For ad agencies looking to seem a little more entrepreneurial, it’s almost too obvious—build a booze brand from scratch.
But next month, Crispin Porter + Bogusky is unveiling its second. Papa’s Pilar, an Ernest Hemingway-themed pair of rums—one dark, one light—will hit shelves on March 4 in a handful of Florida cities, with plans to roll out to other U.S. markets later this year. The agency helped develop and brand the product, and holds what it describes as a “significant” minority stake in the business.
“It’s a marriage of creative and financial interest for us,” said Neil Riddell, CP+B evp, executive director of product innovation. “Doing these types of projects really keeps us evolving as a creative entity. We’re able to evolve our compensation with new revenue streams and equity deals, and evolve what we can be, which I think is far more than an advertising agency.”
It’s a familiar refrain. In recent years, a growing number of ad shops that wish they weren’t have launched liquor startups of which they are part or whole owners.
Sure, such ventures make for good window dressing. They fill glasses at company parties and gift baskets for clients. They also help agencies better understand clients and the risks they face.“There’s a vanity aspect, and there’s a business development aspect for the agencies,” said beverages marketing consultant Arthur Shapiro, president and founder of A|M Shapiro & Associates. And—theoretically, at least—booze can be lucrative.
But what qualifies a company with a bread-and-butter business of making commercials to wade into the cluttered, risky and legally arcane liquor industry?
That’s where CP+B’s partners come in. The Papa’s Pilar CEO is Steve Groth, a former Omnicom events marketing leader and founder of investment company Mahalo Spirits Group. He’s brought on president and chief marketing officer Jay Maltby, a decades-long liquor industry veteran who’s held top posts at companies like Bacardi. With Crispin bringing its branding expertise to bear on Papa’s Pilar, Groth and Maltby’s teams are helping navigate the potentially thornier intricacies of producing and distributing the bottles.
And the group’s working dynamic is already, to some degree, proven. Angel’s Envy, the first booze brand Groth launched with CP+B and company in March 2011, was originally projected to sell 100,000 cases and reach a value of $200 million within 10 years. Now, the bourbon is on track to reach the same targets in five to six years, the agency says.
But is it profitable? Investors say it’s too soon to tell. Instead, the hope is to build brands that can eventually be sold to a bigger player looking for “quality organic growth,” explained Groth. “So doing these things in the right way at the right time and creating a really solid foundation is key to creating a long-term brand.”
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