Admittedly anyone on an entrepreneurial path faces challenges but the spirits industry is particularly hard due to a multitude of local, state and federal regulations and a crowded competitive field. It’s just a wee bit harder for people of color and minority women.
“It’s a challenge trying to break into these big distributors and I’m not sure we’ve gained their respect, especially being a small Black-owned brand. It’s a little bit of a challenge to prove ourselves. We just want the opportunity,” said Irving.
Ricardo Kelly, who owns Kelly Family Distributors, a Black-owned spirits distributor in Alpharetta that helps create, develop and import minority brands, agrees. He works with 14 Black-owned brands; four are female owned. “I think it’s a bigger problem being a minority woman,” he says.
“My perception is that males are taken more seriously. One, retailers don’t take us seriously and two, everyone wants to know who you are and how long you’ve been in business. There’s a lot more questioning.”
TK Burton-Johnson and her brother, Ty, started Red Hazel Brewing Co. which produces a spiced rye whiskey. “I am a woman in the whiskey industry, not just a woman but a Black woman. Sometimes when you’re talking to people you get looks like ‘You’re not supposed to be in this room’. I don’t have to necessarily be rude to get respect but I do have to be more assertive. It starts with respect; that respect is starting to come.”
Start-up money is often an entrepreneur’s nightmare and, the spirits sector is particularly hard to crack financially. “The proverbial saying in this industry is that if you want to make a million dollars, invest two million,” said Chris Montana, founder and owner of the first Black-owned distillery, Minneapolis-based Du Nord Craft Spirits.
“There are investment patterns,” said Giacomo Negro, a professor of organization and management at the Goizueta Business School at Emory University. “Funding is characterized by social factors and tends to come from sources who are familiar with the people they do business with and that may be a disadvantage to minorities.”
Lehrman said there is “no path into the distillery community. Everything is from private investment firms and that’s somewhat limited. African Americans have a hard time. Banks don’t lend money where there’s no economic history.”
Don and Nayana Ferguson founded Anteel Tequila in 2017, making Nayana the first Black woman to own a tequila brand. The couple, both “high earners who saved,” didn’t need outside capital. Their next round will be with friends and family. “We won’t go to a bank,” she said.
They produce Anteel Reposado Tequila, aged eight months in charred Tennessee whiskey barrels; Anteel Blanco Tequila; Anteel Coconut Lime Blanco Tequila infused with coconut and lime; and Blanco Tequila infused with Tarocco blood oranges from Sicily.
Montana, a former president of the ACSA, produces seven house-made brands as well as working with other brands. There is “skepticism. You’re doing business with people who aren’t use to seeing people like you. When I went to get funding we struck out. Others were raising $1 million; not me. I got $60,000 from a community development organization. There’s a disconnect.”
Not helping is that the industry is capital intensive upfront, meaning all the money is spent before a bottle is sold. “There are people who can self-fund; that’s not the norm. For most it’s a second career,” said Montana. “Rarely do you have someone say ‘I have a large fortune and I’m desperate to make it a small one’. Usually it’s family, friends and maybe Go Fund Me.”
Burton-Johnson’s funding was “strictly bootstrapping. We didn’t think we’d qualify for a bank loan. I’ve applied for more than 200 grants and haven’t gotten any.”
There are two paths to a spirits company. One is to the create the formula and then distill it yourself, and handle supply chain issues such as sourcing the ingredients, creating labels, finding bottle manufacturers, transportation and marketing. Another is to create the product and work with a distributor who does it all.
Another snag is a post-Prohibition three-tier marketing chain of production, distribution and sales that is not usually found in other industries. Each step has a mark-up. The first tier is the producer/importer, which in many states requires them to sell to distributors who then sell to stores, bars and restaurants. Distributors must hold state-issued permits for every state they do business in — again not standard.
The restrictions hinder sales and growth. Someone wanting to buy a spirit in Georgia that isn’t available in that person’s home state, for instance, cannot buy several bottles and have them shipped, like wine.
“It’s convoluted,” admitted Lehrman.
The next problem is getting the product onto retail shelves and restaurants, and to be fair, “finding distribution is not a problem limited to any ethnic group,” said Lerhman.
Irving and Burton-Johnson used social media and conducted taste testings. Burton-Johnson goes to more than 200 festivals a year; her whiskey is in 45 restaurants and retail outlets.
Ferguson’s liquors are in 13 states and the Caribbean. “We make a product where there are no sugars nor synthetics. I’m a cancer survivor and can’t drink a spirit with extra sweetness. A lot of distributors weren’t willing to try my brand because I’m a Black woman. I’m proving them wrong. I’m going to become a nationally recognized brand, maybe internationally.”
Adding, “Companies haven’t marketed bourbon to Black people. I certainly feel there is a shift in terms of supporting Back-owned companies. I see a boom in people going into stores and looking for Black-owned brands.”
Irving calls this lack of marketing to the Black community a “lost opportunity.” He’s in more than 35 locations throughout metro Atlanta and “making his way to middle Georgia.”
Montana is optimistic. “If you have a good product, ultimately you’ll skip ahead of celebrities and the major brands. You do quickly realize how hard it is to sell a single bottle but once people taste it, everyone will want to have it.”
Anteel Tequila. teeqspirits.com
Red Hazel. redhazel.net
The Original Irving Whiskey. theoriginalirvingwhiskey.com
Majesty Bourbon. drinkmajesty.com
Wild Creek Distillery. 1133 Wilder Road, Pelham. 229-221-2030, wildcreevdistillery.com
Kelly Family Distributors. 4255 Trotters Way, Alpharetta. 404-720-1819, kellyfamilydistributors.com