Saturday, September 10, 2011

Proximo Is Not That Big.

As I posted here on Tuesday, I have followed with interest the saga of Stranahan's Colorado Whiskey, which was sold by its founders about a year ago to Proximo Spirits. I think it's a cautionary tale for any current or prospective micro-distillers, as Stranahan's was one of the success stories of this young industry.

But I have to take issue with one small fact that has been widely reported. Many of the articles in Westword and elsewhere describe Proximo as "a big company" or, even, "a huge company." Everything is relative, of course. Proximo is certainly much bigger than the independent Stranahan's was. But Proximo is not a big company.

Proximo is a young company, about three years old. It is private so detailed information about it isn't readily available, but in the distilled spirits business it would be called a specialty or niche producer. It has a range of products in some currently-popular segments (tequila, rum, vodka, whiskey), all of which are premium-priced, hence very profitable for everyone in the distribution chain, from producer to retailer, even if sales volume is small. 

None of its products are household names or category leaders, although it is currently spending about $18 million dollars to make its 1800 Tequila brand more recognizable. There are a lot of companies like Proximo in the beverage business. They thrive on the desire of bars, mostly, to carry something the guy next door doesn't have. Sometimes they luck out and one of their brands goes major, as Jagermeister and Grey Goose did for Sidney Frank; but overall, in dollar and volume terms, they are not big companies nor big players in the distilled spirits business.

Proximo isn't a pimple on Diageo's ass.

The size of Proximo isn't really the point. What's fascinating about this story is that the PR was handled about as badly as possible, and we still have no idea why or what really happened. Craft distilleries thrive by developing an intimate relationship with both their trade and end-user customers. Their openness, transparency, and accessibility is what distinguishes them from the majors. They are invariably and proudly local. That's what they can do that a major cannot.

Stranahan's excelled at this. I never met George Stranahan, but Jess Graber and Jake Norris were terrific brand ambassadors. Graber, who made that his primary job, was very good at it and cultivated an appropriate Colorado cowboy image. You could always spot him at a WhiskeyFest or ADI convention.

Then the sale went down. There was no warning and no announcement. A few months earlier, I interviewed Graber about Stranahan's future plans and he gave me a detailed five-year projection that said nothing about selling the company. People like me and the folks at Westword figured it out when things like trademarks began to be transferred, which is a matter of public record.

Then Graber and Stranahan disappeared. Graber sent me a new email address, but he hasn't responded to any inquiries sent there. Norris hung around until a couple weeks ago, but was close-mouthed. The Proximo folks never said much either. All anyone will say is "nothing will change, it's going to remain the same great product it has always been," which really isn't enough. You don't have to go very far to hear the disappointment from the bar owners and others, mostly in Denver, who supported the brand from its earliest days.

They aren't upset because it was sold. They are upset because they were kicked to the curb in the process.

By contrast, Tuthilltown in New York, one of the other bright stars in the micro-distillery firmament, sold its Hudson Whiskey brand to William Grant & Sons a few months before the Stranahan's sale. Both companies announced it, I wrote about it, nobody left Tuthilltown, there were no mysteries, no hard feelings, and it has been an overall very positive transition. 

Perhaps Stranahan's can recover from this, but Proximo is virtually starting from scratch to rebuild the brand image. They have squandered most of the goodwill and 'ownership' feeling Graber and Norris built up over the years among the people who matter most, the loyal bartenders and drinkers of Denver.

What does Proximo think it bought? A name? A recipe? A production facility? In the past year, Proximo has shown they don't value at all what the old guard at Stranahan's valued most, the loyalty and affection of their local community. That's a shame.

10 comments:

Anonymous said...

What do you think of Clear Creek? I know you're generally down on microdistilleries, but they seem to be one of the better ones, with their spin on a Islay malt garnering quite positive reviews (and I must say I found it pleasant the one time I tasted it, though I'd probably rather just get an Ardbeg or Laphroaig for the price).

Chuck Cowdery said...

I don't know Clear Creek that well but they seem like a good outfit.

Anonymous said...

Chuck,
You'd probably like Clear Creek quite a bit - they make some truly great spirits, but poorly distributed in Chicago - Glunz is the only place I've seen them. Steve McCarthy is quite outspoken, highly intelligent, and prone to some fantastic experiments. And, he's been at it for a long time - must be doing something right.

BMc said...

Well, I can see how people in Colorado would be upset, but since it has such limited distribution now, pretty much ONLY people in Colorado and maybe a couple of pockets elsewhere would be upset. Proximo can dial up the whole "it's an authentic American whiskey that rugged cowboys drink" angle and introduce it for the very first time to most markets. I think they bought a genuine novel American whiskey that few have heard of, with a lot of potential. I have no idea why they treated Colorado so poorly, but if they're taking it truly national, I really, really doubt it's going to hurt them financially.

Anonymous said...

Proximo most certainly IS more than a pimple on Diageo's ass! Proximo is owned by the Beckmann family (you know, as in Cuervo?) and their $ from Cuervo is getting pumped right back into the US via Proximo.

With Stranahan's, Proximo no doubt did their usual, no press release and gag orders on the owners. They don't like publicity and want people to think these small, precious brands they are buying are going to stay that way!

Marvin Shakin

North American Whiskey List said...


I noticed that Proximo Distillers seems to be related to Four Roses somehow. (https://www.ttbonline.gov/colasonline/viewColaDetails.do?action=publicFormDisplay&ttbid=13045001000306)

Do you know any of the details? Is four roses just being bottled by Proximo's in Lawrenceburg IN?

Chuck Cowdery said...

Proximo's bottling house is in Lawrenceburg, Indiana. The Four Roses Distillery is in Lawrenceburg, Kentucky. No connection, just a coincidence. Four Roses bottles at Lotus, near Bardstown, where its warehouses are.

North American Whiskey List said...

re: proximo and four roses.

Thanks. The COLA link showed proximo in the applicant address but the label was for four roses (shown when you click the printable link), so i thought it was odd.

Chuck Cowdery said...

That is odd. Apparently, Proximo is bottling that product for them. I know the Lotus line is small and perhaps they're only using it for the Small Batch and Single Barrel. Okay, so it's a bottling job, but there's no other connection.

Chuck Cowdery said...

Lotus, by the way, is also known as Cox's Creek.