This Unconventional Retailer Finds Compliant Way to Ship Spirits DTC
On Friday, we explored the current direct-to-consumer spirits shipping market and where it’s headed [see WSD 04-24-2020]. Of course, the big issue is that not many states actually allow spirits to ship DTC. One company has figured out a way to get more craft spirits shipped directly to consumers’ doorsteps, all while staying three-tier compliant.
Spirit Hub officially launched April 1, 2019 in Illinois, the only state it currently operates in. It was founded by Michael Weiss, ceo, whose background is in building regulatory compliant platforms. Illinois residents can currently choose from about 1,100 products from more than 200 craft distillers.
HOW IT WORKS. In Illinois, “the law reads today that shipping spirits directly to consumers within the state of Illinois is allowed and retailers are allowed to ship within the state as long as they are licensed within the state,” Michael tells WSD.
As such, Spirit Hub is a licensed spirits retailer in Illinois, with a brick-and-mortar location as required by law. They “source our own products, and then what we do is work with different distributors through the process to ensure it reaches the client,” he explains. To fulfill delivery orders, the company has “built our own internal network of logistics providers,” using courier service, local shipping companies, larger scale freight companies etc.
That’s right, they’re three-tier compliant.
“We stand by our model and we fully are looking to maintain three-tier compliance as well as adhere to the government regulations and state laws,” he says.
“We, as a licensed retailer, would have the ability to go into numerous markets, expand our model, all stemming from what we’ve built here in the state of Illinois.” More on the company’s expansion plans below.
SPIRIT HUB’S GOAL: TO HELP CRAFT DISTILLERS. Spirit Hub only carries craft spirit products, using the American Craft Spirits Association definition of craft: produces less than 750,000 gallons annually, transparent about their ingredients and 75% independently owned.
After doing a bit of market research, Michael discovered what small producers know too well, that it’s difficult for small, craft guys to gain market penetration outside of their local markets.
“Our goal as a company, and why we built it, was really to help those smaller distilleries, help the independent distillery grow outside the local market and to help educate the customer that there is more availability than just your top shelf product or the product at your local liquor store or the product at your regional liquor stores or whatever it may be.”
Spirit Hub vets all new distillery partners, and the onboard process takes between 8-12 weeks. “And typically what we do is we then request specific information from these distilleries to make sure that we best represent who they are, and then at that point in time, we do develop a program to go to market with them.”
“What we want to do is we want to help these manufacturers grow and build a market demand and help them evolve before they even enter into a marketplace,” says Michael, adding that they “work with all of our distilleries through cross marketing initiatives…”
FROM BIGFISH SPIRITS TO SPIRIT HUB. Initially, the company launched as BigFish Spirits. But, they ran into an issue: consumers weren’t sure what the company did. So, about four months after going live, they decided to invest in figuring out a new name that “would make the most sense from a brand perspective and then what would speak to our customers and ensure that the customer knows exactly what it is that we do,” explains Michael.
The company landed on “Spirit Hub” because ‘spirit’ echoes the spirit of the independent brands and their commitment to their craft and culture of distilling and ‘hub’ lets customers know that this is the place to go for craft spirits and independent distilleries from around the world, according to Michael.
“We have currently seen amazing results from [the rebrand],” he says. “We’ve seen a large amount of conversions because of the name change– higher conversions– and we’re really excited to see it continue to evolve.”
Pre-COVID, the company was seeing about 25%-27% growth month over month.
In conjunction with the rebrand, the company also rolled out new shopping options that allow customers to identify certified organic, kosher, non-GMO and gluten-free spirits, alongside advanced tasting profiles that cater toward individual preferences as well as short videos that tell stories about the distilleries to complement 360-degree bottle images and detailed descriptions of each spirit’s flavor profile, distillation process, plus industry trends and more.
EXPANSION PLANS. The company’s main goal in 2020 is to expand into new markets, namely Florida, Michigan and Massachusetts. To do so, and remain compliant, the company will set up a physical location in each new market, “and we will also have to develop additional infrastructure in order to operate within those markets.”
“We are also looking at additional markets who do permit shipments into states outside without having a physical brick and mortar location such as Washington, D.C.,” says Michael.
The plan is to enter every major market in the US by 2025.
OPERATING DURING A PANDEMIC. As for functioning amidst a global pandemic, the company’s website says it’s “business as usual,” with new safety measures in place.
On the subject, Michael says: “These are trying times for many as businesses but especially for independent distilleries. That said, we are doing everything that we can to maintain a connection between brands and their customers. Brands that are on Spirit Hub have one less thing to worry about as customers in Illinois can continue to access their products through our website and app. We are utilizing limited contact delivery practices to keep our customers safe and adhere to quarantine suggestions. We hope no distilleries will have to close their doors permanently due to the current circumstances, and we will continue to support them through this difficult time.”
RITUAL ZERO PROOF UNVEILS TEQUILA ALTERNATIVE. Non-alc spirit brand Ritual Zero Proof has launched Tequila Alternative, joining Ritual Zero Proof Gin and Whiskey Alternatives in the portfolio. It is now available through Amazon and the brand’s website for $25. “We’re now selling more bottles a day through Amazon and our own website, RitualZeroProof.com than ever before,” says founding partner and chief brand officer Marcus Sakey. “Shifting our focus to direct to consumer has allowed us to continue to cater to our customers during a very difficult time.” You may recall, Diageo-backed Distill Ventures announced a minority investment in Ritual Zero Proof earlier this year [see WSD 01-06-2020].
ROGUE ALES & SPIRITS PARTNERS WITH COLUMBIA DISTRIBUTING TO PRODUCE HAND SANITIZER. Earlier this month, Washington-based Pursuit Distilling Company and its distribution partner Columbia Distributing teamed up to convert unused keg beer intended for now-shuttered Washington state bars and restaurants into hand sanitizer [see WSD 04-07-2020]. Now, Oregon-based Rogue Ales & Spirits has also teamed up with the distributor to use beer to make additional batches of hand sanitizer for first responders and those in need, per a release. “In order to make hand sanitizer, you need alcohol and a still. We have access to both but can get even more alcohol by working with Columbia, our distributor partner, who has generously donated beer for us to distill into hand sanitizer,” says Rogue president Dharma Tamm. “This partnership will allow us to produce even more hand sanitizer for the many people who need it right now.”
RNDC AND YOUNG’S MARKET DONATE $400K TO COVID RELIEF FUND. Republic National Distributing Co. and Young’s Market Company announced a $400,000 donation to the World’s Biggest Tip Jar, an initiative kicked off by Sazerac to support hospitality service workers amidst COVID-19 crisis, per a release.
“Nobody who ever gave his best regretted it.” – George Halas
——- Sell Day Calendar ———
Today’s Sell Day: 19
Sell days this month: 22
Sell days this month last year: 22
This month ends on a: Thurs.
This month last year ended on a: Tues.
YTD sell days Over/Under: +1