Friday, 14 March 2014

Alcohol entrepreneurialism

42 Below got started when a home distiller figured out that he was really pretty good at what he was doing, started selling to local bars, then scaled up. Eight years after starting distilling in the garage, he sold out to Bacardi.

The Press reports on a new craft distiller in Christchurch.
Ben and Sam Lu have adopted the Kiwi do-it-yourself attitude since arriving from Taipei in 1994. The brothers decided to brew their own Chinese liquor simply because they love drinking it. Since then, they have turned a small-scale home business into a national company.
And it's not the first time they've done it. Inspired by the Cookie Time story, the brothers, along with their parents, started Formosa Foods in their garage in 2007. In doing so, they turned what they describe as a family financial crisis into an enterprise providing most of the city's Asian restaurants and supermarkets with noodle and pastry products. The creation of New Zealand Chinese Liquor has been much the same.
"Formosa is the biggest Chinese noodle factory in the South Island ... since we've had a little bit of money, we've invested in this new business," Ben says.
A home-kit distillery quickly turned into outsourcing production to Southern Grain Distillers in Kaiapoi and bottling to Matson's Brewery in Sockburn. The company now sells its liquor through Liquor King, Liquorland, Ballantynes and a range of hotels and is negotiating with overseas distributors.
Bans on home distillation don't just protect incumbents by preventing home distillation, they also block the emergence of new competitors. And when one guy, starting in the garage, proves successful, others follow:
The Lus are not only trying to turn heads in New Zealand; their main aim is to export to China. Several trade shows there have proved people like the taste of their product and a current negotiation with a Chinese retailer could result in a deal with a possible yearly turnover of $2 million and enormous growth potential.
Motivated by the success of New Zealand vodka brand 42 Below, Sam and Ben read its story - Every Bastard says No - and thought "why can't we be like them but for Chinese liquor?" They've taken a slow and calculated approach to growing their business, starting with a cult following on Facebook of more than 25,000 fans.
I'll have to find a bottle and try it.

Here's an excerpt from Every Bastard Says No. At least, for 42 Below, the bastards were the investors who were reluctant to put up cash. You can route around that kind of bastard and find folks who share your vision. When the bastard instead is some bureaucrat who demands licensing and compliance with a pile of mutually inconsistent regulations, well, you'd have bigger problems: just try craft distillation in some US states, or either craft brewing or craft foods in Manitoba.

Fred Dagg speaks truth.


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