Craft Spirits Exchange

October 22, 2015 1 Comment

A new venture that blends commerce and content

Join. Taste. Share. Explore. That’s the motto of an online startup looking to help craft startups.

If you find yourself, as I do, leaning more and more toward high quality craft and small batch spirits products, availability and purchase are often a problem. All levels of the business – craft producers, retailers and consumers – face hurdles.

The craft producer has limited budgets, a cluttered marketplace and is generally ignored by the mainstream distributors. Consequently, it is difficult for these producers to build awareness and to gain significant national distribution.

Retailers have low margins, need to depend on large brand deals and face limited shelf space for new craft products. In fact, the first question from a retailer when you walk in to pitch a new craft brand is very likely to be, “Which of the products that are selling do you want me to take off the shelf for your new start up brand?”

For consumers, lack of availability is a problem. If you live in a large metro area you may find a nearby store that might carry what you’re looking for and maybe they’ll deliver it. But, what about in the suburbs or smaller cities?

You can use companies like Drizzly, Thirstie, Flaviar, DrinkupNY, Binny’s and Caskers but for the most part you need to know what you want and you don’t always have the opportunity to get a range of reviews and/or ratings.

The Craft Spirits Exchange (CSX) approach

CSX describes itself as “the first and only online community and marketplace exclusively focused on artisanal craft spirits

from around the world.” They provide consumers with discovery of craft products, detailed information and access to hard to find or unavailable products.

They see themselves as a platform that, well, is like TripAdvisor and Amazon rolled into one. The CSX community provides loads of information about brands, events, recipes, and interactive tasting notes and reviews. There are more than 1,100 spirits profiled on their site.

At the same time, CSX works with spirits retailers nationally to provide a single online resource for a wide range of quality spirits. You name the brand and chances are they can provide it.

As to producers, CSX does not, at this stage in their development, charge a fee for being listed. Instead, they have a brand partnership program that provides links to websites, social media, product offerings and more. In the program so far are distillers such as Tuthilltown Spirits, New York Distilling, Mezan Rum and Finger Lakes Distilling.

The people

This new venture officially launched on October 1^st and is founded by Luis Troccoli, a man passionate about being an entrepreneur and a craft spirit advocate. I asked him what makes CSX different from other sites. “We’re both about content and exchange of information as well as an ecommerce site. I don’t know any who do both.”

The CSX team -- Kelly Magyarics, Luis Troccoli, Steve Gilberg — The CSX team — Kelly Magyarics, Luis Troccoli, Steve Gilberg

He also seems to appreciate that craft spirits are more than just about the process. “More than just batch size, type of still or yearly production, these spirits have a unique story or heritage, often produced through artful or otherwise creative methods.”

The Chief Marketing Officer is Steve Gilberg, a real pro in digital marketing and communications with a string of successful ventures under his belt. Rounding out the team is Kelly Magyarics, an experienced published wine and spirits writer and educator. Kelly’s postings are fun to read.

Startup Woes

Unlike many new ventures, they have the product and marketing under control. In fact, here’s an interesting article from New York Business Journal about their launch event, which was top-notch. And, their website has a great look and feel and is easy to navigate.

Like many new ventures, funding is an issue but CSX is handling it better than most. For one thing they raised a quarter of a million dollars pre-launch and have increased their seed round to $750,000.

Here’s a link to their current fundraising effort. Their demo video is here.

Worth looking into, folks.

Built in Brooklyn

October 6, 2015 No Comments

A truly hand crafted, small batch vodka. The best you ever tasted.

In a part of Brooklyn’s Sunset Park area is a 6 million square foot manufacturing district known as Industry City. This is the home of Industry City Distillery and a very unique product called Industry Standard Vodka.

A Brooklyn hipster friend well versed in matters of food and drink set me on to it. “You have to try this vodka, it’s unlike any you’ve ever had,” he said. So I bought a bottle and he was right. Not only was it sensational in a cocktail but also it’s also great sipping vodka.

What makes it unique?

Well, just about everything. But, even after a number of visits to the distillery and lots of conversations with the team running it, I’m not sure I can explain the uniqueness of their process. No matter how many times I read their description I think I get it but not really. Here is how they describe themselves on a sell sheet:

At New York City’s only vodka distillery, we build everything for our beet sugar vodka from scratch – from bio-reactors (glass continuous fermentation vessels) housing rare house-grown French sugar beet yeast, to ultra high separation batch fractional reflux still. Utilizing a uniquely precise distillation method, we take 30 cuts off of the still rather than the usual 3! The cuts are then rigorously tasted and the best notes are selectively blended together, allowing for exceptional control over the final taste, aroma and texture of the final product. Because of the care and precision of this process, Industry Standard Vodka has no need for any carbon filtration and is entirely free of additives, sugars, or modifiers. The result is vodka with a delicate, subtle flavor and unprecedented smoothness.

They usually lose me at the “ultra high separation batch fractional reflux still.” All I can tell you is that they’ve created a new method of distillation and, as a result, it is terrifically smooth vodka that’s best enjoyed straight.

They are also energy efficient and have limited waste so of course they are environmentally friendly. But these aspects also have financial value.

Speaking of which, they are currently distributed in the Metro New York area and have the capacity to ramp up to four times the current production.

The team

On their website and even on their label, they described themselves as “nerds.” I think that’s a self-effacing way of indicating their love of the unique process they are using that combines biology, chemistry, physics and engineering. Every piece of equipment they use is developed by them and built in their own machine shop.

These are the guys you wanted to sit next to during your chemistry final.

The partners are David Kyrejko who is the master distiller and engineer, Zachary Bruner, a distiller and machinist and

Ronak Parikh who handles sales, distribution and operations. Their love of what they are creating is very palpable and their enthusiasm is contagious. They really are reinventing the art of distilling by using rigorous science. Oh, and they develop their own yeast and blend by hand.

Industry City Distillery shares space in Brooklyn’s Industry City with the research, development and support systems located there. Not many distilleries have a laboratory, a machine shop, or a letterpress studio, but their operation wouldn’t exist without them.

Technical reserve

The other product they make is called Technical Reserve. It’s described as the first ever liquor made especially for the spirits craft making market. It’s also 191.2 proof (95.6% ABV) and the highest proof spirit produced in America.

img_4809jpg_14645045008_o — Technical Reserve

What is it used for? I’m glad you asked. Here’s how they describe it.

We take advantage of our glass ultra high separation distillation system, and create a unique spirit made specifically for the bitters, tinctures, and cocktail craft enthusiast.

This spirit is highly refined to the point of being entirely neutral without any need for charcoal filtering or chemicals. Whether you’re crafting a new bitters or trying to re-create your grandmother’s Limoncello recipe, Technical Reserve’s neutral character and strong proof make it essential to any craft spirits maker’s tool box.

The part about making tinctures with it got me curious. I learned that it’s a medicine made by dissolving a drug in alcohol. Like tincture of iodine.

But, I also learned that weed tincture can be made with it but that’s considered the least popular way of consuming marijuana. Although, one marijuana maven website thinks it’s worthwhile and underrated. My advice is to stick with using it for crafted homemade products. I tasted a gin they made with it and very much enjoyed it.

Friday night tours

You have to see this operation to really appreciate it. So, if you’re in the NYC area, their tasting room is open to the public. Cocktails, nibbles and amazing views of New York Bay every Friday and Saturday from 4 to 10PM, no reservation required. Check their website for details.

Now about that “ultra high separation batch fractional reflux still process,” I think I finally got it.

Ambassador Wine and Spirits: Retailer Focus

August 27, 2015 2 Comments

What does it take to succeed in NYC?

At the corner of 54^th St and Second Avenue you’ll find my favorite spirits and wine shop. It’s close but not exactly in my neighborhood but I go out of my way to shop there. It’s arguably the best in Midtown.

If you live in Manhattan, chances are there’s a store up the street, around the corner or, a block over. There are “destination” shops like Astor, Beacon and others so I suppose Ambassador fits this genre – well worth going out of your way. Besides, they deliver. But before I talk about them, let’s spend a few minutes on the New York retail scene.

Only in New York

It’s a complicated market at all levels of the Booze Business.

As recently as the 1980s, there were over ten significant distributors. Today there are only two main players. While the gap has been partly filled with wine and beer distributors moving into spirits, the market is in a state of limited competition aka as an oligopoly. In short, the wholesalers call the shots.

A consumer living in the boroughs other than Manhattan can purchase most alcohol products for less than in “the city.” Lower overhead is the main reason.

Thanks to state tax differences, for many consumers it makes more sense to go across the river to New Jersey if you’re looking to stock up, particularly spirits. The difference in state excise taxes is almost a dollar per gallon –$6.44 in NY vs. $5.50 in NJ.

(I used to joke that a car coming to NY from NJ whose trunk was much lower than its hood probably was either a small New York State bar owner stocking up or someone having a party.)

So imagine you’re a retailer in Manhattan. Your rent is high; you have to compete with many businesses for qualified employees; your customer base (in the midtown area) has changed, with LLCs buying apartments that are frequently unlived in; and the guy down the street is selling the same brand as you for less.

It’s not a level playing field

There’s a rule in NY State that only a single individual can hold a license to sell wine or spirits at retail. Its origin has to do with preventing chain liquor stores from doing business in the state. But guess what? It doesn’t stop retailers from opening other stores in the names of their family members.

So, when a distributor has a multi-case discount, the sole proprietor store can’t take advantage of it but the stores “owned” by cousins, sisters, in-laws can. In short, that’s how many NY State stores beat the system.

This is the environment in which Ambassador Wines & Spirits operates.

The Ambassador Story

Leonard Phillips. owner — Leonard Phillips.

Meet Leonard Phillips, the owner of the store and whose family has been in the business since 1973. It started as a small shop run by his grandmother that has grown to the current 1400 square feet store on two levels.

Leonard’s original calling in life was to be a biochemist and ultimately become a physician in the military. However, as we all know, life has a way of getting in the way of plans and dreams. But if you spend five minutes with Leonard you quickly realize that his passion and tenacity is what has makes Ambassador unique.

Here’s why I think the store is special

This is not the place to go to buy the popular vodka and expect a discounted price. It is the place to go where you will find new or extraordinary products that appeal to the spirits enthusiast and aficionado. Their selection of whiskies (particularly scotch and single malts) is unbelievable.

In fact, if you’re a follower of this blog, you know that I love the whiskies and gin from Koval Distillery. All their products are available at Ambassador, which is how I came to the store in the first place.

Their wine selection is also second to none. But, interestingly, thanks to the whiskey and craft spirits explosion, wine as a percent of volume has gone from 80% to 65% in the last 3 to 4 years.

In addition to wine and liquor, their selection of Sake, Soju and Sochu is, in my opinion, the best in NYC. If you’re looking for hard cider this is the place to go. And, while you’re in the store check out their champagne and sparkling wine selections.

There is even a room downstairs for tastings and education either conducted by companies or groups of friends wanting to discover new and interesting products.

Hey, don’t take my word for it. Go to Yelp and check them out. Not only did they get 4.5 out of 5 but also the comments left by reviewers are amazing.

It’s about the people

Most of the reviews on Yelp talk about the knowledge, helpfulness and friendliness of the staff. In most wine and spirits shops I’ve gone to around the country over the years, most should have the slogan, “shut up and buy.” This is a store whose service orientation matches their style of business – personal recommendations based on knowing the customer and the products they sell.

* * *

When I asked Leonard about how he copes with the peculiarities of doing business in New York City his response was mixed. On the one hand, as a true sole proprietor store facing competition from multi-owned stores and their ability to deeply discount, he describes the situation as akin to being a “one legged man in an ass kicking contest.”

At the same time, or perhaps as a result, he views Ambassador Wine and Spirits as a Dylan’s Candy store for adults.

An article in Serious Eats sums it up nicely:

Ambassador is the liquor store I wish I had in my neighborhood; you find yourself wanting to hang out there, even if you don’t really need to buy anything.

My kind of store.

Leonard and Schlomo. He may look intimidating but he's the friendliest pup. — Leonard and Schlomo. He may look intimidating but he’s the friendliest pup. Schlomo, that is.