Indiegogo was the wrong place to raise funding for me
Having tried, and failed, to raise £10,000 using crowdfunding platform Indiegogo, Calum Leslie pivoted his business and has launched his own whisky brand.
Wanting to capitalise on the subscription model craze, Calum Leslie embarked on a rewards-based crowdfunding campaign on Indiegogo back in October 2015 with friend and business partner Fraser Sutherland.
Taking the form of a monthly delivery service which introduced members to new whisky brands with samples and tasting notes, the entrepreneur has now taken his business ambitions in a different direction — as Business Advice found out.
(1) When we spoke to you last you were launching a subscription whisky service, what has changed?
The subscription service caught the attention of an Edinburgh-based investor. I met with him and he asked me if I had any plans to launch my own brand of whisky. At the time, I had been reading about the PeatReekers, a group of 18th century renegades who evaded the tax man and produced illicit Scotch.
The PeatReekers were similar to the American moonshiners such as Al Capone, a very famous time in US history, yet no one was talking about the days of the PeatReekers and so I saw an opportunity to build a brand around the darker side of whisky. So, I pitched the investor the idea and he decided to fund it.
(2) What brought about this pivot and why did you not continue with the subscription offering?
Launching our own brand was always the end goal. Subscription is a great business model and allowed us to build up contacts in the whisky industry.
We received enough funding that allowed us to pivot and decided to focus our attention on building a great brand. I am always aware that you only get one shot at creating a market for a new brand, so it was important to spend 100 per cent of time and energy doing this.
(3) What did you learn about the crowdfunding process while you were on Indiegogo?
Crowdfunding is tough. Indiegogo was the wrong place to raise funding for our company. I think reward-based crowdfunding is great for tech products, but not so much for food and drink products. On the flip side, equity-based crowdfunding is very well suited for food and drink products that have some traction. I think the reason for this is that rewards-based crowdfunding works well for products that capture the imagination.
So, you’re unlikely to walk into John Lewis and purchase a drone off the shelf, yet if you can watch a video that shows someone kitesurfing in Bahamas then it’s an easy sale. This isn’t really the case with a £30 whisky subscription. Equity-based works well for food and drink because it’s seen as “safer”. Investors understand how the distributor, wholesale, retail channels work — and so they can see their return on investment.
(4) How did you identify a demand for a new whisky brand?
We looked at the current gin boom and thought “what’s next?”. Now, gin is different as it’s easy to produce and you can have a bottle on the shelf the same day that you distil. This is partly why everyone from elderly married couples to multinational conglomerates are in the gin market. This is not the case for whisky. If you want to bottle a single malt, or indeed any whisky that you distil then you need to mature the “new make” spirit in an oak cask for a minimum of three years in Scotland before the spirit can be called whisky. So, huge barriers to entry.
However, I’ve always been interested in blended whiskies — both blends and blended malt — and if you purchase aged stock then there is no further requirement to age. It’s difficult to get access to stock, but the contacts that I had made through our subscription company opened the right doors and so we started on a journey to create interesting new expressions. Next, we allowed people to taste and the rest is history.
(5) What have the major landmarks in the last two years been?
- Launch our own brand
- Secure investment
- Make the first hire
- Get stocked in leading retailers
- Set up international trade routes
(6) Where do you see the main channels for retail being?
Starting with online and as of January we will be stocked in The Whisky Exchange, 31Dover, Master of Malt. Next, we target bespoke independent whisky stores and boutique retailers.
On this front, we are stocked in just over ten independents and will hit the shelves of major retailer later in the year. After that, we will look to the avenues such as bars (on trade). However, it will take time to build our brand in the “on trade” so we plan to start small.
(7) What surprises have emerged in taking a whisky from idea to bottling that you weren’t expecting?
A few surprises and learnings:
- It always takes longer than you expect
- It always costs more than you expect to produce
- Contractors are busy, so plan ahead and always stick to the plan
- You only get one shot with buyers, so make it count
- Never forget that no one said it would be easy
(8) How do you compete with major established distilleries and drinks brands?
We don’t see established whisky brands as our competitors. Scotch is a huge market and the big brands spend a large amount on converting people to drink Scotch. We can’t afford to do this and don’t need to as once someone is a converted whisky drinker they will look to try other brands.
This is where we come in. We are small, craft and appeal to a specific audience. There’s plenty of thirsty people in the world and enough market share for everyone. Plus, the established distilleries create incredible liquid and we aim to learn from this and work with them wherever we can.
About the author
Hunter Ruthven is the editor of Business Advice. He is also the editor of Real Business, the UK’s most-read website for entrepreneurs and business leaders at the helm of growing SMEs. Alongside this, he is part of the team that hosts the Growing Business Awards, First Women Awards and Future 50 initiative. Prior to his role at Real Business, he was editor at competitor website Growth Business and head reporter at M&A Deals. Throughout his career he has interviewed leading entrepreneurs including Alex Chesterman, Lopo Champalimaud, Sarah Wood, James Averdeick and Alex Saint.
