US group Next Century Spirits was founded in 2018 by Joel Pawlak and Scott Bolin. Its initial business centred on creating custom formulations for those looking to enter the beverage market and covered spirits such as whiskies, vodka, gin, rum and Tequila, as well as RTD cocktails.
Many of its early brands were collaborations with public figures, including Seth MacFarlane’s Bear Fight whisky and golfer Greg Norman’s vodka-based RTD Caddy Clubhouse Cocktails.
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In recent years, it has expanded through acquisitions, the latest addition being a clutch of brands from Texas spirit producer Southwest Spirits & Wine. North Carolina-headquartered Next Century Spirits acquired the lion’s share of Southwest Spirits & Wine’s brands, including Nue vodka, The Other 49 Bourbon, George Ocean rum and Calamity gin.
Just Drinks chatted with Next Century Spirits CEO Anthony Moniello and chairperson Matthew Bronfman about growing a spirits portfolio, waiting for and executing that moment of rocket-fuelled growth.
Just Drinks: You recently acquired several brands from Southwest Spirits & Wine, why them and what’s the plan there?
Next Century Spirits CEO Anthony Moniello: Nue vodka is a powerhouse brand. We were looking to get into the vodka set to help provide some scale for the overall business and there’s kind of two types of brands in the vodka set right now: there’s large ones that are struggling to maintain, share and keep their shelf space; then there’s a few disruptors, those grown at 20% to 30% and really not a massive footprint, not in a lot of doors if you look compared to the competitive set.
So, Nue vodka is a growing asset that’s really exciting in that price point range and in that category. It was just really exciting for us and something we were hunting in that space.
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By GlobalDataHenderson whiskey is a nice little brand that’s growing. Nue vodka comes in around 220,000 cases, Henderson’s just shy of 20,000 and growing in that value space. The de-premiumisation trend in spirits has been going now for, gosh, six plus months, I don’t see it going down. As we started to look at the whole portfolio, it just got more and more attractive.
Secondly, these brands give us some scale. Our innovation is working and brands that are launching are working but we needed more scale. We need to be in some bigger chains and some bigger markets. This allows us to build off of that commercial value chain that we get from scale.
JD: Any plans to make RTD variants of Nue vodka or move in that direction?
Moniello: We’re going to focus on the base vodka. We’re going to focus on the size we have, will keep the flavours and understand what our flavour strategy is. I think there’s plenty of room on the base but you know innovations are the lifeblood of this business and our business in this industry. So never say never but we’re excited about the base vodka.
JD: Next Century Spirits was involved in several celebrity backed spirits as its first products, is that type of collaboration now on the back burner?
Next Century Spirits chairperson Matthew Bronfman: We will most likely be introducing two new celebrity brands in 2025. So that is not moving away from it in any way. We find that there’s a lot of synergy in doing both. So we’re going to continue to innovate and look for celebrity partners, where they really can make a difference.
JD: What infrastructure does Next Century Spirits currently have?
Moniello: We have our production facility in North Carolina, which is now an almost 30,000-square-foot facility and mostly do our production or bottling and stuff there. A little bit of barrel storage. We then have two storage facilities, one where we also store barrels and dry goods, as well as another where we have finished goods.
This acquisition (Southwest Spirits & Wine) will challenge our space a little bit when it comes to storage. We did acquire some barrels in this deal, about 330. We’re looking for, in the near-term, ways we can expand in that space and around that current space.
JD: What markets are you active and in future hope to play in?
Moniello: We have a lot to do here domestically. So, for 2024 and 2025 we will focus on the US. This deal effectively puts us from being in around 38 states to really all 50.
Lots to do here in the US but our vision includes international markets, quite frankly, the international markets we’re in are because they asked for us. So, you know we were approached by Australia, Denmark and Canada and a few other markets and so it’s a part of our long-term strategy but there’s only so many things you can be amazing at. We want to own the US first but we’ll get there, trust me.
Bronfman: We have vision to be a top-ten whiskey supplier globally. We have the real advantage of having a long-term vision. We’re not in this to buy a brand, you know, show some growth in the next 24 months and blow it out. Like that’s not the vision that I have.
My background was in private equity. So that might lead you to think short-term five to seven years but it’s not. That’s not the way we’ve ever thought about private equity.
JD: What does the next 12 months look like for Next Century Spirits?
Moniello: We’re going to first and foremost focus on the opportunity ahead of us with our current brands. Nue vodka has untapped potential across the country and we’re really going to go after that pretty hard.
Secondly, we launched the brand Numbskull Whiskey in a couple of test markets. It’s a chocolate-mint-flavoured whiskey. Little did we know it’d be by far our biggest brand four months into this year. It’s just flying off the shelves. We can’t keep it in stock.
So we are between the acquisition of Nue vodka and this insane growth in demand for Numbskull, as well as really great double and triple digit growth on the rest of our portfolio.
Right now, we are in a really good position where we’ve focused on our portfolio. We’ve moved on from things that didn’t quite work. We’re really focused on things that are and now we just have to scale them and execute.
JD: You have done funding rounds in the past, any future ones planned?
Moniello: We are launching a round. I don’t know how much I’m allowed to talk about rounds. I don’t think I can.
What I can say is any money raised in the future is going to be about growing rapidly. Not because we need to survive. We are a strong company. This acquisition makes us really strong. Anything we do in the future is about how do we accelerate a moment.
So, we’re going to be very smart about it but it’s a really tough funding environment for a lot of brands and luckily we’ve been able to thrive in a really tough economy and a tough market for smaller companies. And hopefully we’re not a smaller company now.
JD: You mention the tough economy. What is your view of consumer confidence at the moment?
Moniello: What we see is that people are still engaged with affordable luxuries which spirits are. While we do see de-premiumisation as a trend. That doesn’t mean people are just killing for cheap. You still want a great proposition. You still want a lifestyle brand and still want something that speaks to them and their friends and the moment they’re trying to celebrate in. So, you just have to be cognizant of that.
Everyone’s raising prices and reacting to supply chain and we’re trying to be very disciplined and saying well, we’ll take the hit on our margins. We’ll take the hit on this or that, even if it makes Matthew cringe or my CFO cringe because we know that people are looking for those really great moments to release around brands that they care about whether they’re spirits or otherwise.
So you know, consumer confidence, especially with elections coming up, that is never a fun time to start predicting but what we do know is that consumers are still engaging with brands. They’re just a little bit more cost conscious but they’re not going to the bottom of the shelf. They still want to find a brand that speaks to them. So we just have to be really cognizant of that and react to it quickly and interact with our consumers regularly.
JD: Biggest challenge or thing in view across the horizon?
Moniello: It is being able to stay focused on fuelling our growth when the moment happens. You have to be very disciplined to say this brand or this opportunity we need to capitalise and really hone in on.
We decided we wanted to create a portfolio company, portfolio companies are driven by having a couple of really great brands to build around. We just acquired one and we’re well on our way to defining number two and number three. It’s just ensuring that we never lose the focus on what is going to get us to our ultimate ambition of being a really trusted multinational spirit supplier.
