Why movements matter more than trends- Clean Co. Global CEO Billy Paretti

0:14Hello and welcome to the Tomorrow Brands podcast, where we explore what it takes to build a brand of tomorrow. I'm your host, Ruth Fittock, and today I'm talking to Billy Paretti, Global CEO of CleanCo, the leading independent non-alcoholic spirit brand. We talk about what it takes to lead a category shift, why movements matter more than trends, and how to build desire when you're not the biggest, but you aim to be the most preferred. Let's get into it. It'd be great to hear a bit more about your background and how you got to where you are now.

0:40Billy Paretti:I spent a good amount of my career at LVMH, about 18 years. But prior to that, I worked at agencies, market research agencies, strategic planning agencies, advertising agencies, and then I moved to client and brand side. My first client brand side job was at Prada, which was an odd haphazard occurrence in my life. I wasn't even working in the fashion industry at the time. Let's talk about Clean Co because you are now the global CEO there. I'm pretty sure people will be familiar with what Clean Co is, but do you want to describe it in your own words? Clean Co is the number one independent non-alc spirit alternative in the market today.

1:26Billy Paretti:We do like for liquid alternatives to your preferred spirit of choice, whether it be tequila, vodka, gin, rum, whiskey. A brand launched in 2019 pre-COVID saw a significant benefit to launching during COVID, particularly around D to C. and then the success in the UK created an interest in growing and expanding beyond that market, which is when eyes were directed toward the US. And I came in 2022, so it's three years now. My last tour of duty at Moet Hennessy is how I ended up at CleanCo because on Belvedere as global CMO, I was responsible for the innovation pipeline. for the portfolio. And I was seeing all of these low ABV, no ABV at the time trends, and was eager to pursue incubator projects internally to address that growing consumer demand.

2:31Billy Paretti:And we did quite successfully, but on a very small scale. And when CleanCo came knocking, I just saw it as one of the most interesting opportunities that came my way in a long time. Firstly, because I was already interested in the category professionally and personally. Secondly, I was really interested in pivoting from big corporate, big brand into a more entrepreneurial startup space. And I certainly got it. So low and no emerging categories obviously changed a lot over the last few years. It's growing massively both sides of the pond. Do you think that challenger brands are better placed to build this out than the bigger heritage brands?

3:18Billy Paretti:It's a great question. I think what I've been seeing in the past five years, three years at CleanCo, two years really pursuing low ABV alternatives on Belvedere, it was defined in the past as a trend. And when I came into Clean Co., I was very careful with the team and how we discussed and presented the category and the brand to the board, to stakeholders, investors, future investors as a movement and not a trend. And that was a very critical nuance for us because trends come and go, movements are the way of the future. And we wanted everyone to understand that drinking in moderation, but spirit, full strength spirit alternatives were the way to go moving forward.

4:12So that's where it started.

4:16Billy Paretti:In terms of challenger versus established brands, we are starting to see in the category this, you can either call it a concentration or arguably a division between established full strength brands bringing their own products to market and brands like Kunko. And we believe the challenger independent brands, while being lower on awareness, have the ability to be the most preferred and the best tasting. And those are our North Stars. That's what we shoot for. So I think it's harder in some ways because we don't have the resources, human or financial, as these bigger corporate brands. But we do have the agility.

5:04Billy Paretti:We do have the ambition. We do have the creative thinking and we do have the support of our board and our deskers. How have you seen consumer mindset shift over the last few years as the categories become more established? When I came into Clean Co, the first shift in strategy was recognizing that an education is required at both a consumer and trade level. And what I mean by that is people understood the trend as I just defined the movement, but people really weren't caught up on the personal relevancy and what it means to them. So I think that shift is the biggest piece for me is that we are showing people that a non-alc product like ours is not just for people who don't drink, but it's for people who moderate in a variety of ways.

6:02and I've said from the beginning to even people who were interviewing me for this job like this

6:10Billy Paretti:brand should not be an anti-alcohol brand and Klinko is not it's for anyone who is reconsidering their relationship with alcohol whatever that looks like if they need a night where they can't drink because they have something going on the next day if they're training for some high performance athletic endeavor like our founder does regularly if they are pregnant if they're a caregiver whatever reasons like we're here to make sure that you still have your experiences your moments in the way that you want to do it without any compromise if you happen to have turned 40 and realize that hangovers are now a complete disaster and have children and you have children double whammy and if you need to get out of bed the next day hangovers do not fit into my equation in life right now no no time have retailers on trade they've been quick to get with this movement or has there been resistance so yes and no we saw it goes back to that point on education and shelf space and showing retailers and in the U.S., in the case of the U.S.

7:30Billy Paretti:distributors, that there is a demand for it. It was a slow movement and now it's really booming. People are like very committed at the retail level to have offerings, to have them showcased in the right way. But interestingly, with that interest, there has become greater discernment around what goes on shelf. So it goes back being best tasting, most preferred. How do we get that across to the end user in a noisier, more competitive environment when retailers are thinking more carefully about the selection. Clean Co is, unlike some other low and no brands, is a sort of direct, you said you've got a gin, a vodka, a tequila, it's a direct alcohol swap rather than a functional beverage or something a bit different.

8:24Has it been, do you try to make it feel like an alcohol brand or is it something that's still completely different?

8:30Billy Paretti:When we think about our core objective of giving the end user a replacement for what they're used to consuming, it is important for them to have the experience to some degree of the category from a look perspective, a packaging perspective. So when you look at our bottles, each profile leans into the category cues of that specific spirit. And we talk about notes, we talk about flavor, things that you would find in full strength so that people understand and appreciate the experience that they appreciate with full strength. Now, the difference with us is that we are zero proof. We are all natural.

9:20Billy Paretti:We have no added sugar. So we have additional information above and beyond the typical traditional spirit communication points that show above and beyond why this is quite exceptional. Now, from a flavor perspective, our North Star has always been give them the feel like experience. And in a mixed cocktail or mixed drink, you cannot tell the difference. So that's always been quite interesting and surprising to people when you put a full-strain and a non-alk Queen Co beverage cocktail in front of them and they sample it. They can't really tell the difference. And does that translate into the way you've built the brand?

10:03So if you built it like you would have built an alcohol brand?

10:06Billy Paretti:I would say yes. One of our key movements strategically is innovation. And we pride ourselves on being liquid innovators. We've changed the formulation twice since I've been here. And it's to keep getting to that North Star for like meat for neat. And there's no one in the category that has gotten there yet. But we believe that we can get there quicker than most, quicker than any if we stay on this track. So let's talk a bit about the moves that you mentioned. So you took a big leap from CMO at Belvedere to CEO at CleanCo. What motivated that move? I had a moment in my career and a moment in my life where I decided I wanted to work more independently and outside of the big corporate system.

11:02Billy Paretti:And I was considering the startup entrepreneurial space for quite some time. And I think it really took the right opportunity, put in front of me to do it. It's very different going from corporate to scale up. It's almost like a different job. Some things are transparent. There's totally different rules. There's pros and cons to both. So I can't say corporate America is like terrible and this and that. There were so many wonderful things about working in corporate. Big resources, big human resources, big financial resources, a support network around you, interesting people, big teams that you would interact with, seeing a greater pool of diverse opinions on a daily basis.

11:53Billy Paretti:For me, the best equation professionally is when you can contribute, but you can also grow. And I felt that I was no longer growing in corporate America, corporate in general. I felt like the pivot was necessary for me personally to grow, think about the next chapter of my career, build things that are interesting and build things that are of value and really see the consumer and the brand alongside each other as opposed to thinking brand first. What did you take with you and what did you have to leave behind? I took a lot of structure with me and a lot of order that people who typically work in startup don't use, don't even know, don't go by.

12:49Billy Paretti:And it's really benefited Klinko in significant ways because we have a plan. We pivot from the plan often, but we always have a plan. And that plan is built on structures that I learned from all of my years at LVMH. And what did you leave behind? I left behind the concept of you need more for more. So what I mean by that is as we build and as you have these resources, which I referenced earlier, in order to grow, the concept has always been in previous jobs for me. if we're going to scale to here, we need more of this or more of that. And what I learned very quickly coming into this job with limited resources and limited financing, if we are going to scale, we have to figure out how to scale in a very scrappy way and do a lot more with a lot less.

13:52Which is a fun challenge, isn't it?

13:54Billy Paretti:It's a fun challenge mostly, and it can be a terrathon challenge. So you didn't just go from big to small. You also went from CMO to CEO. Has your perspective on marketing changed now that you're accountable for the whole P &L? Interestingly, no, because I worked in an organization that was very commercially driven and KPI focused. So we had metrics in marketing that always connected back to sales. Now, did we have the bigger brand equity building pieces? Yes, but it was always around driving top-line revenue. So it didn't change much, and LVMH was an interesting company to look for because the chairman, Mr.

14:38Billy Paretti:Arnault, always believed in driving desirability and the rest follows. So you need to have that demand, whatever drives that demand, and inspire the consumer to pull in as opposed to pushing down. Let's talk about leadership, global roles. How do you make that work? It's really important that you work with a team that is competent, first and foremost, obviously, but also shares similar professional and human values. And when you work with a group that is aligned in that way, you can make a lot happen. And I talk to the team in direct or indirect ways about leading with positivity and more importantly, always coming to the table to discuss what we can do and not focus too much on what we can't do.

15:37Billy Paretti:It's always about let's really focus on what's possible. You're the problem, let's discuss the solution. Let's look at the wall and think about whether we need a ladder or a hammer. Let's just figure this out. So we talked a little bit about prestige brands and how Clean Co is building a brand from scratch. How do you think about driving desire without the benefit of legacy? And do you think that legacy has a benefit in this category? I don't think legacy has a benefit in non-alc spirit alternative category at all. In fact, I think the benchmark for success comes down to taste and the consumer experience.

16:18Billy Paretti:So we always stay focused on that. Interesting, isn't it? Because it creates then quite a level playing field, which is quite unique. Any learnings going from managing a board to managing investors, working with a founder? Yes, speak their language. And sometimes I'm not great at that language. So it's been a learning curve. I've managed, I've worked around and managed many board conversations in past lives. So that was not really a challenge for me. The investor piece has been an interesting one because it forces you to be vulnerable and really expose everything about your company, how you've run it, and what your goals and ambitions are in the future in order for them to feel confident and comfortable in moving forward with a potential investment partnership.

17:10Billy Paretti:You're really exposing yourself. So it forces vulnerability. And working with a founder, has that been a learning curve as well? No, I've worked with founders before. My first experience with founders was at Prada, YouTube Prada and Patrizia Boutelli. I've worked with heads of creative at LVMH in and out of a variety of sectors. So that wasn't challenging for me, but I did find Spencer to be, from the first time I spoke with Spencer, he was someone I knew I could work with because he showed excitement, ambition, creativity, but he also showed in that first conversation that I had with him a strong amount of humility.

17:57Billy Paretti:And I don't know if everyone experiences that or sees that in their founders, but I saw that in Spencer and I was like, I can work with this person and I can work with all of that. When you're building a brand from scratch and you potentially don't have huge budgets for insight and data. How do you balance instincts and your previous experience and still look to consumer signals and keep the consumer at the heart? In previous lives, I was very dependent on consumer data. And now we go... In the past, it was more heavily leaned toward data and research findings and less about instinct. And now the equation has completely flipped.

18:47Billy Paretti:We go much more on instinct and then we validate with consumer data. If you had limitless budget, would you still do it that way or would you bring in more data? It's a great question. I would probably bring in more data and I would probably still lead with instinct. What are the challenges with growing in the UK and the US? Any key differences between consumers, category, trends that impact your growth strategy? The footprint geographically is a pretty big challenge for us in the U.S. So coming into CleanCo, the strategy that I adopted was go as wide as we can. And I reset that pretty quickly because it proved to be way too challenging.

19:27Billy Paretti:We need to go narrower and deeper and really focus on places where we believe we can win. What winning looks like are different things. Winning from a distribution perspective, winning from a trial perspective, winning from a consumer share of mind perspective. So really focusing on where and how we can do that. But the U.S. is, while it's the biggest opportunity for growth, it's the biggest challenge to cover the entire market. So prioritization is really key. UK is challenging from the perspective of the competition in the sense that the full strength spirit brands are starting to offer non-alcohol alternatives.

20:19Billy Paretti:And they're getting a lot more shelf space and a lot more consideration than was the case when I first came in. So that's moving quite quickly and quite dynamically. And that's our challenge, really going up against that. Have you had to adapt the brand, like language, tone? We had someone on the podcast who said that UK brands assume that the US is really similar culturally and actually that we're quite different. We just speak the same language and we found that you're nodding. They're completely different cultures. But what we've been able to do is we are a British-founded brand. We have a DNA that we defined that's grounded in that.

21:07Billy Paretti:And that DNA and the brand positioning that we've built over the past year is very appealing in both the U.S. and the U.K. market. And this is one of those things that we actually did go out and test afterward to see how people felt about it. So I feel like our global positioning and brand identity is very translatable. The devil is in the details and how you execute. So it's how you communicate in the most granular way, whether it's on a point of sale material or if it's at an event, And even on-prem menu listings, how you present yourself, is where you start nuancing what the brand means and how it should look.

21:50Do you think there's an appetite in the U.S., like a British tone of voice, that people would see that as a positive thing?

21:56Billy Paretti:Absolutely. Good. Yeah, I think, and I still can't really figure it out. Speaking broadly and harking any kind of politics, the American culture has always slanted toward being Anglophiles. Like we just love British humor, love British cheekiness. It's something that we respond very well to. There's an obsession with the royal family here, even though we're not that kind of country. So maybe that's why. I don't know. But there is an appeal on all things British. What does success look like for Clean Co? Where do you want to be five years from now? It's pretty simple. And I think I might have mentioned it before.

22:42Billy Paretti:we want to be the most preferred, best tasting brand in our category. And that doesn't mean the biggest. We don't care to be the biggest. We want to be the most preferred. And that goes back to the clean organization that we were talking about. We're very interested in having a qualified, qualitative experience with our end user. I'm going to do a few quickfire questions now as we're coming to the end. One big brand habit you had to unlearn at CleanCo. It's that more for more. I had to really unlearn that. I went in building from the bottom up and the numbers were climbing. So it was like, okay, let's reset the brain because we don't overinvest here.

23:28Clean co-product you drink most often and how do you serve it?

23:31Billy Paretti:Clean tea, sometimes clean G. I do a simple G &T with the gin because it's so simple and easy. And tea I do with soda water and lime. Challenge a brand you admire in or out of category. I've become somewhat obsessed with the better for you soda offerings. And I don't know what the competitive set looks like here, but Poppy is probably the biggest one here. And the challenger brand that I discovered at a local salad place is Olipop. And coincidentally, one of our investors is an investor in them. So it all started coming together. So I got very curious about the brand and I started lining up similar to what I do in our category with our competitive brands is the benefits and the proposition on each.

24:31Billy Paretti:and Olipop really delivers what their slogan says from an ingredient and a taste perspective. So I think they're really interesting and I think they're going to make a lot of traction. And I would love to emulate that with Clean Co. Best piece of advice you've ever received. There was a quote that I saw in, I guess it was T Magazine at one point. I tore it out and I keep it on my refrigerator and it says, if I've got the wording correctly, at some point you go with what you have or you don't go at all. And it just always stuck in my head and it harkens back to this 80 % rule that someone taught me at one point.

25:13Billy Paretti:Are you 80 % there? Can you get it to 90? Don't wait for 100 because you've missed the boat. Progress over perfection. That's the better way to say it. No, I'll let you away. finally a question we ask every guest in your opinion what makes a brand of tomorrow purpose purpose in a variety of ways purpose from a practical perspective and purpose from a brand perspective what are we doing here what is the reason for this and is it a good one thanks so much for coming on billy yeah thank you this was great hope you enjoyed this episode with tomorrow browns podcast if you did i'd love it if you could rate or leave a quick review it really helps other people find the show.

25:55And if you're curious for more, check out the other episodes. We've had some brilliant founders and operators share their stories. Thanks for listening and see you next time.