Thursday, December 23, 2010
Is Selling Out Selling Out?
Back in October Jonathan Shikes reported on Westword.com that Stranahan's Colorado Whiskey, one of the early success stories in the micro-distillery movement, is in the process of being sold to Proximo Spirits. Proximo is a marketer of premium and super-premium spirits brands such as 1800 Tequila.
Proximo is no Diageo, but neither are they a small, local, artisan spirits producer. They are a well-heeled international marketing company with a fat portfolio of brands.
Shikes quoted an anonymous Proximo executive who said, "We have no intention of changing anything." He assured Shikes that co-founder and owner Jess Graber and head distiller Jake Norris will "keep doing what they are doing."
Officially, Stranahan's and Proximo have said nothing about a sale, but Trademarkia.com shows that Proximo has re-registered the Stranahan's trademark in Proximo's name. That certainly suggests a deal done .
The lack of comment spanning several months is itself a bad sign. Part of the idea of a small, local, artisan producer is to get close to your customers, communicate with them, and make them feel like they are part of the operation. For example, Stranahan's invites fans to help bottle the product at the distillery. Don't they owe it to those same fans to tell them who owns the company?
Obviously, things will change if the sale goes through, otherwise why do it? That same anonymous executive who said nothing will change also said they intend to help Stranahan's ramp up production. That's a change.
Stranahan's moved into a new facility 19 months ago. By June of 2010, the last time I talked to Jess Graber, they were making 12 to 18 barrels a week. "Our goal, in late 2011, is to purchase 2 new wash stills and a second spirit still from Vendome, which should boost our capacity to about 50 barrels per week," said Graber in June. "That level of production would maximize the current location. No concrete expansion plans beyond that. It will be more than enough if it all falls together." He said that by summer of 2011 they hope to be in 14 more states and start international distribution. He didn't say anything about selling a majority interest in the company, as Shikes reported.
I was talking to Jess in June of 2010 because that was when William Grant & Sons, makers of Grant’s Scotch and single malts Glenfiddich and The Balvenie, acquired the Hudson Whiskey line from Tuthilltown Spirits, a New York craft distiller. Grant bought the brand and contracted with Tuthilltown to produce it. Tuthilltown itself is still independent.
So when is selling out selling out? We won't be able to assess what Stranahan's has done until we know what it really is. Cashing out, in whole or in part, is the goal of most entrepreneurs, regardless of their platitudes about staying small and local and close to their customers. Can you be both? We'll see.