Last Updated on September 26, 2021 by rise25
Josh Jacobs is the Co-founder and CEO of Speakeasy Co., a revolutionary direct-to-consumer alcohol sales e-commerce and fulfillment platform. Speakeasy Co. empowers partners to sell directly to consumers from their own website, giving them the autonomy to drive their own growth.
Josh was involved with entrepreneurial endeavors from online moving, art, and fashion until he found passion in the alcohol industry. He graduated from Wake Forest University as a mathematical business major and began working in corporate America.
Here’s a glimpse of what you’ll learn:
- Josh Jacobs tells about his transition from mathematics to the alcohol industry
- How Josh created a craft cocktail subscription box to connect with consumers
- Josh details how he improved the three-tier alcohol system
- The value of leveraging data analytics to improve and scale business
- How the pandemic shifted e-commerce craft beer sales
- The ways digital marketing can successfully impact your sales
- Josh discusses how e-commerce is powering alcohol subscription services
- Why imagination in digital marketing is crucial for long term success
In this episode with Josh Jacobs
Is there a disconnect between your brand and the consumer? Can you successfully market your brand digitally?
Josh Jacobs is the Co-founder and CEO of Speakeasy Co., and he has successfully created a seamless system for consumers to shop directly with their favorite craft brands — while still giving brands control over the customer relationship and connection with their consumers. By using data analytics tools to optimize your presence in an e-commerce environment, your brand can thrive. Josh’s revolutionary system connects brands to consumers, so smaller brands have the opportunity for national coverage.
On this episode of the Legends Behind the Craft podcast, Drew Hendricks talks with Josh Jacobs, Co-founder and CEO of Speakeasy Co., about utilizing an e-commerce environment to reach consumers. Josh discusses how he improved the three-tier alcohol system, used data to strengthen e-commerce brand flow, and democratized digital marketing.
Resources Mentioned in this episode
- Barrels Ahead
- Drew Hendricks on LinkedIn
- Josh Jacobs on LinkedIn
- Josh Jacobs email: email@example.com
- Josh Jacobs on Twitter
- Speakeasy Co.
- Speakeasy Co. on Facebook | Instagram | LinkedIn | Twitter
- Carlton Fowler and James Pelligrini on Legends Behind the Craft
- Liberty Call Distilling Co.
- WhistlePig Whiskey
- Jeff Kozak on LinkedIn
- Michael Bowen on LinkedIn
- Kim Nguyen on LinkedIn
Sponsor for this episode…
This episode is brought to you by Barrels Ahead.
At Barrels Ahead, we know that your business is unique. That’s why we work with you to create a one-of-a-kind marketing strategy that highlights your authenticity, tells your story, and makes your business stand out from your competitors.
Our team at Barrels Ahead helps you leverage your knowledge so you can enjoy the results and revenue your business deserves.
So, what are you waiting for? Unlock your results today!
Welcome to the Legends Behind the Craft podcast where we feature top leaders in the wine and craft beverage industry, with your host Drew Hendricks. Now let’s get started with the show.
Drew Hendricks 0:20
Drew Hendricks here on the host of the Legends Behind the Craft podcast where I talk with leaders in the wine and craft beverage industry. From design companies like Vint that helps wineries tell their story through visual design. Today’s guest Josh Jacobs, who’s enabling alcohol brands to sell directly to consumers while staying compliant with the three tier system. Today’s episode is sponsored by Barrels Ahead, the Barrels Ahead, we work with you to implement a one of a kind marketing strategy. One that highlights your authenticity, tells your story and connects you with your ideal customers. In short, if you’re a business looking to retain a winery or craft beverage producer as a client, we’re always ahead we’ll figure out a plan to make it happen. Good a barrelsahead.com today to learn more. Now before I introduce today’s guests, I want to big thank you to last week’s guest Carlton Fowler and James Pellegrini of Goat Rodeo Capital. on last week’s show Carlton and James, they give some great advice for startups seeking capital funding. If you’re a startup, you’re looking for funding. Check out that episode to learn when the right time is to start seeking capital. Well this week, we keep the startup momentum going with Speakeasy who is revolutionizing direct to consumer alcohol sales. I’m super excited today to talk with Josh Jacobs, Co-founder and CEO of Speakeasy Co. Speakeasy is, an e-commerce and fulfillment platform that was built specifically for the highly regulated alcohol industry. Today Speakeasy powers, over 240 brands, including national players such as Whistlepig, and was also behind the launch of Tesla Tequila. Welcome to the show, Josh.
Josh Jacobs 1:51
Thanks for having me. Drew.
Drew Hendricks 1:53
Yeah, thank you so much for being on. So Josh, your background’s, not not in the wine and spirits industry. It’s in incident math, right? mathematics.
Josh Jacobs 2:01
Yeah. Mathematical business major, actually. And over the course of my career, I’ve dabbled in a number of entrepreneurial endeavors from online moving to art to fashion and slowly found my way into the alcohol industry while simultaneously hoar holding a corporate job until relatively recently.
Drew Hendricks 2:24
That’s amazing. So what? What is it that excites you about being an entrepreneur?
Josh Jacobs 2:29
It’s good question Drew. And really, it dates back to my first taste of entrepreneurism. Back in college. I was a little frustrated by the internship opportunities. Most of them were fluffy resume builders. And I was looking at the incredible talent pool at Wake Forest University saying we have some of the brightest minds that are looking to actually drive value are, is there an opportunity to create a staffing organization intentionally seeking very specifically skilled college majors, and see if we can place them for project based work or actual continuous base work as opposed to coming in for a summer and checking off a few boxes to make sure you laddered up for the next internship?
Drew Hendricks 3:21
That’s amazing. So as with each entrepreneurial venture, so you went from the staffing to Whoa, tell me about the fashion part. I want to get into alcohol, but you’re piquing my interest here. Sure, yeah.
Josh Jacobs 3:32
So the first case was with staffing. And my co founder at the time, one of my best friends, absolutely were enamored with the idea. However, once we both got full time offers me at IBM and my co founder, he was given a full time offer an investment bank was a little difficult at that point to turn down the dollar signs. So we shut down the first startup, but I always had an affinity towards entrepreneurs, and thereafter, and the next startup was spawned after a move a few years after graduation, a really terrible moving experience. I think everyone has had one personally, or at least knows one second hand where virtually the movers held our goods hostage. And we said, There’s got to be more transparency in this industry. So we strive to create Uber for the moving industry. And that was the first foray into a tech startup and made every single mistake you possibly could in the bucks. First, and probably the most important lesson that I learned then was you need to be in an industry you’re passionate about to have a successful startup. You pour every ounce of your effort and blood sweat and tears into the business and moving was not my passion. I don’t think a lot of people could say that it is which is probably why it’s so antiquated and ripe for being disrupted, but has really struggled to be brought into the modern time. So shut that down and for fashion. And that actually goes back to my wedding, I wanted to get a custom suit made and paid an absolute arm and leg for it. But when I put that custom suit on for the first time, it fit like a glove. And I felt like a boss. And I said, if I can afford custom suits, this is what I want. But no way could I afford another one anytime soon. But not long thereafter. for honeymoon, my wife and I were vacationing in Vietnam, unbeknownst to us the tailoring capital of the world. And I got a custom suit made for I kid you not 1/15 the price of in the US. And I liked it even more. And I said, this has to be a business. Let’s import custom suits from overseas. And so that was the fashion startup, we were actually working with a technology base in Israel, where you could take a couple photos of yourself, and it would extract your measurements, we’d send them then we were working with a manufacturer in China. And they would put together these unbelievable custom suits where you could choose everything from the thread on the buttons to the button itself. So it’s really, really fun startup. And I think there’s a ton of potential there. But at that time, Speakeasy actually started taking off and really devoted my full time and attention.
Drew Hendricks 6:27
That’s a great story. So with the moving company learned that lesson learned there was that it’s not so much that you don’t that identify a problem that needs to be fixed. But you also have to have a passion to continue once that problems been solved.
Josh Jacobs 6:40
One of many lessons learned Drew. Yep.
Drew Hendricks 6:43
And then fashion. So what what brought you into the alcohol industry?
Josh Jacobs 6:47
Back in 2015? We were seeing a couple major trends first, it was the rise of the subscription boxes. Blue Apron. Birchbox. were two really inspirational companies for us. Are you familiar with Birchbox and Blue Apron?
Drew Hendricks 7:03
Blue Apron. I’m very familiar I we’ve been members for about well, we haven’t been members for last year. But we were solid for three years, we had a stack about two inches thick of all the recipes that we we used. But yes, big fans of Blue Apron. Yeah, I was members for years had a two inch stack of recipes at one time.
Josh Jacobs 7:23
Great. Absolutely. And so you know, Blue Apron. And for those that are unfamiliar with it, they’re democratizing something as intimidating as whipping up a gourmet meal at home, making it very simple sending you everything you need. And then the other inspirational startup Birchbox, they’re taking something as unapproachable as sampling in the beauty industry, which is so expensive. And they send you these sample sizes at a very affordable rate. And the whole idea of sample the full size, you sample different things you like, and then you purchase the full size, the products that you do. And I was looking for the intersection of these two startups. What is a really intimidating industry, however, has this e-commerce component that was something that I thought Blue Apron was missing. Back in 2015. They you just had this subscription box, there’s no opportunity to reorder cooking supplies or ingredients, etc. So I was looking for the intersection of these two startups. And simultaneously in 2015, we were also experiencing the craft cocktail boom, craft cocktails, were becoming an integral facet of restaurant menus across the country, dedicated craft cocktail bars were popping up. And I realized virtually no one that I knew had the capabilities or the tools and ingredients to whip up gourmet cocktails at home, very similar to Blue Apron, there was a gap there was also no centralized location to fill this gap. So we thought maybe this is it. Maybe this is our opportunity. And so we thought to ourselves, let’s put together a craft cocktail subscription box.
Drew Hendricks 9:02
So that that was the seeds of Speakeasy started as a craft cocktail subscription. And what was your first What was your first offering? First cocktail?
Josh Jacobs 9:11
Yeah, back in 2015. We were working with Liberty Call Distilling. They’re actually a partner live on our platform. And we’ll walk through the evolution of how we went from a subscription box to a direct to consumer platform. But we were working with a lot of the local San Diego distilleries in our backyard. We as we talked about did not have a background in the alcohol industry. And so for us, it was just about knocking on doors and trying to introduce ourselves to those that were close by. And the distilleries were the ones originally educating us on the three tier system and how handcuffed they are by the existing regulatory landscape. And so they were the ones opening up our eyes to the broader industry, making introductions but ultimately what they were committed catering was our subscription box was the best marketing vehicle that existed in the industry. And our minds were blown. They wanted to give us free product, they wanted to work with us, they want to introduce us to their friends. And we didn’t know what exactly but we knew there was something there something if we could just figure out a way to continue supporting the distilleries in these craft alcohol brands, so stymied by the prohibition era legislation, then we knew that we could have a successful business.
Drew Hendricks 10:29
That’s amazing. He mentioned the three tier system is one of the biggest challenges in the alcohol industry, something that you may not have been aware of when he started it, what were the what was some of the end, you guys now have a very unique approach to helping people navigate that and sell direct to consumers, today, share with the audience kind of the background on that three tier system and your unique approach to solving it?
Josh Jacobs 10:52
Absolutely. So the foundation of the three tier system, tier one are the brands, tier two are the distributors that purchase from the brands and sell it to tier three bars, restaurants and liquor stores where we as consumers, for the most part, purchase our product. As you can imagine, if your brand’s, you’re absolutely reliant upon the second and third tiers for the success of your organization. However, if you look at the size of brands, there are the big household name brands. And then we have these small craft emerging brands as well. And in the middle, you have these distributors. And as you can imagine, they are incentivized, and they will only be a profitable, successful business if they focus on the largest brands. And so what happens is a lot of these small emerging craft players do not have a distributor that’s focused on building out their business. So they really struggle to get to that third tier, the bars, restaurants, and liquor stores, liquor stores, putting that to the side for them. And if and craft brand works with a distributor effectively, in his behind the bar, or on a liquor store shelf, there’s the fact that there are hundreds or in the liquor store 1000s of other skews competing for the consumers attention. And the brands are entirely removed from this transaction, they simply have their bottle and label on their shelf or name on a menu, which is just not enough real estate. While we see stepping back out of the alcohol industry, startups tend to launch online. And why is that? That’s because they have their social media, their website, their entire digital presence, to engage with consumers to indoctrinate them into the brand, tell their story and ultimately convert them. However, as we’ve talked about, because of the three tier system, the alcohol brands cannot just run e-commerce ads and sell to consumers.
Drew Hendricks 12:50
And and that is a throwback to prohibition where they were the three tier system started where you had to go through a distributor. Now how is that in? I can see with the big brands that it all makes sense. But if you’re only doing a couple 1000 bottles, you’re like you said you’re not going to be able to get that distribution nationally. And there’s probably not a local distributor that’s going to be able to distribute that accurately. How did you guys figure out how to navigate this to allow alcohol brands to sell directly to consumers?
Josh Jacobs 13:21
Yeah, I’ll walk you through Drew a series of learnings and iterations. Yeah, that we went through from 2015 to about 2018. So v one was a subscription box. That was our original concept. We got it off the ground, we started pushing, going back to one of our original motivations. With Birchbox. They had this whole sample to full size component. And so we really wanted to embrace that. So v2, we said, okay, once we’ve curated this specific box for one of these local craft distilleries, let’s provide an e-commerce site for consumers, our subscribers to reorder the full size bottle if they enjoyed that spirit. So that was v2, we got our e-commerce store somewhat off the ground, we had something beyond just the subscription boxes. And we were starting to promote and support these craft alcohol brands, who were quickly becoming our partners. And v3, we said, well, we have after five, six months, five, six SKUs and our e-commerce store is not very exciting. Why are we throttling ourselves? Let’s build a craft spirits store. So we spend a little bit of time over the course of 2016. Building a craft spirits store and maybe got 50 60 SKUs in there. We went back as we always did to our craft partners, we said alright guys, what do you think about our marketplace that we’ve put together and they were very frank as we appreciate and they’ve always been today, and they said this is no better than drizzly or reserve bar any other online marketplace that exists today. Perhaps You have a somewhat unique selection. But we as an alcohol brand, are not going to invest resources to drive traffic to your website, when we have no control over the look, the field, the design, the pricing, the shipping at the bottom of our product pages, or other products you recommend. So we might be paying, Go ahead Drew.
Drew Hendricks 15:19
Yeah, to them. It’s just another, another store another three tier system,
Josh Jacobs 15:24
it’s another store. And if you drive traffic to a marketplace, you might be generating sales for a competitor, because other whiskies or other vodkas or other rums are going to be listed. And there are a lot of distractions, because these marketplaces are optimized for conversion, not optimized to convert for this specific brand that drove the traffic there.
Drew Hendricks 15:44
That’s a very good point. That’s a very good point. So how did you get around that version? That
Josh Jacobs 15:49
was a major learning for us when we said, All right, this isn’t about a Speakeasy marketplace. This is really about the brands. So our what we thought ingenious next step was, let’s build dedicated landing pages on this Speakeasy website. And to instill more confidence in our partners to drive traffic to our dedicated landing pages. Let’s hide all the navigation, let’s hide any reference to other brands, let’s remove other products, we recommend and provide a canvas for our partners to include messaging and photos about their brand. So they had a mini micro website on our website that they felt a little more confident wasn’t going to generate sales for a competitor. And this drew we actually productize. And so in parallel, we had this subscription boxes, we had our marketplace. And now we are starting to sell these dedicated landing pages on our website. And the last learning was when we were talking with a potential partner in 2017. We were selling them our dedicated language. And they said, Josh, rather than a page, a micro website and your website, what have you build us an entire website soup to nuts from the ground up, where we had access all the tools, capabilities, and analytics, all the fundamental and essential e-commerce tools for us to grow online. But we leveraged your fulfillment and compliance back end, when we that was the Eureka moment, the lightbulb went off. And we said, of course, that makes a lot more sense, rather than on our website. If you had complete control of everything on your website, then you can scale faster than ever before.
Drew Hendricks 17:37
That is a very logical progression. I see that in a couple other industries. As far as the the nuts and bolts of the website, like is it equivalent to like a direct wine website? Or is there’s other things that need to be factored into when you’re just when you’re selling alcohol across state lines?
Josh Jacobs 17:56
Yeah, so that first pilot that we put together, we didn’t really invest significant energy. And one of my favorite startup principles, the whole lean startup, so we wanted to get off the ground as quickly as possible, we just whipped up a standalone Shopify website, and that initial pilot knocked it out of the park in 20, end of 2017. And we made the tough decision to sunset, the subscription boxes to focus entirely on this whole new concept direct to consumer technology and fulfillment platform. And so at the end of 2017, beginning of 2018, we built a scalable infrastructure, we didn’t want to have hundreds of independent websites that we couldn’t manage, we wanted to have this multi website infrastructure, this true platform that we were building. And so that’s what we were able to launch in February of 2018. And the way that it works is we enable our partners to have complete control over their website. And then we build just the e-commerce, just the sharpen cart functionality on our platform. And then we integrate it into our partners website. And we skin it to look and feel just like our partners website. So there’s this really seamless experience. You’re on for example whistlepig.com, and you click shop online, you go to shop dot whistlepig.com, so it’s still on whistle pigs grater URL, but it was actually built on our platform. And so if you’re on shop, that whistle, pig calm, you’re transacting on our servers. And it’s that really seamless experience. A consumer really has no idea and that’s the intention as we’re empowering. Our brands have complete control while remaining compliant, because that consumers actually purchasing from a liquor store, through our platform was purchased from a distributor who’s purchased from the brand. So we’re enabling ecommerce transaction on the brand’s website while remaining three tier compliant.
Drew Hendricks 19:53
That’s, that’s very creative. So there’s still the whole three tier system you’re not revolute you’re not kind of circumventing the Whole thing you’re just I don’t wanna say this is the right word, but you’re hiding hiding the whole three tier system. From from rice.
Josh Jacobs 20:07
Yeah. Mm hmm. We’re not circumventing by any stretch of the imagination. I don’t know if the three tier system is going to ever go anywhere. It’s been here for 88 years now. And perhaps we’ve seen some restrictions loosening with cocktails to go and some other trends. But absolutely, this is three tier compliant, it’s just a far more seamless experience for consumers to be able to shop directly or seemingly directly from their favorite brands. And then the brands the most important piece, they own all of the data. For decades, it’s crazy, these brands have been forced to scale in the complete dark, they have no idea who’s purchasing their product, what the makeup of that demographic is, what the feedback from their products are. And now all of a sudden, the brands via the Speakeasy platform, have control over those customer relationships and truly control over their own destiny, no longer they reliance upon the second and third tier, now they can just focus on their own digital presence and scaling online and take control back over.
Drew Hendricks 21:14
That’s huge that that allows them to completely market and actually understanding and create new products based on the customer’s desires, because they’ve got, they’ve got first hand knowledge now of this buying behavior. Is there any data sampler to have that of how that’s kind of panned out?
Josh Jacobs 21:32
Yeah, so data and analytics is a major value proposition. And I think there are two chief ways in which our partners are leveraging some of that data, well, I would say three, so two really interesting ones. And then I’ll get to the third, probably the most valuable and most obvious one. So one interesting one is shortening the innovation cycle. So when you have to flow through the three tiers, more traditionally, you have to generate and produce significant amount of product, work with distributors, educate them, train them, have them sell to bars, restaurants, and liquor stores, work with the bars, restaurants, and liquor stores through different activations, different sampling events, get consumers to purchase it. And then you see if it’s successful, this can take many millions of dollars and many months. However, with e-commerce, you can produce a very much smaller sample, send it out to consumers run ads, sell the very quickly, and then survey them you know exactly who purchased that product, you can have that conversation with them, you can learn are they reordering it or directly ask them? Did you enjoy this product when you own that relationship, and all of a sudden, something that might have taken several years and millions of dollars can be one barrel that you put together and few short months. So that innovation cycle gets really shortened and condensed with e-commerce. The second really interesting thing that we’re seeing is, as we talked about these smaller craft emerging brands, it can be difficult to capture attention of a distributor. And what we’re seeing is they’re using e-commerce to capture that attention where previously they had maybe zero sales in that market. And they were on heads, hands and knees saying hey, and other markets were doing great, pick us up, we’re now all of a sudden they can get into that territory via e-commerce and go to the distributor and say, Hey, we’re crushing it online. Really, what is the best offer you’ll make to me and flip that negotiation upside down. And now multiple distributors might be clamoring for their business. And so that’s been really fascinating to see our partners take advantage of the data, and also identify which markets to go into, if they’re maybe in a handful of states. And one market that didn’t realize is huge for e-commerce. Well, that’s where you need to invest more traditional brick and mortar dollars. And I think that’s an important point true is we’re not advocating for 100% e-commerce, we’re advocating for a more holistic approach because e-commerce and brick and mortar they feed off of each other. And we want to ensure that our partners have the highest likelihood of succeeding and we think that’s going to be a major factor. And the third way to use the data is remarketing. So this is probably the most obvious and certainly the most profitable with the data and analytics. Consumer orders your product Make sure to send them an email 45 days later, hey, you empty here’s 5% off rollout of a new product, email that consumer that’s ordered something similar in the past cart abandonment emails, hey, someone add something to cart and then decides not the checkout, hit him with an email hit him with free shipping. There’s a lot of interesting ways that you can leverage that consumer data and really scale your business through tools like MailChimp and klaviyo Facebook advertising
Drew Hendricks 25:01
and does Speakeasy help the, the alcohol these distilleries with their remarketing efforts? Or is this something that you kind of build the system and let them figure out how to do it?
Josh Jacobs 25:13
Yeah, Drew, it’s, this was something we thought would be interesting at the beginning. But going back to our story, hey, where 2018 we got our platform off the ground, it was really slow thereafter, it seemed like a genius idea. And right now, it seems like a genius idea. But in 2018, it was such a paradigm shift away from the traditional brick and mortar model, that only the few brave craft players, the savviest players jumped on our platform. And even through 2019, we had maybe summer 2019, about 1012 partners on our platform. So things were crawling, to say the least. And at that point, we said, this is the future we know it is in our bones, what can we do to make it happen. And I had another full time job at the time in corporate America, leveraging my mathematics background in data science. And I said, You know what, I’m just gonna step back as much as possible from the day job. And I’m going to line up call after call all day, I’m going to work nights and weekends to make this happen. And by the end of 2019, we are starting to really pick up pick up steam, we had about 40 partners at the end of 2019. And then what happens March thereafter, last year pandemia perfectly. We were they are screaming from the rooftops about e-commerce when overnight, up to 80% of sales for these craft brands evaporated, because they’re disproportionately reliant upon bars and restaurants. As opposed to the more household names, they focus a little bit more on what’s called off premise, which are the liquor stores. And so these brands were forced to find a solution. And they were forced to find a new sales channel just to survive the pandemic. And as I mentioned, a second ago, we were standing from the rooftops screaming about e-commerce. And so our business just took off at that point. And from last January, January of 2020, to now we went from 40 partners to we’re over 250 brands at this time. And we have one every three days, it was pretty wild, it still is pretty wild. And we went from I went my business partner and co founder Michael Bowen and he went full time January, he was employee one, I went full time in February, we have 24, full time that we’ve added in the last 17 months or so. And we’ve learned an absolute ton. And going back to your question, how’s it going full story here Drew, you’re asking, do we support on the marketing front. And last year, for better half the year, we said, the only thing we can focus on is our platform and fulfillment or core operations. We have so many brands that are relying upon us for the survival of their business, let’s just stay heads down focused on that. And as we got more brands live, we kept getting questions time and time again, Hey, tell us about the unique visibility you have and the data that you have. And my business partner co founder Michael Bowen, he’s got a marketing background. So we were starting to offer all these tips and tips and tricks. And we also fortunately brought on some really savvy partners that had their own in house digital marketing. And they were the ones that took off, while a number of others were not seeing as much success. And so by maybe three quarters of the way through last year, it became absolutely clear that we had to start offering digital marketing services. And so towards the end of last year, we launched our own digital marketing services where we manage the paid social, Facebook, Instagram, Google AdWords. And we also have our account managers, we call them partner success managers psms, their growth consultants, and so they have a blueprint of what successful we’ve seen in the past and are working with our partners, and you need to have a newsletter, you need to have email capture, you need to have cart abandonment. And so we know all these tips and tricks and we can help our partners go from zero sales to 50 sales. And once they have that buy in, then we can say hey, you’re seeing success. We can turbocharge and take you from 50 transactions a month to 500 transactions a month. And we have case studies where we’ve done this we’ve taken for example, Ginger nine, a sour cherry liqueur, their unique product, where they were averaging a couple $100 a month in sales when they were the ones owning it themselves than Kim, our Director of Marketing came in and brought them up to 30,000 a month in sales man that’s huge for a small business, especially such unique one as a sour cherry on the core. And so now we’re supporting a About 14 12 or 14 partners for digital marketing, and it’s one of our fastest growing segments.
Drew Hendricks 30:06
I would think so because a lot of times you build this fantastic platform that has all this capabilities. And, you know, a distillery, their core competency isn’t configuring cart abandonment emails, no. So it makes sense that you would add that as a value add to your, to your site for sure.
Josh Jacobs 30:25
We want to be a one stop shop.
Drew Hendricks 30:27
Now that makes sense. So going through so we’re we’re now hopefully, on the tail end of COVID. And evolve kind of, you know, California, just finally, we’re we’re recording this in the middle of June. So California finally just released all the all the capacity, mandates and whatnot. Where do you see the the your growth growing? And where do you see like the alcohol space going as we kind of emerged in 2021?
Josh Jacobs 30:53
Yeah, and emerging we are I left my condo yesterday or two days ago on the 15th, for the first time without a mask, and a year, and a couple months. So we’re pretty much on the other side, which is amazing to see. Which is
Drew Hendricks 31:10
kind of strange. I don’t know what to do at the stores right now, like half the people have the mass half the people don’t, you know, kind of curious, not knowing if you need to put it on?
Josh Jacobs 31:18
Or in this awkward transition time, that’s for sure. And we’re in a transition time in the alcohol industry as well. We’ve had a lot of questions and conversations around. What’s next was the e-commerce spike simply a pandemic trends. But I would say using the conversations with our partners as a data point, it’s become evident that that’s not the case. So as he mentioned, March of last year, people came running to us that we’ve had conversations with previously. And the conversation shifted from this is interesting, maybe in a year or two, we’ll have some more budget to how quickly can we get live. And, and at that point, it was about survival. But over the course of our partnership, and relationship with a number of these brands, they quickly realized, for example, Ginger nine started selling $30,000 a month of their sour cherry the core, this wasn’t a solution to survive the pandemic, it’s truly a long term differentiator to thrive. And the number of case studies I mean, we have partner selling hundreds of 1000s of dollars a month. This is not just about a simple solution to survive the pandemic. This is a major sales channel. And it’s not just what we’re seeing an RN, vi Ws are they’re predicting 400% growth in the e-commerce space over the next few years. And probably one of the easiest ways to rationalize the growth that we’re expecting is e-commerce alcohol is 2% of overall sales, e-commerce in other industries 20 to 50% of overall sales. So that 400% growth, the IWA is predicting likely very conservative, e-commerce is here, and it’s here to stay. And it’s going to be a major component for brands of all sizes going forward, especially the small and emerging players because online, it democratizes it no longer you reliant upon distributors and bars, restaurants and liquor stores and billboards and traditional advertisements. With a very small team and intentional spending, perhaps spending with our digital marketing services, you can have a material impact on your business.
Drew Hendricks 33:35
That’s great. I love the term democratizing it. And I come from the wine side, and we do a lot of work with direct consumer wine sales. And on that side there, we saw the same same boom during COVID. And it’s online wine sales are just they’re here to stay. And they’re getting bigger, bigger and bigger every year just in the statistics that you talked about. And going in with like wine club and membership programs. Does speakeasy offer any of those type of kind of membership type aspects to it? Or is it all one off sales?
Josh Jacobs 34:07
Yeah, we get asked all the time, if you’re going to ever roll back the speakeasy cocktail subscription, and perhaps at some point, but the next iteration for us is to enable subscriptions for all of our partners that want to offer whiskey clubs or vodka subscriptions or ready to drink partners. Hey, you want to get your 12 pack of seltzer shipped every single month and not have to worry about it set and forget it. That’s going to be coming out for us in the coming weeks. And as far as we understand, I think we’ll be the first e-commerce platform empowering the subscription services
Drew Hendricks 34:45
for the alcohol sales. That’s amazing. Yeah, that’s it. That’s a huge get recurring sales. It’s a huge value add and then to empower each each one of your partners or each one of your clients to do it themselves. They can kind of put their own spin on it and you it their own. What do you what do you see is the biggest challenges going forward in 2021 in the next few years for the alcohol space?
Josh Jacobs 35:11
Great question. And Drew, there’s a lot of industry tailwinds around e-commerce. And I think at this point, still, our biggest challenge is not really from competitors, other e-commerce players, it’s about awareness, we need to make sure brands are aware that e-commerce is a option and a solution, we need to make sure consumers know that they can shop online from their favorite brands and shop online period for alcohol. A lot of people purchase alcohol for the first time online over the pandemic. And our hypothesis is once you’ve tasted the convenience of delivery to the doorstep for alcohol, as a lot of people have, and virtually ever, every other industry, you’re not going to go back. And so we’re just gonna keep pushing awareness of our platform for brands, and keep working with our brands that help push general public awareness that they can turn online and shop online.
Drew Hendricks 36:11
That’s, that’s great. What advice as we’re kind of wrapping down here. So what what advice would you give someone like a young brand new brand, that is considering you know, selling online, obviously, going through speakeasy, but what are some of the other things that they need to take into consideration before before kind of just jumping in and getting their product online? Well gone
Josh Jacobs 36:31
back to the digital marketing services. So something that has become abundantly clear, there is one black and white differentiator between those that succeed on our platform, and those that are not having much success. And that is having a digital marketer at the helm of professional digital marketer and an advertising budget. This is not build it, and they will come. And this is something that we’ve struggled to really convey to our partners, and we have lots of partners, and they sign up, they get their website live, and they don’t see the sales that they’re necessarily expected. And then we just ask them, How many visitors did you have to the website, if you had only a couple of visitors, you can expect hundreds of transactions. And that’s something that we just cannot instill enough that this is only going to work if you make the proper investments. And we’re not saying you have to use Speakeasy to run your digital marketing. But you need to have someone that has that very unique skill set to tinker with the analytics and optimize in Facebook Ads Manager and you have to have an advertising budget.
Drew Hendricks 37:42
That’s good. What is as far as an advertising budget, what would you propose would be for a startup a percentage of their sales or what would be an accurate or amp or adequate advertising? Yeah,
Josh Jacobs 37:55
with just a couple $1,000 a month in advertising spend on Facebook, Instagram, Google AdWords, you can start generating some pretty significant sales, you have 345 plus rows, which is return on advertising spend. So if you’re spending a couple 1000, you might be generating Five, six, maybe up to $10,000 a month in total sales. And then you start reinvesting a portion of that. So month one, maybe you spend 2000 advertising, and then you reinvest some of the profits a month to maybe bump it up to 2500. And you keep investing and all of a sudden, this starts snowballing into a pretty significant amount of advertising spend profitable advertising spend. And what’s great is usually the first purchase, you have that acquisition costs, but then you own that customer relationship. And you can monetize what’s called the LTV, the lifetime value of that consumer. So unlike in a bar, restaurant or liquor store, where every single sale, you’re going to have to work just as hard for the next one. Once you have that first e-commerce sale with someone, you own that relationship and you can continue to sell to them the same product, cross sell upsell, etc. And so our recommendation is if you can carve out a couple $1,000 a month, even 15 $100 a month for advertising spend, then you have enough to start really growing your business online. And when you look at that, compared to what a lot of brands invest in brick and mortar and traditional distribution, it’s a drop in the bucket. And so it can be a little frustrating when we’re talking with partners and we’re like, you just got to make this small investment and for some, they’re unwilling to do it. But for those that are they are really setting themselves up for long term success.
Drew Hendricks 39:42
That’s, that’s, that’s great advice I love. I love that you mentioned if you build it, they’re probably not gonna come You got it, you got to do something. And the biggest and you also hit on one of the biggest push backs that we get to and there are people like I don’t have $1,000 I don’t want to throw $1,000 down the hole or $2,000 down the hole in marketing and once you’ve point that it’s gonna lead to a sale. So it’s not like you’re just throwing out $2,000, you’re gonna get some sales for it if you do even marginally correctly. And then, and then having a three, four time row is that’s fantastic as well, where you keep plowing it back. Great, great advice.
Josh Jacobs 40:15
And what’s so cool is you’re going back to your point about, it’s not just flushing $1,000, down the toilet and hoping for the best, because that’s what traditional distribution often is. If you buy a billboard, or you run an advertisement, Heisman, you have no idea what happens. what’s so amazing about e-commerce is you put $1 in, you see that you got $3 out, you know, those customers, you know, the click through rates has a ton of analytics behind it. And so you know, fairly quickly if it’s working, and we’ve proven with our team that more often than not, it is,
Drew Hendricks 40:49
Oh, that’s great. What I’m challenging. So for someone that’s just getting into, you know, they’re going to go advertise on Facebook, they just starting from ground up, there are some particular challenges with advertising on Facebook, what are some of the things that people should keep, keep an eye out for given the fact that it is regulated in industry on social?
Josh Jacobs 41:07
Yeah, with the regulations, you have to make sure you’re targeting consumers that are 21 plus, so that’s going to be critical to make sure you don’t get booted off the different platforms. In terms of advice. This is a tough pill to swallow. But good product, good juice is table stakes, what it comes down to is marketing, your company will only succeed if you are good at marketing. And most people, they produce an amazing product, and they think it’s gonna sell itself. But they’re I wouldn’t say it’s saturated in the alcohol space by any stretch of the imagination. But there are 1000s of brands. And that means there’s a lot of choices for consumers, and they’re likely only going to choose yours, because of the marketing. Once they’ve sampled it, they’ll keep coming back because of the quality. So quality is table stakes, it really comes down to marketing. And what we’ve learned is alcohol is much more experiential. When you’re selling a suit. For example, going back to my business, you put up a picture on Facebook of a beautiful suit, someone says I want it, they buy your duck with alcohol, when you have a picture of a bottle. Not many people unless it’s the Tesla tequila lightning bolt bottle, look at the bottle and say, I need to have that. Usually you have to draw them in. And so this is something that we’ve learned and we really preach with our partners. When you’re trying to do new acquisition selling, you’re trying to acquire a new customer, it’s not look at my bottle, buy it, it’s learn more about my brand, pull them into your website, most importantly, capture their email address, so you can continue that conversation. But ultimately, you need to put them through a series of learnings and education, have them be indoctrinated into the brand. And then and only then will they likely be willing to purchase your product. And so that’s something that’s really important when you’re running advertisements. It’s not Hey, $50, buy this bottle, it’s Hey, we’re this craft really unique product, click here to learn more.
Drew Hendricks 43:07
Yes, statistics on how many touch points, the average amount of touch points it takes to trigger a sale.
Josh Jacobs 43:13
I’ve always read it’s usually seven to nine, I haven’t looked into that recently in our data set by wouldn’t be surprised if it’s somewhat similar. Hey, maybe even that first ad you don’t click on, then that second ad you click on it, you go to the website. And maybe that’s it, maybe you get in third ad and you go back to the website, you give your email address, you get a couple of those newsletters, you learn more about the founder about the distillery the way it’s produced, then you’re hooked. You want to try it, you buy your first bottle. And for example, with whistlepig, they are trying to sell the piggyback which is their entry level product for 4999. But then they have an 18 year old reserve with Simon Pierce cocktail glasses for 499. And so you come in maybe you buy a bottle for $50. You fall in love with the brand. And then you keep coming back for more. And a lot of our partners are starting to get into merchandise because it’s much more lifestyle than people have ever realized in the past. So why so many brands have succeeded online outside of the alcohol industry. It’s because it’s a lifestyle, you really identify with a brand and their mission, or whatever they stand for in the alcohol industry. We’re seeing that finally, we’re seeing people fall in love with brands and want to represent it on the hat or on a T shirt or buy cocktail kit or anything and everything that these distilleries can can put out there. And so it’s about building a robust brand and a robust store.
Drew Hendricks 44:43
That’s That’s great advice. As far as brands. So what are you drinking? It doesn’t have to be something on the speakeasy platform. What brands are you drawn to these days?
Josh Jacobs 44:53
I would say I always like to share my favorite cocktail is a spicy traditional message. Call sour. So you have the the sour with egg white. But instead of with a bourbon, I like it with mezcal, and then some spicy bitters in there. That’s my go to cocktail. But I’m actually very rarely drinking a cocktail these days. I mean, you almost always drinking straight spirits. It was something that I didn’t do previously. But now that I’ve been exposed to really premium craft products, you don’t need to mix it with any cocktail ingredients. The spirits are so unique and bold and flavorful that I really want to enjoy them on their own. So going back to my favorite cocktail, mezcal is my spirit of choice. Second would be tequila and one of our new partners mezcal. wago. has some really unique mezcals. Highly recommend checking them out. And then on the tequila side, a very affordable tequila. I’m a rapper zato guy is no sojos tequila there. representa. I think about $45 you can get it online. They are on our platform for full disclosure, so bit biased, but that’s one of my go to tequila on the rocks with a lime. Absolutely delicious.
Drew Hendricks 46:12
That’s Greg. I’m gonna definitely try that. mezcal cellar. Now I’m a big fan of bitters what you mentioned a spicy, bitter. What’s your favorite bitter?
Josh Jacobs 46:20
Are you familiar with firewater? pearcedale?
Drew Hendricks 46:23
No, but I need to be,
Josh Jacobs 46:24
oh my god, if you’d like spice carefully might burn your mouth the first time. Gotta get some firewater bitters. And so in the mezcal sour, you put a couple drops of the firewater bitters, and it’ll really heat that cocktail right up.
Drew Hendricks 46:38
So give us give us the recipe so we can make it.
Josh Jacobs 46:41
Yeah, so usually you’re doing two ounces of mezcal, and then you’ll do egg white, you’ll have a little bit of simple syrup, a little bit of lime juice. And so that’ll be your your base. And then usually I’m thrown in some of those firewater bitters as well.
Drew Hendricks 47:00
Then shake it and strain it into a to a class.
Josh Jacobs 47:04
Exactly. So you shake it, and then I usually serve it in a coop. And so you make sure that you’re shaking with ice, shake it very vigorously, especially with the egg white. And then what comes out in the coop is is really rich, foamy, velvety cocktail. Absolutely beautiful.
Drew Hendricks 47:23
Delicious. Well, it’s noon here. So it’s almost time i’m joined. Yes. So as we wrap up, I mean, when would you like to give a shout out to anybody?
Josh Jacobs 47:36
Yeah, I’d like to give a shout out to the the Whistlepig team, Jeff Kozak the CEO, they’re really done absolutely incredible things with that brands. They’re one of the most inspirational independent brands. They’re not owned by one of the major suppliers, portfolio companies, they are just shaking up the industry. And what I absolutely love about Whistlepig is their focus on rare premium limited releases. So this focus on premiumization, and craft and local has been very visible across industries for a while now. And whistle pigs doing an excellent job bringing in the alcohol space. And it just so happens that selling those sorts of products is really best lived online. And so keep an eye on Whistlepigs website sign up for their newsletter, the rolling out their Sasquatch series and a whole bunch of other really unique single barrels and limited time offerings that you can’t find in most liquor stores. And that’s keeping demand very high for their products. And they’re absolutely incredible. So highly recommend getting your first bottle.
Drew Hendricks 48:49
No fantastic. So Josh, where can people learn more about you and Speakeasy.
Josh Jacobs 48:54
Best way to find out more about Speakeasy is go to our website speakeasyco.com. We also are on social media so you can follow us on social media. And I myself on social media, LinkedIn, reach out say hello. And if you want to reach out by email, Josh@speakeasyco.com. Don’t be shy looking forward to connecting. Awesome, thank
Drew Hendricks 49:16
you so much, Josh, for being on.
Josh Jacobs 49:18
Thank you, Drew.
Drew Hendricks 49:20
Thanks. Have a good day.
Josh Jacobs 49:21
You too, looking forward to come back on.
Thanks for listening to the Legends Behind the Craft podcast. We’ll see you again next time and be sure to click subscribe to get future episodes.