72. How to build a successful brand in a competitive market | Steve Perez

0:00Welcome to All About Business with me, James Reed, the podcast that covers everything about business, management, and leadership. Every episode, I sit down with different guests who bootstrap companies, masterminded investment models, or built a business empire. They're leaders in their field, and they're here to give you top insights and actionable advice so that you can apply their ideas to your own career or business venture. What does it take to build a successful consumer brand? And how do you become one of the fastest growing companies in the UK? Today on All About Business, I'm joined by Steve Perez, founder of Global Brands Limited, the company behind drinks brands such as VK.

0:44In this episode, we discuss entrepreneurship, resilience after failure, how to build a successful consumer brand and why Steve believes family businesses still have an important role to play in the future of the UK's economy. Well, today on All About Business, I'm really delighted to welcome Steve Perez to the studio. He's the founder and chairman of Global Brands, the independent drinks company he launched in 1997 after, I would say, identifying an opportunity in the market for a new kind of ready-to-drink beverage, leading to the creation of VK. What does VK stand for, Steve? Well, that kind of stands for vodka kick.

1:27Vodka kick. Vodka kick, yeah. It's vodka with a kick. It's got a little bit of caffeine in it, a little bit of alcohol. All right. And it kind of gives you a boost. So for listeners, we've got a few examples on the table here in the studio, bright-coloured, quite enticing-looking drinks that you first launched, I believe, in 1997. So, Steve, just going back before that, you worked, I understand, in pubs and bars and restaurants. How did you come to start your own business, and how did you end up in this space? Well, my father was in business. He was an entrepreneur. He had a pub and restaurant, a very successful pub and restaurant called the Red Line and PKH Hotel, which actually I bought back about seven years ago.

2:10So where were these places, just so we can picture it? In Derbyshire, in Chesterfield. And that's where you're from? And that's where I'm from. That's why all my business is based. Right. And my father sadly died when he was just 48. And he was in a partnership, and the partnership all kind of went wrong with me. We ended up with a family dispute. So we basically ended up with very, very little money. So I ended up going to work for the corporate, and I went to work for Tetley and Son, Joshua Tetley and Son, up in Leeds. Famous brewers? Yeah, famous brewers. And I was running what they call then their fun pubs.

2:46Right. And one day my boss said to me. How did you distinguish a fun pub from another pub? Well, bear in mind in those days, you know, you go into a pub and you get a pint of bitter or a pint of mild. We sold interesting, we sold lagers for a start. We also sold premium bottle beers like Budweiser and Bex and stuff like that. So fun pubs had a bit more of a range. Yeah, yeah, and loud music and that kind of stuff, and a nightclub. And yeah, my boss told me, he said, you know, Steve, you're doing a fantastic job. You're our top manager. You're hitting all the targets. How do you see your future?

3:22And I said, well, Jeremy, one day I want to be like you. I want your job. Well, not your actual job, but I want to be an area manager. He said, well, I'm sorry, Steve. You've got no chance. Well, why is that? He said, well, you don't have a degree, do you? no do I need a degree oh absolutely so you have a degree so yes I have a degree oh what what do you have a degree in Greek mythology so so this is somehow helpful to be an area manager I thought that might be quite that must be useful so he says I suggest you go and get yourself a degree and and go to night school you must have been a bit perplexed at this yes I've got to go to night school get a degree he says yeah and then we couldn't get you on our graduate training course.

4:10Right. I thought, I didn't really enjoy education that much anyway, so I thought, you know, I don't think this, I'm not going to go anywhere. And I started to think, well, what am I going to do? I had a few ideas. I noticed we were using a lot of veg, prepared veg, so one idea of ours was pre-preparing veg for hotels and restaurants. But then I'd noticed people were starting to drink a lot of premium bottled beers. And I thought, you know what? I reckon I could make a living and I got no grand desire. All I wanted to do was stop working for the corporate. You used to give me a rollicking because I was 10 minutes late because I'd been working at a nightclub at 3 o 'clock in the morning and I wasn't on time at 9.30 and that kind of thing.

4:54I didn't enjoy working for... And I then thought, these imported beers are doing quite well. So I managed to borrow a bit of money off my mum and bought myself a little van, a little white van, and started to import small amounts of premium packaged beers. In those days, I had Budweiser. Nobody had heard of Budweiser. And I was saying, oh, this is Budweiser. It's from America. Oh, that's cool. And so you put a lime in a bottle and it's really cool. Yeah, I remember this sort of emerging. A long time ago, people started putting limes in bottles. Yeah. That was your sort of promotion. Yeah. I used to say, actually, we don't sell beer.

5:38We sell sex. Right. Well, that would get people's attention. So what happened? Because you look a lot cooler, you know, to the opposite sex. Oh, I see. So if you're drinking one of these. An expensive bottle of premium beer, whether it be Grohl's or Beck's or Budweiser, then you look like, rather than stood there with a pint of bitter in your hand. Right. Yeah. So a lot of the guys started to drink premium bottle beers. and you've always said the dads drank bitter their dads drank lager their sons drank premium bottled beers and their sons drink alcohol VK hopefully So you've got all generations catered for here Yeah well So that business I built up out the back of the little van So this was going around Derbyshire Yorkshire Initially it was all around Derbyshire and Sheffield which was the biggest city close to us.

6:34And one day I got this big account. In those days, of course, we didn't have mobile phones and you had to keep phoning. And one of the things was I kept phoning this guy. I remember it was Peter Moore and the company was called Midsummer Leisure. And he was the area manager and I presented my beers, my range of beers. I had to speak to him and he was never available. But I kept calling his office. And one day I thought, I called his office at six o 'clock at night. and I called the officer and he answered the phone. Oh, Mr. Moore, I need to speak to you about my premium beers. He said, oh yeah, I mean to speak to you.

7:09Yeah, let me give you my order. And he gave me this huge order, which I could barely afford. And we started to supply this company, Midsommar Leisure, which became European Leisure, and we were supplying premium bottle beers. And this was quite a successful business. We turned over about 10 million for about 10 years. but then what happened you know it's change of government policy um what are we talking about this was so 95 96 so the first business started in 1986 right by by 95 96 a lot of brewers cottoned on onto the importer business start to import the beers directly themselves right not only that was at that time there was a if you remember the whole cross-border shopping thing where guys were going over to the continent with white bands not paying duty uh there was another recession and uh in 95 basically 96 my business went bust right and i was like because we got some bad debts and yeah i was fairly highly geared and you know so you obviously had to buy the beer and then sell it on and you were the financing yeah i was financing i was doing stuff like you know invoice factoring invoice discounting you know to raise funds and we took a few bad debts we didn't have a lot of cash and you know the bank that put you under yeah put me under and you know and i thought how many people worked for the company then about 20 at that time so so that must have been really tough you know it was probably one of the worst days of my life you know i remember coming on the train from london looking at myself in the bathroom and pointing at myself and saying failed businessman yeah i just saw myself yeah i look pretty true and i just looked at myself and thought you're a failure um you know because it put me i'm a heart and soul into that business and you could have said it was no fault of my own or you could have said it was my fault i didn't really know it maybe it was my fault yeah maybe i was incompetent and that was a problem of course when i when i tried to set up a new business because i you know i recognized i'd still got a good contacts and when I went to speak to the banks, at best they thought I was incompetent, at worst they thought I was a crook.

9:22Is your organisation prepared for what's coming next? At Read Talent Solutions, we don't just manage contingent worker programmes and fill roles through our RPO solutions. We future-proof your workforce, from scaling operations to upskilling teams and navigating digital transformation we are your strategic partner in building resilient future ready talent ecosystems visit readtalentsolutions.com today to discover how we can help your business grow and this is when you came up with your next idea yeah my next idea well and actually to start with it started off i started trading because i because i recognized grey market stuff, when you're buying products from abroad, it's legal.

10:15So despite the fact that we weren't the importer for Budweiser, I could buy it in Holland at a cheaper price and sell it on the market. Well, that was when we were in the EU, I guess. Yeah, yeah. You could bring things in. It's quite happening, yeah. And then we started to sell. What happened at that time with Alka-Pops? Alka-Pops became very, very popular. We're talking mid-90s, aren't we? Mid-90s, yeah. Yeah, so 96, 97, 98 became very popular. And then the government got involved and brought in quite a bit of legislation to stop them, the way they advertise these things. And a lot of the brewers and big companies got out of Alka Pops, as they were called.

10:55And there was quite a lot of stock on the market, cheap stock, which I bought the stock. And I could sell it to a lot of my customers from the previous business. because I'd built up, you know, it's very important, you know, you build up, despite the fact my first business had gone bust, I'd built up some great customers who became good friends and they were happy to support me in my new venture. And they were buying these Alka-Pops, sometimes short-dated, and the only rule I had then was, please pay me really quickly because I... So hang on, you've said a lot here that I just want to unpack a little bit.

11:31So how long after you were sort of having that moment on the train when you were being so tough on yourself saying i'm a failed businessman to starting again what was the sort of intervening gap are we talking weeks days yeah probably a few probably well well to start with i thought i might i you know i'm also a farmer i got a small holding yeah and i just by the skin of my teeth managed to hang on to the farm uh basically because i had so much money on it the bank weren't interested uh and that's one way of surviving a financial crisis, I've told you. But I got my farm and I got some veg and I got some chickens.

12:07I thought, well, you know what? I can live on the farm. I can grow my own vegetables. And actually, you know, I could live quite frugally. And I was sort of thinking about the business, building some sort of business. But then I thought, I'm never going to have a big business again. Yeah, a little business would suit me. and I thought maybe I could do a little bit of trading or what have you. But I had no money, so I got myself a part-time job as a waiter in a restaurant. So at weekends I was working as a waiter because I still have bills to pay. So I grew my own food. The good thing was for being a waiter, you got staff dinner.

12:51And tips sometimes, I guess. Yeah, and tips. And my uncle had a market stall in Derby, so I helped him sell leather goods on the market store. So it was all ways of just trying to make some money.

13:06But I built this business up trading, not on my own brands, but then it became more difficult to buy these short-dated, and you know what I mean by short-dated? Almost expired. Almost expired sell-by dates. Yeah. And it got more difficult to buy stock. so and then you know where all these great ideas are born was in the pub i was talking to uh one one of my guys they said what maybe what we should do why did why don't we why don't we make our own yeah that's a good idea and we noticed red bull was selling really well at that time and vodka was selling well a lot of people were mixing red bull and vodka yeah yeah that was the drink to have keep you going late at night yeah yeah yeah you have that all that so i said why don't we do a Red Bull Vodka.

13:52And I noticed from a previous business, there's brands that sell well that got sort of one or two syllables like Bex, Bud, Sol. And I thought, I know what, let's think of catchy names. So let's have two initials. So VB, so I thought VB, Vodka Bull. So that didn't work because it was already ready, VB, Bitter. So I went VB, VC, that's Victoria Klaus. VD, obviously, couldn't call it that. I got VE, that had connotations with, you know, drugs. And I got to VK. I said, oh, VK, that looks nice. So literally, you went through V and then the following letters. Yeah, K looks nice. V and K, you know, it's all linear.

14:37And Mark Jays, who was my only employee at that time, said to me, what's it called, VK? It's a vodka with a kick. Vodka kick. So it became vodka kick. and ultimately we actually had to drop the name kick because it was decided by the by the powers that be that uh that it was sort of uh promoting irresponsible drinking so now it's just called vk yes and everybody knows what it is yes and so what was your first vk flavor so it's v it was vk blue but actually which we have on the table vk blue but at that time it wasn't actually blue Oh, wasn't it? It was in the blue, well, it was in the blue bottle.

15:15It was called VK Energy. Right. And so we weren't allowed to call it. We found that a couple of years later, they ruled, the Pals Up B rule, we couldn't call it VK Energy because that could promote irresponsible drinking. Right. But everybody used to call, because it was wrapped in a blue sleeve, everybody called it VK Blue. Right. So let's just call it VK Blue. So for many years it was sleeved, but it was a sort of red bull-flaked coloured liquid. And so it was only some more recently for environmental reasons, really. We took the sleeving off, the plastic sleeving off, and obviously we had to add some sort of coloured...

15:59Was the sleeving on so people would drink it in various locations? Was that why it was sort of covered up? It just looks cool. It just looks cool. yeah it looked really good so you really sort of did a lot of thought around the way it looked and that was your sort of focus i think i think the thing is with you know business you you you might you could say my well 10 years and my probably you know 10 years prior to that in working in hospitality yeah i've realized you've got to give people what they want and uh and and people you People want to hold a bottle in their hand that sexy. Yeah. And like the beers.

16:36And Alka-Pops with a new... So you wanted a good-looking bottle. Yeah, I wanted something. And it looked great. In fact, it was the same color as my car. I managed to afford a BMW at that time because the business grew fairly quickly, really. Was that bright blue? Yeah, that was bright blue. I said, let's make it the same color as my BMW. Right. So blue is the color. Yeah, yeah. It was like a silver blue. Right, okay. So then you obviously expanded the range. Well, yeah. Well, to start with, we just started with blue, and then it was a watermelon. But what happened was, because I got the contacts from my previous business, I got the, yeah, we got the blue, we had an orange and a watermelon and an Ironbrew version.

17:21They were the first four flavours. Because actually, you needed range. Ironbrew's another brand. No, well, that's about to spell Ironbrew. that's I-R-N. Ironbrew actually isn't a brand. What is Ironbrew then? Ironbrew is a tutti fruity flavour actually. It's actually a flavour? Yeah, it's a flavour. I never knew that. So you could use that phrase? Yeah, we could use that phrase, yeah. And at that time, that was quite popular. And I went to my customers, I had fun important beers, and I said, look, I've got this new brand. The biggest brand at that time was Bacardi Breezer. and I said look you could kick out Bacardi Breezer and put in VK and the benefit of VK over Bacardi Breezer is first of all it's vodka, it's not rum people prefer vodka to rum our bottle is a little bit smaller and instead of being 5.4 ABV the 4 % ABV so less strong, people will drink more and actually people will be less ill you get less problems in your nightclubs and to save money it's kind of a win-win and as soon as we started to to produce it and supply it the business we were turning over about but the first started we turned over about two two hundred thousand the year we started with vk we turned over two million the following year we turned over 16 million one six one 16 yeah So grow eightfold.

18:53Yeah. The following year, we turned over 30 million. The following year, we turned over 65 million. This is a huge growth sort of trajectory. That must have put quite a lot of pressure on the business, didn't it? It was. But you know what? Well, how did you do that? It was the best fun I've had in my life. Sounds it. Talk about having fun in business. So you must have had to grow a team pretty quickly. Yeah. It was fun and fear. You know, I'm a rally driver. and people were like, well, it's dangerous, isn't it? And I suppose it was dangerous. You like a bit of adrenaline, Baz. What was left, yeah, everything was on the line.

19:32And, you know, people said, well, how do you defund it? And the difficulty with drinks, of course, you have to pay, well, we had to pay the duty up front. So as soon as we produce, we have to pay the excise duty up front. And, you know, we have to pay for the product because it was very difficult getting, yeah, getting... So you weren't making it, you were getting other people to make it, were you? And that's what we still do today. Everything, you know, we're a mill without looms. So everything is, our skill set is in marketing, in producing amazing liquids. But the only thing we don't do is put the liquid in the bottle.

20:08So you're coming up with the recipes and the marketing. We supply the labels, we supply the crowns and everything. And we supply that to the filler and the filler fills it. lots of the big brands do the same thing, including me. We'd go down the same line as Bacardi Breezer, for example, our arch rival. So you don't necessarily have to have a factor. But you had to be able to finance that. Yeah. And so that was a challenge going that far. How did you do that? Yeah, and that is the biggest... Because you've also got these banks who think you're either incompetent or a croak, as you put it. Yeah, yeah.

20:42So how did you persuade them to finance? I couldn't borrow any money from the banks. Not only that. You couldn't? They were awful. because in those days, because you wrote checks. And I remember one day, you had the bank saying, oh, you were overdrawn. I said, well, I'm not overdrawn. I've got all these checks. He said, yeah, yeah, but you've got uncleared funds. That means you're overdrawn. So I'm going to have to bounce, bounce over your checks. I said, please don't do that. You bounce my checks, my suppliers will lose confidence in me and I'll be out of business again. He says, no, I need five grand in your account by today.

21:15Meanwhile, actually, I was negotiating. you had checks from other people they would take days to administer those people who don't know what checks are those are pieces of paper they took like two or three days while they were making money out of your money so they were going to put you out of business they were going to put me out of business that was shocking so I managed to sell my only car I got a Land Rover I sold my Land Rover for cash got five grand cash put it into the bank and I said there's a cash, Chris, Rick Peake, maybe I can't say his name, Midland Bank in Chesterfield. Just so everyone knows.

21:55There's the cash and close the effing account. He said, what do you mean? No, I've opened an account with Rawbanger Scotland. So close the account, clear the checks. They lost you as a customer. Yeah. Got the bus back to my warehouse.

22:12So literally you sold your car to stay in business. Yeah, just to get those checks cleared. Right. And then it was bought for cash. So then what happened? So the business was growing so quickly. But I got some really, really good suppliers. And many of which, in fact, Thomas Hardy was our bottler. And they were our biggest supplier. and they still, 25 years, still bottle for us today. They're still a supplier. Yeah, they're still suppliers. So that relationship's critical. And they're probably our biggest supplier. And I went to Peter Ward, who's another family business, Chris's father. I said, look, I haven't got the cash yet to pay you terms, but please, if you could, I know I've only got a five grand credit limit, but my business is going really well.

23:10please come to my office see what we're doing if you want to see my bank statements if you want to see my cash book anything you want to do you can see I'll fax them down to you because you knew the money was going to come in yeah we've got great customers we're making fantastic margins we're making a huge amount of profit but we weren't making any cash so I went to all my suppliers my glass suppliers and to my surprise they all said well nobody's ever said this to us before right and you know what in 25 years in business since no one's ever come to me and said you know we certainly put people on stop and give them credit limits but nobody's come and said i'll show you my books come and have a look send your fd along and and so that's good advice to people who are in this situation of growing businesses and yeah the cash is tight you know if you've got a growth story to show yeah and you know what gets me these days and maybe it wasn't around and when i first started business these days everybody talks about seed enterprise scis where you give a chunk of your business away to vcts and and and and i'll say you've got to hang on to your business and and and so find other ways of finding other ways that should be the last resort well equity is your last resort yeah equity is your last resort thought, you know, go to the banks at that time.

24:35You know, you had to go to the banks. And eventually, yeah, you come up with a business plan and, you know, the banks lent us money. There's invoice factoring, invoice discount. There are other forms of finance. But, you know, I see lots of these businesses around. And some people send me business plans. And they show me the business plan. First of all, the founder's on 150 grand a year. And he gives away a lot of his equity. He loses millions and millions and millions. you know i look at lots of lots of our competitors i yeah i see lose millions a year and then and and and then the and then the shout out in the press how delighted they are that they've narrowed the losses from three million to two million and and they're always looking for an exit and and i never built a business to look for an exit i built a business because i love what i do i've yeah i love the people i love my customers and it's great fun enjoy enjoying your own business and over the years many times i've had businesses yeah vct or venture capitalists come along and say oh would you like would you like to take 10 million out of your business you like to take 20 million yeah we'll take a minority stake you'll still be running your business and i've always resisted it yeah i run my own show i don't want somebody why have you resisted it because you think they're going to take it over or because they want to they'll make you sell it or what's the because it means i can make mistakes you can make mistakes when you're your own yeah i make mistakes all the time you know we do think you know we do things we try things we try new brands and sometimes a success on some sometimes they fail and i don't have to look over my shoulder or get permission and we have to do things very very quickly yeah like you have drinks business is almost like a fashion business things change very very quickly uh fashions change flavors change yeah for example peaches are in flavor right now so you know a yuzu is a big flavor right now so we so we've so you need to keep abreast of these yeah yeah and you need yeah and you need you need to move quick and sometimes you get it wrong you know sometimes you're too early to market uh you know we've we've made that mistake a few times we've brought brands to market and we've I mean, we think they're going to be really successful.

26:49And they failed. Yes. So having the sort of independence to be able to try things and to weather failure without a venture capitalist coming down on you like a ton of bricks and you miss some plan is really important, I can see. How have you developed your product range? Because I know you've gone beyond VK and you do other things now as global brands. Yeah. Yeah. So our main market was, to start with, was mainly pubs, clubs, and busy town centre bars. So the first brand we came along was called Corkies, which is a flavoured shot. And that was very, very successful. and then we have another brand called Kick which is a non-alcoholic version of Vodka Kick and it's another energy drink and about five years ago I bought Hooch now Hooch at one time was our arch rival and it went off the market it was originally owned by Bass So Hooch was Alka Pops.

28:06It was another Alka Pops, yeah. That's what I recall, yeah. Yeah. It was, many people say, it was the founding father of Alka Pops. The original. Yeah, it was the original. Okay, yeah. I remember it. Yeah, Coors had it. I think Bass had it, and Coors bought Bass Brewers. I think the Americans just didn't like Alka Pops. They thought they were probably too girly or something. and eventually decided they were going to take it off the market. And it went off the market. Right. And I met up with Bass or with Kurz as it was. And I said, look, you've got this brand hooch and you're not doing anything with it.

28:48Would you let me license it? And so we came up with a very, very simple licensing agreement. and for about 10 years we were very successful with Hooch and Keith Lemon launched it for us Keith Lemon, Lemon Hooch and all that and then to my surprise three years ago Hooch, the owners of Hooch which was Coors, offered to sell it to me. And I was absolutely delighted. It was the first acquisition I've made because they'd always said that they wouldn't sell it. It was too big a brand for them. And I bought it and we brought it into our stable. So we've really sort of cornered the, let's say, the Alka-Bots.

29:51Well, we don't like to call it Alka-Bots. We call it RTDs, ready to drink. Why don't you like to call it alcohol pops? Well, it has connotations with unsociable drinking, irresponsible drinking, but actually a lot of these products are actually not that strong. So you call it ready to drink? Ready to drink. So they're like little cocktails? Yeah, we supply a range of cocktails called All Shook Up. Now, that's in all the major retailers, a lot of the major retailers. All Shook Up? All Shook Up, for example. shaken not stirred yeah you'll see it in tesco's right uh and also we supply a lot of um a lot of own label products for for some of the for some of the discounters uh such as aldi and little and also some of the other major supermarkets because what we have what we're absolutely brilliant at is is coming up with a fantastic flavor uh i really believe our guys you know back yeah So you have a sort of taster team, a sort of laboratory where people are trying these things.

30:56Nice job for people. Yeah, we have our own chefs who come up with flavours. And they are absolutely brilliant at coming up with great flavours and also innovative flavours. Like I said, we've just launched a Yuzu flavour of Franklin & Sons, which I can tell you about. So tell me about Franklin & Sons. Yeah, that's another business line for you. Yeah, yeah. So what's Franklin and Sons? So I'd obviously seen the success of Fevertree, the growing success of Fevertree about 10 years ago. So there was Schweppes. Yeah, first of all, there's Schweppes. And there's Fevertree. Yeah, there's Fevertree. These are tonics, typically.

31:41And now you've got Franklin and Sons. Yeah, and I thought I'd seen Fevertree, but I just didn't want to invent yet another, you know, me too copycat of Fever Tree. But I saw there was a market for another premium tonic. And I looked around and I thought, what a lot of these brands are lacking, our heritage. Because the great thing about tonics, you know, tonics were invented, you know, in India. You know, it was a tonic, you know, which you never quit. It's meant to help you avoid malaria, wasn't it? It's meant to help you avoid malaria. So there's a lot of history. And I looked around and I scoured the internet and I found there was a tonic, a soft drink company called Franklin & Sons, which were originally founded in 1886.

32:32Right. And the brand had died, gone off the market, and the trademarks had lapsed, and I contacted the original family, well, not the original founder, but the family members. Yeah, and asked if they were interested in being involved. Unfortunately, they weren't interested in being involved in the business. I explained I wanted to bring the brand back to life which I was very happy I did so and we were true as possible to the brand so we went back and we tried to find old recipes and the bottle was very similar in terms of logo to how it was back in the day So this is interesting so you were very interested in recreating the narrative around an old brand that made a premium product and recreating.