[00:00:10] Ray Latif: Hey folks, I'm Ray Latif, and you're listening to the number one podcast for the food and beverage industry, Taste Radio. This episode features an interview with Andrew Merinoff, the founder of early stage investment firm Dispatch Ventures, and the co-founder and CEO of passion fruit based liqueur, Chinola. If you're visiting a spirits-related trade show and walking the floor with Andrew Merinoff, be prepared to stop often. Based on first-hand experience at the 2023 Bar Convent Brooklyn event, I can tell you, the man draws a crowd. The 33-year-old investor and entrepreneur is a well-known and well-regarded figure in the business of beverage alcohol and is seemingly connected to everyone from early-stage entrepreneurs to industry captains. A cynic might say that investors often draw crowds and attention, but the pleasantries and short conversations that Andrew shared with attendees had an authentic quality about them. He was genuinely interested in hearing about their brands and businesses. For him, every experience is an opportunity to learn and expand his understanding of what's next in beverage alcohol. And that's the crux of his perspective on investment. It's not enough to know what you're interested in and what you perceive to be a worthwhile funding opportunity. He wants to know what is and what might be on the horizon. In the following interview, Andrew spoke about his family history in the spirits industry, how he attempts to identify trends before they become relevant, the key factors in his investment strategy, and how he's navigated his first few months as the CEO of Chinola. Hey folks, it's Ray with Taste Radio. Right now I'm honored to be sitting down with Andrew Merinoff of Dispatch Ventures and Chinola, the founder and CEO of both. Andrew, great to see you. Hey, appreciate having me on today and I'm looking forward to chatting here at BCB. Absolutely. We are at Bar Convent Brooklyn in Industry City here in Brooklyn, New York. Is there another Brooklyn that I'm not aware of? Not that I'm aware of.
[00:02:07] Andrew Merinoff: And I'm only resting here for 20 something years. So yeah, it's not me. You've been in New York City. You grew up here. So I was born in New York City and moved to Jersey, Vermont, Colorado, and live kind of globally. So I don't know if I called home until about 15 years ago, but my passport reads New York.
[00:02:23] Ray Latif: Your passport, it says, well, if your passport says that it means you're from New York. That's what I like to say.
[00:02:27] Andrew Merinoff: Yeah.
[00:02:28] Ray Latif: Yeah. I think that would be kind of interesting information if your passport said what your profession was.
[00:02:33] Andrew Merinoff: Oh God, I think by the amount of pages that are stamped in it, some people can guess pretty quickly as it is quite full on a regular basis.
[00:02:39] Ray Latif: Well, Vinepear described you as both a venture capitalist and a serial entrepreneur. And I think they started with serial entrepreneur and then said venture capitalist. Number one, do they get both right? Number two, do they get the order right?
[00:02:52] Andrew Merinoff: Honestly, 20 years ago, I probably didn't know what either of those meant at the time. So I think we're still living and learning. I think there are times I wear the hat of an investor, and a lot of times the entrepreneur, and I think that's just more of an excuse of saying we need funding.
[00:03:06] Ray Latif: So we've been, or I've been at BCB, Bar Convent Brooklyn, for, I don't know, 45 minutes. In the time we walked over to this little space where we're recording this interview, I think you were stopped by at least 15 people. And you are very well known in this industry, in the spirits industry. And I think, correct me if I'm wrong, it's something where you do want to be deeply involved in as many aspects of this industry as you can. And I'm reading from your bio on LinkedIn and Instagram, which says, someone told me not to bite off more than I can chew. I said, I would rather choke on greatness The nibble on mediocrity. I guess what I'm asking is, are you trying to put as many fingers into as many pies as possible because that's the best way to really understand and get a comprehensive look at where the industry is and where it's going?
[00:03:59] Andrew Merinoff: Oh, and I think it's an amazing question with several parts to it. I think there's a few things. And in order to be in this industry, it's not just understanding hospitality, but of partaking into it. And partaking in hospitality really means knowing who the players are, being there to help them, and learn from all brands. So whether I want to invest in every brand is different than if I want to know every brand and the players behind it, which I think is really important. And I was able to put myself in a lot of people's shoes which is important when building something because you now know what the person on the floor goes through, the person in the restaurant, the person in the liquor store, and understanding those disciplines has helped me build a foundation that I use to really establish Dispatch Ventures.
[00:04:38] Ray Latif: Yeah, I definitely want to talk about Dispatch Ventures in a more broad way. Let's back up a second and talk about your background. Your family has a long history in the spirits industry. How much does that impact your interest as an investor and as an entrepreneur?
[00:04:53] Andrew Merinoff: Yeah, I mean, it's pretty well known. My family goes back four generations on my mom's side to the Hiram Walker dynasty, making whiskey in Walkerville, Canada, shipping to the U.S. during Prohibition, where my dad's side of the family was bootlegging it. And, you know, it's a sensitive history that we have, but it's one that we are pretty ingrained in. I think that from an early age, when most of my friends were going to sport classes or whatnot, I was driving the forklift in the warehouse. I was working in restaurants, working in the bar scene, opening up restaurants on the marketing side. And I realized from early on, it was zero pressure. In fact, it was the opposite. Try to do something outside that industry. Never wanted to. I wanted to be stodging in a restaurant. I wanted to be working, understand the back of house, the front of house. And so I think that although it helped put me in the right rooms, it was really a love and passion of mine from an early age. Where'd you stodge? I went to 11 Madison Park as the first mini stodge. I was 13 years old, and my dad put me in the kitchen for an eight-hour shift, and three days later, I begged them to hire me. That was the first real time in a kitchen, and I didn't do anything important. Peeled carrots, peeled potatoes. But I fell in love. I was in culinary school by seven. I was teaching the children's class by nine, and I was in the adult class by 11. And so I think I found a love for cooking. And then I found an opportunity to be our guest restaurants with Steve Hansen back in the day. And they're bringing a concept called Dos Cominos. And I said, open up a Mexican restaurant. This sounds great. And they threatened me The Long hours, seven days a week. I thrived off that. I enjoy hospitality, and it really helped. And having the family in was a key bonus for me.
[00:06:28] Ray Latif: I'm shocked that you staged at Eleven Madison, you worked there, and you didn't open your own restaurant.
[00:06:34] Andrew Merinoff: It was funny. They put me there to make me never want to be in another restaurant again, and it had the opposite effect. I fell in love with the kitchen. I fell in love with its beauty, but then again, the other kitchens have their simplicity. And it really had a nice blend to understand what three Michelin stars takes to what fast casual and high volume takes.
[00:06:53] Ray Latif: Working at Eleven Madison, what kind of doors did that open for you? And I mean, I guess, how did you make that transition from saying, I'm in love with fine dining and cooking, to I'm in love with cocktailing and the spirits business?
[00:07:06] Andrew Merinoff: Yeah. Funny enough, you know, a 24-hour stage doesn't seem very impressive. But when you're 13 and your friends are at a party that night, then it changes the dynamic of everything. And what I realized was more important to me is being in a kitchen, doing teamwork, and trying to deliver something that the world loved. more so than being at the party, not being the life of the party. How do you build a party? And it was something that was really key to me early on. And I started to look at less about the, I wouldn't say quality, but how high end the food was and more about the service they provided, which led me to the bar. And when I made my first mocktail at a very young age, I realized There's a lot more to it than a bartender. There's a bar back. There's a dishwasher. It is a true team. There's the front of house, the back of house. And until I learned how to understand and put my feet into everyone's shoes, I didn't really know the industry at all.
[00:07:53] Ray Latif: Well, I think if you're distilling down what you said into a single sentence or a couple, it speaks to the mission and vision of Dispatch Ventures. And I want to read what your mission is from your website. It says, disrupting industries through impact investing. You invest in more than just spirits. You invest in food, spirits, tech. That being said, you know, a cynic might say, well, you know, there are other VCs out there that have a similar mission, a similar vision. How do you see Dispact as differentiated from those other funds and firms?
[00:08:24] Andrew Merinoff: Yeah, and I think it's less about differentiation because I feel like a lot of funds have to define themselves because they report to investors. When I first started Dispac, the mission was, I was in technology before that. I'd sold off a few ventures. I wanted to invest in a lot of different things. I wanted to not do it from a holistic 100,000 feet up, from 30,000 feet up. The reason there's technology, like seven rooms in the fund, is I understand data habits on dining. And we did data analytics. When you look at certain technology companies, is it a technology company or is it a data analytics tool to understand your consumer? And for our listeners who are not familiar with 7Rooms, 7Rooms is? 7Rooms would be a CRM platform that restaurants use to make better hospitality easier. And it's done so in the fact of you understand your guests, their dining habits, when they eat, when they don't, their average spend, making the reservations, and What's funny is The Long restaurant was hard to win was Oriel because the father-son duo said, we're here every single night. We know all of our customers. But is it possible to do at the scale of a Nobu when you have 28 restaurants and people want to feel welcome back? How do you make guests feel welcome back? We saw you in our restaurant in New York. Welcome to Malibu. We know that you like this. Can we offer you this free welcome drink and this favorite appetizer of yours? And to me, that's hospitality.
[00:09:40] Ray Latif: How many investments have you made to this point? How many companies are in your portfolio?
[00:09:43] Andrew Merinoff: So we're in about 19 companies operating in about 70 plus countries around the world with home bases and 12 of them. And so we have expanded quite widely. And there are some things in there that weren't meant for everyone. And the reason that Dispect as a fund doesn't take from a holistic standpoint, large investment from outside investors is every deal to me is individualistic. So it's not when I'm asked how many deals need to get done this year, I don't have a number. I have one of the right deals to get done this year. And I have friends that want to only invest in tech, some in spirit, some in RTDs. So every time I go for fun, if they need to raise $3 million, we might only put half a million dollars or a quarter million dollars into it. But what we're doing is finding the rest of the better investors to come side by side with us so they can go deal by deal and we can get the controls and powers we need to be very hands-on investors. Because if I'm investing in you, assume that I'm on your calls, I'm an advisor, and I'm there with you the day-to-day in the trenches.
[00:10:40] Ray Latif: What is your investment criteria? Again, you operate in a lot of different industries. You evaluate categories and industries, I would think, in a similar kind of way, but maybe I'm wrong. What is your criteria for investment?
[00:10:52] Andrew Merinoff: Yeah, I think the first part goes back to the idea of disruption. And I wouldn't be going to nothing against the vodka space. It's a space that I'm not interested in because I couldn't compete in it. And rum is really tricky until Coconut Cartel rum came along. And the idea behind that was the world's first rum cut with Coconut Cartel instead of flavor. To me, that's disruption. Impact. I think that if you look at Great Jones Distillery in New York City, when we went to build it, it's a farm distillery that uses local New York State agriculture. That is the impact and the disruption behind it. But the biggest one happens to be Chinola Passion Fruit Liqueur, which, as I mentioned, I'm the CEO and co-founder of. And we started this with the idea of actually going to the Dominican, creating our own fruit, and growing it. And what we realized is three Americans going to the Dominican Republic to take away farming jobs from locals is a terrible idea. So we pivoted very quickly. And the idea was, how do you leave a place better than you found it? You go to the local farmers, you buy the fruit back at a premium, get the right principles in place, and then support local economies, local agriculture, because they say, you know, one tide raises many ships. Down there, we help build the road, the power, the water, and education. And now we have a sustainable ecosystem there that helps benefit the passion fruit brand.
[00:12:04] Ray Latif: Do you think about return on investment when you're doing all those things, or is it you just have to create a foundation first before you do anything?
[00:12:10] Andrew Merinoff: I think spending money is only stupid if it's done incorrectly. So by building a foundation of a local community that vouches for the brand, that when we have tourism come down to visit, are proud of it, and at the end of the day, they actually see some ROI themselves, it's worth the investment. I think a lot of people are caught up on investing behind The Long things, and I think that leaves no impact for future generations or future brand building. Every one of my companies, and in the last two, three years, I've only had a handful of companies walk in and I ask them, what's your goal? Tell me that they want to give a dividend check versus a three to five year exit. The day that you start to build means you're building inorganically, you're looking at a metric of what acquisition looks like, and you're building into it. I want to build for profitability, for sustainability, and that my cases aren't being discounted. I think the second piece is perception. You walk into a bar, you see a tequila brand that's all over the menu. How did they get there without knowing the story? And normally it is they pay to play, or I discounted it, or I had a friend here. You kind of get this FOMO, the fear of missing out aspect of it. And then you start to do things that are rational for your brand. So when I'm looking at investment, was the growth done organically? Is it done sustainably? And is there a path to profitability is more important to me than top line revenue, case volume and acquisition within three to five years. So would you say you're more of a long-term investor than a short-term investor? I think that it depends on the space and we'll go into trends, but I do have no fear in any of my companies holding them for five, seven, 10 years. In fact, I like to build sustainable businesses on time. It's not always the case. There are RTDs like The Long drink where, hey, we've seen extreme growth. Eventually you hit a pinnacle where you need to sell before you're too expensive for someone to buy you. So I think there's different sectors of that. But me, I love the idea of holding this company and being around for a while to watch it grow.
[00:13:57] Ray Latif: Aren't you at least curious about the idea of selling to a Spirits conglomerate? I mean, some of the exits we've seen in the last five years have been extraordinary. And that doesn't even include one that may be coming soon in Terramana, which did exactly what you said earlier, which is they sort of got the product into as many places as possible. perhaps discounted the tequila itself and are now doing a million cases a year, which is unheard of. So when you see these kinds of success stories, I mean, wouldn't you say to yourself, well, I can probably do the same thing in a relatively short amount of time with a pretty remarkable exit?
[00:14:38] Andrew Merinoff: Yep, I think that's a great question and a great point. If you want explosive growth, you should have explosive capital. And the space I like to play in is built slowly, sustainably. But yes, I think that we have certain brands, a long drink backed by Kygo, Miles Teller type RTD. We've seen it. We've seen explosive growth. Termina was the fastest growing spirit in history. The Rock went behind it, they backed it, they came with the right amount of funding. So if I'm meeting with someone in a room and they say, I'm raising half a million dollars, I want to be the next Taramina? It's impossible. If you say I'm raising $12 million, $15 million, here's the celebrity, here's the distributor, that's a whole different animal to me, which is a space that I normally don't play in. Because if you're raising $10 and $12 million, you've got to be valued three, four times that. It all of a sudden outscales where I kind of want to be as a brand. That's not saying that's the future of Dispact. That's the foundation that was built on to start. What is your average check size for Dispact? So we range, and it depends how early pre-revenue it might be. I think there are checks written, and just to get me through the door, of $50,000 to $100,000, and that's, I'm going to be with you for the heavy lifting. I think that we can do checks $250,000 to $500,000, and for follow-on rounds, up to a million dollars. But those are companies I've been with from day one. I think, to your point from earlier, there are five big exits that happened in the last few years. 10 years ago, it was more of a supplier game. The last five years, brands have been killing me with their crazy valuations that are unobtainable. And it's not about the evaluation of the time. It's that my biggest pet peeve is a down round. And as a strategic investor, if you come to me and say, I'm worth $30 million because the market landscape now, I'm going to come back to you and say, I spent the last 10 years building brands and companies. And when I bring to the table, it makes me worth $15 million. So meet me in the middle. And it doesn't always have to be done in a lower year valuation. It could be done as sweat equity. But I think a lot of brands in the last two and a half years that have raised at these very high valuations are going to down rounds and going to have trouble because at Dispact, my companies don't raise capital. They raise strategic capital.
[00:16:41] Ray Latif: The way you described it, it sounds like you could be an angel investor, you could be a C capital investor, you could be investing in the Series A. When you are getting those pitches and when you are hearing from founders, you're seeing the investment decks, you're meeting the founders, you're looking at their brands, you're probably tasting their products as well. What typically moves the needle for you most?
[00:17:02] Andrew Merinoff: I don't think that companies and brands and founders need to have 100% of what it takes to build success. I think they need to have certain core fundamentals. I can replace team members. We can improve on products. It's the willingness to adapt and learn. And if you're coming to me with eight skews, I say get rid of four of them. I think there's a few key things founders miss. An example is an RTD brand that comes out to market and says, I have four flavors, but I'll have eight by the end of this year. They don't understand the ways of working capital. I can teach working capital, or we're going to spend as much on marketing in these events. We don't need to do that, we can dial it back. So a lot of the companies I'm looking for is, are they going to take the right advice? Do they have the right game plan? Are they pre-revenue? Because then I'm going to go in less. Is there a proof of concept? I'm happy to go in a little more. And then making sure we're kind of off the beaten path. And we understand that there is a route for expansion that does not require replication. It requires innovation. So you are betting on the jockey more than you are the idea or the brand itself. The founders are really crucial to me. The idea is really crucial to me. And people that learn and are willing to adapt are the most crucial to me.
[00:18:08] Ray Latif: My colleague Farah Insalnikar did a great profile of you and Shinola and I think Dispatch Ventures. It was all kind of built into one story. And as part of the story, you had mentioned that identifying trends before they actually happen is a really key piece of my portfolio. I think everyone listening and those not listening want to know how you identify trends before they happen.
[00:18:35] Andrew Merinoff: No, and it is a really great question that comes with a few different aspects of it. I think you have to look at what you're building, what the marketplace is. People think they need to be in 35 countries all at once. The U.S. is where liquor brands specifically and beverage brands are built. But I do not believe the US is where trends and flavors start. As I mentioned the joke about my passport earlier, I am in Asia, Africa, Europe, Central, South America. And the question is, what flavors are there? The second piece of it, and you need to tie these in together, what does the industry want? And why that's important to understand that is, it's not just educating the consumer, it's getting the trade to want to sell it. Because as a consumer, you're going to go home, you're going to make six, eight drinks, 10 drinks a week. Us industry people make a lot more. But a bartender or a liquor salesman in a store is going to make or sell 5,000 to 10,000 cocktails a week. So they need to be able to adapt to it. I think the last piece of it is the acceptance of what our next generation wants. I think that's visibility, transparency, and to know that we paid fair wages. So I think when you look at trends from a whole, Is it screwball peanut butter whiskey? No, it's the flavored whiskey. But now the ones that are coming out are done in a more traditional style with old world techniques, which means, again, they come back to being a little more natural organic. So I think looking at a trend is difficult unless you understand from 100,000 feet up down to the boots on the ground that are pushing that trend. And it happens by looking into markets outside of New York. city, L.A., Miami, go to the Midwest, go to Central South America, go to Copenhagen, where Noma is, where we built Empirical Spirits, see what they're drinking, see the flavor profile, start designing now, launch in the U.S., and by that time, you're ahead of the curve, because we've been following them forever. Japan might be the most trend-leading places in the world. Go take a visit there, you're gonna see brands that'll probably be successful here in the U.S. in the next five, 10 years.
[00:20:28] Ray Latif: And I'm excited for Empirical to make their way out here to New York City. When is that happening, by the way?
[00:20:33] Andrew Merinoff: They will be here in a few months. They're actually inside BCB right now with two of their products. Okay. Mark and Lars are building. Mark, Emil, and Lars are here? Mark, Emil, and Lars. I know Lars is in New York City at the distillery doing the build-out. Mark will be here next weekend. I know that for a fact because he's coming to join me next weekend. Their new space looks beautiful. The tasting room is going to change the way we look at spirits. And like I said, if you talk about cutting edge, Empirical, Chinola Carta. I mean, that's that is the cutting edge of where our spirit direction is going.
[00:21:02] Ray Latif: I'm going to be a little nostalgic for the past, though, because I interviewed them in Copenhagen at their distillery and it was it was all amazing. I mean, they have just an incredible brand and their products are just remarkable. Andrew, you talked about trends from around the world, but I wonder about the scalability of those trends. How do you consider scalability when you are looking at opportunities like those that you mentioned?
[00:21:26] Andrew Merinoff: So there's two parts of trends. And, you know, to your point, you can be a Teremina, which I have nothing against. Of course, I want to sell a million cases of tequila. Or where do you see the future going? And I think scalability is different than consumer education and education to trade. So it's only how fast you can skew something to get into that sector. For instance, with Chernolo, we did it in 2, 4, 6 states, and then we expanded to 8 and to 10. And what we did is we built trade advocacy. Trade advocacy can naturally build a trend when done at scale in the right methodology. So if I were talking to someone right now looking to build an RTD, I would avoid not to. RTDs aren't losing the race at 100% scale across the U.S. They're losing it in every market one by one. And so I think if you're going to be able to scale a trend, raise the right amount of capital, do not become a fundraising company, don't look to have to raise money every five, six months, because then you're distracted half the time. At the same time, screwball whiskey was built in five states. and it just sold for a speculation of three to five hundred million dollars. It is a peanut butter whiskey. And the number you mentioned has not been reported.
[00:22:34] Ray Latif: It's not has not been published.
[00:22:36] Andrew Merinoff: It has not been published. Thankfully, I work with a lot of the banks that are saying speculatively this is what they think it was at. They also did some discounting. They did something along the way for scale. But seven years ago, if you told me peanut butter whiskey was going to take the US by storm, it would have been a miss of mine. Liquid Death was a miss of mine. I have a lot of friends behind it. So I will never tell people I know all the trends. I know the ones that fit with my portfolio that now would work with the brands in my specific sector, because I can take the data, study what sectors of market there are in, and then try to read it from there. And like I said, I work with a lot of founders outside of my portfolio for fun. I'll always happily take a 30 to 60 minute conversation with anyone because I don't think I know it all. What I do really well is I start myself with smart people. And if I'm the smartest person in the room, I built a really poor room. And I told Farron that. I said that if nine people in a room out of 10 say yes to me, nine people are not needed. And the last thing now, and what I did really well, I like to involve my entire team in decision making. So if I ask a question or say, here's what we're going to do, you have to play devil's advocate to me. Because there's zero chance I get it right 100% of the time. And so I think building the team that lacks the fear to call you out when you're wrong, to me is a bad leader. Because you built The Long culture in your company. My culture, my company, my team knows 100% of the time, if I come up with something, please challenge it. Because we're all going to build off each other.
[00:24:01] Ray Latif: Going back to Liquid Death, don't feel bad that you missed that. There were a lot of people that missed that one, yeah.
[00:24:06] Andrew Merinoff: Yeah, it was painful, but for every one of those painful misses I had, I passed on a hundred of them that also went down a different road. So I don't believe that I've won on my success. I believe I've won on my failure and my acknowledging to admit to when I fail and to try to learn from it.
[00:24:22] Ray Latif: This might be kind of a hard thing to do, but I'll ask you if we can do it anyway. I'm going to go over a list of factors for your investment strategy and ask you to rank them. Do you prefer 1 through 10 or 1 through 5? 1 through 10 gives you a little more flexibility. Yeah, 1 through 10 sounds better. Okay. And we've already talked a little bit about some of these, so it may be slightly repetitive, but for some of our listeners, it might give some more specific detail in terms of your mindset. So let's start with category. Category in the context of spirits.
[00:24:55] Andrew Merinoff: I would say that's innate, because if I can't get behind the category, there's no way I'm going to be successful in trying to build it. Technology. Technology and spirits, I would say is a three to five because I want to put my own implementation of the technology companies that I know work for a brand. Non-spirit technology. Eight to nine. I think that's one of the most important things that we can utilize as companies to really accelerate growth. Branding and design. Branding and design, if done really well, eight to nine. If it's not done well and we'll get into liquid, less important because we can change it.
[00:25:30] Ray Latif: Story and mission. Now this story mission across all the categories and industries you invest in.
[00:25:36] Andrew Merinoff: Nine to ten. End of the day, we all might have the same spirits. We are storytellers. Anyone that goes out and sells a single product is a storyteller. I will not invest with brands without a legitimate, genuine story that I feel like I want to brag about when I'm out and about. Financials. Financials are six to seven. I would like strong financials, but that is where our team can come in and really help change as long as the money has been spent appropriately.
[00:26:02] Ray Latif: Let's pause there for a second. What do you typically have to change? What are some of the missteps or cracks in the foundation, as it were, for some of these companies that are pitching to you?
[00:26:12] Andrew Merinoff: Most of the brands that we've built are liquid to lips kind of brands. So I want to be able to go out, have someone tell an elevator pitch in 30 seconds about the brand, taste you on it, and have you like it better than the next 10 brands. So I do think that is a really key metric for us. And the biggest misspent people have is on social media marketing, or marketing as a whole that's intangible, versus the tangible, which we love. synergy with your entire portfolio? I think I can find a synergy of every brand that we invest in. I'd say it's about a seven to eight with us to make sure it fits within there and that we can find not just synergy, but efficiencies from their overheads. All right. Not too painful. That was relatively painless. Well, that was good. You cut me off. I had to sit up and be like, am I contradicting myself the first 45 minutes?
[00:26:56] Ray Latif: No, no, no. I think you're spot on with all those numbers. Let's talk about deal flow and generation for a second. What percentage of your investments come from inbound pitches versus those brands and products that you already have experience with?
[00:27:10] Andrew Merinoff: Yeah, I would say there's definitely a lot of inbound. And it comes from people like yourself and Farron, who give me the opportunity to speak to not only consumers, but the audience that own the brands that want to hear it out. I go to the trade shows. I don't think any founders shouldn't be getting their hands dirty. And because of that, I will give my business card out to anyone. So I get a lot of inbound, to say the least. The second thing, and my fiance wants to kill me on a regular basis, If I go pass by a liquor store, I survey every single shelf. If I'm in a grocery store, I survey every single shelf. If I'm in a mini bar in a hotel and I haven't tried something, I have to go give it a sample. So I would say the majority is inbound to me, but I'm in a BCB Bar Convent show with 500 brands and 4,000 industry people. I plan to talk to half them in the next two days. And because of that, we start to build a repertoire. And I think I've built a pretty good reputation in this industry for people to want to talk to me. And it might not be from an investment perspective, because I do not invest in a lot of brands that I speak to, because I get thousands of them. But I advise them, I pick up the phone, and that's given me the ability to talk to almost everyone. And that's a great feeling.
[00:28:14] Ray Latif: Let's discuss your leadership of Chinola. You became the CEO, when was that exactly? That was in November of last year. November of last year. So you've been on the job for seven months at this point. Do you have greater empathy for some of the founders that you've worked with, some of the CEOs that you've worked with, given that you are now in a position in their shoes?
[00:28:34] Andrew Merinoff: Yeah, absolutely. You know, we always ran a very lean team and I sat there as chairman, but I did not have the responsibility. And I think having the responsibility I had before, which was accelerate the brand, keep food on people's tables. Now it really comes down to all the above, plus what's the game plan? What's six, nine, 12 months look like from here? And before it was I could make poor decisions and they just give me a slap on the wrist because I was an employee. Now it's make poor decisions and I have to respond to a board that I used to control. So I think when you look at the overall ability to not only expand a brand, but run the day to day, while still working my normal jobs and running the fund, I have a lot more sympathy and empathy. The second thing is building a brand that's small and having a few of them is easy. Once they start to grow, overexpansion is something that I see a lot of founders make, and I'm a hypocrite for saying to them because it's something that I did for a few months. So finding the right balance in your work life, finding the right balance in your free time, making sure that waking up at 4 a.m. and going to bed at midnight every day, although it's great for your brand, it's not sustainable business, I found that, and I will say I have a bunch of CEOs that have found equilibrium and peace and joy of life to work balance relationship, and that's something that took me months and months of struggle on.
[00:29:54] Ray Latif: Aside from the work-life balance, what are some other things that you had to get up to speed too quickly, and what are some of the mistakes that you made early on as a CEO?
[00:30:02] Andrew Merinoff: Yeah, we were looking to expand distribution. We were now covering everything from the West Coast, the Midwest, to the East Coast. I had to go in and really help expand on our team, build a distribution footprint, but also go monitor things like Australia and Europe. And when you start to really do that, it starts to mean calls can start at 4 a.m. o'clock in the morning, then go to 11, but also it's impossible to grasp 45 markets as one human being. So what I did quickly was shifted the team up, I put my COO into place for managing director, and then we started to really pull into outsourcing certain core competencies, accounting, finance, HR, marketing, agencies, that we didn't need to totally internalize, that would start reporting to us, versus us managing directly, and I think that what we did is it took six months to build the right ecosystem for us. It was not fast, but it was done correctly, and I think that that was the big learning curve for us.
[00:30:57] Ray Latif: Chinola has stability net right now. It has the foundation to grow. I guess the question is, given that there is a lot of interest in the brand right now, how do you avoid the temptations that are out there to start growing quicker than you anticipated or you really want to?
[00:31:17] Andrew Merinoff: It's an amazing question. And I say it to some people this way. We have deals with multinational accounts that have 500, 1,000, 2,000 venues that would immediately jump us from where we are up 80%. And it will last for two to three years when they change their menus. And it would be very quick growth. But I do believe when you're going for acquisition and I have a brand at 60,000 cases trying to get to 100,000 cases, I don't necessarily want to get to 100,000 cases. I want to go to a supplier and say, I have this deal with Marriott. It's for 5,000 accounts. Within nine months, you'll be at 100,000 cases. You'll buy me at a lower case volume amount, but I'm giving you the worth of this contract. And I think that's really crucial because you need to show a supplier that there's still room for them to win and to look impressive. When we look at Shinola, we're not turning down some of these deals because they're too big. We're turning them because it's not the right timeframe for us. Our best thing now is build the best foundation possible in the right 32 states. We've been offered to go completely national in all 50 states. We've turned it down. I want to be deeper than wider. I want to get the full market penetration. And I think the best thing about this brand is most of the companies that are our size of volume are doing this in, say, 10,000 accounts. We're doing it in 4,000 accounts, which means our velocity is higher, our visibility is better, and there's room for growth. Because it's not like we didn't pitch our 6,000 accounts. We haven't gotten there yet, but we've won the first 4,000. That means there's room for expansion. And I think that's what we're really trying to keep our eye on, not looking at the shiny object that's dangling in front of our eyes and jumping for it. And it's hard at times.
[00:32:56] Ray Latif: There's a ton of parallels and I think it's a direct parallel to non-alk and food brands as well. So folks listening might say, oh well, he's talking about a spirits company. No, I think this is very equitable in terms of what you're talking about, in terms of the strategy you're talking about, to non-alk and food as well.
[00:33:14] Andrew Merinoff: Absolutely, and I will never knock Walmart, Target, because they're amazing, but what some founders don't get is they see Walmart, go to pick them up very early on, they order the inventory, and all of a sudden your working capital has gone overnight. For us, we're one SKU, one size. If we expand on that, we have to go from holding one SKU, one size in a warehouse, to two SKUs, and maybe two sizes, then to four. Working capital can get drained quickly, hence why I warn RTD brands all the time, if you have four flavors, you know, one mixed pack and four individually boxed, and a distributor pulls in a big order, you have five pallets being sent there instead of one, and then you have to manage the inventory. You have to get on your bottling line or your canning line and do the same. So I do think if you're going to do this appropriately, be in the right amount of states with the right amount of time frame, and just watch out for those big shiny objects because they could be the death of the company that actually has really good potential to grow.
[00:34:07] Ray Latif: A big shiny object that often appears to fast-growing brands is a strategic company. And I'm not sure if any strategics have come knocking on the door of Canola at this point. Maybe they have. But when they do come knocking, what do you have to be wary of? What are some of the questions that you need answered correctly before you align with any of these companies?
[00:34:27] Andrew Merinoff: Yeah, and it's an important question. It depends on the strategic deal you're going to do. Is it acquisition or is it JV or joint venture? Are they investing behind me and taking a risk, or are they trying to buy me outright? I, technically, I prefer a joint venture deal, if I think I can take the brand further than it already is. There are certain brands we hit the pinnacle of, and we know we can't build it past that, but an A, B, and F would come in tomorrow and triple the business. For me and Chinolos, the important one is right now we've hit a stage where we can look to either raise strategic money, from not a strategic investor, like a big supplier, but get more money to keep the lights on, end of next year, and go grow it to 100,000 nine-liter cases? Or do we want to sell off 25, 40% of the company to a big supplier with a three to five-year option to eventually have it bought from us at a multiple per the cases? And what that means is $2,000 per case sold in that three to five years. It's up to the founders. Do you think you can continue to grow? Does the big supplier care because they bring all the value to you? And can you do it at a realistic valuation? The last piece of advice is, do you want to own 80% of something good or 40% of something brilliant? I take brilliant all day long. And so people are afraid to give up equity in their companies. And I get it if you're a fundraising company. But if you do it intelligently and you're going to raise twice and you want to stay at 51 percent, be ready to drop below 51 when the company is ready to go to supplier. Because what supplier wants the founders having control saying they're going to invest behind. So it is a science behind it and think can be done correctly, but understand what the founders are looking to accomplish.
[00:36:03] Ray Latif: Andrew, you'd think you'd been in this business for a long time, the way this interview has gone. It's amazing. For folks who might want to get in touch with you and just, you know, try to get a five minute conversation with you, is the best way to connect via LinkedIn? I mean, how do people get in touch with you?
[00:36:16] Andrew Merinoff: LinkedIn is the easiest channel for us to connect in. What's really nice, and as I do value my time, I like to vet certain things out, mutual connections are the best way to vet something out. So LinkedIn to me is that top channel. The other thing is, go out into the field, do the right industry events, there's a high probability if there's a bar show or trade event somewhere in New York, especially, but across the U.S., myself and my team will be there. And end of the day, although if investment from Dispact is not right, I do like to advise for a lot of companies, expect nothing from it other than a good conversation, maybe a free sample here or there, and to give it to my network to try, because I don't get things right all the time. And I try myself with really good advisors, strategic teams that might see something differently than me, and that can be the difference between us making the investment or not.
[00:37:02] Ray Latif: Well, once again, this has been such a fantastic conversation. Andrew, thank you so much for taking the time. I know how busy you are. This is a very, very busy event. And I know you need to get back to your booth. So I really appreciate you taking the time.
[00:37:13] Andrew Merinoff: Right. It's always a pleasure, BevNET. Like I said, it's one of my favorite organizations to deal with. And thank you for taking the time as I know you have a busy week as well. And I really appreciate the conversation.
[00:37:21] Ray Latif: Yeah. Now we have to go drink some cocktails.
[00:37:22] Andrew Merinoff: Yep.
[00:37:23] Ray Latif: Cocktail time. All right. That brings us to the end of this episode of Taste Radio. Thank you so much for listening, and thanks to our guest, Andrew Merinoff. Taste Radio is a production of BevNET.com, Incorporated. Our audio engineer for Taste Radio is Joe Kratchy. Our technical director is Joshua Pratt, and our video editor is Ryan Galang. Our social marketing manager is Amanda Smerlinski, and our designer is Amanda Huang. Just a reminder, if you like what you hear on Taste Radio, please share the podcast with friends and colleagues. And of course, we would love it if you could review us on the Apple Podcasts app or your listening platform of choice. Check us out on Instagram, our handle is BevNetTasteRadio. As always, for questions, comments, ideas for future podcasts, please send us an email to askatasteradio.com. On behalf of the entire Taste Radio team, thank you for listening, and we'll talk to you next time.
