Business Lessons from the Bottom of the Barrel

In his early career as an investment banker, Matti Anttila found himself frequently traveling to Brazil. Smitten with the country and culture, he finally decided to pack up his desk and start his own venture focused on the national liquor of cachaça, a distilled spirit made from sugarcane juice that serves as the key ingredient in the tropical caipirinha cocktail. Matti’s goal was to bring a premium brand of the popular local drink to the broader market.

“We launched at a time when the market for premium products was very strong,” Matti says looking back at the 2006 release of his first spirits brand, Cabana Cachaça. While the early version of Grain and Barrel would have an easy time raising money leading up to the finance crisis, Matti says the window quickly closed.

Portfolio Approach

Matti’s company lay low during the years from 2008 to 2010. When they began to reemerge in 2011, they started focusing on a more portfolio-driven approach, looking to acquire lesser-known brands as the sector consolidated and bring them to market in a bigger way.

Since then, Grain and Barrel has launched two other major brands, Dixie Southern Vodka and Chicken Cock American Whisky. The spirits marketer also recently acquired the global spirits license to the iconic surf film The Endless Summer.

“There has been a lot of consolidation in the spirits space over the last 20 years,” says Matti. “All the while, the trend in craft spirits has really emerged.” Matti has defined his reborn company’s focus as unlocking the value in forgotten-about brands or categories that have fallen out of favor.

“What we’ve found to be pretty successful is identifying brands that have been lost in the shuffle in some of these large consolidations,” says Matti. Matti’s banking experience has helped provide him with the expertise he needs to structure and ultimately execute on a brand concept.

A Crash Course in Branding

“The whole cachaça experience really influenced how I look at branding and categories,” Matti says of a liquor he eventually realized was difficult on the tongue in a way he never expected. He explains that American consumers are often reticent to order a drink they cannot pronounce.

Today Grain and Barrel has evolved into an American craft focus. “We’re very on trend right now in terms of where the consumer has shifted.”

Matti explains their acquisition strategy. “Either a category is on the ascendency and you can piggy-back on category growth, or maybe the category is large and has stagnated and there’s opportunities for disruption within that.”

Matti explains the cost savings and marketing opportunity of finding brands that have left the market but still have a unique history to them. He speaks to his revived American whiskey brand, Chicken Cock. “Most of the U.S. whiskey brands were wiped out either by prohibition or World War II,” he says. But there are a lot of brands in that category that with the proper research, you can unearth “great stories that no one knows about anymore.”

In this way, Grain and Barrel is bringing beverage brands back from the dead, acquiring retired and inexpensive IP and reintroducing them for the 21st century.

Lessons from the Bottom of the Barrel

For an acquisition-based strategy, it’s getting a lot harder to do business. “Coming out of the crisis we took advantage of pressure coming from shareholders for big companies to strike off non-core assets.

“Now there’s not much of a need to do that, so [brands] are harder to identify,” says Matti. “And valuations have increased pretty substantially so it’s getting more and more expensive and the last thing you wanna do is overpay for an underperforming asset.”

Still, Matti’s not discouraged. “The perspective I have is somewhat unique because I came in at a positive time,” says Matti of his initial pre-crisis entry when it was very easy to get capital, and the premium category was hot. Having existed through the worst of times, Matti wonders about entrepreneurs who are just starting out today without that valuable survival experience behind them. He stresses how important proactive risk mitigation is even when things are looking rosy.

The other big lesson learned? The importance of raising money even when things feel steady. Particularly in the consumer space, brands can fail either from outrunning their growth or not being able to adjust to hiccups in the supply chain or issues in their distribution model. “You always need more capital than you think you need.”