East Imperial plc (LON:EISB) US Commercial Director Jaron Berkhemer caught up with DirectorsTalk for an exclusive interview to discuss ramping up in the US market and its potential, what Cocktail Courier brings to the company, partnerships, consumer trends, and the importance of high-quality ingredients.
Q1: Jaron, with you coming on board, the company seems to be really ramping up its focus on the US market. Could you tell us more about the new team, its experience and focus?
A1: Absolutely, I’ll start with myself.
I have a fairly extensive history in the area of premium mixers. I joined a company called Q Mixers in early 2017 and helped run that and build that through to late 2019. We discovered very quickly that as everything else in the spirit space was premiumising in every single way, the mixer category fell behind quite a bit, and it was purely because nobody was really talking about it.
The gin and tonic and generally the mixed drink trend is a lot further along the way in other parts of the world where it’s the quality of the gin that is very important, but it’s also what comes after the end, right? It’s the tonic and the soda and some of the other carbonated mixers that are also seen as a very valuable and important component to the final product, which is your drink.
Whereas in the United States at the time, awareness around spirits was very high, however, the awareness and also the engagements with the premium mixer category was very low. This was not in line with what I saw and I think what other people saw anecdotally.
So, if you were to hang around in a liquor store, for example, and you ask somebody who picked up a premium bottle of gin, and we define that here as anything above 1999, you would ask them, for example, what are you doing with this gin? Well, I’m mixing it with tonic. So you pick this gin, it says something about you and what tonic are you grabbing? Oh, I don’t know, whatever is available because tonic is tonic. Of course, if you say, well, sure, but how about a tonic that doesn’t have artificial ingredients and all sorts of sugars and other masking agents, because that’s what happens. The more sugar you add in a mixer, which you add into a drink, it really kills a lot of the nuances in the flavours, you lose a lot of the subtleties that make the spirit special.
Usually when people have already spent more than $20 on a base spirits, and then you tell them there’s a better way to create your finished products just by having a better mixer, 9 times out of 10, people would say, oh yeah, never thought about this, you’re right. It’s then a very easy conversion, and once people see that, they never look back.
So, we really looked at this as primarily just an awareness play and we decided to take a very aggressive approach in the own trade, and we built a very strong company and a very strong brand with Q Mixers.
I will say anecdotally as well, that in the time that we started to get very aggressive with Q Mixers, there was really one brand out there that we couldn’t touch, especially in some of the more super premium accounts and also within a pretty loyal own trade community, and that was a brand called East Imperial. I found the level of loyalty that people had to a brand in a category, which at the time still had very low engagement, I found it remarkable and never forgot about that.
Today in our Group, you have myself, and one of the first things that I did was to gather some of the best people that I have worked with over the years in the mixer space, also in some other areas, and that’s where we can honestly say that we are the team that’s, I think, pioneered the growth of this category in the United States.
When we started, Fever-Tree was already here, Fever-Tree was imported by a company called Brands of Britain and not as active in the markets so we came in, we started outpacing our competitors and looking at strategic geographic areas in the United States like Florida, Colorado, Nevada. That’s where we brought in some of the best people that I have gotten the pleasure to work with who know how to do this.
We are excited to have everybody on board and go back to what we know best, which is how to build brands specifically in this category.
Q2: You announced in October last year an agreement with Cocktail Courier. How is that progressing now? How does that fit with your US position and expansion plans?
A2: It’s a very exciting partnership for us, especially as Cocktail Courier is integrating more and more into some very high profile consumer events.
For us, aligning with premium spirits is very important. Again, the big opportunity is, of course, as I always say, what comes up after the end, right? We know that 30/35% of drinks are mixed with a carbonated mixture so you have the gin and tonic, the Moscow Mule, which is of course a vodka and ginger beer, the whiskeys and sodas. and so on and so forth.
So, Cocktail Courier allows us to leverage a lot of those partnerships because they work with the best brands out there. Even more interestingly than that, Cocktail Courier is expanding heavily into the area of consumer events, like the Grammys and the Oscars and New York Fashion Week and a lot of those.
For us, it’s a dual opportunity. As I said, partnering with brands, but then also getting in front of, I think, a much more discerning consumer who simply got them to expect much more out of the full product, the full cocktail so not just the spirit, but equally high expectations around everything else, the mixer, and it doesn’t end with the mixer either. People care more about the quality of ice, for example, and the quality of glassware so this partnership really allows us to dive into those areas in a very strategic and a very targeted way.
We’re working on some very exciting programmes which we look forward to announcing over the course of this period.
Q3: How do you view the potential size of the US opportunity and what could it contribute to the overall business?
A3: I think the US is a phenomenal market to play in, it certainly isn’t an easy market to play in. I think we do have a tremendous opportunity because there isn’t a lot of differentiation here in the markets, I also think that the range of mixers and the range of capabilities that you have with mixers is generally broader than in other regions.
We know that in the UK, for instance, a lot of the mixer consumption happens with gin, and that is a relatively finite category, of course, because there’s only so many gin and tonic varieties that you can have. In other markets, you have, of course, some other focuses and some other beverage and consumption trends.
I think, in the United States because of the popularity of cocktails like the Paloma, which is tequila and grapefruits soda, the way we consume brown spirits, whiskeys with ginger ale, whiskeys with ginger beer, certainly vodka with ginger beer, I think there’s a lot more variety overall. So, I think in that sense also, and also given how I think broad the US market is and how dynamic it is, it’s an interesting field to play in.
For East Imperial, in particular, again, there isn’t a lot of differentiation in the space. I think you really see two primary categories when it comes to mixers, we look at the value brands, you have brands like Schweppes and Canada Dry, you have the more mainstream ones that have come onto the scene in recent years so Fever-Tree is one, Q Mixers is one. But if you look at some of the other entrants, they seem to really, really play into that mainstream space as well so you see very similar price points, you see very similar packaging, you see very similar styles of mixers.
What I think is very interesting for our business is the true premium positioning, which really helps the brand stand out and differentiate and also allows it to take a very targeted approach with our account partners. When we speak to some of the best and most refined hotel groups and restaurants in the world, it’s something that truly sells itself in a sense. You make the argument that, okay, if you’re a super-premium company and you do have a very sophisticated audience that truly pays attention to details and has certain expectations, having, frankly, the only super premium mixer in the market makes it a relatively easy conversation.
I think with that level of differentiation and the level of diversity in terms of where you can go with this, it makes it such an interesting opportunity, and I think there’s a tremendous upside for us here in the United States, and generally.
You see that in the trends, you see how premium and super-premium continues to be very strong as a category, you see that in spirits, you see that in luxury goods, you certainly see that in the premium mixer space, and that’s also the least crowded space.
So for us to really, having built a team, having built some phenomenal strategic partnerships, I think it puts us in a really good position.
Q4: Just before we finish, do you have any closing thoughts?
A4: Again, I think it’s very exciting for me to see how this category has been evolving. I will certainly say that we as a community of former bartenders and people who have built a lot of brands and invested heavily in the own trades, we’ve always operated under this philosophy of let’s invest in the own trades. That’s where you build trends, that’s where you build a lot of value and the hope and the goal has always been to build a trend and have it carry over to the consumer.
What I think has been one of the biggest changes over the past few years that I think is becoming really evident is that now the consumers are really picking upon what those trends are.
I think in general, especially with premium mixers, which is why I love the space so much, consumers are less intimidated to experiment and make things at home. There used to be a very hard separation between what you could have out in the bar and what you could make at home. Something like a Paloma or something like even a Moscow Mule would generally be perceived as something that you would order at a bar, you would leave that to the mixologist because making it at home, well, a Moscow Mule sounds quite complex, a Paloma sounds complex. When you realise that it’s really just about mixing two really good things and finding interesting garnishes and again, playing around with some interesting glassware in different styles of ice, now you’re seeing consumers get a lot more confident about their abilities to make cocktails.
Paloma is a cocktail, a Mule is also a cocktail, a gin and tonic is essentially also a cocktail, and I think watching the consumers pick that up, engage with this culture as we have always engaged with it, more and more and more, I think every day, that to me is a really exciting trend.
I think that is very, very good for the category at large. I think it’s very good for the brands like East Imperial, which I think has flown under the radar, but certainly watching the responses, seeing how buyers, but also consumers are responding to it is very encouraging. Of course, looking at how it fits within the trends of something that is very low sugar, extremely high quality, very, very deliberate in its design and its aesthetic.
Myself and my team, we are very, very bullish on the opportunity here.
