CraftCo. CEO on the Alcohol Business Outlook

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2:14Carol Massar:News. You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevek on Bloomberg Radio. We've got something fun to talk about. Well, our Bloomberg Intelligence team is out with a really interesting note today that could add to the woes facing the spirits industry. Oh, so not so fun. Well, use of weight loss drugs stand to deepen alcohol's demand slump in the U.S. and Europe as moderation in wellness trends gains ground. So by 2035, consumption of beer and spirits is expected to drop 20.3 % and 19.2 % respectively among GLP-1 users. That's here in the U.S. This is according to an analysis from Bloomberg Intelligence.

2:53Carol Massar:Yeah. Total losses could reach$28.5 billion. Translates to about a 3 % to 4 % sales drag in the U.S. And 2 % to 3 % in Europe. There's that going on. The whole alcohol industry globally has had to deal with tariffs coming out of the United States. Just want to mention a quick headline crossing on that. The United States to exempt some Brazilian agricultural goods from 40 % tariffs. So that's going on. And so we'll see as the president and the administration has been looking at the cost of things, some rollbacks. I'm not quite sure how that will ultimately maybe impact the liquor industry. But we'll be keeping an eye on.

3:30Well, it's the economic backdrop that informs our conversation with Allie Anderson. She's CEO at Craftco. It's got a portfolio that includes more than two dozen spirits and liqueurs. Think bourbon, gin, rye, ready to drink cocktails and more. The company also does co-packing for other brands. She joins us from a distillery in Holland, Michigan. Allie, good to have you on the program. And thank you.

3:49Carol Massar:Thank you. Well, we got through the news flow. A kiddo just keeps on coming at us. We can't guarantee that there won't be more interruptions with more headlines, but that's just the way it goes in a breaking news environment. Last time you were on with us, we spent the whole time talking about tariffs and the effect of tariffs on your business. And that's just one element. That's a headwind. Other headwinds include changing consumer tastes and how people think about GLP ones and increasingly people taking GLP ones and that leading people to drink less. What is the environment for you out there right now?

4:17Yeah. I mean, first of all, thank you for having me back. It's good to good to see you guys and chat with us again. You said it at the top. All of the headlines, they seem pretty bleak. Right. But I think that's that's what business is today, especially in the spirits industry. So what's the name of the game? You have to pivot. You know, we certainly want to promote as much health as we can across all industries. But what we're looking at here is lifestyle shifts. And so the industry has to has to shift with it. And, you know, anecdotally, I was out to dinner with a friend a couple weeks ago who was who was on a you know, I said, you look great.

4:52And he said, I'm cheating. It's a shot. But we enjoy two cocktails and a lovely meal. So I think you see people making healthy choices when and where they can and what they're actually choosing. What my friend shows that night was quality over quantity. And so those are the pivots and the shifts that we have to make in three as well.

5:11Carol Massar:I'm super like that with chocolate. Like I just need a little piece of super good chocolate. I don't need a lot. And then I'm happy. And so, yeah, same thing with alcohol. No, no, but let's go. Let's go there because I do think price point is something increasingly, yes, health diet, that's certainly an aspect, but price point is certainly increasingly something that we know all consumers are looking at. We saw that play out in the recent elections in some of the states, It's like the economy does matter. The money that is in or not in your pocketbook, it matters. Absolutely does. And, you know, I've got premium brands.

5:48I have brands that cross the spectrum. And so what we're seeing is, yeah, are consumers down, shifting just a little bit? Sure. But we're also seeing tremendous growth with products that are, you know, over$200. So I think you are seeing a disparity across all of the price tiers. But at the same time, like I said, you're seeing people redefine what premium really means. I think it's becoming maybe less about price point and more about what the purpose driven value is, what the occasion in their life they're using. They're using alcohol to celebrate with. So I think, you know, at the end of the day, people want transparency.

6:26They want transparency in price. They want transparency in how we source, how we produce, how we give back, all of those things. In terms of the lineup that you have right now, you said people are choosing quality over quantity. Is there a certain you have a large range of what you do? I mean, dozens of different spirits and alcohols, liqueurs, ready to drink cocktails. Where's the strength? It's inconvenience, variety, innovation. I think people don't what we're seeing is people don't mind spending a little bit more for something that they haven't seen before. Right. And that could be with an RTD.

7:06So maybe it's maybe it's a little more expensive RTD, but it's a flavor combination they haven't quite had before. Or maybe it's a really luxury whiskey with a finish or a blending technique in our case that they haven't seen before. So again, I think people, we vote with our dollars, right? And they'll consume what they think is new, interesting, and what they can get information about, what they connect with.

7:28Carol Massar:So RTD, obviously ready to drink. I've had certainly some of those. Hey, you sent over to our team so that we could share with the audience some of the stuff that you guys, I actually have next to me, Coppercraft Distillery, made in the USA, Holland, Michigan. It's straight bourbon whiskey. Tell me about this one. I'm actually going to be, it's been quite a day. it's been quite a week it's been quite a year i'm gonna and i join you yes i join you we're so yes wait i'm gonna she's at the you're you're here in the studio i'm here i'm here in our distillery i don't want to wait wait wait wait wait oh there we go okay i didn't want to spill it i didn't want to spill it okay so tell me but tell me about this because it isn't certainly a brand that i think i'm familiar with but you're right people are looking i know when i go to buy a winery.

8:15Carol Massar:I like to try different things. Right. Right. So, you know, we're based out of Holland, Michigan. And you think I get this question all the time. Isn't whiskey just in Kentucky? And the great thing about an American spirit is that it can be in all 50 states. And so for us, we're in Holland, Michigan, on the west side of Michigan here on the lakeshore. And we create, we've had this brand for many, many years. And I think what you've got is it's a straight bourbon whiskey i could smell the whiskey sour that could also be made out of this but this is finished in this is finished in rum casks what does that mean well it means we took an already amazing whiskey i think the one you've got is eight years old and we put it in oh i don't have any casts in this room we put it in a rum cask that used to hold rum and we just let it rest for about a year so it takes on a different flavor than something that would be finished in a different type of cask but i see what you say like you don't we what this reminds me of my dad um who used to make whiskey sours for all of us as kids and most of the times it was a lot more oranges and cherries in it than than whiskey but you could also just the variety um i feel like the craft industry even in liquor like you just alone it's just something really nice right like what did craft used to be if we look back at beer we think craft was small batch craft whiskey small batch and craft much like the way we redefine premium craft has evolved too so like you just said you know i've not heard of this before what is this and so craft is now evolving to be what is that experience i can get who are the people that make it how transparent are they about what they're doing can i go visit them who are you know it's it's the that's what craft is now it's the process the technique, the people, the story that you're telling about the whiskey or the spirit.

10:01The distribution of this is a question that I have because at least here in New York City, I don't know how it works in other parts of the world, but in other parts of the country, but you walk into a liquor store and I've talked to some of these folks in there. And again, it's changes depending on where you live, but it's a challenge to get smaller brands on the shelves, especially with the big brands, the large brands that own a good portion, they come in and say, okay, well, if you want to carry this, you have to carry this. And there's not much power that these small companies have. How do you make sure you get a shelf space and shelf space?

10:38That's like premium. What a great question. Relationships like any business, any industry, it really does come down to relationships and for a small, you know, craft, right. Um, we've got five brands, we cover 42 States and we're still crafts. What does that mean? We have to show up in market. You've got to show up at that retailer. You've got to show up with the distributors. Those distributors are still my customers. So it's built on relationships and making sure they know, just like we connect with our consumers online and tell those stories, make sure they know who we are and that we are a small business, that every single sale matters to us.

11:14And much like them, we're just trying to connect with consumers. So I think it's finding that common ground through relationships.

11:21Carol Massar:yeah it always comes down to that i feel like relationships for so many different industries hey before you go we've talked about um copper craft uh and i actually sampled some um but you also shared with our team just to kind of look at kind of the variety and different places you go um elderflower i'm a little obsessed with elderflower right now and you've got thatcher's organic art art art art art art artisanal artisanal yeah you gotta move to brooklyn artesian artesian yeah yeah that's right sorry sorry i couldn't read it i'm not looking at the word but i'm looking off my because we took a picture um you've got fox and is it odeni odin odin okay forgive me sorry i'm looking at a small picture but tell us a little bit about some of the other ones and then uh thatcher's vodka it's not because i've been drinking i just couldn't read the picture because i took a picture so i could read on air go ahead i'll join you i'll show anyone here's at the end here no it's uh thatcher's organic right it's you know we think about spirits oh does it really matter yeah it sure does um something like thatcher's is very culinary forward so you mentioned elderflower i bet we're drinking the heck out of hugo spritzes right now with that elderflower totally secco amazing right yes yeah and again that's that's a way to enjoy um maybe a little bit of lower proof but still still feel great and be festive and all of those things.

12:39So, you know, then we've got like Fox and Odin is luxury whiskey. And that's, we've got a beautiful double oaked that was just up for, we had two of the top five finalists for the best special barrel finished whiskeys in the world a couple Sundays ago in San Francisco. So, you know, we're super, we're craft, we're competing against all these big guys, but because of what we're able to do with our size, with our expertise, you know, we can deliver some really luxury things to the market as well.

13:08Carol Massar:And we do really, really cool stuff. Um, I think we have to run next time. Come join us, but it was really nice. Cheers to drink with you. Four, four more bottles of stuff that you can sample Carol in the next five minutes. Happy holidays. And I know we'll be, we'll catch up again, but really, really lovely to check in with you once again. Um, Allie Anderson, she is the CEO of craft co portfolio that includes more than two dozen spirits and liquors or liqueurs joining us from a distillery in Holland, Michigan. The thing about AI for business, it may not automatically fit the way your business works.

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