How to launch a product (or service) on a tight marketing budget with Tom Maclean of Sofi Spritz | #404

Tom

I think it was a bit of testing myself. I was probably inspired by friends and family who I’d seen that was kind of where my interest was always drawn to people that were running their own business and it could be just about anything I was. I always found it the most interesting thing I was drawing. I’ve read a lot of management books and I think I’d find myself gone to devouring management books which is pretty rare. Then I got to reflect on what I want to do and I was like, geez I can write those books pretty easily.

Tim

When you look at these friends and family with their own businesses, what was the conversation you had with yourself?

Tom

With myself or with them? It was probably because I think I just like the idea of being the master of your own destiny and charting your own path I guess. I know that sounds complete like

Tim

Any other motherhood statement you want to get?

Tom

But I think I just didn’t enjoy answering to someone else to be honest. It’s not that I hated it. I just, I didn’t feel

Tim

I hated going out. I want to leave for lunch a half an hour early like who’s watching.

Tom

Yeah. And I guess I fell into sales which I never thought I’d be able to I guess the thing I did like about sales is if you got results you got results.

Tim

And now that you are a business owner was the peering over the fence, looking at family and friends running their own business, it was not as hard, it’s not as easy to work.

Tom

Yeah, that’s right.

Tim

So, you finally made the break, you’ve got it. You can’t just make a break from corporate because obviously it’s comfortable, good salary, a lot of benefit.

Tom

Yeah, yeah. I was in the funds management stuff for more on 10 years, left I going to go and then I thought, no this isn’t working. Even though it was a good job and cushy you know, whatever. But I thought now I’m going to leave this one to go back to what I was doing then find men and stuff I can do for myself. I’ll be a freelance kind guy and a few months into that I had the idea for Sofi Spritz and I still hadn’t really that business to be honest and really go off it and I find myself spending a lot more time working out how to make your character rather than working it out or run a fund manager and sales and marketing business.

Tim

So clearly it was ringing but flooding you by. This idea of a Spritz, where’d it come from

Tom

So, at the time I was living in Sydney in Tampa Ammara just next to Bronte and the bond of Bronte track. It was a funny little shack. It was a very small little place with a beautiful backyard so I’d have a lot of Barbies after one of those. I mean it’s not a six-year story. It had a few ciders it didn’t sit well I was kind of like you know what I love to do something with wine that kind of fit that backyard Barbie kind of occasion and I just sort of seemed like a silly idea. I then thought back to my time I’ve been living in London and Europe and stuff for years during the funds management stuff and I thought back to travelling through Italy and seeing their whole culture around the spreads you know, the piazzas are filled with people with the colorful drinks, round Sunset, dinner drinks and whatever thought that, had loved it, thought it was really interesting. I thought that could translate to the Aussie setting really nicely. The kind of beach side Barbie. So much yeah, I just became obsessed with it and what seemed like a kind of harebrained idea initially started doing some research and it kind of stacked up on a few France.

Tim

What research did you do?

Tom

The old google and just calling everyone that I knew that had anything to do with wine or drinks or whatever. I tried to start a drink called the bloody CSRIO guys and they gave me a list of other people to speak to and all that kind of stuff. But yeah, a couple of the things that I thought were most interesting was you know both on the supply and the demand side. Say on the supply side the Aussie wine industry is obviously had a huge period of success and then a huge direction. So, there’s a huge oversupply of wine in Australia. I saw some kind of mind blowing stats on what Australia is now exporting its wine for its kind of stirringly low prices. A lot of the time. So, I thought you know maybe there is an opportunity there to create a new market for what is great wine.

Tim

Because the Spritz is essentially flavoured wine with soda?

Tom

Yes, it’s white wine with, the originals inspired by the Veneto Sprits. You know you might have seen Spritz coming out too so that’s probably the most popular version of the Veneto Sprits.

Tim

What’s Veneto, is that a brand?

Tom

That’s a region in Venice.  So, they have had different types of sprits. So the traditional are dry white wine or a sparkling wine with bitters.

Tim

So you had this idea of going to Italy. You magically gone jeez, I’m seeing all these people and piazzas drinking these beautiful coloured dreams. You know, I can bring that back to Australia. Part of that and I have seen that beautiful piazza, a big part of that is the piazza. So what made you think that it would work back here and has it?

Tom

I think it has it. I think it’s an outdoor lifestyle, isn’t it? Like they live outdoors in piazzas before dinner we live outdoors in the back yard, having a barbecue by the beach or whatever. So I guess it’s an outdoor lifestyle I think. Yeah, I don’t know. So yeah I guess that’s why I thought we would relax it. And so we’ve made it kind of ready to serve so you don’t need to source multiple ingredients so we’ve kind of made it more convenient for the Aussie lifestyle.

Tim

You had the idea, done some research, then after you got on Google. God knows why you rang the CSIRO were a serum laboratory. So you’ve done it, you’ve got an okay, valid idea, it’s valid, you’re passionate about it. What do you do? Do you then go, what point do you jump off the cliff and leave the security of running a little consultancy or a corporate job behind?

Tom

Well I’d already kind of done that. That decision would have been a day behind you have not huge amounts by any stretch of the imagination but enough to support myself for a while.

Tim

We’re talking tens of thousands of dollars to kind of

Tom

I would have probably invested into this upfront like only about 20 grand.

Tim

Great. Okay so you’re going I mean yeah. Now you know what the product is essentially, you’ve got to come up with some flavors. I’m interested in naming and branding.

Tom

Sure. So same things I just called every man and his dog and anyone else I could. Every friend I had and ended up getting introduced to some really talented guys down here in Melbourne that shall Alisha who has a business school love of money and the girls from William Blake who created that Frank body scrub.

Tim

Yeah, they’ve been on the show.

Tom

Have they? I’ve got to listen to that episode.

Tim

So it is all about does sex sell. Because all their Instagram, it’s like soft porn. But I digress.

Tom

Well some other similar thinking went into Sofi as well into Frank. So it wanted to be a brand personality that came to life through the social media. So I don’t want to speak for Frank in the personality there but I guess Sofi’s like was one of the world. She’s got the Italian heritage but she’s translated the Aussie setting, knows how to live life well. So I mean it’s hard to summarize in a few lines but it’s you know it’s something that we try through the social media.

Tim

What’s hard to bring to life up because I think you described it pretty well. So you’ve got this what I call a brand character, ideal customer, and you build everything around it. So you’ve got your 20 grand. I mean those girls wouldn’t be cheap and whoever else you mentioned but you’ve gone directly to find someone who can put together some kind of brand strategy and then execute it?

Tom

Yeah, I think when I met them right, I think they were starting definitely breakthrough but it was probably really taking off. And I worked closely with Shiloh who worked closely with them so I think it was, but they were happy to support a little business which was great.

Tim

Yeah okay. So then they came along, they do a brand strategy, they name it for you?

Tom

They helped with the naming yeah. So we definitely workshop that for a while, went through a whole heap. I had my own sort of ideas, I had a whole kind of look then and what I wanted to look like but in the end, I was just like I just tried to find people that I thought were super talented on what they did. So I mean on the production side, I found a winemaker Simon Gilbert who’s a fifth generation winemaker. And he helped get the taste right. And you know, expert flavors to help get the other components to add to the wine right then Simon and I can. So I just recognize that I didn’t have the skills even though I natural look like your own ideas but I was willing to let them go

Tim

Just tell me about surrounding yourself with super talented people because only yesterday I was listening to an interview with Australian Dick Smith who is dyslexic who has in his words, very few skills but he’s very good at finding super talented people. It sounds like an expensive strategy but maybe not?

Tom

Yeah I was probably lucky. I mean I found guys who are good but were expensive and they were nice enough to say you know go and tell this person who is very talented but at an earlier stage in their career and he’s probably looking for interesting opportunities to build on and build a career on. So I think that worked out well but I mean I think I think you got to be comfortable with people who are smarter than you in that particular area.

Tim

Oh yeah. Well the minute as a small business owner, you’re trying to do everything. You know you’re just going to spread yourself

Tom

And I was thinking about an impression before about have you learnt how hard it is to run a business. I think sometimes when I’ve tried to do what the experts have done early on I’ve learned to how good they were what they were doing if you know what I mean. So social media has been an area like that where we’ve tried different things and I’ve definitely learnt that it’s constantly evolving and be challenging. So it’s good to trust the people you work with.

Tim

So Tom you have you’ve come up with the idea, you got some flavours, got a name, you’ve come up with some label branding obviously the bottle beautiful bottle. Everything all that’s coming together. So now you’re all dressed up, anywhere to go?

Tom

That has just changed since we first started when we first started. It was a lot more basic and probably not totally right. But yeah basically when I first started the first batch in late 2013, it was a small batch started literally knocking door to door, not to houses, to bottles shelves and farmers markets because it’s gonna be a wine product were allowed to sell at farmers markets which was great. And those sorts of things were great. So it started at the bottom and I end up doing just about every farmer’s market in Sydney, all the food wine. So I just started selling mostly through bottle shops initially but also trying to get into some venues.

Tim

Is it you literally do as the founder and owner; did you start because you got sales and marketing experience you literally were manning the stands at the farmers markets and then during the week knocking on kind of cool bottle shop doors?

Tom

Yeah. And then towards the end of that summer, we ran a little crowdfunding campaign. So we only had the original blood orange bitters and we ran a campaign where we kind of raise some money to help change our packaging that I said wasn’t quite right initially. We got that up.

Tim

Tell us about the crowdfunding campaign because they fascinate me Was it purely to raise money, to redo the branding?
Tom

Both basically yeah. So the branding stayed pretty simple but we raised just over 10 grand. I think we had a target of 10. I think we raised we loved 11.

Tim

And what did you do it on?

Tom

Possible,

Tim

That’s the Aussie one isn’t it? What were you offering?  Was it equity or just

Tom

That’s just change the rules now and those guys are launching a new platform to do equity.

Tim

So you’re reward based crowdfunding.

Tom

So that was reward based. So we were basically offering drinks and other bids in phases but primarily you know if you give us 50 bucks we’ll send you a case or two or whatever it was. And that helped generate more awareness it helped prove out the product a little bit more publicly because crowdfunding I guess helps raise that awareness and on the back of that we landed a trial with Dan Murphy’s which gave us a bit more scale and got us to test out that new package.

Tim

Hang on, two things. Overseas listeners Dan Murphy’s is the biggest wine and liquor retailer in Australia. Out of the crowdfunding campaign you have been noticed by Dan Murphy’s?

Tom

I still had to approach him but I’m confident that they saw that as a proof.

Tim

So yeah, you’re not a dummy.

Tom

There is a market there and you know that.

Tim

But that’s cool. We all need a hook. We all need a reason for someone to take notice and I think that’s what we’re doing.

Tom

Gets help you get a bit of press and all that sort of stuff. So I think mate to be honest in terms of marketing, one of the things I’ve learned I guess is you do what you can do you. I mean like I can’t afford Billboards TV ads, I could do crowdfunding campaign. You know I could go to the farmers market. Sometimes those sorts of marketing ideas are born out of necessity but they work almost accidentally sometimes.

Tim

Yeah. So you’ve raised your dough, ten grand, you’ve been noticed by Dan Murphy’s, was that a kind of tipping point for Sofi?

Tom

Probably yeah. Because then on the back of that bit of yes gave us a run. So they’ve got over 1000 stores. So that was huge for us. And then on the back of that we went on Shark Tank.

Tim

Okay. Hold that thought. So you just find a fundraising machine what do I think actually raising equity for other things. You’ve got to beach house in Bondi now. Now tell me so with being noticed by big retailers creates I imagine problems, like supply.  All of a sudden then goes yeah, we like this. We’ll take a million units or something like, how do you manage that? How do you scale up?

Tom

Probably like the outsourcing to the experts. We’ve always outsourced most of the production so we used big, we actually use some guys here in Melbourne again for the production side the bottling and all that stuff. So they have no capacity to keep up with a lot more than we’re doing even today.

Tim

Is it the most expensive way of building a business? Outsourcing to experts? What kind of say defining people who are on the way up they’re not necessarily on the top of their game but they’re very talented.

Tom

Well I mean it would probably in terms of cost of goods sold would probably be cheaper per unit if we could afford to buy our own factory. But we can’t afford my own factory, so born out of necessity.

Tim

Goodness, mate. So okay now you’ve got some distribution, BWS, Dan Murphy’s, you’ve raised some dough. There’s the next stage you’re saying you then go shark tank. Why Shark Tank?

Tom

Well that was born of, you might have a point about the raising capital. Now I’m meeting an investor.

Tim

I wonder you. This interview is cancelled. I thought you were a cocktail manufacturer.

Tom

So this guy was very wealthy and very successful. I took his advice seriously and he said you don’t need money you need publicity. And so you know you could spend and I think his point is you could spend endless amounts of money on marketing those game or in FMCG probably in general and you might not get anywhere but get really great publicity that money can’t buy and you know build the story which is all show and get that story out there and you’re on to something. I had thought about it and I actually used to watch your show a lot it was an Australian thing when I was in the UK one but I never really wanted to go on there but at that point again when out of that he said that to me it was the right time to do it. We’re just letting the BWS thing. When we needed to do something to keep the momentum going and I googled it and the auditions were open.

Tim

Great time. That is a great bit of advice. You don’t need money you need publicity. And so therefore shark tank, big audience, national TV program. Are you going on, not really with the intention of giving away any equity to the sharks playing difficult? But if you get on publicity boxes ticked.

Tom

Yeah. To be honest I wasn’t overly confident that we would get a deal but I was I thought it couldn’t go too far wrong. Apart from being humiliated on national TV.

Tim

Did you win a deal?

Tom

No, I did and we got a deal. So we did deal with Stephen Glenn at our asking price which was fantastic and I’ve been a great support. I now work out of his office in Brisbane in the downtown Brizzi and he goes to his office in the valley.

Tim

How much do you have to get away?

Tom

So we did 10 percent four hundred thirty grand. So not just massively exceeded my expectations.

Tim

What did they see in your business?

Tom

I think they understood that kind of supply and demand opportunity. So I mentioned the supply side before but I think on the demand side we’ve seen that, we play in the space of what used to be called ready to drinks RTD premixed and whatever where this is more of ready to serve. So we suggest serving over ice with fruit but that’s it. That’s the space we play in and a lot of those drinks have been just capitulating in terms of demand because they’re perceived as sugary and fake and this has no added sugar and it’s all natural so we’re entering a market that’s really struggling with a product that is addressing the consumer demands for some healthier alternatives. So with the basic ingredients are that’s in massive oversupply. So it’s got a product as it goes into a market that’s going through pretty significant change.

Tim

Yeah, you’ve got a product relying on oversupply of wine. What about when wine is under supply, you stuffed?

Tom

I mean you can buy a winery maybe.

Tim

Love it. Oh, and we’ve had Misener gelato Misener Dylan, his name was the owner of that and he’s actually bought a dairy farm so he wasn’t happy with the milk that he’s buying.

Tom

Yeah and we are actually doing some of the same stuff. So we’re starting to buy the grapes. So we’re moving up the supply chain.

Tim

You’re going to have it buddy. Bondi Beach yes, you’re going have a little farm at the Yarra Valley. I’m onto you.

Tom

Still a massive struggle.

Tim

I’m onto you. Guys Sofi’s a front. So, shark tank crowd funding what did you do with 130 grant from shark tank from the 10 percent?

Tom

Yeah good question. Read it all go.

Tim

No, I actually made that seriously.

Tom

A lot of it went into working capital because of the growth. So we had to fund increase supply. So I guess our revenues have kind of doubled and tripled each year and this is the thing again to one of your first questions about learning how to run a business that growth doesn’t necessarily make things easier. So the growth has in some ways made things harder and it is in itself a drain on cash because you got that big

Tim

As new a small business owner Tom, what’s freaking you out?

Tom

Geez, too many things.  I think we’re doing a lot of new product development and again funding and just organising it all is hard. So, we’ve gone from one skew originally which was 670 we’ve got three different flavors and four different sizes as well. So 12 skews and we’re looking at doing a whole another kind of whole packaging format. So we’ve got the 250 more phone or bottles 30 to 50 liter kegs for the cocktails on tap and they’re rolling some stuff for the festivals and we’re talking to the big airlines about an airline.

Tim

You got a Qantas contract, haven’t you? How did you get that?

Tom

Yes, all in all the Qantas business plan it that actually that was a great one. Steve Baxter’s team, Nicole there helped to be honest again probably like when I went into shark tank I was kind of skeptical that we’d land such a known marquee account. Baluchi. But she does just like you know I’m going to give him a call and she got us in front of them and they loved it. Now looking at the space at the time so again the market trends worked in our favour and they work closely with the guys at Rockpool. So they had to screen it and they really liked it too. So I guess you know the product had to stand up to scrutiny from people with higher standards of it.

Tim

I look at these types of products alcoholic beverage products top and as a consumer of them, you know you walk there so many these days. I mean you know it used to be relatively limited. You bought a VB or a carton or Allan call or I think back in the day it whiskey was cool. Generally, most people I’m guessing buy off the back of big advertising campaigns of which the one that comes to mind at the moment is Canadian Club which I think they’re smashing it out of the water. Wow. But when you got to deep pocket like clearly, they have sponsoring the Australian Open and TV. I mean it must be spending millions and millions of dollars but off the back of that people buy it. You don’t have that luxury being on Shark Tank and getting that publicity was a moment in time your underneath that you’ve now got the support of some amazing minds, I get that. But I’m guessing you still don’t have to run ads in magazines or TV or radio. So how do you how do you get awareness? Is it just through distribution?

Tom

Well that is the thing that I have learned is incredibly important. The distribution side I think in it and of itself often helps to drive awareness and what not so yeah. Again, we do what we can and new doors are opening up for us. I mean that Qantas business is fantastic in terms of driving trials and in terms of marketing value. It’s huge for us. And things like that. I mean next week we’re doing a Bond I open cinema for example or this week and losing track of dates where we might not you know we make a little bit of money but it is for the marketing so we we’re, It’s still an early brand early in its life. So, I think driving trial is probably the most important thing for us. If we can raise awareness and have people taste it and learn what the hell it is. Then that’s what we’re focused on and there’s ways to do that without spending too much money. It might not be on the scale of huge billboards and TV ads but.

Tim

Is there a reason, what if there is a reason? What is the reason that Quanta’s and Dan Murphy’s and BWS and anyone else is at the outdoor cinema why are they taking you on. There’s other, there’s lots of choice. Well price, is it an exceptionally good product? Be objective.

Tom

I think we balance the cost and quality you know we’re focused on a quality product. There’s the oversupply of wine so we can pay above average prices so get premium quality wine but it’s still incredibly cost effective for what is really nice base product. And then on top of that the Australian government is supportive of the wine industry. So, you know there’s differing tax rules.

Tim

Is there? Because I had Jim Stu Greger from four pillars gin on a few months ago. And he’s fairly scathing about it. I think for pillars sells for 75 bucks a bottle, he could sell it to 35. If it wasn’t for the taxes, not the same with wine. He hit the wrong part.

Tom

He helped me early.

Tim

Did he? Is a great example of a guy who owns a marketing agency? He’s been getting all this advice to other brands are you going you know what I’m going to test what I actually have to say.
Tom

I actually can’t remember how I got his details but he helped me by giving me someone else’s details it helped me on through the journey. So he was one of those people early on that definitely helped.

Tim

Yeah right. So yeah. Well clearly one of your secret sources Tom is surrounding yourself with very good people.

Tom

Yeah, I’ve been lucky to definitely.

Tim

Not afraid to ask?

Tom

Yep, and maybe that helped having a you know past in kind of sales related roles where you had to pick up the phone and call people and give you a whole lot of no’s and a whole lot of dead ends and I guess recognize when there’s a vein of opportunity there and then seize that day

Tim

You don’t seem or maybe you have or haven’t found it. You don’t seem to have created a media platform for Sofi of your own. A YouTube channel, a podcast series a big social presence.

Tom

We’ve got over 10,000 on Facebook and Instagram. So, we went hard on Instagram early which I think that actually puts us pretty well placed in terms of Aussie alcohol drinks on Instagram but we have been investing more lately still time you may ask but more time and energy more than anything into videos. So, we do have a little, a few YouTube videos

Tim

I’ve seen them. The little one with, what does that Italian car called? Those all three-wheelers?

Tom

Piaggio Ape. Yeah that was a bit of fun.

Tim

So, where’s the business at now. Time you are four years old. How many staff, can you talk turnover?

Tom

So, we’re aiming to serve up over a million Sofis this year that’s across all the different packaging formats and whatnot so that’s just kind of head spinning for me. The team has come a doubled from last year as my cousin and I have served to have to start a family which was very really exciting really sad for me.

Tim

But since then we’ve got now a team of four. So basically, got an operations manager, a sales manager, and a marketing manager and myself.

Tim

Turnover?

Tom

Yeah, I can’t say that.

Tim

We’ll work it out. That’s a million serving.

Tom

It got a doubling and tripling each year. So, if we can keep that up, it’s starting to get.

Tim

Looking back five years ago when you weren’t doing this and maybe the idea was just a little germ of an idea. How do you feel about it all?

Tom

Oh no I wouldn’t take it back. So, I made a job you know whatever happens from here I don’t think I’ll ever have any regrets. I want a crack so you know, I’m really stoked and we’ve been very lucky in a whole lot of ways.

Tim

What do you say to people listening who are sitting on an idea maybe for a new business, maybe just to take their current business to the next level. But they’ve just got to they got pages of ideas and done nothing, what do you say to them.

Tom

I mean I wouldn’t know what to say to be honest. I used to have a lot of ideas and used to always talk myself out of them and to be honest they were probably pretty ordinary ideas. But at the time when I had the idea for Sofi it was the right time for me and it turned out I think to be a good idea. So, I don’t know if I’d necessarily say just do it whatever the idea is but I guess I’d emphasize what we’ve already been talking about which is go out and talk to people who know what they’re talking about and don’t always take negative feedback and let it kill your idea. But be prepared to run the idea up against some brick walls and you know if it can’t withstand a bit a hit back, then you know maybe it’s not the best idea but if you believe in it strongly, I’ve definitely had to do that at times if you’ve got a strong business case, you’ll get through the naysayers and you’ll find the people will help you on the way and you’ll break the ice.

Tim

Great advice when people find Sofi.

Tom

So yeah, we’re now at Murphy’s. BWS vintage sellers. Sofispritz.com. And we got all the stocks on there we got a bunch of great independent stocks as well and a bunch of pubs now with the cocktails on tap.

Tim

Good on you buddy.

Tom

Thanks mate.

Tim

You should be very proud. I’ll see you next time.