The Indie Spirit 

Jörg Rupf of Alameda's St. George Spirits inspires a whole new generation of small American distillers.

Page 5 of 6

Liquor marketer Geoff Smith spent five years heading up sales and marketing for Skyy Vodka, a San Francisco vodka startup that flourished in the 1990s. Even with the success of Skyy behind him -- Italy's Campari Group purchased a controlling interest for $207.5 million in 2001 -- Smith believes that liquor is one of the riskiest industries out there. "There are a tremendous amount of failures, and that is equally true across all the spirit categories," he says by phone from the St. Helena office of his latest project, Precis Vodka. "Only a handful of them actually do make it to the next level, but those who do make it, make it at such a huge level, that it's pretty fun and attractive to be associated with that when it actually happens."

The question is, how does it happen? Especially for a tiny business such as St. George Spirits?

Liquor trends can get started in at least two ways: either by advertising, or by word of mouth among aficionados that moves into the general population.

There are several tiers of marketing a vodka product, the first of which is the bottle itself. "Vodka is very fashion-oriented, very hip," Smith says. "It's a lifestyle beverage, so the packaging is important in terms of connecting with people who are living a certain lifestyle and want their aesthetics all around them." Precis went to great lengths to create a beautiful, handblown, ice-blue bottle that will have visual appeal to the high-end vodka consumer. St. George, meanwhile, knew that the bottle design for Hangar One would be an important part of its own business plan, but both Rupf and Winters were smart enough to realize they knew nothing about that end of the business. So they turned to Ansley Coale, the owner of a Ukiah brandy microdistillery called Germain-Robin, to handle their company's marketing.

"It's a collaboration," Coale says of the relationship. "St. George makes it and owns the brand, but the design, the packaging, the concept, the sales literature, the marketing, the publicity -- that's all ours." Coale has a long-term contract with St. George, and takes his profit in the form of commission. "The basic arrangement is that we split the profits."

Besides the quality of the product itself, distribution is the biggest hurdle that most liquor entrepreneurs face. It's also the giant companies' biggest strength. "The two white spirits that you can count on to generate revenue, vodka and gin, are dominated by these huge companies that have millions and millions of dollars," Winters notes. "It's really difficult to be able to jump into that market."

Oregon's Steve McCarthy audibly groans at the mention of distribution. "It's very difficult to get distribution," he says. "It's really an enormous challenge." For smaller makers like McCarthy, it comes down to word of mouth. Luckily, foodies such as those behind Berkeley's Chez Panisse and Portland's famed Wildwood restaurant pride themselves on finding locally made, hand-distilled liquors to put in their restaurant and bars. "Those people really get into this and they like it," he says. "They put it in their recipes, they put it on their menu, they give it away."

That was certainly the story behind the Ritz-Carlton's praise for Hangar One. Ansley Coale has developed relationships with distributors all over the country for the last seventeen years, and one of his "operatives" in Maryland was responsible for bringing the vodka to the hotel where bartender Michael Brown works. Liquor distributors are something like Hollywood agents. They will sign on with you if they believe you have something they can sell. In Hangar One's case, according to Coale, they tasted the product and knew that it would fly. "We've had people tell us that this is the best brand that they've seen in years," he says.

There are distributors nationwide, and Coale is working in at least 38 states. Each distributor has a sales force that makes its presentations on the street, and it was one of those people who introduced the Ritz-Carlton to Hangar One. Brown, who created the Total Recall cocktail, says he took one sip of the vodka from a salesperson and said, "This is God's gift to vodka. I compared Hangar One to Absolut, and I said, 'Wow, this is way better!' It kills them. I knew this was a product we could use."

He began to push the product in his bar, and he says the response has been great, with people asking for it by name. Closer to home, Dave Ezzo, the bar manager for Paragon at the Claremont Hotel, says he began carrying all four Hangar One varieties about five months ago and that it is now the bar's most requested premium spirit. "We go through a couple of bottles a week," he says. "It pushes itself; people ask for it by name."

Coale says major beverage companies have been known to pay large bars to stock their products -- one big nightclub allegedly asked for $5,000 in exchange for stocking Hangar One -- but St. George has selected a more low-key approach. "We didn't want to go out and borrow five million dollars and turn this into a huge marketing company," Coale says. "The difference between this vodka and everybody else's is that it really is genuinely handmade, and it really is genuinely a superb product. If we sold it the way Absolut does, which is to basically give a bunch of it away to get people behind it, we think that what we'd be doing would be undercutting what excites people about it."

Winters admits that the vodka has yet to make a profit, although he concedes that a lot of investment went into the front end. But Rupf takes pride in the fact that St. George is now self-sustaining, and Winters credits his partner's financial conservatism with the company's slow but steady growth. "He has stayed out of debt this whole time," he says.

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