The Philip Duff Show
Liquor, bars, cocktails: the people and companies who make them, sell them and drink them, plus everything & everyone in-between, with your host, globetrotting spirits guy and escaped bartender, Philip Duff.
The Philip Duff Show
Mike Paladini and Danny Polise, founders, Penelope Bourbon
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I bumped into Mike at NY's legendary Irish bar Swift in 2020, when a mutual friend who'd been showing Mike around Manhattan bars introduced us. I'd heard a story or two about this new-to-the-market MGP-sourced bourbon named Penelope from a couple of New Jersey guys, and I took his business card and wished him well; the whiskey had only been available for a year or so at that stage. Mike sent me a nice email afterwards saying he enjoyed reading some of the articles I was writing for Imbibe magazine at the time.
Fast forward to May 2023, and MGP bought the brand for $105m in cash, and potentially a further $110.8m if they hit some targets.
So it was high time for Mike and his co-founder and childhood friend Danny Polise to come on The Philip Duff Show and tell us how they did it!
This is a great episode, covering Mike's origins in the worlds of showbiz and tech, Danny's background as a bar owner and engineer, and how they built Penelope by ignoring a lot of received industry wisdom, working from first principles, and trusting in themselves. Danny also taught himself to be a true master blender, never having done it a day in his life before.
Enjoy!
Many thanks to LaForce PR for hosting us (great cookies!) and Mike and Danny for bringing some tasty whiskey for us to try, plus their banging bottled cocktails.
Mike on IG: https://www.instagram.com/michaelpaladini/
Danny on IG: https://www.instagram.com/dpolise/
Penelope Bourbon: https://www.instagram.com/penelopebourbon/
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We're back at the Philips Duff Show in a very swanky uh conference room after our two protagonists have fought the traffic in all the way. Daniel Polisi. Yeah, Danny Pelesi. Correct. Michael Paladini. Welcome. You and I bumped into one another at Swift six years ago.
SPEAKER_01I I I know they told me.
SPEAKER_03You were being dragged around town by somebody who had done the traditional thing of you know bringing the brand owner out. And then, you know what? We just go and have a beer. I think you're actually drinking Guinness. Uh probably at the at the bar in Swift.
SPEAKER_02Swift by NYU? Yeah. Oh, I love that place. It's the best. It's the best.
SPEAKER_01That was a w that was Fed well.
SPEAKER_03That was Fed 2020, incidentally.
SPEAKER_01That was like right when we started.
SPEAKER_03You well, you guys had only been rolling with Penelope Whiskey then for two years, right? You started in 2018?
SPEAKER_01Yeah, but we really, I mean, we really didn't even technically start selling it till summer of 2019. So it was still new. Especially to market. That for that matter, yeah. Well, let's come full circle. Let's get the origin story, right? Yeah. I was speaking to uh Daniel before you got here.
SPEAKER_03You guys grew up together, right? Yes. And you stayed and you stayed in touch. But you took different career paths, right? Yeah.
SPEAKER_02I've I became an engineer after college. And uh and Mike, what did you mean?
SPEAKER_01I had a hodgepodge of careers uh from uh entertainment to technology to I I started a mattress company. Um and that that's kind of where when I was doing the mattress business, bear mattress, uh I started Penelope soon, uh you know, about three years into that.
SPEAKER_03But you were at William Mack Morris Calendator thing. Was it all like just delivering cocaine and oaker seed? Like what did you think?
SPEAKER_01I was in the mailroom as as glamorous as it sounds. I was pushing mail. I started out in their mail room out in Beverly Hills, and uh as part of their trainee program where you literally not figuratively, literally start in the mail room and then you kind of work your way up as an assistant through the various departments.
SPEAKER_03So that's why cons exist anymore.
SPEAKER_01I think it still does. It's uh it's kind of uh it was like a a big deal to get into it. Uh, but it was fun, you know, learn a lot, you know, got a lot of uh met a lot of great people and man, that's just that's almost I'm trying to think if I don't want to date myself, but that was probably 15, 20 years ago at this point. Yeah.
SPEAKER_02I always just think of entourage, right?
SPEAKER_01It was exactly like entourage. Exactly like that. That's wild. Yeah.
SPEAKER_03Well it's it's still a thing, it's a billion-dollar industry. Yeah. Like, how do you how do you get in there?
SPEAKER_01There's this I think in Malcolm Gladwell book, he talks about uh, I think it's the producer Brian Singer, who started off doing that. Yeah. And he was done so early every day.
SPEAKER_03He said to his boss, he's like, Hey, can I uh sit in that empty office? His boss is like, sure. And he would go through the slush pile of rejected scripts. And he would then approach the people and say, Hey, you've been rejected.
SPEAKER_01What if I can sell the movie? And that's literally when he's a 20-year-old intern.
SPEAKER_03He sold his first movie and so on and so forth. It's it's kind of like a sitcom, you know, you creep into an office and hope nobody notices you.
SPEAKER_01There was, I mean, there's a there's a very big list of notable, like very specific Hollywood executives that that started out in that William Morrison album. It was uh, you know, I think it was either I can't actually can't remember a lot of them, but I know like David Geppin was one of them. Um there there was a few of them, yeah, that were just really big names that had kind of similar stories, like Brian Singer, like just kind of kind of started there and then eked their way up.
SPEAKER_03Well, we used to say there's no training speed distillers. That's not true now. Most distilleries are chemical engineers, but you've clearly got an affinity for that.
SPEAKER_01But when you kind of got out of entertainment, you got into tech right away, is that right? Yep. Yep. So I I had want to move, I wanted to move back from California to the east uh east coast. Uh my wife and I were, or then girlfriend, now wife. We were uh we were getting back together. We we started dating in college. And uh so William Morris had a consulting arm, and they they were close with uh a actually a very a close friend of mine, a New York entrepreneur, a very good New York entrepreneur called Mike Lazaro, Mike and Cass Lazaro, and he had started this company called Buddy Media. And as I was driving here, I drove past our last office down in Soho. I came, came right, I drove literally right by it. And uh I started I threw a connection at William Morris, their consulting arm, uh I I took a job with Buddy Media, I was one of their kind of early employees, and it was an original social media management platform uh when Facebook opened up their Pages API uh for businesses. So it was a really unique way. It was like the first time really ever brands could actually communicate direct with their customers. So if you think about like a Ford Motor Company or a Coca-Cola, there was never really an avenue to have like a direct one-to-one conversation with their customers, their end customers, their end users, right? So to speak. And so that's what Buddy Media gave them the ability, these larger enterprises, to kind of scale that operation and really have those more one-to-one direct conversations. Was it fun? No, it was, I mean, it was unbelievable. I actually, that's where I really learned like how to be nimble. I mean, Mike and Cass were obviously great mentors, but uh they uh, you know, we went from 20 employees and all of a sudden I blink and we're at 350. We had we went through three offices within like, I mean, a blink of an eye, we were in three different offices. Soho being the last one, and then we were acquired by Salesforce. Um, and then I went on to work at Salesforce for uh a number of years, worked with a lot of smart talented people. But you're doing like social media, kind of marketing tech, and then you're kind of in the CRM sales tech world. I went on to work in uh dynamic signal and smart recruiters, which was an HR technology. And you don't realize it at the time, but in technology, you're kind of like, wait a second, I you know, I don't know anything about HR. And it doesn't even like it, you don't even think of it, does it matter? No, it's tech, you know, whatever, it's all this kind of the same, it's software. But it really was, they're they're different. And and honestly, that was where kind of we got, I really kind of developed this kind of notion like anything's possible. If you can go from marketing to sales to HR within the enterprise and software worlds, you know, maybe you could do a mattress company, maybe you could do a bourbon company, you know, you just never know. And so I think that's what the origins of where I started to kind of feel like that a little bit. And did you guys like stay in touch over the years or had you fallen out of touch? Because you had your own firm as well, right?
SPEAKER_02Yeah. So after college, um, I went into the engineering field and it was in New York City, just basically designing buildings in the city. And then uh at the same time, like I had an affinity for drinking. And uh all through college, I used to I used to bartend, I ran a restaurant that I started in in college. Then after it, I started a bar restaurant on the Upper East Side with uh my buddy that I went to school with, Kenny Bowen, and uh got into that. So it'd be like engineer by day and restaurant bar owner by night and weekends. Uh so kind of just kind of burning the candle at both ends there. But it was it was a good experience, you know, starting a small business like that from scratch, you know, running the running a bar, as you know, has a lot of sort of issues and even before people crash a truck into the front of the bar, which happened to you. Yeah, fun, fun challenges just getting the business going and and and working at it. And then the engineering was a really good, you know, sort of life lesson lesson on running a small business and all that stuff. Um, yeah, the bar was a fun time though. I was in my 20s and you owned a bar restaurant, and uh it was it was almost like my living room too at the same time. But uh I think that's what kind of led to the success of it still around, you know, two two decade old bar in in uh New York is a is a challenge.
SPEAKER_03Well, there was a really good article on this exact topic recently, and funnily enough, I was just talking about it with uh Lauren.
SPEAKER_01It's that we all gravitate to the new, the new, the hottest new restaurant, like uh I think the New York Times just published their top 100, you know, best new restaurants. Right.
SPEAKER_03And then there's your classic places like Gallagher Steakhouse and Keene's and Delmonico's and stuff like that. But the places that are about five to eight years old, maybe ten years old, we tend to forget them.
SPEAKER_01They're no longer the cool new thing, and they're not yet the uh the grand. And five years in, they're usually at their best. They've ironed out all the kinks, you know, you've got the kitchen running just right, you've figured out how to run it so you've got a little bit of profit left over.
SPEAKER_03Those are the places we actually should be going. Right. Instead of, you know, hot new restaurant X from Chef Y.
SPEAKER_02Yeah, and that's the path, that's the exact path that we took. We were hot when we opened, we were cranking when we were five years old, and then probably eight to fifteen years, we took a real deep trough, like a lull. You know, it was hard to get people in the door, hard to pay the electric bills, and then kind of had a resurgence. And sort of now I hear it called like a upper east side staple, which is crazy. It is excellent buffalo chicken wings. I'm I'm in that I'm in there a couple of times a month. Those were developed back in uh in college in 2000.
SPEAKER_00It's not nothing. I tell you, I swear, we said the best wings in New York.
SPEAKER_02We used to spend a lot of time talking about those wings back then.
SPEAKER_03Yeah, well, you'd be proud to know that they're still uh still killing it. That's very cool. But would you guys like meet up for drinks every now and then, or was it just, you know, you're kind of well our high school, our group of friends in high school is extremely close.
SPEAKER_01I mean, there's still a group thread with our high school group, so we were all really, really close. We were neighbors growing up. So yeah, we were always kind of in touch just through our our our close, obviously our close high school group. Um, I mean, I moved to California, so I was, but even when I was in California, a few members of our close high school group were also out in California. So it was all intertwined for sure. What's funny about the bar comment, you know, I'm like staring at the bottles of Penelope right here. And there's there's uh there's an interesting like analogy too between, you know, bourbon brands and bar brands and and getting to like the cool new thing and then settling that settle-in stage of five to eight years, and then becoming a heritage brand. And then, you know, I think we're at that interesting crossroads too of we're close. Like, you know, we've we've done a great job building out good, high-quality products. But as you were saying, I'm like staring at the whiskey, and I actually think there's a lot of similarities, you know, to the restaurant world and the cool factor to the staples, to the heritage brands. Well, your first year, I mean, I've owned brands and I advise them too. You it's like, oh my god, we got it in the New York Times, we got featured hair, we got written up there, it's amazing. But then in year two and year three, you're not the new thing anymore. So I think it's that's pretty apt. But let's just before we get into the whiskey business, talk about your uh your your side journey in mattresses.
SPEAKER_00Yeah.
SPEAKER_01Was this like uh in the era of when you know the direct-to-consumer shipping and Casper was happening and all that? Yeah, so my my family's been in the mattress business on the brick and mortar side. So I had known it. I mean, I might one of my first jobs in high school was working at a mattress store. So I had kind of known that business on the Somerville Circle. Yeah.
SPEAKER_02Just like I fixed the I fixed the AC at the end.
SPEAKER_01Yeah, it was just like selling mattresses, it was great, um, at a at a retail location. And then uh yeah, I saw I saw Philip from Casper launched this bed in the box company, which by the way wasn't even, I mean, you you could buy bed in the box uh off Amazon from 10 years prior. He just made it cool.
SPEAKER_00Yeah.
SPEAKER_01And and it was really became like it was really a marketing arm. I mean, it was a marketing company for the most part. And I saw they did like a million dollars in one weekend, which out of brick and mortar back in the day, a brick and mortar mattress store, you did a million dollars in a year, and that was a great store, right? That was kind of like, nah, this is a good store. Um, so I saw that, I was like, oh my God, that's like that's some heavy sales market. So I had gone out uh literally almost uh I quit I quit Salesforce and went and and started bare mattress. And that's that was kind of the journey. And we uh my brother and I, my dad, and we we kind of built that up and uh eventually sold it to private equity in 2022.
SPEAKER_03Yeah, I remember reading a study of direct-to-consumer brands, and there was this woman who ran a really successful fund that invented invested in them, and she said one of my biggest misses was Casper or one of the other mattress in a box companies, maybe it was even this one. And she said, Because it didn't dawn on me how many people have multiple houses and multiple bedrooms that would buy six at a time. She thought, I just thought people would buy two at a time. She said, That was my miss.
SPEAKER_01Yeah, and it's also too you people, you know, everybody needs one. So everybody in the world has one, multiple beds for the most part. And if they have multiple homes, they have multiple beds, but then you you change them out, you know, seven to ten years. So you're constantly, you're constantly going through that cycle of uh, you know, the it the one of the challenges with the the mattress company is it's highly competitive. And you know, you're and especially on the online e-com world, it's uh your customer acquisition costs are gonna get high because you're such heavy competition fighting over just online, you know, retail space or you know, uh, you know, a platform online. So that was the main thing was uh you're you know just managing your your CAC and going and trying to figure out creative ways to attract new customers and get people at the right opportunity at the right time when they're looking to buy a bed or they bought a new house, whatever it might be. But uh yeah, it was a it was a great business and uh it was kind of helped you know, it was another origin to how we started Penelope for sure.
SPEAKER_03Well, Don's backstory with uh booze and liquor is well documented now.
SPEAKER_01Yeah. Yes. What was yours? Like, did you go to college in Jersey or college more? Um so my wife and I we both went to Siena College uh up in upstate New York outside of Albany. And uh yeah, I think for you know, really my alcohol background was I was just a professional consumer uh and damn good at it, too, I might add. Um so yeah, I I you know I I originally was starting with beer, then you're doing like your vodka sodas or vodka tonics and Jack and Cokes, and then you started navigating into maybe some wine and some other things. And I, you know, I don't know what it was. It was like a moment in time, but then I went over to Scotch. I was doing a lot of uh, I was drinking a lot of scotch, not it, not high-end scotch, I'm talking like doors on the rocks, like stuff like that. But we ended up uh, and then I I tried a bourbon, and then I like flipped, and this is like before we started Penelope, I was like only drinking bourbon, not like high-end bourbons, but just like you know, your buffalo traces, your eagle rares, they were readily available. And I really liked bourbon. So that that was where I was at at that, probably in that 2016 time, was like, man, I like that was all I was drinking. And bourbon was having a moment then. Like you would have seen 15 years before buying whiskey professionally and wholesale, the incredible value it was, right? Compared to, you know, you were getting an amazing bourbon for the at the time for a fraction of the price of uh other liquors, right? Yeah.
SPEAKER_02Even bourbon, when we when we started in 18, you know, we just kind of caught that that bottom edge of this, like this this boom. But you know, I think about that. But then if you go back, like you were saying, even six years, seven, eight, ten years before that, it was like half of what it was then what we could buy a barrel for. So it it's definitely um we you know, we kind of caught it at that that mid-base, I would say. But um, I was just thinking about you started drinking bourbon, but then he got me into bourbon. I remember I would have, you know, whatever, I'd have I'd have like a 4th of July party or something and have my friends over. He would cut he would always come over with a with a bottle of it.
SPEAKER_03Had you become one of those bourbon guys, you know, you collect it, you read about it.
SPEAKER_01No, never. I was just like, I got a bottle and it was gone, and then next time I was I'd get a new one. I didn't I didn't I didn't really I had the ones I liked, and that was that was it. It was really pretty pretty elementary in terms of my knowledge. Actually, I know for a fact it was.
SPEAKER_02But my first collection was all the bottles that you had been bringing over. Yeah, yeah, yeah, yeah.
SPEAKER_01And I mean there were nothing, I never had anything, yeah, it was just your kind of standard kind of core offerings from some of the major suppliers. That that's that was what I was kind of drinking. Oh, that's what people drink.
SPEAKER_03Look, I just to make all the listeners absolutely sick, uh, I opened my cocktail bar in Amsterdam in 2008. And as you probably know, the Netherlands is possibly the world capital of parallel import.
SPEAKER_01So if something is for sale anywhere in the EU, you're allowed to import it from there and sell it alongside official distribution. Yeah. So we were getting, and this is before it was well known, Papi van Winkle, and it wasn't famous. Uh, we would every so often I'd buy a bottle, the wholesale was 40 euros, uh, and we would sell it for the then astronomical sum of, I believe, 15 euros for an ounce and a half. Which is, you know, it's uh it's gone up a bit since I imagine. And people didn't care, they actually preferred Eagle Rare back then, most of my customers.
SPEAKER_03Yeah.
SPEAKER_01And neither of them had any kind of a profile in Europe whatsoever. No proportion, maybe not even. Uh but but things have changed a lot in the bourbon world. So at what time did you guys say, fuck it, let's go for it with Penelope, which is your daughter's name? Yes.
SPEAKER_03Do you have any other kids that are like that? When do I get my product?
SPEAKER_01I got a I have a four-year-old son, Henry. He's uh we call him Hank the Tank. He's fine right now. He's four. Uh he might ask in a few years. Henry Vodka. Henry Vodka. So I think it was uh probably uh yeah, we well the mattress industry was was unique because with the mattresses, we weren't manufacturing mattresses. Right. Yeah, but we would we would basically build a supply chain. So, you know, you're you're ticking your outside fabrics, um, your foams, uh, and then your kind of fulfillment center. So you you know, there was other parts involved, but like you kind of build out a supply chain, but you weren't like necessarily manufacturing something. So that that was that that was like kind of like a light bulb went off. And then uh yeah, but when my you know my wife and I were trying to have kids for a long time, uh after a few years, we always said we always loved the name Penelope if we had a girl. Um we fast forward a few years, we found out we were having a girl, and like immediately I was like, Penelope bourbon just had like a really nice ring to it. I remember it was like a light bulb, and I think my wife was all excited. I came coming in the house one day, and she's like, uh I was all excited. She thought I had like a nursery color picked out or something like that. I don't know. And I was like, no, no, no, no, we'll figure that out later. I got an idea for a company that's called Penelope Bourbon. And if you think about it, at the time it was like Jack Daniels, Jim Beam, you know, old granddad. It was, you know, a lot of that, you know, guns and velcro and dip and all that kind of cool stuff. But they uh so I I just thought I had a nice little touch there. It wasn't necessarily marketing into females, it was just look, it's just we want I was like, man, let's just make great bourbon at a good price. That's just named after my daughter, right? And it does start out a bit.
SPEAKER_03There's not a lot of Penelope's name. Kind of come in and out of fashion. There's a lot of Britney's now who are about 25. Oh, really? Yeah. A lot of 25. Brittany's bourbon. There's probably gonna be a lot of Rihanna's in about 10 years going in the bars.
SPEAKER_01I would imagine so too, yeah. But anyway, yeah, that was so I I didn't have uh anything. I mean, I didn't know anything about the industry. I just was like, oh, all right. Well, first thing, if I'm gonna have a whiskey company, I need to have whiskey, right? So I did some research and um, I think it was an NPR article. It was like the world's largest distillery you've never heard of. And uh it was this about this distillery out in Indiana um called MJP. And I had never heard of them at the time. Uh I cold called them and kind of like kind of talked a little bit out my ass a little bit and was like, yeah, we're gonna buy a lot of, I'm looking to buy a lot of barrels on the mattress king of the East Coast, and you know, like, you know, throwing anything at them, right? Yeah, yeah. The guy I was just talking fast, hopefully they wouldn't pick up on a lot. They would just give me an invite. So they invited me out uh in July over Danny's birthday, uh, oddly enough, like it's July 11th, and uh they they asked, like, do you want a plus one? They're like, Do you want a plus one? And make sure you have a federal wholesale permit. I'm like, oh, I alright, I don't have either, but I'll take a plus one, and of course I have my federal wholesale permit. Why wouldn't I? Um, but uh so uh yeah, fast forward. I'm like, okay, fast track, I gotta get this federal wholesale permit because they're gonna need it in order for me to buy both whiskey. Uh, no lawyers, and just happened we were playing golf one day with our friends. I was like, oh shit, I got this thing coming up in like two weeks. I'm doing this distillery, I'm buying barrels of whiskey for Penelope. Um I got a plus one, anyone who wants to go. And our one friend, John, was like, I'm in, but I gotta ask my wife. Danny, who's married too, was like, I'm in. No questions asked. I go, all right, he's taking the spot. So Danny came and that was the rest was history, and that was it. Okay, well, how do you obviously need liquids and obviously Martsburg, Indiana distillery, which I think is still a question in American trivial pursuit, largest distillery in America probably is the you know supplier of choice for many, many, many, many, many, many, many brands. Um had you thought anything more about it, like branding or how you would acquire clusters or anything like that. No plan. No business plan, just other than look.
SPEAKER_02Let's figure out what the liquid is.
SPEAKER_01I think our fail-safe plan was let's just make something good. You know, we're gonna have to start small because we're gonna mess it up. And if it doesn't work out, we'll never have to buy bourbon again the rest of our lives. That was our that was our backup plan. Uh and so yeah, we we we go to Lawrenceburg.
SPEAKER_02Not even for me. I was I thought I thought I was just a going.
SPEAKER_01Yeah, I would I would have I would have been we didn't know.
SPEAKER_02That was kind of like look, we're not like it's more of let's make it, you know, then we started blending when we were there.
SPEAKER_00But yeah.
SPEAKER_02You know, I think we were both we walked out of that distillery that day. It was July 12th of 18. And we walked, I remember we walked out of there and we were so like probably we were buzzed too, but we were so into it. Yeah, you know, we were just like, we're we're doing this.
SPEAKER_01We're in the biz, you know, we're in the liquor biz, yeah. But they had like a ton of mash meals put out on the table similar to this, and then uh we were like a deer in headlights. They're like, all right, guys, go have at it.
SPEAKER_03Well, there are an expert team there who will hold the hand of any new customer. But had you gone in there, did you walk into the room with an idea like we kind of want to go this way with this?
SPEAKER_01No, and you couldn't even tell you. They had no idea.
SPEAKER_02I mean, they they we walk in the room, and that was my first time at a distillery.
SPEAKER_01Same with me.
SPEAKER_02And it's like, where am I? There was a table and it just had glasses of each one of their bourbon mash bills that they make, that they produce, that they and then, you know, years, it was like two through six of each mash bill. You know, and they're just like, all right, here you guys go. Like, pick out, you know, like start figuring out what you've never even done this, like we didn't even know, we didn't even know what the term mash bill was.
SPEAKER_01Some people do blending like for fun at home. You've never even done that. No.
SPEAKER_02So did no. We thought we were gonna walk in there and just be like, yeah, this one tastes good, we'll take it. This three-year-old, this is perfect, we'll take that, put it in a bottle, and that's and we're good. But like him and I were tasting different things, and I'm like, oh, I like this mash bill, he liked this other mash bill, and we kind of kept going back and forth. And uh, and then the salesperson from MGP sitting there and they goes, Well, you know, you could bun stuff together, right? We're like, Bun? He's like, Yeah, yeah, like mix it together. We're like, oh, and they brought out these like pipettes.
SPEAKER_01Well, of course you can mix it. You're like us like yeah, we're talking about you guys opting.
SPEAKER_03No, they were who came here from New Jersey.
SPEAKER_02Easy money. So then they left us again, and we're like, so we just start tinkering around and we're mixing, you know, X amount of this, X amount of that, and we come up with a blend of three different mash bills. And I remember we we both sip it and we look at each other and we're like, wow, that's actually really good. And he liked it, I liked it. And we're like, I think we're I think we're good. Let's ship it. Yeah. And did that column?
SPEAKER_01That's the white label.
SPEAKER_02That's still this.
SPEAKER_01That's our original foregrading to this to this day. It is well.
SPEAKER_02Now the age has increased, but and the and the where we've come from there to there has changed, but it's this it's the same three match bills and blended together.
SPEAKER_03Well, you've got other variants too, which we're gonna talk and hopefully drink our way through. I thought we might wait until the reasonable hour of 11 to get going. Although we've been set up with ice and everything here. God bless the people and uh the Brown Guilds. But it sounds like you knocked out of the park. Obviously, MGP would never put anything in front of you that was not good, you know, subjectively.
SPEAKER_00Yeah.
SPEAKER_01Well, what happened then? You've got a liquid. Uh, what was how many barrels did you buy? Well, that was a big thing. They thought I was probably buying like 10,000 or something, but uh no, so we had three different mash bills, so we set, and you know, they at the time in 2018, you could buy like 11-year-old, and you know, I went through the the the barrel market's gone through this weird cycle of where it was impossible to get 11-year barrels in 2020 and 2021, and um, it's kind of tropped around a little bit. But uh we we I was like, look, we're gonna mess this up, so don't fall out of your chair, but we're gonna take two barrels, two barrels, and two barrels. So two of each mash bill. And uh they almost fell out of their chair because they had like rolled out the red carpet for us. I mean, it was a nice setup that they had, they had all these people, it was this whole thing. I was like, and they were like, Well, really? I'm like, Well, we're gonna mess it up, but just bear with us, you know.
SPEAKER_02The guy took us on his boat, we drank course lights.
SPEAKER_01Yeah, we were like, I mean, they went, they was like uh, and so we ended up buying six barrels to start. Um, and we we knew we were gonna mess up, and we did our, you know, we went, we it was really hard finding a copacker, number one. Uh Penelope was being born in November. We were bottling that right around that time. Uh we didn't have any clue even about the bottling experience, right? The pack uh the blending experience. So our original assumption was we were just gonna show up at this copacker and they were gonna do it for us.
SPEAKER_03What do you say a copac? You mean an existing distillery bottle?
SPEAKER_01Uh an existing like bottling light. So these these are contracted out bottling lines that will bring in the raw materials, so the raw barrels of whiskey, and they'll have tanks, and you can kind of do your thing, and they'll you bring in your glass bottles and your caps and your capsules and all that good stuff and labels and gets all assembled there and back boxed up and put put out to uh put on a truck. Uh so we've I had thought I walked into a conference room, I put my feet up on the table, I was like, all right, let me know when we're done. And they're like they like threw like four clip keys on the table, and they're like, All right, facility's yours.
SPEAKER_02Yeah, they're like, What do you how do you want us to blend it? What do you think? I go, whoa! Kind of filtration, blah, blah, blah. You tell me. And then so you know, we we worked our way through it, but we tasted it. We're like, this doesn't really taste like the way it tasted when we were at MGP that day. And then that's like where we learned the lesson that production scale.
SPEAKER_00Yeah.
SPEAKER_02Or, you know, the barrels we tasted that day at MGP were not the barrels that we tasted, even though the same mash bills, like every barrel of bourbon, yeah, they like maybe similar traits, but they're different, they're different because you know, just through the aging process, they could be sitting next to each other and they could taste completely different. So the ratio pretty much the ratio that we worked out the day at MGP was not the best ratio that day with those three other different barrels. And uh so we learned that the hard way we we realized what blending actually is at that point. Well, then we had the issue with the the tequila.
SPEAKER_01Yeah, we had a lot of issues, let's just put it that way. But also like I can't say that not explain it. No, you learn real quick. Tell us about the tequila. I mean, right, like you know, you learn quick that if uh uh a uh a you know a bottling line uh is running other products, like they could be running a flavored, like an old-fashioned, flavored, uh flavored old-fashioned. Uh they're running a flavored tequila, which happened to be the case. And you know, those oils are, you know, that takes time to remove those oils. Oh no. And so the first production budget, we had a little bit of a jalapeno flavor in ours. And they're like, oh my god. So yeah, that was like right out of the gate, like issue after issue. Half our first batch was like jalapeno. Yeah, I wrote jalapeno and like a big Sharpie on some of those. Uh people always ask, I can't, I can't I actually used to have a ton, and then I they just disappeared over the years. I don't even think I had it occurred to you guys to like hire a consultant like a distiller of land. Yeah, we had no money.
SPEAKER_02This was like down in as bare bones as it gets. I mean, at this point, yeah, we would call each other and be like, hey, uh, should we you want to like wire in some money for we gotta buy labels tomorrow? Like how much how much of that?
SPEAKER_03Were you guys using the university at Google? Were you reading books?
SPEAKER_02No, just honestly, uh, the best the best experience. We didn't even hire a lawyer to set up our permit.
SPEAKER_01Yeah, I did it all by part. I mean, I was calling like the New Jersey ABC. Every time I called, they know it was my because I called so often, they knew my number, like, hey Mike, it's not done yet. Um, so yeah, we were just doing it like, you know, uh kind of like really down and dirty. But uh, you know, with the blending, it was the first batch. You kind of like, okay, this is a thing we got to tweak. And then you go to the second batch, okay, this is a thing we got to tweak. Third batch, and you just you honestly, the best thing probably that happened was just the real life experience of doing it. Um, I think just doing it and trial and error, uh, you know, and and refining your thing, and then being okay with not being able to sell a complete batch out of the gate. But that's why we started with six barrels. Yeah. Um, we sold it, you know, with that. We we brought it back to New Jersey and started. We we had just had got our New Jersey permit. Um, even before we got our Jersey permit with a federal permit, you can go down to DC and sell it in DC with just a federal permit because it's not a state. So it was an interesting little tidbit that we learned from uh uh the folks at Strong Spirits, like uh Darrell told us that. So we're like, cool. So our first 10 cases we sold was to uh Schneider's on Capitol Hill. He bought 10 cases. It was like, whoa, of the first batch. That's amazing. So we drove, he's like, Yeah, well, just let me know, like, well, who's your distributor? And I'm like, dude, I'm driving them down myself. We all drove down to DC and it like dropped them off, did sampled out. We got a picture of our first customer buying a bottle. And uh then we started selling it from our car. We had no distributor in New Jersey. Uh, and then we, you know, we sold through those first uh and you targeted liquor stores. Yeah, we just went to liquor stores. Uh, you know, our our rationale was uh the bar and restaurant game, it's so like sexy and appealing. It's also uh it's a lot of work. It is a lot of work. So from a from a from a supplier standpoint, right? It's we so I learned that, I mean, I figured that out real quick. Like, man, we're we don't have a we are like strapped. Like there's two of us. There's we're you know, where can we get the most bang for our time and buck? And really for us, it was like, okay, let me just put this together. So if I understand this correctly, I can sell in three cases to a retail store, and then I personally will go in and do a tasting on Friday from four to seven, sell through those three cases, and then I'll buy another three. So that's six cases in one kind of swoop, in one kind of sales motion. Or I can like burn a ton of calories, sell a bottle into a back bar that probably will collect dust, right? Because like I we just don't have the manpower to keep going back in there, right?
SPEAKER_02Nobody's gonna know what to call it by name off the back box.
SPEAKER_01Everybody told us, well, you're gonna you build your brand on premise. And I was like, oh, agree to this. I'm like, I'm not trying to build a brand, I'm just trying to sell cases. Like, seriously, we were like, no, we just gotta sell cases.
SPEAKER_02We gotta stay in business.
SPEAKER_01Our job is to make create revenue and sell cases, sell cases, that's it. And uh, if a brand, you know, we'll figure out on-premise. We know we need on premise, but like we'll figure that out later. Um, and later by, like, we're we're like we're still we're still we're still like we're just starting to crack that code and because you need like such vast resources and manpower for that. We definitely want to talk about that as well.
SPEAKER_03So at what stage did you order a batch to?
SPEAKER_02Uh we sold our first bottle March probably March 1st of 19. And I think we put our next bottling line was like July of 19. So we'll keep in mind, half our first batch was not really sellable. But so we sold the first half of it or the second half of batch one, used that money, bought, you know, I think we bought nine barrels the second order, right? Bottled that, and it was another batch of the four-grain. And you were trying to hit the flavor mark you hit with the first batch. Yeah, but we improved it at that point. We were just really dialing in like what was blending and how to do it. Who's better at nosing and tasting?
SPEAKER_01Danny is Danny's our master blender.
SPEAKER_02So I'm the yeah, I'm the master blender.
SPEAKER_01He's the although I think in the beginning, because he wasn't drinking a lot of bourbon, I was kind of the expert in the beginning. You were the expert in the and then that I've I've passed the torch. Now they don't even let me taste anything. Yeah, that's the way it happens with founders. I think everything tastes good though. That's the problem. I'm like, oh, this is good. Oh my gosh. Drink enough, it all does. Yeah, it really does. It all kind of blends.
SPEAKER_03And you've got a standard uh bottle. Yep. Right? Um, it definitely stands out.
SPEAKER_01Visually, what was the idea? You had a name, it was Penelope Bourbon. Yeah. Right? What did you tell your designer? Well, originally we looked at the Yeah, we didn't really have a designer in the beginning. We didn't get this this kind of fancy peak till uh a little ways down the road, we were just using some Times New Roman peak on Word doc. But we like peonies. My wife loves peonies. Um, they and I thought that's that's our favorite flower. So we I was like, I don't know, just throw a peonie on there. Those are cool. Um, that's what they are. Yeah, full full bloom. They're actually probably blooming in the next uh couple weeks here.
SPEAKER_03So what were the initial because if you're a liquor store owner who would order 10 cases of go, you've got a daily stream of people coming in and they've ordered whiskey from MGP and they've got a label and they've got a bottle, and they're like, hey, please taste it. What would what were the reactions to Penelope?
SPEAKER_01Well, with Schneider's on Capital High, a pretty good sales pitch. I said, look, here's the deal. You buy 10 cases, you will be the only store in the world that carries this. It's not kind of hard to say no to that, right? He goes, Okay, good point. I'll take 10 cases. So that was that was we had that one dialed in. But then when we got to New Jersey, it was a little bit different. New Jersey was tough. I mean, New Jersey is a tough market to crack. Like most people go to like a big chain state and try to, you know, where the I mean, New Jersey's highly regulated. Um, it's in it's an uh independent market, meaning there's no chains. Um, so every every store is like you're on, it's like a knife fight.
SPEAKER_02You think you're only allowed to have three stores per yeah? Yeah, something like that.
SPEAKER_01Yeah, it's it's it's not like uh a Texas or floor.
SPEAKER_02You can't just go to one buyer and then be in ten stores. So no, literally go door to door.
SPEAKER_01Our sales pitch was easy. It was uh with New Jersey, we just learned immediately was well, we'll come do the tasting, and we own the company. And they're like, yeah, you're gonna come in and do the tasting, no problem. That's a really powerful thing. My friend Michael Bashton, who builds liquor brands in the UK, says that's the unfair advantage of small family-like company. You don't have money, but you can't shake hands with Jack Daniels or Jim Beam or Buddy Walker anymore. Well, people can meet you guys. Exactly. So you know, so I always say this too. I go, look, this is and this was it was, I mean, I I've talked to a lot of uh founders, and they're like, well, you know, I'm working on my marketing plans and I want I need like X number of dollars to like spend on market. I'm like, why don't you just go to a store and sell it? Just go to a store and sell it. You'll they'll give you, they'll welcome you with open arms because you're making them money and you're helping drive trip volume or velocity for every at least in Liquor, they will welcome you with open arms if you're gonna go do a tasting. And I think a lot of people don't want to do that. I think we broke, if there was a Guinness Book of World Records for most in-store tastings in one year, we definitely broke that record. Every week? Every it's Thursday, Friday, Saturday, Sunday. Yeah. I mean, then we had delivered ourselves. Festivals, and then we we got Jace, Chase and Bridget. They were friends of ours, and uh, they came on board as like part-time. And I remember doing deliveries up. I mean, I was living down south, going to Sussex County, all those uh shop rights up there.
SPEAKER_00Yeah.
SPEAKER_01Oh, that was so you're doing a whole loop, come back, making all the drops. They're like, sign the QuickBooks, and then uh they would sign off on the delivery because we were doing our own.
SPEAKER_02We were our own our own deliveries, like all the time.
SPEAKER_01Yeah, picking up checks. Don't say it's wrong, but you didn't know that there was a way to outsource all this content. We didn't think you were well we knew it just distribution was the goal. Like it's a district, it's a distributor model, so uh but we were we couldn't, we we didn't get picked up. I you know, originally they were like, come back when you've sold X number of cases. Because I think, I mean, a lot of distributors are for them, they look past maybe the label and the liquid, and it's like, well, what's unique about it, right? But at the time, what was unique about it was uh the the notion, and this is kind of pure luck, but the notion of like blending aged distillate was was actually kind of fairly new in the bourbon world. The notion of like blending, uh of like you know, blending barrels together and that that sort of creativity was usually it was distilled uh a certain way and then aged in barrels. So like you were blending a sim similar match bill. Yeah, of course.
SPEAKER_02Blending of multiple match bills. I mean, obviously Scotch has been doing it for a long time, but in whiskey, that was something that I mean bourbon, I think that's what differentiated us. Like you were saying, what would what were people saying when you went and sold it? Like the we would get, oh, that's MGP. Like, where is it from? Oh, it's still an MGP, and then yeah, they're like, I have there's plenty of MGP, and you know, we don't need any more MGP. And be like, oh, just taste it. And they would taste it and be like, this is MGP if they knew bourbon. And I think that was because of the blend of three different mash bills created like a unique profile that was stood outside of what the typical idea of MGP distillate tasted like.
SPEAKER_01Uh why how did people react to the packaging?
SPEAKER_02Um, no, we don't need more wine. It looked like a wine bottle, you know. They'd like to do it. Is it gonna fit on my shelf?
SPEAKER_01I was like, I'm let's go check. And then if they were really like, and that's when you're like, all right, how about I just come in and do a taste? Right. And they're like, okay. Did you start with liters or 750s? 750s. 750s. Yeah. 750s. Oh, yeah, that is the liter bottle right there.
SPEAKER_03Yeah, it's just so large, yeah. They hooked you up.
SPEAKER_01So how many uh nine liter cases did you sell in your first like 12 months? Oh man, it was not many. Um, it was pretty, what was it? Like we had a hundred accounts in the first in the first nine months. I'm trying to think of that first 2029 number, 2019, was that like wasn't 2,000, was it?
SPEAKER_02I feel like it was.
SPEAKER_01Yeah, it was like probably 2,000 physical cases.
SPEAKER_02Yeah, it was that's not bad at all. Oh, nine liter, nine liter.
SPEAKER_01Yeah, it was like it was half bad. Yeah, half bad.
SPEAKER_03So a thousand nine liter cases.
SPEAKER_012,600. About that, yes. Right. Yeah. So was it wasn't also not bad. No, not bad. And no, but that was like grinding. That was like that was the hardest thousand cases I've ever sold. Yeah, that was a that was a grind. And you know, but then we uh but we caught a we caught a wave as we kind of we with um we were going to work on the third batch of our four-grain. Um we go, you know, we need more, like, we need more some some variation. And at the time, you know, we were we would always be blending it um at cast strength, and then we proof it down, right, for the four-grain. And I remember the uh that one time I was like, wow, this is like really good at cast strength on the second go around or something like that. So I was like, let's just do like a red P and do it at barrel strength. And lo and behold, barrel strength became a thing. Barrel strength really took off in like 2019 and 2020. It's always been a thing. We're not like we didn't create that, we didn't create that, but it's it it really took it started to really take off barrel strength. High proof from the the whiskey enthusiasts, uh, the whiskey community really wanted whiskey at its purest form. And you had bottled it at what ABV initially for the four-grain? Oh, uh that's at 80 proof. That's at 80 and the barrel strength is it was it was that so that was meant to be a uh a consistent product or four-grain. We went back and forth. If you look at the first couple batches of barrel strength, it went from is it is it all the same or is it a batch product? So you'll see it's like no batch on the first one, then we put batch two for the second one, nothing for the third, yeah, and then for by the fourth, we're like, okay, it's a batch product.
SPEAKER_00Yeah.
SPEAKER_01So you like they we we were just trying to figure that out in the beginning, and then it became a batch product. So every batch was different, every ABV was different. Oh, um, yeah. So which was actually more work from like you know, uh registration perspective, but that's ultimately, I feel like that's what people wanted. And you know, that that was uh that's been a uh a product that's been with us since the beginning, basically since the beginning. Well, the four grain is your your flagship. What did you you know, what price do you like to see it sitting on the shelf at in a liquor store? Uh the four grand's usually around 30 bucks a bottle. Right. Yep. And for the barrel strength? I I want to say like 55. 59, 99. 59, yeah, somewhere in the 50 to 60 bucks. So you've done well for the first year. Yeah. What did you improve in year two?
SPEAKER_02We picked up distribution in year two. So in New Jersey, the wholesaler that we met with called us and said, Hey, we see yourself around. You know, why don't you come over to the team? And we were like, Yes, no, you're not.
SPEAKER_01No more deliveries. Yeah, checks. She was trying to get checks, was crazy. Right. But, you know, I think what a thing that we did, which was I think it was the right thing, was if I'm a we always thought about the customer. Always. So it was always about the customer because we were customers, but that's how we always viewed ourselves. Like, if I'm walking in there to a store as a customer, uh bourbon, I'm looking at bourbons, I want quality, it's like quality and price, right? Those are my two kind of leading decision factors. As cool as the P is, I maybe I bought a bottle of it, but it's you know, it's 80-proof, it's a little expensive, right? And if that was the case, right? I'm not saying at 30, I'm just saying if it was expensive. Say it was like 4550. Um, so when we went to this distribution, like I, you know, you see some folks from a supplier side uh in the craft world, they are uh very dead set on maintaining their own margin, which means their prices go up for the most part. Not everyone, but just some people. People. But we we said, you know what, we're gonna we're gonna bite the bullet. We're gonna take the loss as the supplier because we can't jeopardize price with the consumer. Um, we because look, uh my we're competing against Buffalo Trace, Elijah Craig. Like these are good products that have been around for a long time for a long time. They have very so if we just took bit the bullet and didn't we we knew it was a volume play, like you're gonna have to sell a lot of bottles uh anyway. So just take it get take the margin hit when you go to distribution and just maintain our prices. So they're and our prices even went up a little bit. Like I think originally we were like $29.99, which was great. Um I think I think we were like we we try to stay at like the max minim was like $34.99 with distribution, then it got could get flexed down to $30. Um so it it did it did go up a little bit, but we try to like really hunker in on that. And that was a bit that was a big thing because looking back on it, I mean in theory, you're like, man, I we can't we're gonna run out of we're gonna run out of fund. We're not gonna be able to support this. Well, I gotta do $45 a buff, right? Just to just to maintain the business, like the revenue. But yeah, walking that line was well, it was like a really tight, tight rope in that big in the beginning with that. But that turned, I think that turned out had really a big easy.
SPEAKER_02But it played out like if you ran the numbers out, you just had to grow. And hopefully you'll you grow and then it'll work out.
SPEAKER_03Well, as somebody who's in the bar business, you will appreciate you don't take margins to the bank, you take cash to the bank. Right. So that's not definitely worked out for you guys. But what was it like your introduction to the wonderful world of dealing with distributors?
SPEAKER_01I that was like, I did well. Like I got, I I don't know, I was like, I I kind of got it pretty quick. I picked that up pretty quick.
SPEAKER_02That's when Eck and I kind of started veering off a little bit.
SPEAKER_01Like I gave Danny, like, you know what, you can blend. I don't want to deal with all the barrel management anyway. It's like I can't, I can't. And then he's like, and then I was like, well, you also then if you're gonna do the barrels, you might as well take on HR if we ever have employees, right? So Danny got the HR and then operations work great because he was like in the weeds and engineering and all that cool stuff. And I was more like big ideas and sales and marketing and stuff like that, and product innovation. Well, product innovation was pretty, pretty uh universal. Um, but with the distributors, you know, I think like we just I just knew this from the get-go. Like it a, it's uh they don't work for us, right? So I, you know, and you could you sometimes see it out there too. It's like A, the distributors don't work for us. We're we're partners, right? And yeah, I also learned too, we started out with a big distributor, um, and they have great brands that sell. So in order to earn their respect, uh, you can earn the the the team's respect um over time by just texting them. Hey, I was at one of your accounts, I sold it in. Can you put this order in? Do that a lot, and then they're like, oh man, Mike's out there really, he's out there really doing it. Danny's out there a lot. They're hustling, they're trying to get this thing out there, and they're like, all right, I'm gonna, I'm gonna throw him a bone. Let me help them out a little bit. So, you know, by you know, it was interesting with distributors. Like, I don't think once ever we sat down at the end of the year and put a case goal in front of them. We said, let's just we're gonna deliver, you know, we're gonna keep product innovation humming, we're gonna come to market, we're gonna invest in tastings in the customer to help drive demand. And they appreciate it. They were like, all right, that's music to our ears. We never, you know, we never were like, you have to sell this many cases, which kind of has the relationship of, well, they don't work for you. Now, I get it, if maybe you're Diagio, you can do, but Penelope, we couldn't, you know, I knew we couldn't do that. We'd look ridiculous if you asked that. So we we always viewed it as a partnership, and um we actually built great relationships with our distributors, like genuine like relationships, um, to this day, even the you know, Taylor down at Best Brands and Pete Kelly and Gary and the good, you know, a lot of the folks and Sepalo over at Fedway. And yeah, they're they've been great partners of ours.
SPEAKER_03And was the company at this stage still being self-financed?
SPEAKER_02Yeah, in 19, yeah. I mean, we actually to the day we sold it, I mean, it was basically self-financed. We had taken some loans from family, like a promissory note. Yeah. But we and then but we got through the first two years of business kind of on our own. You couldn't get a bank loan. And then we could get a bank loan after about two, three years in business when we started kind of moving. And so we made it, we made it through holding on to you know, the company for the most part.
SPEAKER_01Nothing spent, zero dollars spent on marketing outside of tastings. Um, but Danny and I primarily did those, so it was free. At least that first yeah, two years.
SPEAKER_03But how'd you, you know, by year two, had you guys started engaging with the the community, the whiskey community, the bourbon community, the influencer of the events.
SPEAKER_01Well, no, I mean, even on our even on our first batch, we we, you know, that's true, yeah. We we sent out bottles to people. And at the time, too, you know, I don't know if we were like supposed to or not, but like we sent some out, like just as sample bottles to try it. And people respected that. And that whiskey community from an online perspective was was was around, but it was still kind of in its infancy, I think, from a social perspective. And we were kind of like in there at the right time at the right place. Um, and again, a lot of these folks, like we were like we were just as much part of the community as they were. Like we were into it, like we were like this was our baby, like we loved like whiskey, like we still do. It was awesome. So a lot of the folks, like these have become very close friends of ours, like genuinely close friends. So it's uh yeah, it's been it's been awesome to see. But I think when we really from a from a sales perspective, I remember we what was that deal? We did it through New York. I think uh the was it uh the retailer, wasn't it, Mashville? But it was um we we sold a private batch of barrel strength online through uh, you know, it was all set up, it was through a retailer, so it went through distribution. Or at the time we didn't even have New York, so it went through like LibDib, I believe. Um, and it was awesome. All of a sudden we're like, oh my god, like our bottles like all over the country, legally. Like, I mean, it went through our LibDib, which was our New York distributor, to an online retailer that was able to, you know, ship. And it was it was unbelievable at the time. That was cool.
SPEAKER_02Yeah, that was the first time we were like, well, we just sold one palette to one person. Like, this is amazing. That's great. It's a nice big check coming in.
SPEAKER_01Let's do more of those. Yeah. So that's when we really kind of were like, okay, this it's like people want customization and stuff like that.
SPEAKER_03Yeah. Uh, what did you do to sort of cater to those people?
SPEAKER_01More of the same? Said yes to everything.
SPEAKER_02Yeah. And then we we had uh we had done all our own shipping. So we would bottle the product down in Kentucky, and then we were shipping the product back up to New Jersey, and we had a small, tiny like warehouse, basically a garage in Roselle, New Jersey. And that's where we would ship out to our wholesaler or our wholesalers and keep the product. We at the time we were to go down to Kentucky and to have to do it. If we wanted to innovate or do something more hands-on, it was just a lot of work, and these bottling lines, you know, just didn't have the capacity to let us do that sort of work. So we expanded our warehouse and made it bigger, and then got it, we got it DSP'd, distilled spirits permit from the federal government to allow us to blend, dump barrels, bottle. And when we got that open is where we really started taking off on like the product innovation and being the being able to really like curate specific types of projects, like our rose cask finish, uh, our toasted series, where we take the bourbon, we put it into a new cask, and then we let it age for a couple months and then we bottle it. So that was like a whole that was a game changer for us.
SPEAKER_01Yeah, and more than then there was so like barrel strength was this this unique trend in whiskey, right? Like really skyrocketing. At least in my opinion, now it might have skyrocketed previously. But I mean, I just seemed like it was like such a hot thing. You look at like smoke wagon and stuff like that at the time too, right? They're uncut was just um, it was unbelievable, right? And so we see it started seeing brands and us included doing barrel strength and and full proofs. Um, but then the other big curve in whiskey that we we kind of were like early on in that in that uh phase, which was just a rocket ship, was cast finishes. Um, cast finishes, bourbon was a hockey stick, but then you look at the cast finishes within the hockey stick, and it was like straight to the moon. I mean, this that was like that was a lot of growth was happening just within that segment of bourbon. So, and we we kind of like we never we didn't have any data, we didn't have like Nielsen reports, we just kind of like knew because we were so engaged in the community. So we're just talking to like our friends and be like, oh, this is so we kind of like hear it, and so our first cast finish was a rose cast finish. Um, we wanted to do something different that wasn't like a sherry, just like you know, and with our name, we were like, oh, let's do a rose. Um people think it's bottle of rose anyway. We think it's a bottle of rose anyway, um, which actually now has kind of morphed into Riviera. So we've uh uh you know upgraded the product. Riviera just was bottled, and that is our rose cast finish, with the the big difference being it's uh American light whiskey um uh blended in there. It's uh eight, was it an eight-year American light whiskey? Nine year. Nine year. So Donnie, just from then until now, uh have you hired any consultants, brought on any professional training, or you've just all done it yourself? You've learned on the job. We learned on the job. So no, we had Monica and uh Ashley too for a little while. Oh yeah. Yeah, yeah, yeah. So when was that? That was probably 2020 or 2021.
SPEAKER_02Yeah. Yeah, yeah. So we had a consultant for a couple months in 2020, 20, 20, 21. Um the blender MGP was a big like sort of encyclopedia of knowledge. So it'd always go back to to him and be like, well, why is this doing this or why is that doing that? And he'd be like, oh, you know, and kind of give a lot of uh feedback there. But you know, it used to take us a long time to do these blends. Could take like, you know, back then it could take a week to do a blend of barrel string. It was just a matter of putting it together in as many different ways as possible, you know, and until you find what it tastes the best. And then now you can get to the end story pretty quickly.
SPEAKER_01And over all, you know, I think at that time too, like we kind of realized that man, this is like we're starting to hum. Like, are we doing it the right way? Like, that's when you start like, okay, this is like getting real. Like, so we we would bring in various folks and you know, beyond these uh shorter term engagements, or they could be longer term. We didn't really know. Um, and then I think ultimately Danny was like, I can, I I got this. Like, I'm he's had he was really starting to dial it in. But even on the consulting front, we did we brought in um consultants who actually stayed with us too, was the uh the uh on the compliance side. So as we added more states, you know, doing the compliment, I mean it was just so much manpower managing, you know, product registrations and pricing and price posting, every state is literally different. So um that was like an area. So we've kind of like picking different areas of the business to help us scale, which helped a lot.
SPEAKER_03Well, before we get on to you know, the sort of second half of the story, which is building it up to the stage where it's actually acquired by your uh supplier NGP. Shall we try a little? Yeah, yeah. I would love to reacquaint myself with it because I haven't had it. I think you pulled the bottle out of your bag when I met you six years ago. Probably.
SPEAKER_01And I might have probably had jalapeno in it, but it's not possibly. Oh, I might have remembered that.
SPEAKER_03But uh the flagship Penelope, the four-grain.
SPEAKER_02There's some uh yeah, yeah.
SPEAKER_03I have this glass, I have this glass specifically to use as the dump glass. So I don't know if you want to, but yeah, I'm hoping.
SPEAKER_01I hope you don't.
SPEAKER_02Yeah, I'll just want to be glass. Yeah, this is where it all started. So you got our Glen Cairns, and then you you got glasses with a rock in it.
SPEAKER_01Cheers. Cheers. Congratulations, gentlemen. Thank you. Thank you for having us on.
SPEAKER_02So this was meant to be an easy light sipper. Um it's got four grains, so it's got the corn, rye, wheat, and malted barley. Most bourbons, you know, have like either two or three grains, but it's a rye bourbon, or maybe it's a weeded bourbon. It'll have the corn. All bourbon needs at least 51% corn. And then uh, so with this, it's still primarily corn. It's 76% corn in this, so it's still very sweet and sort of robust. It's got that classic sort of bourbon sweetness, yeah, sweetness to it. And then you get a little bit of that rye, so you get a spice kind of on the on the palate as it goes down, and then you get that weeded kind of like creaminess. What's the rest of the uh mash bill? Now that we know you know what a mash bill is, yeah, exactly. It's um 15% wheat, uh 7% rye, and 4% uh malted barley. And 76%.
SPEAKER_03So it's very pleasant. How I I know this is a wild generalization, but how do most people uh use it? Like do consumers drink it neither with ice, or do they mix it or what? If you have to talk about just of the four grain.
SPEAKER_02I've seen honestly it's all over. I know, yeah. I mean, people mix it, they drink it on the rocks, some people drink it in meat.
SPEAKER_01It like what do you see in on-premise? Are people drinking it in cocktails? Are they I've seen a lot of old fashions? Uh it's definitely it's a it actually makes a great lighter old fashioned. Not as much bite, um, especially if they were doing rye before. Uh so to everything, to mixing it with lemonade and strawberry lemonades. Has anyone ever written in and complained that it no longer has the jalapeno note? No, no.
SPEAKER_02It really mixes well with ginger and fruits. Um it is a very easy drinking uh whiskey. But of course, it's a whole range.
SPEAKER_01And it's our what's crazy, it's our it's our number one seller. It's a it's a it's a workhorse.
SPEAKER_02That thing, it's it was consistent, it's the least spoken about, but it's our biggest seller. So there's every every range needs one.
SPEAKER_03Well, let's try a little of the barrel strength, if you don't mind. Yeah. Yeah. Or we resume the serious talk.
SPEAKER_01So barrel strength just went through a kind of a nice little upgrade. Is that uh I don't believe this is it. It just it just came out, but we've moved barrel strength now to a seven year. And what is the four-grain now? Uh four, is it four to five on the four-grain? So four to five. The barrel strength was always four to six, you know, depending on the barrel. And those barrels are aging in Indiana. Uh yes, yep. And then, but now barrel strengths, uh, we put it's now a seven-year. So we went, we moved that product up to a seven year, which is nice. That's a nice little upgrade. That was the other thing, too. We always wanted to, we were okay starting young with our whiskey and progressing. Like we always want it to be show progression in our product. Like we didn't want to come out of the gate swinging with something out of this world, and then the next release isn't as it's a letdown. So if you're always progressing, uh that's a good thing. Just like an iPhone. It's always getting better.
SPEAKER_03I've actually noticed that with there's one other brand in particular that comes out of NGP, and I didn't like their first iteration, and they improved it. They increased the proof, they increased the age.
SPEAKER_01They they're they're they're getting it, they're making it better. So, and I always looked at that's like a that's that's kind of like uh an ode to the customer. Like, bear with us, we're we're getting we're gonna get this thing's always we always want it to the every batch should be better than the prior batch.
SPEAKER_03Well, that is some truly delicious whiskey. Can you talk us through the mash bill for the barrel strength, please?
SPEAKER_02The barrel string mash bill will roughly be the same as the four grain. And you don't realize when you're bunding the three different mash bills, just plus or minus like two percent, three percent on one of the greens is a big difference, especially when you have like a hundred barrels lined up and you're doing the ratios. It could be uh, it could be you know 10 more barrels. But um so the barrel strength, every batch kind of just gets blended to whatever works best for those barrels. Um and you know, it might be a rye forward batch, it could be a more chocolatey batch, it could be uh maybe we're higher on the weeded side of it, and uh it becomes more green followed, something like that. So it's it kind of jumps around. You always tell that it's oh, this is barrel strength, but you get very different notes across the batches.
SPEAKER_03And do you find that four-grain drinkers drink the barrel strength, or that there's people who just drink barrel strength that don't really drink the other penalty?
SPEAKER_02There's people that like I've met a lot of people out there that are just like, oh, I just barrel strength's just my go-to. That's just like what they do, you know, and they're like a couple glasses of that a night, two glasses a night, and that's great. That's all I need. So much taste, so much flavor.
SPEAKER_01I mean, but blending is such a dark art, nobody talks about it. Uh you'll have they'll they'll wheel out master blenders, but most actual master blenders do not have that title.
SPEAKER_03It's like operation supervisor or something, and it's typically somebody, it's very often a family connection, certainly in Scotland and Ireland where I'm from, yeah, here as well. Like there's no blending course I'm aware of at any university, you know, it's literally the sitting next to Nelly class of uh of learning, as one of my instructors used to call it.
SPEAKER_02Well, I always say, because people are always like, Well, how do you blend? And I mean, to this day, I still do all the blending for all the products. So every every day there's shipments to my house of samples, tank samples, barrel samples. I still go out to the distillery all the time. Um, you know, we but uh people are always like, Well, how do you blend? How do you learn to blend? And I'm like, anybody can blend. It's just a matter of how much time do you have in the beginning, you know? And then as you keep doing it, you just become very familiar with the liquid or the distillate that you're working with. So, like, I say I I can I can blend MGP extremely well because I know all the warehouses, I know all the barrels, I know all the barrel types, different profiles that you could expect and where to find them. But you know, if you sent me into like Heaven Hills warehouses, yeah, I it'd be like starting over a little bit and be like figuring out where you are, what they taste like, and the different sort of ingredients that you have there, you know. So I'd be back to like taking a week to do one blend instead of like I could I could really pinpoint it in very quickly now, you know.
SPEAKER_01Well, there's a lot of uh dark arts in blending, like for instance, the use of intermediate blends that nobody admits to, or in cognac, they'll even alcoholized water and age that too.
SPEAKER_03And that's gonna be the water they use to proof it down. Yeah. You know, micro bubbling, fun weird nerds. Yeah, yeah, like that.
SPEAKER_02There's a lot of like sort of inner processes that go into how it the end product's gonna taste. Like how you dump the barrel, how long you let it sit in tanks on finishing, like what's you know, do you cut it with water before you put it into the finishing cast? Um you know, especially when buttoning multiple match bills, like letting them rest, sit, and uh what time of year are you bottling or blending or or aging that plays a big factor in how stuff comes out. So yeah, there is a a little bit of that stuff that you it's kind of like you figure out who it's on the ground or it's handed down to you through knowledge, you know. Yeah, or you can Google it. Fuck it.
SPEAKER_01Yeah, these days people use AI.
SPEAKER_02Yeah, the trustworthy source.
SPEAKER_01Put the memory feature on cowork, and you're good to go.
SPEAKER_02Right.
SPEAKER_01Yeah.
SPEAKER_03So putting if you upload all your notes to Claude, yeah, the cowork, maybe, maybe incidentally, you guys are here because uh the brand guild reached out, and this is you know, there's there's much bigger podcasts than mine. But I get uh on average one to two pitches a week. So I have a new uh line item in the show notes, which is like the terms and conditions, which is we automatically reject pitches written using AI because they are all, and I mean all identical. Um Wim Mitchell, who's I don't think he's with the company anymore, but he he just wrote an actual email. He's like, hey, there's these guys, uh, would you have them on the shop? Yeah, yeah. Um literally, because I've been drowning in a sea of AI pitches. Yeah, like it's all they're they must all be using the same program.
SPEAKER_01Well, I don't use it for emails. I really don't because I haven't found it has my tone. But uh cowork with Claude Cowork, oh my gosh, I'm talking more like imagine Danny had all these notes of the warehouses and all this stuff and the barrel types and all that that knowledge up there was just written. I mean, it could be in raw data form, you just upload it and it could create the Danny Pelice Master Blender. Playbook. Like it, but like instantaneously. Oh no, I think which is really cool. Like to me, like organizing like large data sets is what I think is so cool. Like I think that's really interesting. Should do that. It used to be a coffee table book.
SPEAKER_04Yeah.
SPEAKER_01It used to be that the smart person was the one with the best memory.
SPEAKER_03You'd say, look, I know Dave smells a bit, but we've got to have them on the quiz team. Yeah, yeah. Now it's currently it's the person. Then it was the person who could put in a Google query the fastest and best.
SPEAKER_00Yeah.
SPEAKER_03Literally who had the best cell phone service. Yeah. And now it's probably who can interact with AI and ask the right questions. Let's get back on track. We're going to skip ahead a little bit. You guys were acquired for the Princeton 105 million by MGP in 2023. So at what stage had they started like hinting at that or said, You guys sure are buying a lot of whiskey from us. Like, had it been anything or did it come out of the blue?
SPEAKER_02I feel like it came out of the blue. That whole year happened so quick. Yeah. We were, we were just, I mean, we were so heads down in the business and just it was exploding in 2020. Exploding, it was growing. We were we had no staff. Like we were just all over the place. We were traveling constantly. Uh you know, in those short amount of three years, we had five kids between the two of us. We is a big word.
SPEAKER_03Yeah, yeah, yeah. You're involved, but someone else is doing that.
SPEAKER_01No, our families were very supportive, our wives in particular. Um, but it was it was a wild year. We were going like a thousand miles an hour. And what were your case sales at when you were acquired? I don't know if we're allowed to actually say that.
SPEAKER_03Was it five figures?
SPEAKER_00Four things? I have to use my fingers. I can't edit this, so don't.
SPEAKER_03Yeah, well, that's great. Um, yeah. And again, don't want you to betray any confidences, but what did MGP say? It's like, hey, you guys are lucky or you're good, or you've caught lightning in a bar. What was their internal logic?
SPEAKER_01I don't I don't think it's more of just MGP. I think it's uh the basis of maybe outside of tech, a lot of MA is just looking at, you know, you you got if you look, if you read between the lines um on numbers, it's it's pretty telling whether it's got the potential to be a real brand.
SPEAKER_03Well they knew obviously exactly how much of uh how much whiskey you were at least buying from them.
SPEAKER_01Yeah. Yeah. Yeah. So they knew what we were purchasing from them, but but uh I go back to the mattress world of your customer acquisition costs. So, you know, I think if you look at numbers and you kind of read between the lines and you could you could tell pretty quickly just by looking at a a balance sheet of is this a real brand that's you know organic and really got its organic growth, or is it, you know, unorganic growth, right? Or paid growth or just launching a new market. It's you could you could, I mean, I could tell you that in two seconds by looking at a balance sheet. Um, so I think it's I think that goes for M, you know, any MA, I think that you can kind of see that pretty quickly in the numbers. And uh then it's up to the acquirer whether they want to they want to go down that route.
SPEAKER_03So you're now are you the VP of strategy at MGP overall or just for the Penelope product?
SPEAKER_01Just like really Penelope, yeah. Right.
SPEAKER_03The same you're the uh master blender for Penelope. And obviously they they know how much you're buying from them, so they can work out more or less how much you're selling, and then it's easy to work out a multiple and stuff like that.
SPEAKER_02But if the business also, I'm sorry, but also you know, a lot of like liquor sales are you can get that data.
SPEAKER_01Like they're control state data, NAPCA data, Nielsen data, uh there's depletion data. Um there's that that's that's you know services now. I don't know if you've heard of them. Uh they basically scrape online menus on the that are on the internet. And then they're like, people in Texas. Yeah, yeah, yeah. It's on the online menu. I know it's off the bars. Yeah, whose menus they've scratched. So it's not totally but it gives you like an idea. Like, and I think even like even if you look at Nielsen data, you're it's a it's a subset of your of your total sales.
SPEAKER_02But so they had an idea. So they yeah, they gave us a call and they said, We're thinking about this. Would you mind sharing some information? And we'll let you know right away if we're interested. Are you it they said, are you interested? Well, what did you do then? Did you go home and say, fuck? Or like, yeah. Yeah. I just we didn't expect them that like we didn't we really didn't expect them to call, which was interesting. You thought there was other people who might call? We thought there might have been other people that were out there that would call. And we had at the time the most obvious one we didn't think.
SPEAKER_01But we we were more like we we were looking at it like, oh my gosh, we're growing so much. We never it wasn't about an acquisition, it was about uh, it was really about the growth. Like we were like, how do we support new markets and this? And we're gonna need more sales, sales reps. We're gonna need yeah, so we were looking at more like doing like uh a strategic injection of cash. Right. So you you need money, but also expertise. Yeah. 100%. No, because we were getting smart money, right? Yeah, we were getting into we were getting definitely into like uncharted territory. Like and then there was now much more at stake than say, you know, when we made batch one. So we we were definitely looking at it very similar.
SPEAKER_02And uh well, we're you know, we're looking at we're at a fork in the road, like how do you grow? We had our facility in New Jersey, we had our warehousing in New Jersey. It we were the time was ticking, like we were gonna outgrow that space you know very shortly.
SPEAKER_03So an engineering perspective, you see?
SPEAKER_02Yeah. So we knew our deadline up here, and we were actually looking at like maybe buying property in Kentucky, like building a facility somewhere else, you know, and then kind of going that route, bringing in strategic money and growing it like that. But the other fork in the road is get acquired at this stage, you know. So we were sort of looking at all everything at that point.
SPEAKER_01And in terms, obviously, if you are a company who requires a smaller company, uh, you bring money, cash to the table, you bring knowledge, connections, and generally you want to scale it.
SPEAKER_03You want to take them from 100,000 cases or 50,000 cases to a million cases.
SPEAKER_01But if the sales were largely Mike and Danny doing tastings and liquor stores, what became the sort of logic for scaling Penelope, I guess to this day as well. Because are you guys still out every Thursday, Friday, Saturday? No, we actually haven't been since the I mean a lot of it there be even pre-acquisition. I mean, a lot of like, because again, we had no marketing budget really per se. We were scraping by, we had uh every dollar we had was going towards barrels uh inventory. Um and I think we we in part uh really well and genuinely loved the innovation aspect of the product development. So, you know, we were coming up with new and exciting products and and how they fit in our product mix was one thing. And we were, you know, that was a big piece of how we were able to, you know, to get things humming. Again, we had a great rapport, rapports with our distributors. So that, you know, they were they kind of always had our backs based on those kind of relationships that we had established. Um, our retail partners that we became close with were also big supporters and help help helped us along the way. Um, the the customers, obviously. But then after the fact, too, I think it was about with the MGP expertise, is now we had like a real marketing team. We had real resources, we have an entire sales team. And I think it was then like about quality, and then now post-MG post-acquisition, it was like, how do we marry these two companies? We get our whiskey from them. So, how do we we and from a customer's perspective, they're gonna be like, well, the product's gonna get better. And it and it did. And so being able to introduce products like our state collection, you know, um uh light whiskey kept was able to keep going. Like it was 13 and 15 years, and then it was done. Like there was no more light whiskey. And then with them post-acquisition, we're like, well, now we can do like a 17, an 18, a nine, you know, we can keep this thing humming. Um, so we were at barrel strength seven year, increased the age of four grain, uh, really without jeopardizing, without increasing prices. So, and in fact, in many cases, it's gone down. Um, so product quality went up, prices go down to the end consumer. I'd say like just any industry I'm in, that's a pretty that's a pretty good winning formula, in my opinion. So now that there is a marketing team, uh what is the the marketing USP or USPs for Penelope bourbon? It's not that Mike and Danny are gonna come do a tasting in your liquor store. Like who's the target demographic? How's it presented to them? Is that a thing you have now? Yeah, I mean, that's something they've been working on for I think I and I think it's like safe to say too, um, it's we're still in that, we're still only, you know, we've been at it now for seven years. Yeah. So I think we're now like at a point where over the last you know 18 months uh and still ongoing, like figuring out what that is. And I think first it starts with what's our what's our lineup look like? What's our shelf set look like? And and where these products fit in. You've asked questions about like, you know, who's drinking, you know, and it a lot of it goes back to too, is it is it a taste? Uh it's a taste for everyone, you know, there's a a taste for all tastes, yeah, so to speak.
SPEAKER_02We used to say everyone's bourbon right before, and then they're like, well, who's everyone's? Or like, well, we go somewhere and they there's an eighty-year-old woman that says she loves four green, and then you know, you got the demo was all over the place.
SPEAKER_01It was, and now they're starting to dial it in, and and you know, you know, who's your bullseye target consumer for this? The one that you're what I've seen from the data that I've seen the most, uh, and again, it's not like uh uh end all be all, but the data was really like like what was it, that 25 to 44, like we really were performing well in that in that kind of millennial demographic, performing very well millennial demographic, which is a good demographic to be for the future's sake. Um, but that wasn't everyone. We had uh we had baby boomers that were in there as well. But but in terms of like one that really stood out was that was that millennial component. And we kind of knew that too. I mean, we've done so many in-store tastings, but yeah, I don't know, Danny, what do you think?
SPEAKER_02Yeah, I think like yeah, that the 30s, kind of just exploratory phase, graduating from you know, beer and vodka, and just trying to get into something new. You know, they don't want to drink their their dad's bourbon, um, and they're looking for their own identity.
SPEAKER_01Yeah, that was interesting too. If you like almost think about it, it's like you had Maker's Mark, which was one generation, then you had Bullet, which is kind of another demographic or generation, and then what's next, right? And uh, we always felt like you you guys would know better than I would, but like every, you know, every bartender wants to kind of have their own plant their own flag. I mean, of course, you got your heritage brands, which are you know not going anywhere, but maybe there is something new and cool that you could grab onto that's like you can make your own.
SPEAKER_03Well, should we try another one just to uh fit something in? Do you want to pick one out there, uh?
SPEAKER_01Toaster.
SPEAKER_03Which is what we're gonna be by the end of this podcast.
SPEAKER_01Oh five o'clock somewhere. This is true. I got back from Australia not long ago, so uh I can say my clock hasn't adjusted yet. Definitely five o'clock. That's good. Well, they love American whiskey more than any American. We actually opened up Australia pretty early on in our phase. What was uh Brock? We had Brock down there in Australia. We were selling bottles out of Australia, it was fantastic.
SPEAKER_03No, they specialize in amazing American dive-ish whiskey bars. So Fortunate Sun, Palino Lounge in Sydney, uh Frog's Hollow Saloon in Melbourne, uh my friend Marty's Places, Cinematic's, uh, Saborone, Brisbane.
SPEAKER_01Like, and they do it better than America. It's like when you go to Disney World in Japan and it's like better than the one in Oregon. They're just so into it.
SPEAKER_03I think they share a little bit of the kind of cowboy mentality.
SPEAKER_02Yeah, yeah. Yeah. Well, talk us through this one, please, if you don't mind. This is one of my favorites, actually. Um, it's it was it's always been fun to make too, because we take we take a bourbon blend and we put it into a new charred American oak barrel. So it gives it like this sec sort of second life to it. So Penelope has always been more grain-forward, like with that foregrain, you you can actually like really taste the grains. You know, it's not so much char and oak that are coming through, right? With this, this like layers on that grain profile, like this caramaz and sort of oak, tannin note that give it this added layer of depth.
SPEAKER_01And it's 100-proof.
SPEAKER_02Yeah. It's muscular. Yes. So it stands out. Um, and then also we release this four times a year and we release it at different chars. Interesting. Yeah. So we realize that the char level on the barrel is kind of impart this additional flavor or profile. Like the lower chars are more kind of sugary and caramelly, um, you know, brown sugars. And then the the higher chars, like a char five, is more, you get more of like the oak and the charcoal and the darker chocolate notes and things like that. But um, and for people, the the barrel char is where you actually like put a flame inside the barrel and you light it on fire, and then you get that charcoal inside. So a char one is like a light char. So maybe they they only leave the barrel on fire for 10 seconds, 15 seconds. And then a char five, I believe, is like 40 to 60 seconds, right? So just deeper char that lets the the liquid kind of penetrate farther into the barrel and get more contact with that that charcoal. Um but yeah, we were this was just a huge experimentation in the beginning. It was like 2020, and uh I show up at the warehouse one day, and Mike had ordered these new American oak barrels because he was talking to this sales guy from uh from SpaceX Cooperage. I'm like, what are these? He's like, I don't know, let's let's try putting like a blend in there and see what it's like. And this is in New Jersey, right? Yeah, in New Jersey. And he got like a char one, two, uh, I think one was a five. And um so we threw we put together a blend and we put it in there, and we we thought we were gonna pick one of the barrels, so we're just oh maybe it's a char three. So toasted will be a char three product. But we started realizing that they were all really good in their own different ways, and the way you finish it was very different between a char one and a char five, like the duration or what type of blend you put in. So over the years we've really bowed that in a little bit, even like the season in which you put the the liquid in the barrel. So we'll do our tar, the lower chars in the summer, where you get more kind of in and out of the barrel because of the weather, and then in the in the winter, you don't get as much penetration into the barrel. So I use the higher chars in those months. But it was a really fun product to put together and and uh it's one of my favorites.
SPEAKER_01So, amen. You guys are rocking and rolling now. Do you have like an office for Penelope? Is there ever gonna be a visitor center? I think that's part of the marketing. They're trying to we're trying to figure that all out. I mean, we we piggybacked off um our sister brands at Lux Row. So, you know, we have uh barrel picks out of Lux Row. We do some barrel picks out of Lawrenceburg. Um where we have Lawrenceburg, we have like our own little barrel kind of section within one of the warehouses, which is really cool. Uh, but no, uh everything's kind of in in St. Louis at the LuxCo offices. Um, and then we have our you know, Kentucky distilleries. Yeah. Really, that's the two, that's like the two main locations right now. But nothing, just nothing yet. That's projected to be a big thing. Um there was an article several years ago about the Napa fication of uh liquor visitor centers. If you look at what Napa does just with winery vids, a lot more fun to visit a distillery. Yeah, yeah, yeah, yeah. Amazing stuff being done uh all around the USA, but some of the best are in uh Kentucky on that main street, uh which I think is called Main Street there.
SPEAKER_03And it's a way to interact with uh your customers.
SPEAKER_01And they work. Your super fans, and yeah. I know it's something we've we've looked at, we've talked about. I know it's something that's people wanna wanna definitely continue exploring. I know it's definitely on the roadmap. So yeah. TBD.
SPEAKER_02It's like planting the flag of like your identity a little bit. It's like, you know, we have a lot of identities, I guess.
SPEAKER_03You've got a few. Well, it helps you solidify it. Like you guys, you kind of remind me of one of my clients. Uh they created a brand and it got to a million and a half cases, it was adding half a million cases a year, it still is. And they called me up and they're like, we'd like you to uh work on the brand story.
SPEAKER_01And I'm like, you don't have a brand story? So I had to reverse engineer a brand story for a brand that is now too many cases. Yeah, yeah.
SPEAKER_02That was uh that was hilarious. People would always ask us what our stor our brand story is, and we'd you know, we'd like to We just give them the rough background on how we started the company. Yeah. We're we're develop we're in it right now, we're making it.
SPEAKER_01Yeah. Well, like Mark Twain said, if you always tell the truth, you don't need to remember anything. Exactly. But obviously, brand stories develop over time. They might be a little polished and a little embellished.
SPEAKER_03There's hopefully at least a grain of truth to them. Yes.
SPEAKER_01So let's talk about whiskey more generally in the moment. Obviously, American whiskey right now, lots of uh uh, shall we say, tricky bits going on, tariffs and stuff like that. Has any of that affected you guys? Not as much. Uh and I think partly because Penelope's still in growth mode. Um, and and that's I mean, I think if you look at uh the the the distribute the open distribution available in the US, Penelope's got a big runway ahead. So I think Penelope ha hasn't been as impacted by that um fortunately right now. Just so given the timing of where we're at as a brand being seven years old and uh you know some of the outside things around tariffs and things like that, I think Penelope's kind of skirt tailed underneath that, partly because we're still young. You know, so I don't think it's uh I think if you're like obviously like a bullet or one of these more Jack Daniels where you have these real mature businesses, yeah, it's probably gonna have a significant impact. Because a lot of the big players have paused production at their sites, not just in America, not just famously Jim Beam and I I think MGP as well. But uh most of the Irish distilleries. It's all more due, uh the uh Middleton distillery. So they're obviously sitting on rich inventory, like they they could chill for a minute, and they also have to tap dance for their public investors, even if it's a a bit of a silly thing to do. Yeah. What do you think is gonna happen in the States in the next like five to ten years? Because Bourbon was on a vertical upward trajectory, as you mentioned.
SPEAKER_03Young people discovered it, like famously the people who watch Mad Men and Dragon Fashion.
SPEAKER_02Then now it's in many cases their kids who were doing it. If you look at the growth trajectory before COVID, it was on a steady sort of increased trajectory. And then COVID kind of threw it, threw it off a little bit. And the you started the hockey stick, and that's where everybody got a little reactive there, right? Because right before COVID, the distilleries were planning on reducing capacity anyway. And then when COVID happened, they were like, oh no, like we gotta we need to turn the faucet on. So like it's just kind of like this readjustment. It's still growing on that like sort of same trajectory. It's just not as it's not that sort of 2020 hockey stick that started to occur. Um and you know, so it's like uh it's just like the re like the markets, it's a little reset in the market, and it's I don't think it's going anywhere. I think you know, it's probably like an eight-year trough or something, and it will start re start producing again at some point, you know, we'll run out. People will use different people will figure out ways how to use the liquid as well. You know, maybe it's not just traditional bourbon in a bottle, right, that you pour and eat or on a raw. You know, maybe they'll use it in different sort of things that meet more of the consumer's needs at this point.
SPEAKER_03Well, we're 30 years into the second golden age of cocktails, which started right here in this city.
SPEAKER_02Yeah.
SPEAKER_01In uh call it like the 1830s or 40s, and it ran all the way through uh to the start of Prohibition. And it didn't kick start again until about nineteen ninety four. So cocktails have a long way to go. What's your uh biggest export market outside the US? I don't even know, actually. What is I mean, I know we're we're doing A bunch in Europe right now. Australia was a great market. Japan was a good launch. Yeah, we did Japan. We have the duty freeze out in South Korea. So yeah. I mean, I think internationally is a huge uh is a lot of white space for us. I mean it is. I mean, I think that's uh that's an area of focus. So I think international is something that has always been on the radar. Um but I but yeah, probably I'd say the the Asia, actually, that's probably a good point. I think Japan and Korea is probably our top export markets. Yeah, it was explained to me on my first ever trip to Kentucky that the reason Japanese people love bourbon so much is that after World War II, they were being wined and dimed in Kentucky by real estate developers who wanted them to put Japanese car factories in Kentucky.
SPEAKER_03Uh-huh. Nice.
SPEAKER_01They would be taken out and given the finest bourbon, which was you know very difficult to get inside the US at the time. So even when bourbon went through a slump in the US, it was actually rising in Japan. That's why they love it so much. Yeah, no, they do. They definitely do. Yeah. But yeah, I mean, I think the whiskey market's like everything. I think uh it's it it's it's whiskey, it's American whiskey. It's uh uh I wanna it's our national spirit. So uh it there's I think there's a lot of exciting times uh like like across the spectrum for large and small brands and new and emerging brands. Um so if we're sitting on some inventory right now, those are starting to dwindle. Um I think it's a great opportunity for new brands to come out. I think it's a good opportunity for brands like Penope to continue our our sales growth and grow distribution. So I think it's exciting. And now that you know you've got some gas in the tank and you've got some time and perspective and a team, what's the uh what's the on-premise strategy? Oh, that's a tough one. I we have, I mean, honestly, we it it a lot of it's been organic. So as our brand has gotten bigger and A, it's more readily available in all these markets. Um it's been amazing to just see organically the the the uptick in on-premise. And that's like a very big organic. It's also a testament to a lot of the programs our sales our sales team is running, our marketing team is working with conjunction on. Um, but on-premise is uh is always a a point of it in every conversation historically was never a big topic. Like we'd never be like, all right, on-premise, we'll figure it out later. But now as we're as we've kind of come into this stage, like we're always thinking on-premise is always a part of the discussion. And with with every kind of market discussion that we're having with our team and the distributors, we're always it's always a part of the plan.
SPEAKER_02So plus as we fill out our off-premise distribution and we have great coverage, it's like, how do you then further support the off-premise distribution by you know backing that up with on-premise? We're also, you know, Penelope started as an 80-proof, and then we went to Cast Strength. And if you look at all our releases after that, they were all like 100 plus proof. So we also never, I felt like had the right product for on-premise. And you know, as we're developing, like we have our weeded, it's at 95 proof, it's just a very good drinker. Uh, we have a new classic um what we call it, our Kentucky Straight bourbon coming out, which is um 92 proof. And uh, you know, it's a it's like a nine-year bourbon, it's a blend of uh seven, eight, nine-year bourbon. But um it's you know, it's just a solid product, and I think people like it. I think it goes well sort of in that on-premise area. Especially with the price point.
SPEAKER_00Yeah.
SPEAKER_03Well, shall we conclude with one last taste uh of your choice, mate?
SPEAKER_01You want to try our. I do actually give it a go. So this is well, why don't you explain it?
SPEAKER_02This I'm holding a bottle, it's uh it's a pretty made old fashioned, so we call it a ready-to-drink product, and it's uh peach old fashioned. And this all started with maple syrup, am I right? Right. Well, so let's all start. I know like we love old fashioned, especially especially Mike. Um, you know, we we always wanted to make a sort of a cocktail in a bottle, and it was like, well, what are you gonna make? And we were like, well, we love old fashions, why don't we well it's also one of the most popular cocktails in the world?
SPEAKER_01So just stick to the basics, right? Um where did the peach idea come from? Well, I just wanted to start out of the gate with something sweet, kind of out of the out of the norm peach. I think peach was a booming flavor profile at the time. And it's been an amazing launch. These RTPs have done phenomenal for us. We have peach, we have apple cinnamon, we have black walnut, and we just blackberry coming out. And all three kind of are very they're old fashioned, they're all old-fashions, but they all kind of serve a different kind of palette type. So this has rye and bourbon in this. Did you think we're gonna split the differences between the people who want rye old-fashions and bourbon ones, or was it a flavor preference? I think it was a flavor preference.
SPEAKER_02It was a flavor preference. The rye gave it this like a little additional spice to stand out in the cocktail. Also, no, the the cocktail, because we decided we were gonna make a ready-to-drink product, and then Tim, um, this guy from Tennessee, that became sort of friends with us over Instagram uh through the years, was a Penelope fan. He was a big old fashion maker. Like he loved old fashions, and he just like curated them, made them at home. But he would send Mike samples of his old fashions that he made with Penelope. They'd be like wrapped in like saran wrap. So he's telling me about the he's like, Tim's been sending me cocktails, and he has this one old fashioned that's awesome. Yeah. So he's like, you should reach out to Tim and see what he's doing to make the cocktail. So I reached out to Tim and loved his peach old fashion that he made. We ended up partnering with him, right? So that's a Tim.
SPEAKER_01Can you say his name? Tim Beckner. Yeah. The man, the myth the legend.
SPEAKER_03In Memphis, Nashville.
SPEAKER_02Nashville Bourbon Enjoyment. Yeah, that's his handle. Um great guy. Yeah. So the and I'm security a guy who'd be doing it at home for his buddies.
unknownYeah.
SPEAKER_01Yeah, he was just making them. He liked to have them. And then he would send me some, and then and then we had a we didn't uh we did a partnership with them. He's helped us along with that.
SPEAKER_02That was a very tasty, uh, old-fashioned. Because 25 bucks a bottle. In the process of making a cocktail, I always feel like you you need something real that you're trying to make. So it's like, all right, let's get we want a homemade cocktail. We want it to taste like it was made at home. We you know, we want it to be made like it was made at home. So his ingredients were super simple, right? And we just kind of mirrored that. At the time, we made a product called Havana, which used maple syrup barrels from this maple syrup farm in Ohio. And we would, so we would send this farm our our empty bourbon barrels. He would put his maple syrup in it, and then he would dump his maple syrup out. He would sell the bourbon-flavored maple syrup, and then he would send us back the map-coated barrels, and we would put bourbon back into the barrels to get like a maple finished bourbon. And he called it Havana? Yeah. It was cool, right? It was first finished in a rum barrel. That's yeah. Yeah, no, that's where the name is.
SPEAKER_01So we started there. And now I guess it was a party in a bottle.
SPEAKER_02Yeah, the sort of molasses from the rum was kind of like astringent a little bit. It wasn't as sweet as it needed to be. So like the maple syrup balanced out the rum product. And that's why the maple syrup is in here. So yeah, it was like called him and was like, hey, can you send us some of your maple syrups? Now we and then I you realized like, you know, making these, like I didn't want to use artificial sweeteners or things like that. Like, I want to keep it as pure as possible. And uh so he shipped us all this maple syrup, and we've been using it to make these cocktails.
SPEAKER_03Well, I tell you, you can you you're actually an interesting test case because me and him are both refugees from the world of bar ownership.
SPEAKER_01Yeah, yeah, yeah. And I was a bartender for about 30 years. Um, can you be bothered to make cocktails at home?
SPEAKER_03No.
SPEAKER_01That's it? You uh no, not really. Maybe my wife are both in the business. She works for Heaven Hill and she was a cocktail educator. And if you come around to our house, there'll be batch martinis, uh-huh, and maybe Manhattan's, and that's as fancy as it's getting. Yeah, yeah, yeah.
SPEAKER_03The rest of it is purely beer and straight liquor. Yeah, yeah. Exactly.
SPEAKER_01Yeah, and I think I think that reflect because in the world of cocktails kind of were hard. Usually you're entertaining in your way, you're making cocktails all the time. But bear in mind, you Americans, I'm speaking to our 40% of the listeners as well as the guys in the room, you're the guys who make cocktails at home more than anyone else in the world.
SPEAKER_00The rest of the world does it even less.
SPEAKER_03Yeah, yeah. That's interesting. They're just not gonna people here will give it a go. But it's who wants to be stuck in the kitchen making drinks all night?
SPEAKER_01Yeah. Not me.
SPEAKER_03Yeah.
SPEAKER_01So we and these have been performing great. People love them. How long have they been out? Uh this peach was our first for it was our first one that's been out for about a year, right? A little over a year. Yep. So what are the what are the other ones? Uh uh black walnut, old-fashioned. Yep. We have an apple cinnamon old-fashioned, which came out in the fall. Uh, and now we have uh blackberry coming out.
SPEAKER_03Yeah, they're fancy. And is it a case of you know, Tim sent you samples? You're like, this tastes good, let's put it in a bottle, or are you strategically thinking, well, let's make another flavor and see if it's a little bit more.
SPEAKER_02Yeah, like the process. It's like, you know, is you it's making it at scale compared to like the home sample. So it's always like always use his sample as the control sample. Like this is what we all constantly go back to to make sure that it stays authentic and and sort of have that at-home feel to it. And then uh, and then you just kind of work with the you know, with the rest of the stuff and like the mixing it at a larger scale. They've been fun to make, you know, like we've been making the the bourbon for so long. Like to start change it up a bit. Yeah, start making the RTDs was like a refreshing sort of challenge again.
SPEAKER_03It's also about sizes, like the 750 is great.
SPEAKER_01Um Diagio just announced that their bottle cocktails are gonna be available in 100 mls, those little tins, which are actually great. Yeah. And they're perfect for airlines and airports and the train. Uh great. I also think it's a lot of the the market. I mean, if you look at the the growth of um, you know, like high noons and these kind of more those types of things, I think it is these are coming becoming much more widely accepted. Whether it's in a 750 ml glass bottle um or in an aluminum can, I think people are they're interested in it.
SPEAKER_02People are so individual, and this is just a hypothesis, as individual consumption goes down for the like on a nightly basis, you know. So say someone used to go out and drink eight drinks, six drinks, whatever, that's a lot. Um, you know, I feel like they're looking to have like one or two, three quality sort of drinks instead of going for the qual uh quantity.
SPEAKER_01Well, something that's definitely uh affecting it was actually first flagged up by uh my great friends Mark Pascal and Francis Schoss, who own Stage Left Steak in New Brunswick and New Jersey, which is the effect of uh all the Olympics of this world. Yeah, because they they basically deaden your appetite. So you'll have one drink and just not want to have another. So I think that might be.
SPEAKER_02Yeah, I'm sure that's playing a huge role into it, too. I never thought about that. That's been a challenge because I talked to my buddy Kenny about the yeast and and uh he said that's been one of the challenges over the last couple of years is a lot of people, a lot of people still coming into the bar, but just the the ring is a lot less per customer. So it's how to how to engage them and get them to spend money in other ways.
SPEAKER_01Well, the long-term thing is even more worrying, which is it doesn't just kill your appetite for food and drinks, it actually lowers your libido. So you're looking better than ever, but you don't want to get with somebody, which is obviously long-term disastrous for bars. Yeah. Yeah. Yeah.
SPEAKER_03Oh, wild. Yeah, these things are getting like generic now. So you'll be buying them for you know less than what you pay for a packet of Advil.
SPEAKER_01So but we live in interesting times. Yeah, we do, right? And the whiskey industry has survived uh an awful lot to make it this far.
SPEAKER_03Um, when you look outside your own company, Penelope and MGP, uh, what other brands do you admire?
SPEAKER_01Who do you think is doing good stuff out there? Well, I always I mean, me personally, I always think Heaven Hill uh is just Sazerac. I mean, Buffalo Trace and their brands, they're just the quality is always there. I think Heaven Hill always does a great job. Um, on an emerging front, I love uh what Pablo is doing down there with uh rare character. Pablo Moy. Yes, uh I think. Yeah, so there, I mean, there's uh there's and they it's exciting like to see like what other folks are doing. I think you know, we're all part of the same industry, and though those those folks in particular just kind of sit off top of mind for me at least.
SPEAKER_02Yeah, the passionate bourbon drinkers are still very much out there. Like that whole group has not, I don't think has changed or changed too drastically in the last couple years. So it's fun that it's nice to see that.
SPEAKER_01And liquid-wise, what um what other brands do you admire? Both you know, big scale and maybe emerging.
SPEAKER_02I like Sazerac. I like what they're doing there. Um I was liking what uh Art Sound Bourbon Company was doing, some of their experimental match bills have been really good and their distillation processes. Um I don't know, Dark Arts. I like some of their stuff. You know?
SPEAKER_01I I like all I like everything.
SPEAKER_02Yeah, like I was just telling people it's like I it's so I I couldn't tell you like a a bourbon that I hated. I just think and I think about it like with Penelope, it's just like well I can, but I won't. Yeah, there's very like from a distillate standpoint. It's very you know, but it's just how you use it, I think. I think that's the key to a good product. It's just how do you use the distillate? Some people don't use it correctly. Um and then I'm sure there's bad distillate out there, but it's it's hard.
SPEAKER_03It's hard, but it does exist.
SPEAKER_00Yeah.
SPEAKER_03I so somebody sent a ton of that to my apartment uh only a couple of months ago. Yeah. And I had people staying in the apartment. Yeah. And we have to lock our main liquor closet because it's got MBA covered projects in it that I'm working on, and sometimes even that my wife is working on.
SPEAKER_00Yeah.
SPEAKER_01So we put all this chili whiskey, including flavored whiskey, out on the bar cart, and we're like, guys, drink as much as you like.
SPEAKER_03If you have space for it, it's no more talking. I'm like, no, no, sure. I'll pay the extra check back for you.
SPEAKER_01Take this stuff.
SPEAKER_02Like I've literally I caught myself last week and I used it to uh you feel bad pouring it out, but it's like yeah, you sometimes you don't know what to do with it. Yeah. My whole basement's filled with just barrel samples.
SPEAKER_03Well you can blend them all together into an infinity bottle. Right. That's what you should do.
SPEAKER_02But I brought a barrel home and but I filled it, and I'm like, what am I just gonna keep collecting these barrels? I can't drink it fast enough. This is it. I don't have enough friends to drink it.
SPEAKER_01Uh you have to you have to throw a uh a party. I I was at a friend of mine who's a great rider, and uh he gets sent everywhere. Oh, I'm sure.
SPEAKER_03Yeah. Uh shout out to Sony Socks, regular guest on this show. And um I was over at this place and we're talking about oldest Gerald Whiskey, which is from Heaven Hill that's being revived. And every year they do one special release. And he had all of them. And I'm like, what if we blended them? So we blended them equal portions? Fucking delicious.
SPEAKER_00It's really good.
SPEAKER_02Not like this, just blending racket as a joke people can do. Like that's why I said anybody can blend.
SPEAKER_01That's awesome. Where you guys stand on Boilermakers, or as they're called in Minnesota, a beer and a bump.
SPEAKER_03It's generally a great way to introduce somebody to a new liquor or a new brand because their logic is, well, at least if this doesn't work out, I've still got a beer.
SPEAKER_01Yeah. I love it. Yeah, liquor to lips. Why not? Right? So I I would imagine it's just a numbers game, right?
SPEAKER_03Well, if you get if you get it right, like there's one bar I know, it's got like $10 uh beer and an ounce of whiskey, but it's a miniature, the the miniature seven-ounce uh Miller High Life.
SPEAKER_01Uh or the miniature modello, which is also very Instagrammable. Yeah, that is cool. That is cool. I would do that.
SPEAKER_02Heck yeah. I used to always get an I I went through a phase where I'd get a beer and an amaretto. Okay, that's weird. Sorry, yeah. I don't I never cherry soda when you like or drinking the two of them. Yeah. I think there's a shot called it. It's like a Dr. Pepper shot. Yes. When you used to drop the amaretto and the beer and drink it together. But then I just started like kind of drinking them together separately and still had a good flavor to it.
SPEAKER_01Yeah, it's weird. I think whiskey and tequila and mezcal dominate boiler makers. It's very rare to have like a liqueur one on no one's drinking shots of gin except maybe me, because I really like gin.
SPEAKER_02I like gin too. I've been really starting to get into it.
SPEAKER_00Yeah? Oh yeah, gin's great.
SPEAKER_03Well, hey, plug for World Gin Week, my new project, which is nice. There you go. Yes, there you go. Exclusive article in uh Forbes and encouraging everyone everywhere to drink more gin, bars to promote it, have gin cocktail menus, brands to promote it, conspicuous to drink more, and we'll also be doing a couple of wild ass events uh right around the corner from here.
SPEAKER_01Okay in my friend Carl Finnegan and Business Partners bar Ivory Peacock. I saw that when I was coming over. Beautiful. 1,200 gin, second largest collection in the world. Wow. So great looking bar. I mean, I'm pulled up, I was trove right there.
SPEAKER_03It's absolutely gorgeous. Yeah, it's really nice. Two levels. And we'll be doing a kickoff party there. Oh wow. We'll be doing seminars by legends like Dale DeGroff and Alan Katz and Natasha Barani, and then some of the top uh bars in New York, like uh Bemelman's and Snip and Guzzle, we'll be actually hosting little pop-ups inside that very three-hour World Martini Day party. So it's gonna be the greatest happy hour this city has ever seen on World Martini Day, which is the 20th of June. So hopefully guys there. Heck yeah. All right. Well, I think we found the bend in the road where if we keep sampling, they're gonna call the cops on us here in the PRM's boardroom. So where can people find you guys, both personally on social media uh and Penelope on all the various channels? Please literally spell it out for them.
SPEAKER_01Uh just my first name is at Michael Paladini, uh P-A-L-A-D-I-N-I, and uh at Penelope Bourbon, of course, um, is our Instagram handle. Um, but you can find us on all the socials out there, and uh our websites is Penelope Bourbon.com.
SPEAKER_02Beautiful. Donnie? Yeah, uh Danny Pelisi, P O L I S E. And um, yeah, we're we're we're out there. Penelope Bourbon. Well, let's go. Donnie and Mike, thank you very much. Thank you. Thank you.
SPEAKER_01Appreciate it.