to Spa Girl.
A: Yeah, absolutely. I’m joining you all from sunny San Diego. Normally it’s sunny, but it’s actually raining today. But it’s part of how this whole story came about. From a career perspective, I guess you would just say that I am an entrepreneur and come from a long line of entrepreneurs. I started my first company in my early to mid 20s and was fortunate to love it. I built and sold five different companies and the thread through all of them, which really ties into Spa Girl Cocktails and what led me here, is the fact that all my companies were focused on products for women. So whether that’s a beauty product or it was swimsuit companies for Sports Illustrated, whatever it was, it always evolved around building something that women really wanted. That, and connecting in those brand communities.
J: Amazing. We can get into that a little bit later, but before we jump into Spa Girl and your experience working with the brand, maybe you can share with us the things you wish you knew before you bought a vodka company, coming from fashion and beauty.
A: I always say that I went from lipstick to liquor, and I obviously was drinking way too much when I actually made the decision, actually. There are a lot of things I can tell you about this industry. I built different companies for women, but this is a special business. The other day, I was talking with the big strategist and they said, “Well, how have you done this? How have you run this company?” I run it on caffeine, chaos, and cuss words. Here are my top five that I really wish I’d known and didn’t. One, cash is king, but cash flow in this business is queen. You’ll run out of money faster in liquor than anything. You’re going to turn around and be like, “Wow, where’d that million go?” It’s gone really, really fast. It’s a very expensive, high bar of entry. It’s very difficult to succeed. The second one is that red tape is everywhere, so you better bury your scissors because I had never been in an industry like that. I’d heard about it. I didn’t really realize that you are regulated constantly.
J: Left and right.
A: Oh my goodness, this is crazy. I started my career as a crisis communications manager, so I really didn’t use that much until I acquired this company. That’s the third thing. And I’m really glad I’m a crisis manager. So I would say running this business in liquor is inherently chaotic on a daily basis. You need to be a great chaos coordinator, and I think it takes a very high tolerance for extreme uncertainty, which doesn’t happen in a lot of businesses. I’d say that in my first six to eight months, I woke up every day to a number of crises that I had no idea were even coming. Those are different from other companies. The other thing is, in this business, sales fixes everything, and you need to just stop talking and start doing. What I would tell people about the industry is that you have a very small window. When you get on the shelf, people think getting on is the hard part, but selling through is what’s hard. That window will shut so fast, you don’t even know what is happening. You’ll be off the shelves, and you’ll be gone. So there’s a pace to the chaos and it’s unlike anything I’ve ever seen. The fifth one is that success is super temporary. I guess I would say success is temporary luck, and the weak will absolutely get eaten in this market. You have to hustle in this business like you can’t imagine, and it never ends. That’s probably the hardest part, a burnout for the team, because you think you get the contract, you get on the shelf, or you get the next product. It just doesn’t end. The hurdles just keep going. That’s something I wish I knew. It’s not easy. But it’s fun. The last thing I would tell you guys, and we could dive into this at any point that you think it’s interesting for the listeners. What I found most surprising is that innovation is not seen as sexy. You will hear “no” a lot. Compared to beauty and fashion and other industries I’ve come out of, where innovation is everything, you’ll hear “no” a lot. And we heard “no” a lot. That’s not the right product, nobody wants that, that’s too much, it’s too innovative, it’s off trend. That was really surprising to me because other industries thrive on innovation. I think we’re getting there. But we’re a pretty old fashioned industry. It’s pretty old school.
J: Those are all very interesting. To the last point of the last one, why do you think that is? Is it a matter of nailing what you know works and rolling with that? Why do you think there’s a resistance to innovation?
A: First, there’s a total lack of focus on the consumer. We’re talking about strategy or starting to go to retailers, I start out not talking about the product, I start talking about our consumer and their consumer and everything we know about them. People are always surprised. They’re asking, “how do you know about that,” or “how do you build that brand community?” There’s not two-way communication with the consumer in a way that you see in other industries. And it’s because of the three-tier distribution system and the fact that you’re so far removed from your consumer. So as a spirits manufacturer, you manufacture, you distill, and you sell it to your distributor. The distributor sells it to the retail, the retailer gets it to the consumer. That’s how it’s supposed to be set up. But you’re really far from your source. The three-tier system creates a barrier to innovation because you have to sell it to a lot of different parts of the market to get it on shelves.
J: Sure. That’s something that I don’t think a lot of people consider. In one of our discussions before this interview, we were talking about the consumer and how you’ve used your unique experience in beauty and fashion to know who the Spa Girl consumer is in a way that liquor brands haven’t been able to yet. I was wondering if you could speak a little bit more to that, because I thought it was really interesting.
A: I think what separates our company is that we really understood who she was and redeveloped and repackaged the brand for that. We had a woman who was basically motivated by two things: She’s got an active lifestyle, and she’s what we call affluent-edgy. I’ll give you some comparison brands: We track really well to the yoga brand Lululemon. We’re really similar. They have slightly younger consumers, but the majority of their sales represent ours. What that means is that she does a lot of team sports like tennis and yoga. She’s very social and she’s with her girlfriends and she’s not necessarily going to go out. She’s usually female-oriented and she likes nice things. She’ll shop at Target and Nordstrom. So we knew quite a bit about her. She’s also super health-conscious. She wants to drink, but she’s really concerned with sugar and carbs. Her number one issue is bloating from drinking too much. Our no guilt, no bloat really worked. We built a community of about 35,000 women that have opted in, and we talk to them a lot and we’ve got events that we do with them and we really work to build a community. I don’t target her. I really just connect with her and with like-minded brands. From that, she’s really led everything. We just started off with Cucumber and Pear, and we now have Peach in our non-carbonated category, and then we have our three sparklings, Mango, Strawberry and Pineapple. Our consumers are the ones that said, this is what we want. These are the flavors. They want the high ABV. That was the thing that really stuck out where we had an innovation problem. Because we were like, no, no, no, our consumer wants high ABV. Less liquid, less calories, less sugar, but a substantial buzz. Now the market’s going, that really is what everyone wants.
J: We’ve got our hard seltzer surges and whatnot. What is the ABV on Spa Girl?
A: We have the highest ABV for ready-to-drink vodka cocktails. It’s 16.5 percent in our 200 mL non-carbonated can. It’s 11.5 percent in our carbonated ones. We’re a little can that packs a punch.
J: I want to backtrack a little bit. You spoke about your experience in crisis management, and it’s really important to note that when you came across a Spa Girl, it was at a very interesting moment right before Covid happened. And so you definitely had to deal with a lot of crisis management in that time. Can you share a little bit about what the company was like when you bought it and how you’ve gone about rebranding it? And then how that had to change over the course of the past almost two years?
A: I actually just saw a quote from one of the executives who said this is just not normal times. That’s true, and that’s the reality. I acquired the company and got it recapitalized in October 2019. Karen Haines is the founder of the company; she’s just utterly amazing. She’s probably got the best palate of anyone I’ve ever met in my life. But the company didn’t really have any sales or real distribution. It was very, very small. It was a startup or start over from ground zero. We signed with Southern Glazer and did a national agreement with them. We decided to roll out in three or four states. We did our first funding round, which was about $2.5 million on a pre-seed on February 2. Then, everything shut down for Covid on the 4th in California. We had about 75 hotels, resorts and spas, and we were rolling out in Vegas. It was just all great. Then, Covid hit. Like everyone, I thought it was going to be about two weeks.
J: Right, we all did.
A: And that felt really overwhelming. I have an amazing group of investors. First, we say that we pivoted until we puked. You can’t panic; you have to keep pivoting. We kept trying to learn what worked and what didn’t work. Sometimes, it would work. Sometimes, it wouldn’t. But we’re going on two years of this now. Every way that a startup brand sells a bottle or a can ended on that day. There’s no liquid to lips or in-store tastings. Which I think really goes to the brand and my team and what we’ve been able to do because it has been extraordinary. My background as a crisis communications manager, although I did not think that was going to be required at all, was probably my best asset, to be honest.
J: Of course. We were discussing that a big part of your brand strategy was on premise and how that had to shift completely and how you really intended to retail 750-milliliter bottles. And that shifted completely as well.
A: It sounds like my business plan went out the window.
J: It’s not funny. I’m sorry.
A: No, it is funny. One of the reasons I love business is because I’m an optimist, but I carry a raincoat. I’m always waiting for the train to run me over. I think it makes you a good entrepreneur and a good CEO to be somewhat paranoid. So I assume that things aren’t going to go in the right direction, and you have to not panic. But I didn’t anticipate this. I think you’re right, Joanna. It was a 750-milliliter business, and what no one saw coming in, because there weren’t that many of us in RTD at that time, is that 750ml bottles just died on the vine. So we switched from on-premise, which was dead. Then, we got really great authorizations in California. We’re in about 600 locations like Whole Foods, Ralphs, Vons, Pavilions, Safeway, CVS. We really worked hard to get in there. Then the bottles don’t move because everybody wants a can. And then there’s a can shortage.
J: Maybe you can share a little bit more about that, I don’t know if it was foresight or just good luck like you said, but you pre-bought some cans.
A: Yeah, a little bit of everything. I will tell you up until the shortage, the beauty of this industry producing is way easier than a lot of other businesses like beauty. But I thought, why don’t we just stockpile all these cans? What happens if we run out of cans? It’s almost like a doomsday prepper mentality. So we bought 75,000 cases worth of cans. And boy, am I really lucky we did, because if we didn’t we probably would be out of business. There were just no cans to be had at the time. So we switched that. Fortunately, we had capital and then we were able to manufacture all the cans, and then we just started hustling to remove the 750-milliliter bottles and get the cans on the shelf. So we started the year thinking that 100 percent of our business would be 750-milliliter bottles. We ended 2020 about 50-50, and this year, it’ll be about 80-20. We’ll be totally out of 750-milliliter bottles by the end of the year, and will be 100 percent 200-milliliter cans in 2022. That just goes to show you how brutal it was. The consumer and the retailers just said, “we’re not buying 750-milliliters, we’re not doing it.” The cans are just what the consumer wants in a ready-to-drink vodka cocktail.
J: We’ve certainly found that ourselves as well. I know we’ve discussed a few of the hurdles that you’ve encountered. But I was also wondering if we could chat a little bit about the supply chain shortage and what that’s done in terms of your own expenses on your end and how that affects your prices.
A: I love numbers, and people want to understand that. So let’s say the first year, we had two months in the market. We barely did anything. In 2020, we did a little under 20,000 cases. This year, we doubled it to 40,000 cases. actually a little bit more than double. So it’s pretty significant growth. I was really lucky because I pre-purchased and I used a manufacturer because I had capital, which goes to my biggest advice to everybody. Make sure you have capital getting into this business. Manufacturers assume you’re going to sell so that you get your best gross margins and minimum order quantities, because that is a big problem in this business. For 2021, I was in really good shape. The question is 2022. I would say that, based on what my supplier’s communications have been, it looks like they’re almost going to be doubling the cost of goods. That’s not just for me, it’s for almost everybody, since trucking and all kinds of fees are going up. It’s probably one of the biggest questions in our industry. A lot of the larger companies are lucky because they’ve in-housed their production for bottles, doing it as part of their overall portfolio. For those of us on the outside, it’s going to be harder. Minimums are going to go up for everybody. Pricing is going to go up. Lead times are extending by three to four months. Our strategy is that we are going to put a stake in the ground and say, “this is how many cases we’re going to move next year,” which we’re targeting about 85,000. That’s what we’re going to manufacture, and then we’re going to stick to it. Rather than larger companies that can continue, there will just be limitations until this supply chain evens out a bit.
J: Interesting. Maybe this is a part of this conversation, 2022 aside, but what comes next for continuing the momentum with Spa Girl?
A: There are a couple of things. We have a pretty aggressive roadmap in terms of what we want to do for product innovation. So we’ve got a whole part of our business called Fresh Infusions. Let’s just say the next big mountain for us as an industry is looking at infusions into our cocktails or any of our spirited drinks. Whether that’s CBD, whether it’s immunity, whether it’s skin enhancing, there’s like a whole portfolio that we’re going down as a company. We’ll see how fast and fierce we can innovate. We’re only in the state of California right now. So those numbers you’re talking about are pretty substantial because they’re in our state. We’re rolling out in Nevada and Nashville. So we’ve got some of that. But our strategy is to go deep and not wide. We are already in conversations with strategics, whether that’s an investment towards a pathway to acquisition or it’s a full acquisition. I’d always had the intention, based on understanding the economics of it, that we would create a brand community that was really extraordinary which is very difficult to do inside a large multinational. And that we would then be able to be a beautiful bolt-on, most likely for a really good spirit company, and they would be able to take it and roll it out. This is an industry that prohibits young, small, innovative brands from national rollout from growing. It’s very difficult. If what you can do is prove in 50,000-100,000 cases in a few states, then you are basically giving strategic an opportunity to come in and roll it out. As long as the current distributor model stands as is, that’s just going to be important. So I personally, as an entrepreneur, like it. That’s what I would say to people listening that are interested in that. If you have the idea and you’ve got the capital, what’s really beautiful is that there’s a very defined path to acquisition and a very defined metric standard of what they’re looking for from you. So if you can manage your business to that, knowing that you’re probably not going to create this for the long term (these need to be built for acquisition), then you can have a lot of fun.
J: Amazing. This has all been such wonderful advice for people who are interested in this business and who are budding entrepreneurs. Alisa, thank you so much for joining me, and we’ll talk to you soon.
A: Alright. Thank you, Joanna. Thank you to the whole VinePair family. We love you.
J: Thanks. Take care.
Thanks so much for listening to the “VinePair Podcast.” If you love this show as much as we love making it, please leave us a rating or review on iTunes, Spotify, Stitcher or wherever it is you get your podcasts. It really helps everyone else discover the show.
Now for the credits. VinePair is produced and recorded in New York City and Seattle, Washington, by myself and Zach Geballe, who does all the editing and loves to get the credit. Also, I would love to give a special shoutout to my VinePair co-founder, Josh Malin, for helping make all of this possible, and also to Keith Beavers, VinePair’s tastings director, who is additionally a producer on the show. I also want to, of course, thank every other member of the VinePair team, who are instrumental in all of the ideas that go into making the show every week. Thanks so much for listening, and we’ll see you again.
Ed. note: This episode has been edited for length and clarity.
The article VinePair Podcast: The Five Steps to Building a Successful RTD Brand appeared first on VinePair.