How coffee liqueur Mr. Black rode the espresso martini wave

0:04Hello, everyone, and welcome to the Modern Retail Podcast.

0:30Mr. Black's a really interesting company just on its own. It's been around for a little bit, but it really precipitously rose with the rise of the espresso martini. In 2022, I believe it was acquired by Diageo, but it's still an incredibly popular company. I believe over the last year alone, it's doubled its business. With coffee liqueur's growth, which is growing as an overall section, 29 % of it was driven by Mr. Black. So it's really a leader in the space. I'm really fascinated just to talk about when you are a product, especially in the beverage and alcohol space that is driven by a certain virality of, say, a recipe, how you keep with that, how you expand beyond that, and how you think about distribution, because Mr.

1:11Black is available in retail, but it's also available in bars and restaurants around the world. I won't get into all of that, but Tom, how are you doing? I'm well. I'm good. Sun's shining. I've had a coffee. Feeling great. I'm glad to hear that. Yeah. So let's start with you because you have kind of an unorthodox background for a liquor magnate, right? It was a weird one. And quite honestly, you know, I had no intention of starting a liquor brand. Like I was 24, you know, when we started this thing, there was no strategy. There was no quite literally not a single Excel doc was opened before we started.

1:44I was just I was a 24 year old that walked into a distillery and sort of never left, you know, met my co-founder and never left. Just fell in love with him professionally, you know, the distillery personally, and just the craft of people that make stuff a lot more than I did still in my old job. So, yeah, it had no ambitions of grandeur. That's for sure. We just made something we believed in. And you were doing industrial design before. Is that correct? Yeah, you got it. Yeah. So I was working. So I trained as an industrial designer and then spent the first five years of my career in an agency working for large corporate brands, doing new ideas for them effectively.

2:21So helping them sort of define their, what their new product strategy over the coming decade might be. So you can see there's a bit of a dovetail into what I did next. But to say that set me up for anything that we then had to do over the next 10 years at Mr. Blackwood, be overselling it. It was really just the really early stage sort of product ideas and idea generation for companies. And booze was one of them. You know, I had worked in the spirits industry and the coffee industry a bit before, but not in any way to sort of set me up for some mainstream long-term success. That's for sure. When you walked into the distillery, was it just that you had this idea for a product or you and your co-founder had this idea for a product and you were like, maybe we can make this work?

2:58Or I'm always interested, especially with someone like with a background like yours, a lot of people go in with sort of the branding and the marketing first and the product second, but it sounds like this was a normal one first where you just had a good product and you thought maybe we can make this work. Yeah, you got it. Like I suppose the background to all of it, we talk a lot about the sort of divine intervention of the coffee gods. There are a lot of things at through business always, but really in the early years, there were just some completely serendipitous things that happened. So I'm like a huge coffee guy.

3:28Have you ever been to Australia, Cale? I've not, but I know a lot about Australia. I used to work in coffee back in an old life. Oh, you get it. I know all about Australian coffee culture. We're obsessed with it, right? It's like a religion in Australia. My high school had a barista, right? Like we're obsessed with this stuff. I've done a lot of work in the coffee space at my old job. I was a very bad barista at college, right? So I dabbled, right? and and I walked into this distillery and met this guy because you know like craft beer was exploding right like this is like 10 12 years ago craft beer exploding Australia has a really interesting wine industry cocktail culture was sort of nascent not something I was that heavily engaged with but probably because I was 24 and broke you know but not something I was heavily engaged with but I just thought you know surely craft spirit's gonna have a moment so I literally went on my phone like distilleries near me you know in google maps and drove up and and met this guy so and I was about I was about to leave he showed me all the products he makes and Phil was like, oh, Tom, do you like coffee?

4:20And I love coffee. I worked in coffee. I was a bad barista. You know, it's a high school had a barista, you know, all that sort of stuff. Same picture I just gave you. And he's like, we'll try this. And I had the same reaction that everyone does when they try Mr. Black for the first time, which is, oh my God, what is that? And I shook his hand and grabbed a bottle from him and came up two weeks later and said, hey, I think this has got legs. You know, like I gave it to my wife. She hated it, which was a good sign because she certainly at the time didn't drink coffee. Gave it to my friends who were coffee obsessives.

4:47And they said, this is the best thing they've ever drunk. So I literally drove back up and we started the company together. It was that, that much thought went into it. You know, I just had this sense that this, every bar in the world would one day want to buy this product from us. And that was, that was all the strategy that went into it. And so then what led to its growth ultimately with Diageo coming around and what was the distribution? Like, did you ever have a strategy for distribution or was it just like, we'll try and get placement in Australia at bars there and and then see what works?

5:15Yeah, absolutely. So like, you know, that old adage, like a startup is just a, you know, a business model and a hypothesis, you know, it's just everything's a test and learn, right? So, you know, while we had no idea at the start, we spent a couple of years, I saw say getting my on the job MBA, you know, like, when you're starting a business, you have to learn how to run a business, and then also how to test and learn and get better at your product as well. So there's sort of two work streams in parallel. So yeah, we noodled around for a couple of years in Australia, you know, sort of 14, 15, really understanding what the business was, how to go.

5:48Like, I didn't even know what a profit and loss was or a balance, you know what I mean? Like the starting point was really low. So there was a couple of years of, of sort of understanding how to run the business. And then we started exporting quite early on. And there was always a thesis in the business that, you know, we could never be the largest sold spirit in Australia because, you know, the category is only a certain size, but if you look globally, it's a huge category. So could we be the largest spirit produced in Australia, but sold everywhere? And the answer to that was, yeah, cool. So it was certainly a hypothesis.

6:16So we started exporting early on. We went to the UK in 2015 and learned a lot of lessons there. That was a lot of tests to learn and didn't land in the US until 2017. But we'd had a couple of years of sort of a test market in the UK to learn from. So kind of had a good idea of what our success case in Australia looked like, what launching in another country was like in the UK. And then when we came to the US, we pretty quickly understood that maybe things were a bit different there. And we were going to have a slightly better time in the US than we had in other markets. So everything's a test and learn.

6:46We had a bit of experience by the time we landed in the US. And then when it came to launching the US, that's a whole other topic that took a really, you know, a really strict plan over, say, five years to go from zero to eventually acquisition by Diageo. Well, that was I wanted to ask because for any spirit entrepreneur, you want to be in the US, I imagine. Maybe I'm wrong. But also, US distribution of alcohol is just so gnarly. And if you are not owned by the major players or understand how the three-tier system works, you're going to be pretty screwed or be at a very unfair advantage. So in 2017, when you attempted to go into the US, what did you do?

7:21How did you approach that? So we made a lot of mistakes, right? And still do to this day. But one of the things that we did right was we gave ourselves a year in the US with effectively no sales pressure. So it was just me flying in, flying out, staying in some grotty Airbnbs in Bushwick. And one of my friends on the ground who actually lived in Philly and used to catch the Megabus down. And we just walked Mr. Black into hundreds of bars and liquor stores in New York. And we chose New York, I don't know, for convenience. It was sort of the hub of cocktail culture. All roads kind of lead there, especially in liquor.

7:53It's an expensive market to do business in. And we just literally did a year of just walking around pitching the brand and then shutting our mouth and then seeing what people were saying back to us. So we really had a really strong first focus year of test and learn to kind of understand how we needed to modify the pitch, the proposition, the product, get our chat right before we started to go into other markets. So to give you a bit of a timeline, like we launched in by launch, we sort of did our test and learn in New York in 17 through 18. We were sort of only in New York and a handful of markets until 19, end of 19, we started to expand into about 15.

8:27and now we've only gone national with Diageo as of last year. So only going national with Diageo's extraordinary footprint on the ground. The idea that you can really be in more than a couple of states when it's only a few of you is nuts. You know, when you're a zero volume brand, your distributor is unlikely to be doing a lot of work for you, you know, and the booze doesn't magically fly off the shelf. You know, it takes an extraordinary amount of execution in retail, you know, 365 days of the year or working with bars, you know, in each market to actually drive your product. You know, there's thousands of other products that also want to be sold.

9:02So unless you're in there pounding the pavement, wearing out the shoe and leather, you know, that old adage, you're unlikely to get traction. So yeah, we kept it really tight in the early years for sure and really only started to expand nationally once we had the support of Diageo. Was it with Diageo that you first entered retail or were there these years before when you were in States, were you also in retail stores in addition to bars and restaurants? No, we entered retail straight away. We obviously launched with bars and restaurants. They were sort of our original accounts. That's not uncommon for like, especially for someone in cocktail culture like us.

9:34That's not uncommon. But no, we were in retail from day zero for a number of reasons. Like one, we're not like a particularly peculiar like liqueur or a pair of teeth that you kind of need to be trained how to use. Like it's a coffee liqueur. It tastes bloody delicious. You know, like if you haven't tried it, it's just the most incredible product. and so quite frankly like we always knew and what the brilliance of Mr. Black was we could have this great on-premise business but people in retail absolutely love it so yeah you go drink an espresso martini in a bar sure but you can also just go home pour Mr.

10:04Black and ice you know put Netflix on that's good evening as far as I'm concerned you know so we always had these two business side by side and you also have to get good at both of them you know like you can't just you know the sort of the playbook you have in 2019 for Mr. Black in retail bears little resemblance to the playbook in 2025. You know, it's a bit, you know, the brand has evolved as we've come to understand our consumer better, the opportunity for us better, and just, you know, Kaizen, small improvements over a long period of time. We've just got much better executing in both retail and the on-prem, but no, it started with both from day zero.

10:39We've always told, oh, we didn't have enough money to win in both, which is sort of true, but we did it anyway. And learnings from one definitely fueled the other. I think it's probably true that you probably don't have enough money as a startup to do both really well. So just choose your battles in both for sure. Got it. That makes a lot of sense. Given that your background was industrial design, was there an idea behind designing it a certain way so that it would pop at the bar or pop in retail? Or how did you go about thinking about it so that you would actually stand out? And is it different today than it was back then?

11:13Yeah, it's a great question. For us, the broad philosophy was put as much love and care into the pack as we did into the liquid. Consumers don't say, oh, that's a great liquid in an ugly bottle. Or conversely, they don't say that's a great bottle. It's all one subjective brand experience, right? They just buy into the thing. And I'm just a big believer in the integrity of products, you know, everything from our business cards to our bottle, to our cap, to our label, all do our liquid, quite frankly, should all have the same amount of care. Because if we don't care about it, why would I expect you to, right?

11:47So that's always been the philosophy. Obviously, being the leader of the business for 10 years and believing that meant we could just do that, right? But a lot of it for us was the product was just so extraordinary. It felt like we were doing a disservice to it by just sticking it in an sort of unremarkable bottle with an unremarkable label. but also it just the product just developed a personality of itself you know so it's sort of it's sort of transition from being another coffee liqueur to to being mr black quite quickly and sort of developed its own personality so you know for the first few years we were in like a off-the shelf bottle you could just buy from big supplier you know the label was i mean we won awards for it but you know it was beautiful at the time quite breakthrough but i don't think timeless would be the right answer but yeah it's you know timelessness is like a lifetime commitment to reinvention you You know, we redo our label literally every 18 months, every year and a half.

12:33The label constantly, which, you know, just constantly nipping at it. The glass bottle changes all the time. You know, obviously reducing weight, increasing strength, giving it more shelf presence. The job's never done. You know, the job is never done. So, and that's part of being a design-led brand. You know, we don't think it's one and done. The job is never done. We're always at it. Even post Diageo days, we don't outsource that work. We have our own internal creative studio at Diageo where we do all the work ourselves to help build this brand internally. So we design our own bottles, our own labels, our own ads.

13:06I was on a photo shoot for a new campaign we're doing just the other week, you know. So we still do all that ourselves. It's still very much the part of the DNA of the brand. I actually wanted to ask about that. So when Diageo comes in and you're a startup brand, how has your role demonstrably changed? Like it sounds like you're still involved in marketing decisions. you're still doing the creative. Has your day-to-day changed that much? Yeah, completely different. Yeah. So it's this odd moment where, you know, we were a team of, I don't know, 20 odd, 30 odd, whatever. When we got acquired, there's mortgages, there's kids, there's the overdraft for the businesses on my condo where I live.

13:43Like everything I ever had was in this business. And then to go from that one day and then you sort of kind of unglamorously, you know, do a DocuSign or whatever, you know, click a few buttons on the screen. And then all of a sudden you resign your position of CEO and director and you become the founder. So the accountability, literally, it's like the legal bit, the switch flicks overnight. But there's obviously a transition period as we integrate the brand. But no, my day to day is very, very different now. You know, I work alongside our team, not in it. You know, I definitely work every day with our creative team.

14:15So I'm able to pull my heart and soul into that. But in terms of like commercial and marketing, we've got great teams at Diageo that run that now. You know, they do such a good job of it as well. So I'm almost like brand ambassador at large. You know, I spend a large part of the year traveling for both internal sort of teams at Diageo, but also like our external partners drinking a lot of espresso martinis in bars and telling the story about how we made it and why we made it. And, you know, I've made a lot of Mr. Black over 12 years. You know, a few people know their way around a coffee bean like I do.

14:42So love to have those conversations with bartenders or journalists or whatever, or punters in liquor stores doing tasting. So yeah, very different job. Very different job. I wanted to ask, just because it seems like you hit the scene, especially in the US at a very advantageous time, a few years after you hit the rise of the espresso martini. Also, I would say that like liqueurs as a whole have become much more popular, especially lower ABV. Amaros have become really popular and drunken every day by more people. So like, can you talk about when did you see this happening did you expect this to happen like like just talk about the overall phenomenon and how you tried to sort of i don't know if right it's coattails is the right way but just like use that to accelerate the business it's a great one so i'd say the broad trend we're on is is the rise of the cocktail right like kale you look as old as i am you remember when you were at college right you weren't ordering cocktails you know i mean like But you go to watch these NYU guys and girls ordering espresso martinis like they're Bud Light, like I used to drink, right?

15:46So, you know, there's been this huge sort of like cultural trend in drinking less but better, people going out having a couple of cocktails instead of just chugging light beer all night, right? So that's sort of the broader sort of drinks trend, less but better, and this move to cocktails over the last 10, 20 years, right? So the espresso martini is an interesting one, right? We didn't capitalize on the trend for the espresso martini. And I might be overstating our role in it here, but we built that trend in the US brick by brick. And I'm not saying that luck didn't have a huge role in it. Anyone that runs a business knows that it's 95 % luck and 5 % hard work, right?

16:23But for me, it's no accident that the US didn't drink espresso martinis in 2017. Well, not really. Outside of localized capitals, Boston, they did. A few places in Florida, they were kind of popular. New York, always popular. Boston, they did espresso martinis? Oh, they love them. They love them up there. Yeah, yeah, yeah. Interesting. Shout out to my New England fam up there, man. They love an espresso martini. Landon Duncan, man, they've been on that coffee train for a long time. Love an espresso martini. I'm from Massachusetts. I didn't know that. That's super interesting. Oh, yeah, yeah, yeah.

16:52It's still one of the most per capita consumption of espresso martinis. It's a banger, yeah. But save for isolated pockets, it wasn't a thing. So we worked out quite early that it wasn't a thing. And this bartender told me, and I'll leave their name out of it. They were like, you know, don't, don't come to New York and try and, you know, it's like, don't try and make the espresso martini a thing, man. Like we don't drink them here. It's like a relic. It's not going to happen. And I'm like, okay, cool. Well, we disagree. And, you know, correspondingly, we trained thousands and thousands of bartenders on how to make a great espresso martini across the U S you know, over the coming five years, and we've worked with cocktail creators on YouTube with celebrities, you know, we had Hugh Jackman and Colbert drinking Mr.

17:32Black Espresso Martinis on The Late Show. You know, like we put so much work into populising the serve. The pandemic happened. We all know the effects of that on both the industry and the global trends about how consumption changed. But I tell you what, everyone came out of lockdown and felt like an espresso martini. And thankfully, you know, like, you know, we were the ones with great distribution and kind of loved by bartenders. So when people decided that the espresso martini was the drink everyone was going to drink in 2022, bars, you know, increasingly around the US and around the world reached for Mr.

18:00Black. So I feel like it, you know, and look, just let's look at the data, right? Like look at Nielsen in the middle of a coffee and a cure boom, we're growing and Kalua, other category players are declining, you know? So it's not like we just happen to be like, why are we growing? And everyone isn't, you know? So I think it's, you know, I take a lot, like I, and by I mean the team, we take a lot of credit for the rise of the espresso martini just through the sheer legwork we've put in. I mean, we host the espresso martini festival every year, you know, like this is, you know, hundreds of bars, thousands of cocktails drunk every day with Mr.

18:33Black in them that popularized that serve. So yeah, look, it's been a good one. And I suppose the question you'll probably ask next, Cal, I can probably, I can see into this crystal ball, like what happens if this drink isn't popular anymore, right? Or what happens when it goes out of vogue? You know, that was definitely on my list of questions. So what happens? Yeah. What's interesting, like you drink coffee, like you're a coffee guy. Yeah. You have what, two coffees a day? Two to three, probably. Yeah. Yeah. For like the last 20 years. Yeah. Have you got sick of coffee yet? No. So it's an interesting thing, right?

19:06People always ask me, Tom, surely you'll get sick of drinking three espresso martinis a day, five days a week for 10 years, right? I'm like, I haven't got sick of my morning coffee, you know, two or three a day for what, 25, 25 years. You know, this, the espresso martini has been consistently popular around the world in Australia, in the UK. Yeah, it's ebbed and flowed, but it's been part of the drinking lexicon of really everywhere other than the US. It's like a margarita or a negroni, you know, it's just been part of the drinking lexicon of the world, like a modern classic cocktail for a long time.

19:36So am I naive to think that it's going to be as heady and as viral and have meme accounts, you know, after it, you know, like it does at the moment in 10 years, probably not. But is it going to be part of the drinking zeitgeist in the US for quite a while to come? I'd say so. And I think the reason why we're so convinced about it sort of like the longevity of the serve and the longevity of Mr. Black is it's coffee. You know, we don't see ourselves as a liqueur producer. You know, we see ourselves as a as a as a coffee company. You know, we roast our own coffee. We have guys that sauce green beans and roast coffee and cold brew.

20:08And, you know, it's not just a flash in the pan flavor or some funny colored liquid in the bottle. It's just boozy coffee, you know, you know? Yeah. And so I guess you think it's going to be a new a new classic. That makes a lot of sense. I wouldn't be surprised if that's the case. But have you also been investing in just making the drink stand on its own the way that we're seeing Amaro players try to have people drink an Amaro with some ice, like that type of thing? Or are you just, is it the espresso martini and that is the best vessel by which to understand Mr. Black? This will sound like a bent sitting answer, but we kind of do both.

20:42At the moment, the world wants to talk about the espresso martini, right? So why wouldn't we? Why wouldn't we? you know mr black really is that like a lot of people i meet they're like what do you make miss black and like i had that before like well have you had an espresso martini in new york and like yes multiple and like well then you've had my product before right so a lot of our job to do is remind people that we are the secret to their brilliant espresso martini that they've had before right like that's like absolutely comms pillar number one but interesting if we talk to our like we email our database you know we got a hundred thousand people on or whatever i email you know our coffee club and I ask people how they drink Mr.

21:16Black. Yeah. People drink espresso martinis, but mostly it's people just glass ice pour, maybe a splash of milk, maybe white Russian, probably not just glass ice, Mr. Black Netflix or beautiful sunset. That's how most people drink Mr. Black. You know, there's the magic of it, you know, and, and not poo pooing like a, a delicious, like I love Campari, right. One of my favorite things, I think it's delicious drink Campari and soda, so good, but not a lot of people just pour themselves three ounces of campari in the evening you know it's because incredibly intense and bitter when mr black it's just like the best most delicious intense cold brew deliciousness you know a lot of people do just drink it on the rocks so so in a lot of respects like if we were some super intense amari i'd be a bit more worried than i am because it just tastes so good by itself and that's how most people drink at home so hey people want to talk about espresso martinis i'll talk about that people want to talk about cold brew old fashions i'll talk about them every day of the week but most people end of the day just pour it on the rocks and drink the stuff got it i wanted to ask just when you are you're talking about how much earned media everyone's drinking espresso martini it was on tv it's mental it's crazy but how much of that was it paid on like did did you try to manufacture some of it or was it all just you were there at the right time it definitely a bit of both i'd say like and it's hard to define a percentage but no absolutely there was a lot of a lot of manufactured success of the espresso martini in the US, for sure.

22:40You know, like these things aren't popular by accident, right? Yeah. What would you say led to it becoming such a sensation, just that you had the right mix, it was with the right people? I'm always interested just to know how you're able to manufacture that, because I feel like everyone will usually say it was purely organic and we had the right product at the right time. But I think you did something a little bit more savvy than that, where you helped create it and then it became its own thing on its own in addition to that. I think it's Tom Ford, you know, the right idea at the wrong time is still the wrong idea, right?

23:10So I completely get that. It is the right idea at the right time. I suppose what we did to get Mr. Black into the drinking zeitgeist of the US, they say like, geez, I'm full of quotes today, right? This is not normally me, but they say like, you know, your job as a startup, like your most important thing to do is just to build on momentum, like to parlay one success into the next. And, you know, a friend of mine launched a company called Seedlip in the UK, which really revolutionized non-alcoholic drinking. and I still got a bit of a masterclass in it from Ben because just watching him you know really grow from selling out a thousand bottles in three days to a thousand bottles in three hours to ultimately selling to Diageo in four years they really highlighted for me the importance of really building taking a small nascent little ember of success and turning that into you know revolutionizing how people drink so really that that's the approach that we took at Mr.