Humans love a good origin story. And, in the business world, the power of the overnight success narrative often means the extremely difficult period of starting and growing a business is conveniently overlooked in the mythology. The latest Kiwi business to join that club is Stolen Spirits, which was started around five years ago in a bedroom in Mt Eden and this week sold a controlling interest to US company Liquid Asset Brands and Spirits Investment Partners for $21 million. And it's another great example of a Kiwi business that has understood the power of marketing to create a huge amount of value in a short amount of time.
In hindsight, business successes like these seem so obvious. But, when you look at it rationally, you have to be slightly mad to take a risk like this and think you can beat some of the world’s biggest companies. And that’s where branding, design, storytelling and influencer marketing have played such a big role for Stolen.
James Hurman, the founder of innovation consultancy Previously Unavailable and a man well-known to many in the advertising industry after roles with Colenso BBDO and Y&R NZ, was part of the inner sanctum when the company was formed. He was brought in to help advise on strategy alongside co-founders Roger Holmes and Jamie Duff. Holmes was an architect and Duff was a lawyer at a bank in the UK. But when they returned to New Zealand during the GFC, they couldn’t find jobs. So Hurman says the rum lovers “put their nuts on the line” and decided to create a rum brand because they felt there were was nothing out there that lived up to their idea of what a rum brand should be. Kelvin Soh (who designed the cover of the Broods album) was responsible for design, branding and packaging. And Hurman is quick to lay most of the credit at the feet of those three (he is a small shareholder in the business, along with with a few other ex-Colenso colleagues, including Nick Worthington, who helped with some creative ideas, and Nick Garrett. Kyle Melnyk, ex CFO at Colenso BBDO also moved across to a role with Stolen in 2013).
The name of a company is hugely important—and that importance is sometimes underestimated—but Stolen wasn't actually the first choice. Hurman says it originally came up with another name for the brand (he wouldn't say what it was, aside from saying it also started with s) but the lawyers said it couldn’t be used in some territories, so Soh exchanged that word for Stolen in some of the early concepts and Hurman's “immediate visceral response was 'yes'”.
He had been reading a book about the history of rum and, with its associations to the slave trade, piracy and rum running, it was always something that had been "on the wrong side of the law". So the name “was such an interesting truth about rum” and an appealing, provocative name considering we always seem to be drawn to rule breakers.
“We thought ‘we can build such a great story and a great marketing platform around that’.”
And that’s exactly what it did.
From the start, the four of them understood the importance of a good story. It’s regularly pointed out how New Zealand companies are lacking in this area and he agrees that not having a strategy from the start is a major weakness. But just because you've got a good story doesn’t mean you can get away with having a bad product, he says. Like Lewis Road Creamery's Peter Cullinane, he believes that the product and the brand are inseparable and he is "a huge believer in the power of products to tell brand stories, even more than other forms of marketing".
That’s the rational side of the argument; the idea of 'homo economicus' constantly optimising its utility and making the best choice. But time and again it’s been shown that the value of brands exists mostly in the mind. A brand is a perception that is built up over time, it is made up of all the interactions we have with it, and, in many cases, it doesn't have anything to do with quality.
In the case of alcohol, research has shown that experts don’t really know what they’re talking about and how much we enjoy it depends on a variety of factors (chief among them how expensive it is). Or, as Mike Hutcheson likes to say, you’re drinking what you’re thinking.
Hurman agrees to a point. Quality can definitely be subjective, but he says the company would never have got to where it is—especially in the US—if the product wasn’t good.
And that goodness was validated early on. The first product came from Trinidad and it was blended by Holmes. And just before it launched, it decided to invest $2,000 to enter one of the world’s most prestigious spirits awards in San Francisco (no doubt his years spent in award-loving adland cemented that decision). That was a big call at a time when money was scarce, but it managed to win a few gongs, Holmes’ blending skill was proven—even though he’d never done it before—and these independent endorsements became a big part of the initial marketing effort.
Like many booze brands, a sticker on the label can have a big effect on purchasing decisions. We are herding animals after all and we seek guidance about what to buy. And another big part of establishing a brand like Stolen is to get on the right side of influential bar tenders, with the flow-on effect being that it might eventually gain enough of a following to get distribution with retailers.
Hurman says one of its ideas to help do that was the Stolen Mules campaign. It created a new product called SX9, an overproof rum that was not legally able to be sold in Australia. But it discovered a loophole and found that you could take two bottles as carry-on and the bottles could be given away as long as no money changed hands. So it asked for ‘mules’ to deliver them to the bars in Australia and they got a cocktail in return.
“It was about breaking the rules and it was backed by a really clear commercial need,” he says. “That was a strategic product that was created to help crack the Aussie market ... And it was an interesting piece of marketing because it allowed people to participate in the brand."
Stolen products are now available in 1600 stores.
Hurman says the numerous restrictions on booze marketing lead Duff to observe that the marketing shouldn’t really be about the product. It just needed to have a connection to the name and it needed to form a bond with people. And its couch giveaway in Dunedin, Sydney and Florida was a good example of that strategy in action.
Perversely, Hurman says restrictions can often be a luxury for marketers, because they’re forced to come up with creative ways to get around the rules. And in the world of start-ups, "there’s a lot to gain and very little to lose" (as Facebook's Mark D'Arcy pointed out during his visit to the homeland, when marketers are working inside big corporates they inevitably stick to the script, but if they break free and set up their own business, they instantly revert to challenger brand mode and start experimenting so why not just give it a crack and see what happens).
The bit of the Stolen story Hurman is most proud of is the brand's introduction into the US market. It met with Rudy Ruiz from one of the country's biggest distributors, Southern Wines and Spirits, and he liked its white and gold varieties, but sales were flat in those categories, so he asked if they could come up with a spiced rum that was completely different to anything he’d ever seen before. He gave them ten days to do it so it developed a smoked, spiced rum called Coffee & Cigarettes. And, because Hurman was at that time exploring the idea of setting up his new business, he sees this as the first project of Previously Unavailable.
While it was able to call it Coffee & Cigarettes in the US, it wasn’t able to in Australia. He says there was a lot of debate about whether to change the name, but someone suggested simply crossing out the words. It then rolled out is mule idea again to get the contraband into the country and hoped that people would make the association between the bottle they saw at the bar and the bottle they saw at the store. And for those who didn’t know, there was a degree of intrigue about what was underneath the scribbles.
“It adds to the story and fits in with the idea of being slightly on the wrong side of the law."
While there’s plenty of talk about authenticity in marketing, a huge number of large companies attempt to create cool, edgy brands and often fail. It’s a bit like seeing dad at the dance party. And this is why he says the brand often needs to be built around the founders. To Hurman, they embody the "sophisticated punk" of the brand and, as he says, “they're like Vice magazine at The Hamptons”.
Stolen took plenty of inspiration from 42 Below, which followed a similar path around creating distinctive branding and attention-grabbing marketing and also sold out for a handsome sum to a bigger overseas company. And there are plenty of other Kiwi brands, such as Rogue Society Gin, Thompsons Whisky, Blue Duck vodka, Jumping Goat coffee liqueur, Black Robin and Lighthouse also seeing potential in premium (Holmes stepped back from the business a few years ago and, along with Hurman and Soh, he is now focusing on the Serious Popcorn brand). So is there a formula here? Hurman says the Stolen success story is definitely a rarity when you look at the percentage of new businesses that fail. But there are definitely some lessons to be learned.
“There is a formula, in a sense, but it’s not as easy as that," Hurman says (or, as Mike Tyson so eloquently put it, everyone’s got a plan until they get punched in the face). He points to the wise words of one of the founders of Hell Pizza, Callum Davies, when he asked him how the company had grown so fast and taken over from Pizza Hut as the country's biggest pizza chain.
"He thought about that and he said: ‘pretty much you just made sure the pizza was really good and the brand was really different.’ It's pretty simple. But when you think about it, how many companies work like that? The vast majority of organisations make sure their product is commercially viable and just good enough. And their brand often just conforms to the category.”
If there is a formula, it’s creating a unique brand positioning, he says. Or, as Darryl Parsons, one of the main brains behind the 42 Below brand, said on his website: "Look at what everyone else is doing—and don’t do that.”