From Farming To Creating A $10.8M/Year Organic Spirits Brand

Mark Anderson

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Published: March 26th, 2022

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Mark Anderson

Founder, Drake’s Organic Spirits

$900K

revenue/mo

Founders

Employees

Drake’s Organic S...

drakesorganic.com

from Minneapolis, MN

started January 2017

$900,000

revenue/mo

Founders

Employees

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Note: This business is no longer running. It was started in 2017 and ended in 2023. Reason for closure: Acquired.

Hello! Who are you and what business did you start?

Hello, my name is Mark Anderson, and I am the CEO and Founder of Drake’s Organic Spirits, the only spirit on the market that is certified USDA Organic, Gluten Free, Non-GMO Project Verified, Vegan and Kosher. Our products include spirits, mixers, SpikedIce ® Pops, and Boxtails ®, ready-to-serve cocktails in a box! All the ingredients we use for all our products are organic!

We’re proud to create spirits for those inspired to do better for both themselves and the planet. Our goal to travel the world in search of the best, in turn, inspired us to give back to the planet, and the people we met, through the practices we learned. We’re proud to create spirits for those inspired to do better for themselves, and the planet. We want consumers to know that Drake’s Organic Spirits are better for you and better for the planet.

Among all of our spirits, it is particularly worth calling out that Drake’s Organic Vodka – which is the basis for 3 of our 5 Boxtails, and of course vodka leads US spirits consumption by a mile -- is made from organic, non-GMO sugar cane, while most competitors based their spirit on genetically modified corn ethanol, which is very hard on the planet.

What's your backstory and how did you come up with the idea?

I grew up in North Dakota and have an agricultural background in both conventional and organic farming. My experience helped me understand how to create sustainable food and beverage supply chains.

My career started as a trader at the Minneapolis Grain Exchange and Chicago Mercantile Exchange, trading both derivatives and physical commodities. Eventually, I started my own company and became the largest importer of non-GMO verified, organic cane sugar from South America.

As consumer demand for healthier options has continuously grown, food and beverage manufacturers have in turn needed organic, non-GMO verified alcohol as an extracting agent to produce items such as, for example, organic, non-GMO vanilla flavor extracts. So, my company began making -- and importing -- organic cane sugar distillate, becoming the first USDA Organic alcohol manufacturer which also achieved the certifications Non-GMO Project Verified, Gluten-Free (certified by GFCO), Vegan certified, and “ou” Kosher.

Having established this organic alcohol supply chain, with the additional four certifications above, I realized that many of the large, well-known spirit brands were primarily made from genetically modified corn ethanol. On top of this, cane sugar is a grass that produces two crops per year, for four years, before needing to be replanted; also, cane fields remove carbon from the air as they grow. On the other hand, GMO corn needs to be replanted every year and requires millions of tons of herbicides and pesticides, which of course end up in soil and water supplies. I wanted to produce a spirit with the purest, freshest, and most sustainable ingredients, far beyond the current industry standards.

Take us through the process of designing, prototyping, and manufacturing your first product.

In 2017, I founded Drake’s Organic Spirits, the leading beverage alcohol brand in sustainability, the largest organic alcohol company in the United States, and the first to achieve all five certifications: USDA Organic, Non-GMO Project Verified, Gluten-Free, Vegan, and Kosher. In terms of funding, seed capital and private placement are our strategies.

At the earliest stages of my new business, our founders used our money to support Drake’s Organic Spirits until it generated cash of its own. As for the capital expansion, instead of choosing an initial public offering (IPO), we chose a private placement, a funding round of securities that are sold to a small number of chosen investors, through which we were able to raise $3M.

In 2018, Drake created the “adult popsicle” category with our SpikedIce ® Pops. Within a year, they became available in Costco. Our growth was rapid, so we needed more capital to support and expand our business. Hence, in 2019 we launched our second private placement, raising more than $8M this time. In 2020, Drake's Organic Spirits became a C Corporation, which separates legal identity and assets from the founders.

Next, in 2020 we brought the boxed wine concept to cocktails, with Drake’s BOXTAILS® RTDs. These products also meet all five certifications, and of course, the packaging is eco-friendly: each 1.75-liter BOXTAIL® means 5 fewer seltzer cans will end up in landfills. The boxes are compostable, and the inner bladder is recyclable. BOXTAILS ® was a success, and we launched the third private placement in 2021 to continue to support our growth. As Drake’s growth continues, we keep innovating to bring our consumers delicious, convenient, and sustainable products.

Describe the process of launching the business.

Before I launched Drake’s, I spoke with several successful brand owners to get an idea of what I was getting into. They told me the secret to success is to choose one state in which to start, so we first focused on our home state of Minnesota. We started our marketing campaign while developing our product lines, including generating media coverage, advertising, and couponing strategies.

Initially, our team oversaw both production and marketing. In 2020, we hired Taco Truck Creative, an advertising & marketing agency. Their first job was to fix up our website and that helped us with selling our story.

Since launch, what has worked to attract and retain customers?

Our mission from the start was to build a new category, but it was very hard to forecast something so new. We aim to create sustainable spirits which are good for both our customers and the environment, however, most things were unclear when we started. So, we decided to apply for BevAlc certifications first to officialize our sustainability attributes and had to move fast. By the end of 2017, we launched Drake’s Organic Vodka and Rum, hoping to provide our customers with overall better products. To retain customers, we focused on quality control, package design, and marketing campaigns as the three most important factors.

Quality control plays an important role in the sensory performance of our products. We have to thank Luis Ayala, Drake’s Master Distiller, for his great contribution to quality control. Based in Hutto, TX, Mr. Ayala has overseen Drake’s Organic ultra-premium, handcrafted spirits since launch. As a founding member of Rum Runner Press, Inc., President of Rum University, and publisher of “Got Rum” Magazine, Mr. Ayala has created the quality standards in the production of rum and other distilled spirits for more than 25 years. With his help, our vodka and rum have a clean taste and aroma.

In terms of packaging, it is a combination of common sense and research. Our team put a lot of effort into figuring out how to make the packaging sustainable and distinctive, but nothing was smooth at the beginning.

We visited a lot of bottle manufacturers and ordered many sample bottles to find out the most suitable packaging for Drake’s spirits. We made a lot of mistakes; however, we didn't mind as long as they were small and we could adjust or fix them as we went along. For example, we went from corks to screw caps while choosing the closures for Drake’s Vodka. It’s not only for cost efficiency but also for a clean look. We also cooperated with Loggerhead Deco, which provides eco-friendly glass bottle decorating. They decorate the glass with UV Ink, which does not have any carbon footprint and enables the package to be 100% recyclable.

For Drake’s Rum, instead of applying glass printing, we use a paper label and screenprint technique to relate the packaging to the category. Since our products launched in 2017, we have received lots of feedback and have made some adjustments. Today, we are happy to see that our product packaging aligns with our standards and our goal.

Perseverance and innovation are two important attributes needed to maintain and sustain a reputable business.

Last but not least: marketing. For me, the best marketing is to sponsor specific events. In 2018, Drake’s Organic Spirits sponsored TAO Group to hold a three-day Super Bowl party at The Lumber Exchange Building in Minneapolis. In 2019, we sponsored the Daytona International Speedway and served our product at the racing event. Then, we became the official vodka, rum, and SpikedIce ® (frozen adult popsicles) sponsor of the Association of Volleyball Professionals (AVP), the biggest and longest-running professional beach volleyball tour in the United States. Drake’s Vodka and Rum along with the SpikedIce ® were available at all AVP Tour events during the 2019 season. We traveled alongside AVP to CA, TX, NY, WA, IL, and HI; AVP placed our products in hospitality areas and provided significant promotional support, hospitality, and other assets during each event.

This was followed by soaring demand for Drake’s products, especially SpikedIce®, and much of the credit goes to Beyoncé. The pop superstar posted a video of people enjoying an earlier version of a sorbet-based Drake’s frozen cocktail product at a pool party during the 2019 Coachella music festival in California. To this day, we sponsor concerts, vegan events, and in-store tastings. In the future, we’d like to participate in more food, beverage, and vegan events, because it is a great way to position our products. We recently purchased billboard ads to raise brand awareness.

What I've learned from the achievement of Drake’s Organic Spirits is “move fast and innovate”. The Drake’s brand overall is a great fit for national retailers, which generally seek high-quality yet affordable products for their customers; our spirits retail for around $19.99/750mL, and the BOXTAILS ® are around $14.99/1.75L. We support our retail partners in many ways: like nearly everyone else we offer in-store merchandising, as well as drive consumer awareness via our investments in social media, advertising (including TV), and PR.

We are business people who make sure to meet or exceed margin requirements, and we have some compelling strategic partner programs in place. However, I think more than anything, success is due to the “clean” nature of our product, and the really strong consumer demand for that right now. We have been working for 6 years to create this new category in the Bev Alc space, and the timing was right: in 2020 we sold more than 40K 9L cases, and in 2021 we are on track to exceed 100K.

Drake’s well-priced, high-quality items often win Double Gold Medals from prestigious competitions including WSWA and the Global Spirit Awards, and our charitable partners include The Galápagos Island Relief Fund and Long Lake Animal Rescue. Today, Drake’s products are distributed in 44 states and 5 countries; they can be found from TGI Fridays to The Ritz-Carlton, Walmart to Bev Mo, and Caesar’s Palace pool-side to Fashion Week in New York City.

Customers can order all our products through our website, though we prefer our customers to support our partners in retail and restaurants.

How are you doing today and what does the future look like?

Every year we just keep growing. Drake’s capitalizes on health and wellness trends through its certified USDA Organic, Non-GMO, gluten-free, vegan, and kosher status, and receives strong consumer reception for differentiated products. Our short-term goal is to increase our sales and expand the distribution. In the long term, we want to build a “natural” category in BevAlc space and produce products that are “Better for you, Better for the planet ®”. To reach our goals, we have put effort into expanding the company from both the marketing and production sides.

In terms of product innovation, we seized the chance to bring the boxed wine concept to cocktails in 2020, and this year, our core ready-to-drink (“RTD”) BOXTAILS ® is gaining traction in the fastest-growing category in spirits. The innovative idea of putting pre-mixed craft cocktails in sustainable packaging paired with high growth trends in the RTD beverage alcohol category, and BOXTAILS ® are expected to bolster Drake’s growth trajectory.

As for our supply chain, Drake’s unique setup allows the company to efficiently source high-quality ingredients and maximize production through strategic agreements with suppliers, co-packers, and distributors. The growth of BOXTAILS ® exceeded our expectations, and we have a 12M case capacity lined up to meet future demand. We have strong core market penetration and national distribution, yet substantial whitespace ahead.

Our core markets are California, Florida, Illinois, Nevada, and New York, and we are looking forward to continued expansion. Our production can satisfy growing market demand.

Through starting the business, have you learned anything particularly helpful or advantageous?

Perseverance and innovation are two important attributes needed to maintain and sustain a reputable business. Drake’s Organic Spirits are always curious about BevAlc innovation, and we gain experience through hands-on practices. We observe, we practice, and we innovate. Product innovation is like putting the pieces of a puzzle together; there will be a lot of difficulties to face, and there won’t be a result until the end.

Drake’s Organic Spiked Ice® is a good example. When we were creating Spiked Ice®, we wanted it to be a freeze-and-eat product with 5-8% alcohol. However, due to food safety concerns, products under 10% abv would require preservatives to achieve shelf stability, so we formulated at 15% abv to maintain all of our certifications using our organic alcohol.

The problem then became the FREEZING temperature, since the higher ABV lowered the freezing temp. By utilizing natural emulsifiers, we were able to achieve a functional 15% abv freeze-and-eat popsicle with all 5 certifications to our first customer, Costco. After a successful launch in the U.S., we expanded to international markets with our higher 15% ABV and formulated new SpikedIce® flavors with 12% abv for food safety and faster freeze time packaged in 9-pack boxes for the domestic market.

When the pandemic hit in 2020, we noticed the demand for alcohol never really wavered; even though bars and restaurants had largely closed, the consumption of alcohol had just shifted from on-premise in bars and restaurants to “home premise” to retail and big-box stores. We happened to have products that were ready to go in that category, and SpikedIce® was a big driver. We never stop innovating “better for you, better for the planet®” products. We are about health and wellness, and we are on a rapid growth trajectory.

Advice for other entrepreneurs who want to get started or are just starting out?

Go all in every day! Launching a business requires a lot of time and effort, and you can only learn by being involved in your business. Our dream is to produce spirits with the purest, freshest, and most sustainable ingredients, because we just weren’t satisfied with the current industry standards. We travel the world to find the best ingredients, and along that way, we were inspired to give back to the planet, and, the people we met.

I believe in hands-on experiences. I have so many ideas that I want to put into practice but am focusing as much as I can on running Drake’s Organic Spirits, from production to marketing. Thanks to the efforts of my team and the support of other co-founders, our sustainable and delicious products are distributed in 44 states and 5 countries.