Enabling Innovation in Business
Distill Ventures was born out of a realisation that emerging spirits and drinks producers were being held back by numerous barriers, including limited access to resources.
Sonya Hook catches up with chief executive and co-founder Frank Lampen to find out more:
At the start of this century England was blissfully unaware that in the years to come it would face Covid-19, Brexit, and a crushing defeat at the Euro 2020 final, while even the more positive stories, such as the nation’s rediscovery of gin, had yet to come to the fore.
Around this time, two of Frank Lampen’s friends were in the process of launching their own businesses and he was struck by the difference between the two journeys they faced.
He says: “One friend had a tech-centred business and the other was launching a gin, and this was going back 10 years or so, before the crazy wave of gins arrived.
“It was interesting seeing the difference between the two businesses. The first was highly tech-enabled and any questions would quickly get answered by the tech community. He also had access to lots of investors and plenty of support.
“In contrast, the friend who was launching a gin business found it really difficult to find out even the basic bits of information about the industry. He spent a long time just trying to convince HMRC it wasn’t just a big tax fraud.
“At a basic level it made me wonder why there could be so much support for a tech-enabled business but so little if you are starting something in gin or spirits.”
Delving a bit deeper Lampen did discover some accelerator programmes in the food industry and some for soft drinks, but very few for alcohol.
“I think there were various reasons for that. It is an industry dominated by a relatively small number of global players compared to other sectors and it is an industry with lots of barriers. It is heavily regulated and so traditionally investors could see lots of challenges and relatively few players and they would question if it was the right kind of sector to invest in.
“Setting up Distill Ventures was really an opportunity to tackle this issue and build a bit of an ecosystem for founders in the drinks space.”
Diageo showed interest in Distill Ventures early on and became the sole investor when the company launched in 2013.
Lampen, who is the chief executive and co-founder of Distill, says: “We didn’t want to be one of these accelerators that doesn’t help you with one of the really crucial things, which is raising money. We needed a partner to provide that sort of funding.
“We find potential opportunities, we take them to Diageo for consideration, and if they like it they invest and we facilitate that investment.”
One of the first brands Distill invested in was Balthazar vermouth, which went on to become the first brand acquired by Diageo out of the programme.
Lampen says: “Balthazar tapped into a couple of trends. We were definitely seeing a shift in terms of where people drink, and it was moving from late-night occasions and dark nightclubs to more daytime and much more around food and casual dining. So, vermouth tapped into the trend for lighter drinks, which suited this kind of space.
“I also think there is an element of bartenders being interested in the more classic categories like vermouth, but wanting to put a more modern spin on that. The interesting thing about Balthazar is that it was made in a beautiful distillery in the Black Forest using wines from Baden down in the south of Germany.
"It is modern and not what you think of as classic vermouth. A Balthazar and tonic is a great drink to have on a rooftop bar at sunset. It connected with how people were spending their leisure time in cities, daytimes in the park, the rise of street food vans. It was a modern twist and take on something with classic roots and that’s always a really interesting place to play I think.”
Looking at emerging trends and ways to connect new drinks to the consumer is an important part of the process for Distill. Lampen says: “You have to think about how radical the shift is that you want people to do. In some cases the shift is not that radical, it is just a kind of swap out. You might be launching a new gin and you obviously don’t have to create the gin market; you are not trying to get people to drink gin. You just have to convince people this gin is more interesting or might have a better flavour than what you were drinking before.
“And then the further out you go you have to think harder, so something like vermouth and tonic is quite simple to explain. It is quite like a gin and tonic but it is a bit lighter, somewhere between a G&T and an Aperol Spritz. I can explain it to consumers, but it isn’t a straightforward swap, so I need people to try it. In the on-trade environment consumers can be encouraged to try it and in the off-trade we could accompany the launch with a sampling programme.
“And then there is something like Seedlip, where you don’t really know how big the shift will be. On the one hand a Seedlip and tonic is an obvious substitution for a G&T in how it is served, but on the other hand people will ask: ‘What even is a non-alcoholic spirit?’. So there is an education piece there.”
Distill supported Seedlip through its early years and helped it secure its first retail listing with the Whisky Exchange. In 2019 Diageo acquired a majority shareholding in Seedlip, its first acquisition of a non-alcoholic brand. Lampen says: “Seedlip is a great example of what can happen when you get someone who just looks at the industry and category from a totally different perspective.
“We were able to create support and a set of tools and finance packages to enable it to go from idea to transformation to a global brand in the space of three years, which is exactly what we were intending to do. We perhaps didn’t anticipate that level of success with something so early on, but the intention to facilitate that was there from the beginning.”
Looking ahead, Lampen points to cocktails at home and non-alcoholic spirits as areas that deserve further attention.
He says: “I think the cocktails-at-home thing is super interesting. There are lots of things happening in that space, but the market is still up for grabs.
“We are also really excited by the non-alcoholic spirits category, and we are pleased to have brands which in their own markets are doing really well – Ritual Zero Proof in the US, and Siegfried Wonderleaf in Germany.
“Another growth area for us has been New World whiskey, and all three brands in our portfolio [Starward, Stauning and Westward American single malt] did really well last year.
“Now is the time when we can start doing a better job of helping consumers in this journey of discovery in this category. Whisky retailers often organise the category with very traditional single
malts, bourbon and ‘other’ and they don’t necessarily help consumers to really engage with the stories and enjoy these liquids. We have worked on how the industry can work together to really curate great offerings in New World whiskey and guide consumers through it to find things they will really love.”