The story of MOTH- cocktails, copy and category gaps

0:15Hello and welcome to the Tomorrow Brands podcast where we explore what it takes to build a brand of tomorrow. I'm your host, Ruth Vitock, and today I'm joined by Rob Wallace, founder of Moth, the UK's number one canned cocktail brand in grocery, and one of the most thoughtful, well-executed drinks brands I've seen in a long time. In this episode, we get into everything from raising to international expansion, the power of brand and the importance of culture. Let's get into it. Hi, Rob. Before we get into it, I'd love to hear your background and how you got to where you are now. Yeah, people often ask about background, but Sam and I started this when we were 24, 25.

0:51So there's not loads of backstory before that. Sam had built quite a successful sort of film career in visual effects and things. I went straight into hospitality after university, moved to Switzerland, worked in hospitality, lived with a bunch of chefs and just fell in love with food and drink. I'd always been a massive fan of food and drink. My mum worked for Guinness and Diageo while I was at uni. So we made cocktails at home, unlike lots of students, which was really cool because mum sent gin in the post rather than the jumpers, which was very kind of her. Then went and worked for an entrepreneur because I knew nothing about business, literally nothing.

1:21I did a music degree, but learned loads with him. It was an amazing experience. I got let off the leash to run a sort of one of his sort of side projects, which was amazing. And then 2018 came around. I sent Sam a Facebook message saying, I want to start a company that makes the perfect pre-made old fashioned. And his verbatim reply was that's not actually a terrible idea. And here we are. so you started moth with the aforementioned sam what's that partnership look like over the years were you friends beforehand or acquaintances or yeah so very close friends as kids know he's since 13 then went to university together so lived in the same town schools next door to each other went to university together by pure happenstance then lived together at university and then we lived a road apart from each other in london and he this year moved to the u.s for moth so it's this long long friendship he was best man at my wedding it's like he is my best friend and it's amazing to be able to run a business with your friends it's definitely a test to be able to do that and we're very fortunate it's worked out as well as it has which is amazing because i know it's not always like that but yeah so best friends still laugh still hang out still like drinking a cocktail together that's mostly the point and i guess probably a big comfort having that trust there as well from a years-long relationship yeah it's a super high trust relationship i think there's loads of stuff I'm bad at and thank goodness loads of that stuff he's great at and so I don't feel any kind of great need to question his judgment on stuff I'm super trusting of decisions he makes and so from my perspective and it's vice versa right from my perspective to have someone who I can just totally put faith in and let him make the decisions on say brand or copy but then obviously on the commercial stuff and the sales stuff he lets me do it and so we both have areas that we're good at and we own and then we're both bad at loads of stuff and so in the early days we both did the bad stuff together like finance or operations and all that stuff and then we hired brilliant people all of whom are much cleverer than us to take the bad bits off our plate as much as possible and be experts rather than letting us do a bad job of it.

3:19You're very sensible and you are following advice other people have given on this exact podcast so good to hear. So let's talk about brand building. One thing that's always stood out to me about moth from the very early days is the copy that you have on the cans. Was that a conscious decision to lean into copy? Because it's quite unusual, I think. Yeah. So when we rebranded to moth, we did something that has not really been done before, which is we work with Pentagram, which obviously lots of people have done before. And we had one partner on Pentagram called Harry who designed Waitrose and other stuff.

3:52The visual guy and the visual language of moth is all him. But rather than just have one, we had a second Pentagram partner work on the project called Naresh Ramchandani. He's done amazing copy for huge brands over the years. And so we had two Pentagram partners on the project. One very visual, which lines up exactly where Sam's focus is, and one very wordsy, which is where I love to sit. I just, for me, the visuals are interesting, but the words are everything for me. So having a words partner as well. So to have two of them to cover words and pictures, to put it at its most simplistic, was absolutely incredible.

4:25and then part of Naresh's team was someone called Robin and she did a lot of the copy herself and she weirdly loves moths. It's one of the reasons we're called moth is her and she's actually recently joined us full-time as our head of copy. So we've taken someone who was there from day minus whatever working on the original copy of the brand now in-house, which is amazing. So to have that sort of full circle moment with her and with Pentagram has, yeah, it's been awesome. I don't think I've heard of a brand your size or maybe even bigger brands who have a head of copy that's like a different role in marketing?

5:00Yeah, I mean, we have a sort of full internal agency at Moth. So we have design, we have copy, we have brand. All of that is internal just because in RTD, it's often massively under-invested in. It's an afterthought for people, whereas for us to charge a higher price point as well as the ingredients in the can, it's also the ingredients of the copy and what it looks like and everything. So that sort of standard of excellence and that sort of obsession internally to be able to turn stuff around that is exactly moth, but really quickly with amazing people internally, it's been a bit of a superpower.

5:29So yeah, it's not an early hire usually, but it's been amazing to have her on the journey. And what do you think looking back now were the other early brand building calls you made that have paid off? I think investing first time around. So when we first, we did the brand ourselves first time around. Sam did it all. We did three years like that, bootstrap, funding, no team, no nothing. And then when we rebranded, Sam went and met, I think it was 17 agencies across London and the UK, like in Scotland as well. And they all did the full proposal the whole way through. This was Sam's life for like months.

6:01And we'd raised our first raise and he came back to me and was like, we need to spend 25 % of this half a million quid raise on brand and rebrand. And I went, are you insane? That's so much money. That's four people you could hire for that. And he was right and I was wrong. So we really invested into a brand, but it means you do it once, stands up globally as you take it to the US, and it becomes synonymous with a category that we have now built around quality and really going against what the rest of the category does. When we sat in that front room at Pentagram, we took them through what existed already because they'd never done an RTD.

6:38We said it's 250 ml cans, it's 5%, it's full of sugar, it's shiny, it's colorful, it's got ingredients in it that you can't spell and you wouldn't put in a bar. Take all of that and every single choice the category has made do the opposite. We're going to make it a matte can instead of shiny. We're going to make it rough instead of smooth. We're going to do black and white instead of color. We're going to do quality instead of price. We're going to do all of these things. And that's what spits out moth in the end. But yeah, that sort of took a lot of bravery. And we weren't able to do it by ourselves.

7:04We needed that sort of guidance and reinsurance from Pentagram that we were allowed to charge a price point in a can that we knew the liquid was worth but had never been done before. So that, yeah, that is a great agency and a great partnership we've now had with them. And the two partners who worked in us actually subsequently invested in the brand, which they'd not done before. So to have them really back the project in that way, it's just amazing. I obviously love that advice to invest properly in brand, having worked in brands, but also... It's so terrifying, though. So scary to spend it. But it pays good, solid brand strategy and the powerful brand pays for itself.

7:41Not immediately, that's the terrifying bit, because it's not an immediate return. but a couple of years later. Now, how many years later are you? Eight years later? So I think we're like seven years in but five years into Moth, yeah. And then you can say that is still adding value and I think the mistake people make is that like buy, they do it cheaply to redo it and in the end you've spent the same amount of money anyway. Yes, but you do have to spend it when you have the least money which is the scary bit, right? So as an outright cost, it's expensive and as a proportion of your non-existent revenue it's incredibly expensive but it's a bit of bravery that sam really led on the project we need to do this and i went sure you're cool you want to do it let's do it and he was right it leads nicely on to my next question which is about risk because there's a lot of risk in building brands how important do you think taking risks is in brand growth what's your personal tolerance for risk it's a really good question i think i think it's an inherent part of what we do, that sort of appetite for risk.

8:44But I think it also changes massively. We started this when we were 24, 25. And let me tell you, the naivety of a 25-year-old man to take risk is high. And I think now thinking about into my 30s and with a different sort of home life, you think, would you take the same risks at 25 that you took at 30 something? It's probably no. But also, I think there's part of it is a naivety. Naivety is a superpower. You really just don't know what you don't know. So from my perspective, I have a huge appetite for risk because that's what's exciting. And going to the US is I'm so reinvigorated by that because it's so scary and so terrifying and so new.

9:18I get a lot of energy from that. But I think it's really important as well to be like, this is not a risk I'm taking by myself. From day one, I've had a co-founder that picks you up on the bad days and you do the same back. And it doesn't feel so risky when you're looking at someone that you respect and think is smart going, I'm also going to make this decision. and then you start bringing in employees who should know way better because they've had real jobs and real careers. Our head of operations joined from Innocent, which is a company we have so much respect for, both culturally and what they've achieved in the startup landscape.

9:47And she later told us that she wasn't sure if we'd still be solvent by the time her three-month notice period ended. But she took that risk and she should have known way better. She's now our global head of operations and is doing an amazing job and here five years later and all the rest of it. But every person that joins that you have respect for and knows more than you reduces that anxiety and that risk because you think smart people are choosing to spend their time on this. And that helps me sleep at night. Let's talk about the US. You mentioned it then. You launched into the US. That's a big move.

10:17Why now? What tipped that decision? Yeah, I think it's a couple of things. One, people say the US is 50 countries, right? So we haven't launched 50 states. We're targeted markets and there are ones that we really want to win. But California is bigger than the whole of Europe put together for RTD. So the size of the prize is obviously part of it. The second bit and the bit that really convinced us is in the UK, super premium and RTD didn't exist. So every single category in alcohol, FMCG has a bottom shelf, private label, and then you've got a mid shelf that's where brands start to appear and play a role.

10:48And then there's a top shelf for the expensive stuff. In RTD, we built that from scratch, didn't exist. It's a category that we've decided should be there and disrupted and went in and took that risk. In the US, we went, did a bunch of research and we thought, if there is a product that's fantastic, occupies the super premium space that does what Moth does in the US, it's probably not a risk we would take because it's so competitive and they have local advantage and all the rest of it. But we went and we couldn't find it. Just like when we were in the UK five years ago and we could not find that option that we wanted as people who knew what a cocktail is and as bartenders and we couldn't find it.

11:23And so we went to the US and And what we found is there's no super premium can nationally. It doesn't exist. And so the reason to go now is someone's going to work it out. Someone's going to work it out that this has to be a category. This is the future of the category. Every piece of data is pointing in that direction. And if we've worked that out, someone else is going to. So we need to go and we need to do it because we think we have a great liquid and a great brand and a great chance of winning. But if we wait, someone else might work it out. And so it's a bit of that and a bit of the size of prize and a bit of the general ambition for us is global number one premium RTD.

11:59And when you talk global in RTD, really you mean, can you win in the US or can you prove that you can be able to? And so for us, all of those things coming together and a bit of naivety and a bit of risk tolerance sprinkled in there for good measure, shaken up in the shaker of what we're doing, gets us to a US launch, which is mad looking back on it. When we started, the end goal was maybe one day we'll get Waitrose. the u.s is huge said huge opportunity but also just huge in terms of landmass what is what has been your sort of headline entry strategy i think a lot of it is we have success in the uk in the brand how do we find points that are similar and that we know we could be good at so probably our focus in the uk when we started was off-premise and the groceries so how do we go and look at that how do we look at states where cocktail consumption is high, places where RTD is established, and there's that opportunity for an upgrade.

12:53And then how do you look at states that are geographically possible and meaningful? So we didn't launch California until very recently. We were in Florida because it's the East Coast. There's some practical stuff there now. But now we have a team in the US and Sam living there over there as well. We can expand ourselves a bit. But it really is also led by retailer opportunities. You might want to test, but if no one wants to list you, what kind of test you're and fulfilled. So it's working in partnership with retailers. Do the buyers get it? Do they want to take a risk? Are they also interested in the data that comes out from this?

13:22Because premium is good for everybody. Retailers make more money, consumers get a better experience, and the cash group premiumizes to offer a better quality product. So if retailers get that, who really buys in? Who'll let you try it? Who'll work with you? There's a bit of that as well. What would you say are the fundamental differences that people should consider? So say you've, like you guys, you've got a successful brand in the UK, you've scaled to a certain size. Now you want to launch in the US. Is it the same? Is it different? Yeah, that's such a good question. I left on my first US trip with a suitcase full of assumptions and I came home with an empty suitcase.

13:57Honestly, the language is a red herring. If you were exporting or starting in Brazil, you would not just assume everything's the same. And so you really do have to take that attitude of it. They happen to speak English, but how they drink, where they drink, who they drink with, what age they drink, when they drink. All of this is different. And so I think the danger is going out there thinking it'll be like the UK. We have an advisor who's an investor who's an amazing part of our story. And he lived in the US for a long time. He's an Aussie. And he had to do like immersion training for going to the US as part of his business.

14:31So he was sent to this a few day course where they taught you how to order a latte. No, but like to how to get into how to fit in. And he thought this was crazy. I'm an English speaker, I'm Australian, how bad can it be? And he was so grateful he did it. And one of the things that's really interesting is the biggest failure of integration as a nation in the US for experts for work is Brits. Because we don't think you need to learn anything. We don't think it's different. And we go and there is a massive jar and you go, whoa, hang on, this is so different to how I thought it was. And he told us that start at the start, and it really started to help us go down that path of you cannot take any of these assumptions with you because you will find out you are wrong.

15:11Interesting. Great advice. What does success look like for you in your first one to two years in the US? Yeah, it's difficult because we launched at such a bizarre time into grocery in the UK. It was COVID, people were drinking so much and it was like a really great time for experimentation. For us, I think the focus is always with every retailer, with every account, it's rate of sale. So for us, it is, A, is the proposition right on the brand? Is the liquid right for the US consumer? Is the packaging right? Are we telling all the stories we need to tell for a US consumer? And once you have that, do you have the right retail partnerships?

15:45Are you going to be where your future consumers are? So have you lined up the right retail partnerships? And then finally, can you drive a rate of sale story that makes everybody sit up and go, wow, that's unexpected? Because that's what we did in Waitrose, right? No one looking at the sort of objective view of the category says you should launch something half size and twice the price and good luck. But that rate of sales story in 200 Waitrose stores in year one in the UK, let us add a zero in year two. So 200 to 2000. And in the US, we're in that sort of phase as well of how do we build that unbelievable rate of sales story in a tight number of stores to then add a zero on the end when you're ready.

16:22So that's a focus at the moment. But setting up manufacturing in the US, getting the proposition right, getting the packaging right, dealing with the logistical complexities of an enormous continent, basically, all of that, you can't take that for granted as a sort of, yeah, we'll just get ready and then we'll start. That's a huge amount of work that we've been doing to get to this point. And you've set up a team there, right? So you've got boots on the ground now, and that's because I think that's another risk brands or trap brands fall into is you split your attention between the two markets.

16:49You don't want to lose sight of your home market, but that can be tricky. So your response to that would be, build a team as soon as you can, get people in market and literally split it? Yes and no. I think the reason we're allowed to go to the US, allowed, is because we are so confident in the UK team doing a good job. So I spent 90 % of my time on the US business, despite being in London. So if we were worried about the team or their capability or their ability to deliver the plan, we would not allow ourselves to go. It is only because we have hired a team who are so good, so much cleverer than us, so good at their jobs, such experts now, despite being really early into the journey, that we can look away from the UK and watch it grow massively and still have loads of ambition.

17:37And we tap in and we help guide the strategy and we're with them for the budgets and everything. But we fundamentally trust the team to do a really good job in that. And if we didn't, we wouldn't go because it's too much of an existential risk to the business to leave your home market when it is, in our opinion, nowhere near done. We didn't go to the US because we think the UK is over and we're looking for the next bit of growth. We think the UK's got loads of headroom left, double, triple the business in the UK. We really believe that in the next few years. And so that sort of combination of having a team that you can trust with that ambition to do it allows you to go and do the US and then you can start to hire and then you can start to build boots on the ground.

18:12I think it is really interesting though, the dynamic of you have calls with retailers and distributors when you can say there is a founder on the call who lives there and you have people there, you watch people relax because they're so worried that you're so far away that you can't, you won't be that helpful. You're not going to be around. You can't come and visit. You're not going to spend time in the market. All of this stuff, it's a real worry for retailers and distributors. So you just instantly watch them relax when our US Center Marketing comes on with an American accent and Sam says he's in New York and they go, oh great, we take you seriously.

18:43You're a real company. We go, yeah, we're made here because I think for so many British brands and European brands going to the US, it's a long way away. and they worry about it. And it feels like a good time to say as well that you've left the team in charge of the UK business and Moth is now the most successful canned, the biggest... We are the number one canned cocktail brand and grocery in the UK. Congratulations. You've left it in six pounds. Yeah, clearly much more qualified than me. Honestly, week in, week out, especially in the on-trade now, I find that we win accounts and things go, yeah, I've been trying to get them since 2021 and the team come in and go like, We got Frank and Manka and Honest Burger recently and a pair of jewels in the crown of British entree casual dining success stories.

19:28I've been trying to email them since 2018. And the team go, oh, by the way. And it's just amazing every morning. We have a team meeting on a Monday morning and they come in and say, oh, by the way, such and such were in here last week. I last emailed them for like the 50th time in 2021. I turn around and go and do a bit of stuff in California and I come back and it's, yeah, it's there. So clearly we've hired. Either I'm terrible at sales, which is option one. Or we've hired a team who are great and not the day, which I'm hoping is the actual reality. It sounds like you're quite comfortable with handing things over to the team.

19:58I know that can be a problem for founders of letting go of certain areas of the business and things that you feel very emotionally close to. Has there been anything like that, that you have found hard to delegate or let go of? Yeah, I think it's a balance. So there are things as I said earlier that I'm bad at so giving over finance and operations to Tanya and Jay that is not even doesn't register what a relief it's amazing to have experts in those fields doing it the thing that's difficult for me is we have a sales team and in the UK and it would be so easy for me to spend my time micromanaging them in the UK trying to get involved in accounts and like wanting to go and sell in the UK because I know it and I'm probably a bit better at it and trying to add value there whereas really I should be spending all of my time selling in the US and And so that's really hard not to want to go and get involved with the Frankenmanka pitch or the Onesberger or whatever it is.

20:49Like I would love to go back and play with that. It's great. And to see the team be so successful is amazing. But I have to really consciously leave them to it. They know what they're doing better than me anyway. And go and focus on the thing that it's I'm worse at and it's hard, which is selling in the US and it's new and I'm much more at school and I'm learning stuff every day. And so, yeah, there's, but that's really difficult. So leaving some things, easy peasy, leaving other stuff really hard. So let's talk a bit about raising. Let's maybe go back to the early stages. And when you first started raising, what did that look like?

21:23What advice would you give other founders who are preparing for their first raise? It'll take twice or three times as long as you like, and it will be often unfun and challenging. I think the first, we did the first two and a half years pretty bootstrapped. We didn't have any outside investment. And then we did our first raise and COVID turned up. So our first raise we had no grocery listings we had no listings because everything had closed we were like harrods and selfridges and the ritz and dalesford not really open during the first bit of covid unsurprisingly and so we raised during that point and our entire pitch was it was a great deck and we put a lot of work into it and sam's great decks and we said here's what we've done with no money imagine what we could do with money which is an interesting pitch and works sometimes and doesn't work others.

22:09But I think it's a few things that we really focus on. One is it matters who you take money from. It can't just be anybody. There are people who will be... I was always told taking money is like taking passengers onto a bus. If the people on the bus want to go where the driver's going, they leave the driver alone. They're all happy. You're all going to the right place. But if you're going on a bus to somewhere and they want to go and you're going to go left, they're going to try and A, ask the driver what they're doing and B, maybe try and take the bus. And so I think with that in mind being, we have a cap table, all of whom I would go for a margarita with, which I realize is quite rare and a huge part of the success and support from what we have.

22:47So I think in those early days, piece of advice, it matters who you take money from. If they wouldn't pass the way to test, then I wouldn't do it personally, because there's always more money out there. Just tell us what the way to test is in case anybody's not familiar with that one. Yeah, so if you're rude to people who have less power than you, if you're rude to waiters and if you click your fingers at people or have never worked in the service industry or know what it's like, I think, especially as someone in food and drink, like for me, that's a bit of a red flag. It's always really interesting.

23:15Some of the wealthiest investors we have on are the most polite, lovely people to whoever makes their three pound latte. It really is an interesting dynamic. But yeah, so from my perspective, who you take the cash from and then what terms you agree. But also we didn't have a grocery listing. And we said within 18 months, we'll get a grocery listing. That's what we raised on. That was the sort of premise. And we got a grocery listing sort of two thirds of the way through the rate. So already that was quite a unique story that said, you know, he said it'll take us 18 months. Here's Waitrose, which does rather help.

23:44But I think expect it to take a long time. Expect to kiss a lot of frogs. But stick to your guns about who you take money from. Would your advice be bootstrap as long as you can? Or would it be go early or link it to distribution? Or what's the right time? I don't think there is a one size fits all ever a right time because I was 25 and could afford to not pay myself by borrowing money for two and a half years. That now would not be a reasonable thing to do. To my wife, to the friends, that's not a fair thing to do. So how I would raise money if I was starting today versus how I was starting as a young idiot, it is very different.

24:22So I think there's no blanket. I always think about what are the headlines you need to write to make it worth raising money or make it worth doing the next thing. So the headline you need to write is bestselling new product in Selfridges gives you confidence that one day you can get a waitress listing. Do you need cash to write that headline? And if the answer is yes, you need to raise some money. If the answer is no, bootstrap it. and if you need and then if you get to the point where you're going to have a waitress listing probably you're not going to do as good of a job as you would like without cash i think there is a brutal reality to grocery listings in the uk that they you need some money to do it to be able to make enough stock to be able to keep up to be able to live with the payment terms i think up to that point with grocery you're going to need the ability to deploy some cash so before that i think there's a huge spectrum what you do but in fmcg and people who look at grocery there is a sort of fairly hard line, I would say, that you're going to need to do yourself justice, to get more listings, to scale, all the rest of it.

25:16You'll need some cash to do that. Has fundraising changed the way you think about growth? So is it faster versus more sustainable? And I know the fundraising landscape has changed a lot in the last few years. So that kind of growth at all costs mantra seems to have shifted more towards profitability. Massively. When we started, it was, show me your DTC numbers. Isn't this exciting? We're all going to sell online. That's the future of everything. And I'll grow through maybe later. That was what the VCs wanted. We thought Waitrose was a good idea. Now it's show me your profitability, show me your plans to get there, show me how can you do a cash flow without this money and all that kind of thing.