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How to Bring an Alcoholic Beverage to Market

Hey, home-brew whiz. So you have what it takes to get your intoxicating beverage behind bars and on liquor-store shelves?

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Ralph Erenzo began selling batches of corn whiskey out of his car and now sells to some of the nation's top restaurants.

Ralph Erenzo was desperate to find a use for his land in the Hudson Valley in New York after some townspeople objected to his plans for a "climbing ranch." He learned about a change to New York law that created a new class of distillers. Prior to 2003, the only option was a $50,000-a-year industrial distilling license. The new class, designed to give farmers another outlet for their harvest, dropped down to $650. Tuthilltown Spirits was born.

Erenzo and his partner Brian Lee taught themselves to make alcohol by trial and error. Erenzo sold their batches of corn whiskey out of his car, convincing bartenders one-by-one to carry the brand.

Now, the Hudson Valley spirit sells for about $50 for 375 ml, and is carried in some of the nation's top restaurants including Blue Hill and Per Se, and the company continues to release new products, including rye, rum and vodka.

But for every success story like Tuthilltown Spirits, many entrepreneurs try to bring a new spirit, wine or beer to market and fail. How can you make sure that your drink will get behind bars and on liquor-store shelves?

Bringing an Alcoholic Beverage to Market: Find Your Niche

One common pitfall in the wine industry is the traveler who visits another country, enjoys an outstanding bottle of wine and wonders why it isn't sold in the United States. That's what Chris Haroza, the U.S. sales manager for Terra Andina, a line of Chilean wines, called the "I'd buy it" mentality.

"Wine doesn't always taste as good at home as it does on vacation. Or maybe it's just as good as ever, but if its priced at a point that between your markup, your wholesaler's markup, and the retailer's, is that $5 bottle of wine still going to be as good at $18?" Haroza says.

That noted, opportunity does arise occasionally. When Arik Torren and his business partner Amy Hardy were traveling through Oaxaca, Mexico, and met Enrique Jimenez, who came from a family of mezcaleros and wanted to produce a mezcal that was made without the influence of smoke and a wood-burning oven, they knew they had found something unique for the U.S. market.

"There's a huge amount of optimism for me because there is such a real opportunity for growth," says Torren of Fidencio Mezcal, which is now sold in several states as the company gets ready to introduce new varieties to the United States. "As more people know about mezcal more people are drinking and buying mezcal, I'm here. I like the idea of coming in bootstrapping, small, artisanal, and working with a less-known type of product.

Having a unique history or production method will help set your product apart. Scott Goldman started importing Combier after discovering while he was a professional ice hockey player in France. Combier created the original recipe for triple sec in 1834—and still uses the same methods. Goldman says the advantage of marketing Combier is that all bartenders are familiar with triple sec and how to use it—think margaritas—and his brand also has a rich history.

"Bartenders are the gatekeepers to consumers," Goldman says. "They like to be learn about products and Combier has a unique story and they have really embraced it."

Gable Erenzo, whose father, Ralph Erenzo, was one of the founders of Tuthilltown Spirits, says that being the first whiskey produced in New York state after prohibition, as well as a product made from locally sourced ingredients, was a huge selling point with chefs and bartenders.

"There are ways to differentiate your brand," he says. "The liquid in the bottle is important, but the brand you build up around it and the story you tell is really important."

Dig Deeper: What You'll be Drinking in 2011

Bringing an Alcoholic Beverage to Market: Understand the System

Following the repeal of prohibition, most states adopted a three-tier system for selling alcohol: the producer or importer sells to distributors, who then sell to retailers. The idea behind it was that it would be easier to collect the bulk of excise taxes at the distribution level with a limited number of wholesalers.

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