Dad’s Hat Pennsylvania Rye Whiskey

A brand with a legacy

America’s first whiskey was made from rye, not corn, and Pennsylvania was where it was produced. In the late 18th century, pioneering farmers from Europe with distilling skills found that rye grain was easy to grow and made a very delicious spirit. The first American indigenous spirit was born.

(I’m far from a whiskey or spirits historian so for more detail I suggest you read some of the books and blogs by David Wondrich, Fred Minnick, Chuck Cowdery, Gaz Regan, and others.)

But, after Prohibition, the stills of Pennsylvania remained closed.

Starting in 2011, spurred on by Pennsylvania’s new distilling regulations, rye whiskey returned to the state and since has begun to flourish.

Enter Dad’s Hat

John Cooper and Herman Mihalich had known each other from their college days at Wharton. They kept in touch over the years as each pursued different careers—John as a sales person in tech and software areas and Herman in the chemical industry.

Along about 2006, each had grown tired of the corporate life and began thinking about “what comes next?” An article by Eric Asimov in the NY Times on November 29, 2006 pointed the way. It was headlined: All but Lost, Rye Is Revived as the Next Boutique Find.” They decided that they were going in to the booze business and, “bring rye back to where it belongs—Pennsylvania.”

Herman’s father owned a tavern (and at certain times, a speakeasy), so he felt right at home in the business. As Herman puts it,

“My Dad wore hats. Real hats. The kind you only see in old pictures or movies… Before he left the house each day, he’d carefully choose one from the rack and don it. The hat always seemed to fit his mood—or the occasion—perfectly. In those days, it was more than just fashion. A symbol of optimism. That we cared about quality, polish and finish. A subtle, personal signature. From an era when taking the time to do it the right way mattered.”

That became the credo and guiding principle for the distillery—to produce a rye that is true to its Pennsylvania roots and based on quality and a particular style.

So off they went to the Michigan State Artisan Distilling Program and by 2011 they were off and running.

I’ve met scores of startup and craft entrepreneurs and many (but certainly not all) subscribe to a philosophy that I call “build it and they will come”—meaning it’s all about the distillery, the process, and the end product. Only a handful think in terms of the drinker, the bar, the marketing, and sales.

For Herman and John, this broader view of the business means is that they have fully thought through the commercial and route-to-market issues. Take distribution for example. They don’t lose focus by opening markets indiscriminately (hoping to increase revenue) but by strategic expansion. They don’t over promise; they strive for consistency; and, believe that slow and steady growth is the way to go.

Herman Mihalich (L) and John Cooper (R)

The products—Local, sustainable, practical, and genuine

Dad’s Hat is a rye in the Pennsylvania Rye tradition. Period.

The rye comes from their close relationships with local farmers. The spent rye mash even goes back to the farmers to feed their livestock. Using high-quality ingredients, a grain bill of 80% rye, 15% barley malt and 5% rye malt yields a “flavorful mash that undergoes a week-long, controlled fermentation to develop complex flavor.”

The recipe was formulated at the Michigan State program over a two-year period and is based on traditional Pennsylvania rye whiskey.

The flagship is, of course, the 90-proof classic Pennsylvania Rye Whiskey, which, by the way, was recently awarded “Best in Class” by Whisky Advocate and named the Craft Whiskey of the Year for 2016.

There is a Straight Rye Whiskey (95-proof). Also, a Bottled in Bond 100 proof Straight Rye Whiskey aged four years.

But to me, their most intriguing products are the rye whiskies that are finished in vermouth and port barrels (also 94-proof). These came about when John and Herman were sitting around one day after work, drinking manhattans, and wondering about line extensions. The eureka moment was “what would happen to a Manhattan if the rye was aged (3 to 6 months) in a vermouth barrel?” I’ve tried it and, let me tell you, it’s amazing.

This idea also led to port barrel finished rye with an interesting taste. Both products use barrels from the Vya-Quady winery in the San Joaquin Valley of California.

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Dad’s Hat Pennsylvania Rye Whiskey sells for roughly $40 for a 750ml. The distillery and warehouse is located in Bristol PA in Bucks County and just across the river from New Jersey. There are tours which are held on most Saturday afternoons and well worth the visit.

Finally, a big shout-out to my friend Cliff Oldfield with whom I fought the Mongolian wars a few years ago. Cliff introduced me to John and Herman. He runs their sales in the NY-NJ region and is among the most effective salespeople I know these days.

Gentlemen: My hat’s off to all of you. (Please… I can hear you groan.)

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Kim Brandi: The Rocky Road of an Innovator

A woman’s journey to succeed in the booze business

This is the story of an amazing and gifted woman who followed her dream to develop her own brand and start her own company. The ups and downs she confronted are important lessons about business in general, and the booze business in particular. It’s also a story about violated trust, duplicity, and outright thievery. Most people, faced with the difficulties Kim Brandi has endured, would close down and move on.

Not Kim Brandi. Her tenacity and resilience, coupled with a can-do attitude, sustains her continued innovation journey. Folks, she is among the most creative and outside-the-box thinker I’ve meet in very long time. If I were still at Seagram, I’d hire her in a heartbeat. But, she would turn me down in favor of the American Dream to own her own business.

There is a lot to this story so this will be one of a number of articles on Kim.

How I met Kim Brandi

A mutual friend, Ted McDonnell, introduced us under some interesting circumstances. Ted, owner of the Liberty Lighthouse Group, a sales and marketing agency, called and asked if I could assist Kim in a pending lawsuit by helping to ‘value’ her brand. Ted is a great guy and I was only too happy to follow up.

The brand? KAH tequila.

The circumstances? Well, that’s a long and complicated story.

KAH Tequila

In her own words:

Inspired by the spiritual meaning of Dia de los Muertos and the calaveras—the ornate decorated sugar skulls used in the rituals of Mexico’s Day of the Dead celebrations—I began to research and develop my own tequila brand. I came up with the new concept of marketing a quality tequila that would be sold in unique hand-painted, calavera skull–shaped bottles.

She named the brand KAH which translates to “life” in Mayan. In 2009, Kim formed Elements Spirits to import and market the brand. The manufacturer she found produced a very premium tequila and the relationship between Kim and the owners was warm and friendly. Or so she thought.

By 2010, consumer demand exceeded Kim’s expectations and she put expansion plans in place. No sooner did she do that when the folks from Crystal Head vodka sued her claiming that the KAH Tequila bottle, with its hand-painted calaveras skull, was somehow confusingly similar to the clear glass bottles used by the company Dan Aykroyd owns to sell Crystal Head vodka. Seriously? I don’t understand how a consumer would be confused by the two packages.

(Just to fast-forward for a moment… the Crystal Head lawsuit was first dismissed in 2010 by the United States District Court based upon the Judge’s determination that there was no likelihood of confusion; Crystal Head appealed and insisted it should be allowed to present its case to a jury; an appeals court agreed and sent the case back for trial; in 2013, a unanimous jury also found there was no likelihood of confusion ; an appeals court reversed the jury verdict on a technicality, and now the case is again set for another jury trial in March of this year.  In short: the lawyers are making a bundle.)

But that was only part of the problem. Kim partnered with the owners of the distillery in Mexico that produced the tequila for the KAH brand, who turned out to be less than trustworthy. Based on what I know about evil human inclinations—I believe they looked at her being “a woman of color” as an easy target. They were wrong; Kim is as tough as can be.

How KAH was lost

This is the long, somewhat difficult and potentially litigious narrative, so I’ll tread softly and succinctly.

  • The owner of the Mexican contract bottler brought an investor to the table. Elements Spirits (Owned by Kim) entered into a Stock Purchase Agreement with WXYZ
  • Before she knew it, WXYZ assumed a majority interest in Elements and took control.
  • A series of unpleasant events and attacks on Kim’s role in the business followed. Lawsuit after lawsuit ensued and the cost to Kim to defend them rose and rose.
  • The worst part was that the new owners began attempting to remove Kim from the KAH history and claimed others had created the brand.
  • To protect herself, she filed copyright registration in 2011 for all parts of the KAH brand and package and all applications were approved.
  • In the fall of 2013, Brandi and Elements (now controlled by WXYZ) attended a court-ordered mediation in the Crystal Head litigation in order to work out a resolution of various disputes. They needed peace, so they could fight the Crystal Head suit.
  • The binding agreement called for acknowledgement that Kim was a shareholder of WXYZ (they had previously cut her out) and also acknowledged her ownership and copyright rights.
  • The agreement was ultimately breached and WXYZ and the Mexican co-packer began a series of actions to infringe on the copyright owned by Kim. Assorted other deceptions and outright illegalities followed. A vicious fight in the U.S. and in Mexico ensued. In the end, the U.S. court acknowledged, Kim’s rights to the intellectual property ownership of the calavera shaped bottle. She won the battle but not the war.
  • Meanwhile, WXYZ continued to sell KAH with no royalties or proceeds going to Kim. She was forced, therefore, to file suit to block the KAH importation and to notify U.S. distributors to cease selling the brand.

In sum, for six years, Kim Brandi was embroiled in a fight for her intellectual property rights. Finally looking forward to ending the pillaging of her life’s work and livelihood, a trial was scheduled for December 8, 2016.

Seeing the handwriting on the wall, WXYZ and the Mexican co-packer sold KAH Tequila to the Amber Beverage Group (a division of the Stoli Group) for an undisclosed amount.

That’s Where I Come in

Kim and her attorney, Jon Miller (Miller Johnson Law), asked me to appear as an expert consultant to assist at a mediation session. My role was to address the value of the KAH brand and help explain what the spirits industry was all about—in terms of operations, finance, sales, and other matters.

The valuation of KAH was difficult, since Kim Brandi was kept in the dark. The records and information about sales were not easy to come by. A friend provided some public data and Kim’s ingenuity located some import sales data, so we knew the number of cases sold.

On November 2, 2016, Amber Beverage – the new owners of Fabrica de Tequila Finos, S.A. de C.V. (producers of tequila for the KAH brand) and Kim Brandi settled their disputes over the ownership, sale and distribution of tequila using the unique calavera bottle design. The intellectual property related to KAH (calavera-shaped bottle, trademark, various artwork) was transferred for consideration and is now under the control of Amber Beverage.

I can’t go into the details, but suffice to say that—for better or worse—the matter was settled.

Lessons learned

  1. Be careful with whom you do business. That smiling friendly face across the table can easily become evil when money is around. Of course, you never really know at the outset, so protect yourself with all the paperwork you can (or that makes sense) right at the beginning.
  2. Surround yourself with knowledgeable, experienced booze business people and take their advice.
  3. With all due respect to my lawyer friends, don’t assume the courts and the legal process will come to your aid. Even when you win, if the other side has deeper pockets, the system allows them to keep going at your expense. (Although if you end up in court, try to find someone like Jon Miller to represent your interests.)

What is Kim doing now?

Tenacity is a word that gets bandied about a lot. It’s defined as the quality or fact of being very determined. In Kim’s case, I’d have to say that she is beyond tenacious. She gets going and is fueled by her creativity, passion, and desire for innovation. When she lost KAH, she created a new vision for the Sangre de Vida (Blood of Life) brand, to be released this Spring, which I’m sure will be no less than amazing. I’ll show it to you when it’s released.

Her other tequila is called Apocalypto Tequila, an award-winning product, it is handcrafted in packaging made from artisanal glass.

The most interesting product, Deadhead Rum, is produced by a special slow process and aging that makes the product unique in taste and complexity. There is also a Deadhead Dark Chocolate rum, coming this spring. I have not tried it as yet but the back story is incredible and from what Kim has told me, the taste is extraordinary. And, so is the package.

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The Booze Business needs people like Kim Brandi. If you haven’t figured out why as yet, stay tuned, I’ll be telling more of her story in the future.

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Seagram: Down Memory Lane—Part 2

Seagram and the War Effort

Welcome to the second installment of Seagram vintage posters, ads, and products. Like most companies at the time, Seagram participated in using its advertising and promotion efforts and money on behalf of the war effort. This included ads promoting the purchase of War Bonds and public service announcements.

(Thanks again to John Hartrey who contributed these ads from his Seagram vintage collection.)

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