How I Did It: Sidney Frank, founder, Sidney Frank Importing
As told to Stephanie Clifford
His pals in the liquor business thought Sidney Frank was crazy when he started importing a German herbal elixir, called Jägermeister, in 1972. The drink was selling about 500 cases a year. But Frank had a plan, revolving around promotion techniques the liquor industry had never seen. He employed a squadron of young women--dubbed Jägerettes--to patrol bars and sell drinks, and he threw parties for high visibility. In the first half of 2005, Sidney Frank Importing sold 2 million cases of Jägermeister.
Frank's second big success was the French vodka Grey Goose, which he introduced to the market in 1997 and sold last year to Bacardi for more than $2 billion. At 85, he is enjoying his money--his fleet of cars, chefs, and golf instructors attests to that--but he's also looking for new deals. He's rounding out Sidney Frank Importing with wines from around the world and Corazon de Agave tequila; he's introduced an energy drink called Crunk; he just bought a magazine, called Travel Savvy. Retirement, he says, is ages away.
I grew up on a farm in Montville, Conn., near Mohegan Rock. That rock was one of the largest rocks in the United States. So a lot of people would come and look at it. When I was 12, I made a ladder to go onto the rock, and I charged 10 cents to go on top of it. From the top of the rock you can see Long Island Sound, Norwich, New London. So that was my first entrepreneurial deal.
I wanted to save to go to college, and it took me until I was 17 years old to accumulate $1,000. I went to Brown for a year; I didn't have money for the second year. I noticed in the paper that they were hiring people at Pratt and Whitney, which made airplane engines, in East Hartford, Conn. I went up there, and there must have been 100 people in line and nobody was getting a job. And the hiring manager said to me, "No--oh, you went to Brown? I did too. Go down and see the foreman where they test the engines." I went down to see the foreman, who said, "Come back in a couple of hours. I want you to show me you can use a slide rule."
I said, "Of course." I didn't know how to use a slide rule. But I looked at the directions, came back two hours later, and showed him how. It was a great job, a dollar an hour, dollar and a half for overtime, two dollars Sunday. So I worked seven days a week.
The father of a girlfriend of mine was having a party in Greenwich Village. Well, I went down and met her father, Lewis Rosenstiel, who was chairman of the board of Schenley, which at that time was the largest distillery in the world. He said, "You know anything about alcohol as a motor fuel?" I said, "We use it at takeoff. It gives 20% more power." He said, "Will you have lunch with me and my chief engineer tomorrow?" And he began teaching me the liquor business. [Frank married Rosenstiel's daughter, Skippy, in 1947.]
I found out what hard work was. I remember one time there was going to be a glass strike. So we rented every warehouse in the country and filled them with glass, and sure enough a couple of months later, the glass strike came on, and we had glass and no other distributor did. You have to be forward-thinking.
The big time came around 1950 when we bought a Scotch plant in Scotland, and the distiller called up my father-in-law and said, "You have two executive vice presidents getting drunk every night; bring them home and send your son-in-law over." Well, I went up to the plant in Glasgow, and it was producing a million gallons of grain whiskey a year. I didn't think that was much because some of our plants in the States would do 10 million gallons. And so I watched very carefully, and I said to the distiller, "I notice you're only distilling twice a week. Why is that?" He said, "It used to be law." I said, "Is it still the law?" "No." "No? You mean you can distill seven days a week?" "Yes, but my instructions were to do what was always done." So we began doing seven days a week and increased production from one million to three million six. It cost a dollar a gallon to make, and you can sell it for $5 a gallon. That's $10 million and we only paid $13 million for the company. So I was a big hero.
I butted heads with my father-in-law, and I finally started my own company in 1972. It was just me, my brother, and a secretary.
One of the things I'd learned was it's a lot of money for bricks and mortar; don't build a distillery until you have enough money to do it properly and enough production to put in it. So I began looking for something to import. I noticed a few bars selling Jägermeister. I was looking for anything that had a niche. And warm Jägermeister is terrible, but whatever it was, people of German descent like Jägermeister. There were a lot of Germans around the country. So I sent a telex to the president of Jägermeister in Germany and asked if he would see me.
We went to dinner. I said, "I'd like to have Jägermeister for the States." He said, "We already have commitments for most of the country, but we still have Maryland to Florida left." I said, "I'll take it." But the next year the importer from the East Coast didn't pay his bills on time. So I got Jägermeister, eventually, for every place except the West Coast. The president had never been to the U.S. but he flew to the West Coast and asked the importer there to take him to Disneyland. They got lost, so he figured he didn't know the territory. So I got the whole country in 1973.
We had no money for advertising, but we got a big break. The Baton Rouge newspaper said Jägermeister, to the drinker, is instant Valium. Well, there are no drugs in it, but sales went from 10 cases a month to 1,000. I made millions of copies of that story.
But the big thing I had, I came up with Jägerettes. I thought a pretty girl can always help you selling, and I noticed that one girl I had in California would go to 80 tables in a room and say, Open your mouth. She asked, Would you like a Jägermeister? And 80% of 'em said yes.
"It was hard getting that first Jägerette. They thought we were running a den of iniquity."
It was hard getting that first girl. They thought we were running a den of iniquity. Eventually they began to trust us, and we got two and three and 10. Now we have 900. And 300 Jägerdudes.
Grey Goose started because I figured that we were so popular with the bars and distributors were making a lot of money on us. I figured they'd go along if I came up with a vodka. The nice thing about vodka is you make it today, you sell it tomorrow; even Jägermeister is aged for a year. So you don't have to put your money into buildings and machines and warehouses. Just make it today, sell it tomorrow.
The big-selling high-priced vodka at the time was Absolut, which was $15 a bottle. I figured, let's make it very exclusive and sell it for $30 a bottle. I said, France has the best of everything. I asked a distiller there whether they could make a vodka. They said sure. The product manager and I tasted about 100 vodkas on my front porch here, and we agreed on one vodka as the best-tasting.
We submitted two bottles to the Beverage Testing Institute, and Grey Goose won as the best-tasting vodka in the world. So we took $3 million, which was going to be our total profit for a year, and we put it into advertising. We made big, beautiful ads that listed Grey Goose as the best-tasting vodka in the world, and we indoctrinated the distributors and 20,000 bartenders, and when somebody would come in and say, What's your best-tasting vodka, they said Grey Goose.
We gave away Grey Goose to any charity that wanted vodka at its bar. The people at charity events are the people who are our target audience. Sales started to zoom. In 2004 we sold 1.5 million cases.
A few years ago, a banker in Paris asked to see me. He said, "I think you're getting someplace with Grey Goose; a lot of distillers would like it." About a year ago he came to me and said, "I was just with the chair of the board of Bacardi. He says he would give you over $2 billion for Grey Goose." We went back and forth, and then the chairman said, "I'll give you two"--I can't give the actual figure, but it was a lot more than $2 billion.
I wanted to make sure that nobody in the company would quit. So we gave bonuses--if they were with us 10 years, we gave them a two-year bonus. It changed a lot of people's minds. Not one employee left.
First I bought two Maybachs. Two big Maybachs, not the little ones. In one of the Maybachs, if you sit in the back seat and press a button it extends like a bed. I bought a Bentley. Little toys. I gave $100 million to Brown. I wanted to be a billionaire. I'm 85 years old; I wanted to count the money while I was on this side of the ground.