East Imperial's Secret Weapon? A Consistent, Disciplined Emphasis On This.

0:10Hey folks, I'm Ray Lateef and you're listening to the number one podcast for the food and beverage industry, Taste Radio. This episode features an interview with Tony Burt, the founder and CEO of super premium mixer brand East Imperial. Tony Burt has seen the light, but he's rarely swayed by it. Tony is the founder and CEO of East Imperial, a New Zealand-based brand of upscale mixers inspired by a 1903 recipe for tonic water and made using natural and sustainably sourced ingredients. The brand markets several varieties of tonic water, along with a grapefruit soda, ginger beer, ginger ale, soda water, lemonade, and cola.

0:56A globally distributed brand, East Imperial is specifically focused on the on-premise channel. Its products are featured at world-renowned cocktail bars, restaurants, and hotels that align with its premium positioning. The company is in the midst of a major expansion in the U.S., and despite vast retail opportunities available in the market, Tony is adamant that East Imperial maintains its focus on high-end hospitality. While the allure, spotlight, and potential windfall revenue associated with distribution at major retail and restaurant chains are compelling, Tony notes that at the heart of East Imperial's business strategy is discipline and an emphasis on the brand's core values.

1:40In the following interview, I spoke with Tony about the origins of East Imperial and how he, a former advertising executive, became a beverage entrepreneur. He also spoke about how he and his team hold the line on pricing and positioning, how the company identifies ideal placement for its products, and why it's agnostic about strategic partnerships.

2:06Hey, folks, it's Ray with Taste Radio. Right now, I'm honored to be sitting down with Tony Burt, who is the founder and CEO of East Imperial. Tony, so great to see you. Great to see you too, Ray. Thanks for having me. Yeah. You're joining us all the way from Sweden, one of my favorite countries in the world. What are you doing in Scandinavia? Well, I'm obviously usually based in New Zealand and from New Zealand, but my better half is Swedish. So I find myself here with my children and her at the in-laws for Christmas. We've just arrived here. So it's a very dark and very cold comparative to where I've just come from.

2:45Yeah. Southern hemisphere, you're in the midst of a nice summer. And right now you're up in the northern hemisphere, near the tip of the northern hemisphere, actually. Yeah, well, it feels like it, believe me. I've been outside a couple of times today, and it's pretty chilly out there, and it's dark as well. So as I said, it's quite the stark contrast for where we were three or four days ago. Well, I recall eating some outstanding food in Sweden, so hopefully at least you have that. Yeah, well, I did do a smorgasbord this afternoon with lots of herring and salmon and whatnot, so you have been indulging in that.

3:21I love it as well. Very nice, very nice. Yes. Tony, it seems like you've been all over the world. You're from New Zealand. You're currently in Sweden, where your wife is from. And you have some deep roots in the UK as well. You were in the advertising business for some time, right? That's correct, yeah. I lived in the UK for 15 years. I returned back to the homeland, New Zealand, in 2009 with my wife and our newborn. But also when I returned to New Zealand, I took up a role as chief executive of M &C Saatchi, which was arguably, in New Zealand at the time, the last of the true brand agencies. My career has really been built, my advertising career anyway, was built on strategy and planning.

4:07side of advertising. So that's sort of analyzing human behavior and what makes people buy one thing over another, which I've always been intrigued about. So it's more the analytical side, although any good planner will tell you that they're a creative as well. And I guess I fall into that bucket as well. But I think really what I loved about advertising was the breadth of companies or industries that you got exposed to. And typically when a lot of companies came to advertising agency, they came to you because there was a problem. And a lot of those problems were they weren't selling as much or there was a competitor or the market was changing due to online.

4:46So it was a really rich background to explore different industries. And one of those was FMCG. And I've always been fascinated by FMCG and namely beverages. and sort of late sort of 2006, 2007, that sort of time, there was obviously a big movement into the craft space and beer and that was when I was living in London and that was no different when I returned home to New Zealand. I was fortunate enough to work at a number of different large spirits brands as well in my advertising career and also saw the proliferation of craft or premium spirits as well and craft spirits. And it seemed that every sort of city that I ever sort of visited would have its own gin or its own rum or its own whiskey.

5:36And that really fascinated me. And I guess that was really the backdrop for me to start thinking about other categories, which are cocktail adjacent, as we'd call it, and what opportunities lay there. When you were working in the advertising business, did you encounter or connect with or work with any entrepreneurs? Oh, definitely. I best describe, and I was talking to someone about this the other day, and I still keep in touch with my old advertising friends and the people that I met through advertising. I had some of the hardest working moments of my life, but also some of the most fulfilling, I think, in advertising.

6:14And you meet some incredible people. The best way to describe it is there's a lot of misfits that kind of have to come together and do cool things together. And I love that. I've always loved the idea of people coming together and sharing their craft, so to speak. And then at the end of it, you'd have an incredible piece of work. And then off the back of that, watching how people engage in it. It sounds a bit like hospitality. Yeah, it does. Yeah. Well, I originally was in hospitality in my university days as well. So I've done my tour of duty, as it were, in that trade as well. But, you know, I've met some incredibly talented entrepreneurs and continue to do so even in this space that we're working at the moment.

6:57But advertising was no different. You know, I was fortunate enough to, you know, for a big part of my career to be sort of in the dot-com sort of boom. So, you know, there was a lot of incredibly smart and talented people that were kind of born from the late sort of 1990s into the early 2000s, which I was lucky enough to work with. What did your experience in advertising inform you or how did it inform you about things like consumer trends and sustainable innovation and entrepreneurship as a whole? That's a great question. One of the biggest lessons I've taken from advertising, which I still use now, is very much a delivery mindset and the discipline of delivery.

7:37It's ingrained with you or in you and was in me anyway in the advertising agencies that I worked in. And, you know, it's about having this delivery mindset. It's about, you know, working to a set way, you know, create a process and at the end of it, delivery. And I think that discipline is really important in entrepreneurship. It's the idea of taking an idea. And I think it's very easy to go down a rabbit hole and to lose yourself about what is right and what is wrong. But a lot of times the best times is just to continue to deliver and see how it goes. And, you know, one of the things we always talk about within our business at the moment is to fail fast.

8:17So if something's not working, we're grown up enough to sit around the table and say, why isn't it working? And then to either not do it anymore and move on. And I mean, there's been a couple of products that we've launched that haven't done that well. And we'll, you know, we'll take the learnings from it and we'll move on. So I think I take it for granted. I don't really think about it too much, but it's just the way that I've been trained through my advertising career, which I've applied to my own business and entrepreneurship as a whole. But I think it's a great discipline. I try and run the business in the same way now.

8:54We don't like things sitting around the office for months and months on end, just like advertising agencies don't. We like to turn it around and get it out as quickly as we can. And I'm sure you know plenty about the value or lack thereof of advertising agency fees. So, well, the best way to describe it, and I've said this for a long time, is we're the advertising agency and the client rolled into one. You know, we do have a head of creative in the agency, you know, designers. And so, you know, we do everything. A lot of our brand architecture is all centralized at a global level. And, again, that's just a learning that I've taken from working in ad agencies.

9:38But you are right. I do know the model. Agencies, a lot of the time, are selling time. You know, you rack up time with them, you pay. It's very much like a solicitor's model. But, yeah, I know the way that they work. And as I said, you know, a lot of it, we've just got it in-house at the moment. You know how agencies work. Did you have a solid understanding or at least feel confident about how the business of beverages worked? 100 % not. Thank you for your honesty. Yeah, no, no, no. But, you know, on reflection, I think being naive, I think, is somewhat of a superpower at the beginning. I believe anyway, in reflection that not settling for what everyone else was telling us we should do in terms of, you know, our proprietary bottle size and, you know, all the downstream manufacturing headaches that that actually caused and turning to change parts and, you know, packaging and fill heights and the list goes on and on on the operational side.

10:41But I guess the naivety about it and somewhat stubbornness of not wanting to change has actually served us really well. I mean, it could have been very easy. And I see a lot of brands do it now. You know, they go for the standard bottle, they go for the standard label and what have you. But for me, again, with my brand hat on, brand is always about finding your own place. And you're only, in a lot of instances, get one chance to do it. And so when you do do it, do it properly. So I guess with that lens is kind of how I went into it. As I said, I didn't have a lot of experience in the beverage side, maybe not on the marketing side I did, but very much not on the manufacturing side.

11:20So that was a steep learning curve, but one I've really, really enjoyed. So I can hold my own now when I'm speaking to, you know, co-packers and packaging people and shipping lines and what have you. But at the beginning, it was completely foreign language. I would write notes down and go home and Google search acronyms to understand what people are talking about a lot of the times. Well, manufacturing aside, I feel like you had a really good sense from the start about what you wanted East Imperial to represent. And that is a super premium mixer brand. Why lean so heavily into that tier of the category?

12:03And again, you You and I chatted yesterday about East Imperial's near total focus, at least in the U.S. market, on the on-premise channel. Can you talk about why those two aspects of the brand are so important, were so important to you? I'll answer the first question first, which is, you know, why we chose to focus very much on the higher end. And again, on a personal level, I've always been fascinated by luxury marketing and luxury positioning. Again, this is the analytical side or the understand why people make irrational decisions or emotional decisions when choosing brands. That fascinates me to this day.

12:43I read a lot about it and I follow a lot about it. But I think at the very outset, you know, if we all believed and it has proven to be true, this trend of, you know, premiumization as they label it now and all these premium spirits and premium experiences that proliferated over the last 10 or 15 years. For me, it was really important that we had a brand that actually measured up to those experiences. And I know it's easy to call yourself premium, but what we're sort of seeing now, I think, is proof that our strategy was the correct one. I've always been a big believer that simple strategies are the best strategies, and we've just sort of stuck to our knitting, so to speak, and really focused on that super premium end.

13:27But I think what we're seeing in the market at the moment is very much a change. There's a lot of commoditization going on. Everyone knows what a premium mixer is now, I think. And that's been a category job by the market leader and others. And it's been incredible to be involved in it. But I think more so than ever now, particularly in a market where it's becoming heavy commoditized, it's more important than ever for us to continue to hold that super premium into the market. And that's where East Imperial has always felt most at home. And I guess that probably brings me on to the second part of the question, which is on trade.

14:02You know, luxury entree has always been our bread and butter right from the very beginning in terms of, you know, our sales strategy. And talk about simple strategies. We just looked at the world's 50 best bars for that particular year in 2013 and said, OK, let's try and get into many of these as we possibly can this year. That was a strategy. That was a sales strategy. You know, it wasn't any more complicated than that. And we try not to get distracted with other opportunities. We just stuck to what we wanted to do and went after it. And I know you and I spoke about this. It's very easy, I think, as a new brand to get somewhat hypnotized by the bright lights of other opportunities in different areas, particularly if you have a strong product and a strong brand and a strong offering and a strong category.

14:46but it takes discipline to actually you know stick to your strategy and and do the right thing because I'm a strong believer that over time that will pay dividends because you continue to actually build your brand and actually what it means without eroding your brand equity and I guess that's been the journey we've been on for some time now we've obviously had a couple of hiccups along the way in terms of COVID and we talk about having a luxury on trade strategy in Asia and America during COVID that was somewhat flawed, but, you know, no one could see a pandemic coming. I think it's really pleasing to see that, you know, we're seeing a return to that.

15:21I mean, I know we're living in extraordinary times with cost of living crisis, but what is actually happening at the very top end is we are still actually seeing growth and a lot of the large hotel groups, the big hospitality groups are still expanding and that's really important to us, but it also underlines the importance of us to continue to hold that super premium into the market, to capitalize on those opportunities. I definitely want to talk about focus and discipline. I just want to back up for a second and talk about the super premium nature of what it is that you sell. And as you mentioned earlier, as a brand, you can describe yourself as premium, but what does that really mean?

16:02And how do you communicate what that means authentically to consumers? so you know as much as the descriptor is important backing it up with validation about why you're calling yourself this it's just as important can you talk about the communication aspect and the the marketing of how you use that word super premium or luxury yeah there's a number of different aspects to it right a number of different proof points this is the way we we look at it and it's got to be the company you keep you know and and um the company you keep uh where you actually found and we place a lot of importance on on those relationships and and i guess that anybody that really knows us knows that we've had a number of very strong global relationships for some time now and that's just a reflection of the strong uh relationships we have and the way we we manage and the way we respect each other and over time you know that puts us in a great position for as these people are expanding.

17:03So those proof points are really important to us. Of course, packaging and presentation is important. And, you know, from the very outset, we've put a lot of attention and focus in the way that we look and present ourselves and the language we use, the copy we use, what have you. I mean, all the things you kind of expect from someone that's from an advertising background and that has somewhat of a fascination with luxury marketing. And I think the third thing really for us is actually the taste of the product. You know, the product's actually got to stand up for itself as well, you know. So we can't be the only ones that say it tastes great.

17:38So, you know, we've had a number of different people that are not only judged in blind tasting tests and continue to do so. We, you know, we see ourselves, you know, like the Spirithood Awards awarded each year, like Best in Class, Best Tonic or what have you. So those things are important. But I don't think anything on its own is going to be enough. I mean, you just can't put all your efforts into winning awards if it doesn't look good and you don't keep good company. So it's a combination of those three axes at all times, just keeping focus on them. We don't do a hell of a lot of above the line marketing.

18:13There are some regions that we do a little bit. A lot of what we do is actually looking after on trade and looking after those relationships. You know, we like to be there for on trade. We like to see ourselves very much a friend of the on trade. We're here to support them. We understand the challenges that a lot of them have had. We understand some of the opportunities that they have got ahead of them as well. So again, as I said, it's about managing those relationships as strong as we possibly can, but also ensuring we're delivering on the other two things I mentioned. I like the term, the company that you keep.

18:46And correct me if I'm wrong, but I believe what you're saying is that the restaurants and bars that you're in reflect positively on the brand. And the retailers that you're in, even though they're only a handful, reflect the kind of retailers that, again, best represent what you're trying to say to consumers about who you are and what's inside the bottle. But that also seems a little limiting in where you could be. And I know you talked about the opportunity and the bright lights of potentially being in a big time retailer or a restaurant group or hotel chain. And this goes back to the question of discipline.

19:27How do you maintain that discipline? And how do you make sure that it trickles down throughout your entire team? I think there's a couple of things there, right? I tend to disagree that the opportunity in Super Premium is limited. We're just scratching the surface on a number of these outlets we are at the moment. You know, we're not only just US-based, you know, we have a very strong presence in the Asia-Pacific and pockets throughout Europe as well. So there is a lot of headroom for East Imperial to grow. There's absolutely no doubt about that in my mind. So to stick to that for me personally is not that hard.

20:03I think for maybe some of our sales team, it's been challenging in some regard. But I think, you know, the key word for me is discipline. From the very beginning, I haven't been afraid to say no to people. And I think that's probably one of the biggest learnings that I've had because I've been such a stubborn guardian of the brand that I didn't want it to erode in any way, shape or form. So there has been a number of times I've actually walked away from deals because I just don't think it was the right partner for us. And that's not arrogance. I think that's just doing what I think is right as the founder and putting my advertising ahead and protecting the brand.

20:42So it is all about discipline. But, you know, I think some of the interesting things for me is that sometimes we've said no to people and then a year later they come back to us and then they want to do the deal and they want to do something different. So it just sort of validates the approach. And I may have spoken to you about this the other day is that I was having a dinner with a food and beverage director who, you know, who looks after 270 or 270 odd five-star hotels, you know, and they're going to double in the next three to four years in this particular region, the Asia-Pacific region. What was interesting, something he told me, was that he understands that Eastern Imperial is not the cheapest product, but what he's actually looking for is a product which reflects the experience that they want to give their customers.

21:31And that's everything from the sheets to the pillows to the bedding to the flower arrangements in the room, everything. And to start seeing food and beverage directors start to think this way rather than just say, how can I get this particular product cheaper from these guys? It's really refreshing to me. And I think it's really reflective of our discipline, but also what's happening in the market at the moment as people kind of get commoditized and we get pulled naturally up to the top and we'll find these opportunities. Going back to this question of where you can be and where you should be is something that I want to dissect a bit.

22:10I think about a retailer like Costco. And again, most of your business is on trade. Most of your business is on premise. But I don't know if Costco sells Burberry clothing and handbags or Hermes. I don't know if either of those brands would want to be in a Costco in the same way that I'm not sure if East Imperial would want to be in a Costco. But Costco does have a lot of shoppers who have refined palates and tastes. Yes, of course. And so that opportunity does exist. Yes. And I wonder how or whether you would turn down, you know, an opportunity to be there. Yeah, I don't think it's the time now.

22:49We've got a long way to go. And I know, you know, we have tried going straight, not to Costco, we've gone straight to retail in a couple of regional markets straight away and tried to cut the corner, if you will, of, you know, okay, let's try this and do this, and then found that we just fell into this cycle of deep discounting, low margins, you know, high percentage given away to either the retailer or the distributor. It just kind of felt not where we belong at this stage of the brand. And I completely agree with you, you know, I'm not going to say that people at Costco don't have refined palettes or whatever.

23:31I completely agree with you on that. But I think for at the moment where we are at the moment, it's about building it out in the luxury entree. And maybe who knows in five or 10 years time, that may be the channel that we want to go into. But at the moment, it's about remaining focused. And as I said, discipline of where we naturally align ourselves and where we naturally align ourselves at the moment is in that luxury entree. And that It has to be the focus. So stay disciplined in the present, in the moment, while thinking flexible or incorporating flexibility into your long-term business strategies, what I'm hearing.

24:06Yeah. The reason we do retail, for example, in our home market in New Zealand was due to the pandemic. You know, we had two years of disruption of pretty much no entree. And when entree did come back, no one really wanted to go out because everyone was scared to death that they were going to get COVID. But we had to navigate that. And the way we navigated that was to go into sort of premium retail up and down New Zealand, you know, 260 kind of supermarkets and a bunch of sort of premium grosses and premier liquor outlets. So that was a change of strategy for what was given to us at that particular time.

24:42So if you would have told me sort of 2019 that we'd be doing that, I would laugh you out of the room. So there's no way we're going to do that. But we did do it because it was a shifted strategy. So I'm not saying that in five or six years' time that we won't change our strategy. But at the moment, we're very much focused on that on-trade and supporting that on-trade and taking the opportunity, particularly when luxury on-trade is actually growing. It's more important than us than ever to support that. I do have a feeling that whether or not you accept that opportunity five, six years down the line, you're going to hold the line on price.

25:15and I see this often with super premium or luxury brands that make the mistake of deep discounting or at least, you know, significant price reductions to be in a certain retailer or a certain market or a certain bar or restaurant group. And it ends up being to the detriment of that brand. Can you talk about your pricing strategy? Yeah, definitely. You know, So we do have a couple of levers that we pull. Typically, you know, as I said, the market's become heavily commoditized. We are seeing reduction in shipping costs and glass costs and input costs in some areas. And so what's been interesting for me at a global level, and not just in the US, but at a global level where we operate, we are seeing competitors in some instances dropping their prices.

26:04And that could be, you know, their own strategy and their own reasons to do that in terms of where they are as a business. But again, we go back to this whole theme with discipline. We're not big enough to get pulled into those sorts of price wars, and neither should we. We're not ashamed that we're more expensive. But as I said, we've got those three axes that we talk about constantly, the company we keep, the proof points, the awards, the great-looking product, the great presentation. And we feel that it's fair enough to be 10%, 15%, 20 % of some instances more expensive than our competitors.

26:40That's not us trying to make more margin than everybody else. I'm sure they've got way more efficiencies due to their scale. That's just a reflection of our positioning in the market and where our cogs are at and the way that we should position ourselves. So we look at things pretty much in the US. I go back to the US at a state level on pricing. We kind of have a target price. But, you know, pricing we understand is commercial reality as well for a lot of decision makers. But we do have some flexibility in there. But overall, I would say it's between sort of 10 % and 20 % price premium in our competitors in most instances at a global level.