The Month End provides emerging inventory-based brands real life knowledge in the accounting, finance, and operational world. Our guests are not only similar brand founders and owners, but key stakeholders and contributors to the industry. Each episode provides a glimpse into the vast experience and insight from its guest’s unique background in a casual, conversational tone.
• • •
In episode twenty four, Accountfully's CEO and Partner, Brad Ebenhoeh, sits down with Craig Lewis, aka “Lewie” of Flyers Cocktail Co. to talk about his award winning CBD-infused cocktail line. The company was founded inline with Lewie’s passion for enjoying life to the fullest without compromising. His story going from big-brand marketing consultant, to high risk founder sheds light on how to capitalize on your brand story when classic avenues are not an option for brand awareness.
For more small business and CPG- focused resources, visit Accountfully's resources page, where you will find helpful articles, guides, eBooks and more. • • • Follow us on social media to take advantage of even more info and news.
Brad Ebenhoeh:
Welcome to The Month End CPG community chat, emerging CPG brands real life knowledge into the accounting, Our guests will be key stakeholders from those same contributors to the industry. Welcome to Episode 24 of The Lewis from flyers cocktail co how're you doing today, Lewie?
Craig "Lewie" Lewis:
Good, Brad. How you doing mate?
Brad Ebenhoeh:
Great. Great for August on a Thursday morning, Flyers Cocktail. And we were just chatting offline. Like I concept. You guys are kind of relatively new in the space of to learn more. So why don't we start with that, like, what is
Craig "Lewie" Lewis:
Right. So we are one of America's first cocktails. We launched about nine months ago. And we knew opportunity in the non-alcoholic space for premium crafted sophisticated flavors. And we think during those occasions, level of function as well. So that's why we laid in the CBD as allows you to feel something during that alcohol occasion. So ago, about three products in the market. And yeah, we're ramping
Brad Ebenhoeh:
Awesome. Awesome. Give us a little background
Craig "Lewie" Lewis:
Yeah, so I used to work on the agency and beverage. So we used to help build out their innovation beverage concepts that they would bring to market, which was then COVID hit and so those innovation budgets obviously are just trying to survive, let alone innovate. And so that was think about, alright, if we were to do this ourselves, what would there's a unique opportunity where big beverage cannot the moment just because of the regulatory challenges. So for traditional marketing budgets that come from big beverage and beverages. So there's a bit of a like rush for CBD beverages and share. And then when those regulations lift, and you know, going to be probably it's gonna be a lot easier for them to just been built. That's a little bit of a strategy.
Brad Ebenhoeh:
Yeah, gotcha, that really makes sense. I'm said you've been awarded the world, or you're the world's that right?
Craig "Lewie" Lewis:
Yeah, exactly. Yeah. So yeah, we farming strategy. So we submitted to all the awards Francisco Spirit Awards, the New York International Spirit from platinum, gold, silver, bronze, and everything in different products. And so now we can claim that, that we're beverage, which is really exciting and help us with all of
Brad Ebenhoeh:
Definitely, definitely. And for all of you DrinkFlyers.com. Their branding is fantastic. And their their cool. And great names - Tokyo Marg, Sydney Spritz, the are you guys just selling in the US right now? Or are you
Craig "Lewie" Lewis:
Just in the US at the moment, we're looking Europe. But there's some additional regulatory hurdles this CBD hemp ingredient. So at the moment, you know, we had expanded into additional states. And now we're shippingto over 35 operating in I think, up to 10. At the moment, but predominantly
Brad Ebenhoeh:
Gotcha. Cool stuff, cool stuff. So let's get discussed, you are kind of in consulting, kind of brand of in your past life. So this is your first founder CPG product,
Craig "Lewie" Lewis:
Yep, absolutely. Yep.
Brad Ebenhoeh:
What is what has that been like? Just from just decisions or the information you get?
Craig "Lewie" Lewis:
Yeah, so I feel pre-revenue and first year, wearing every single hat in the business. One minute, you're at channel strategy, and you know, expansion. And then the stickiness of labels, like on boxes and cans, you're learning these different elements. And so that's the part I actually find to kind of learn about all the different areas, but I'm looking and expand and pass some of those hat over to some other
Brad Ebenhoeh:
Yeah, I'm sure I'm sure as a fellow we're like a decade and it's a little different, but the first doing everything and you have to identify with your co-founder, for? What am I responsible for? And let's like segment dutie, so efficient with all of our time.
Craig "Lewie" Lewis:
Yeah, divide and conquer, you know it.
Brad Ebenhoeh:
So from having CBD involved in the regulatory of kind of background on the regulatory regulatory challenges encountered and then we'll also then get into like how that has manufacturer, your coman and things like that.
Craig "Lewie" Lewis:
Yeah, totally. So the long short is in and then 2018 again, fully federally legalized. So anything considered hemp and that's hemp derived CBD fits under that have not approved ingestible CBD yet. So there's there's 1000s of edibles. There's all sorts of CBD all across the country. But it means that publicly traded companies, it's too much of a the space. Which is a good thing, because it means it's an ours and hundreds and hundreds of others. It's a challenge banking, and insurance and freight, it's also also a risk copacking, and that's pretty, that's pretty good. You know, out of Georgia that we work with. And, you know, the biggest actually banking--trying to find a bank that works with us And obviously, they're anti that obviously. So and then outside pretty straightforward. You know, the finding the right to work with, because we have to, we want to be able to get but then also be able to do larger and larger production And then the additional challenge on the other side is can't run ads on Instagram, Facebook, LinkedIn, Reddit, CBD, this isn't THC cannabis, this is just hemp CBD. So there's already additional challenges for CPG brands on in not being able to run any ads or any programmatic. There's a but it's pretty restricted. So you got to come up with creative actually initially went DTC heavy at the start for the first realizing the customer acquisition costs was just not pivoted and actually accelerated in retail. And now we're, you we're in about 140 stores across New York and a few other states.
Brad Ebenhoeh:
Awesome, awesome. A couple questions on I guess, talking about some kind of accounting, finance, opp stuff, let's talk more about the whole banking situation, because we've come either from CBD hemp or even not as a core product as infusing one of their SKUs, right, and then all sudden, they off Bill.com or systems like that. So how did you how did you kicked off any? Or did you find anything? Like what what has
Craig "Lewie" Lewis:
Yeah, so we we use the CMS Shopify, and we innate payment processors on Shopify, so we can't use PayPal, to use a third party payment processor. So finding that took a long time and then filling the application of that actually work with another bank, who then processes that payment, every week effectively. So it's a bit of a challenge and then website is not ideal because you technically have to click out click back in but we try and make it as seamless as possible. hard and that's just on the payment processor. Then in terms
Brad Ebenhoeh:
So basically you're getting charged more just cannabis friendly so there's not many in the country and to have an additional transaction fees on every per transaction for that and then on top of it Yeah, you have mentioned that you know, we're still we still are able to use effectively we have kind of like three different payment different banks, all kind of like running to just to help know, then you're obviously we have working with you guys and all the other tools as well. So our tech stack has some then your cash cycles a little bit longer just because you're takes longer to process and get through various systems.
Craig "Lewie" Lewis:
Maybe cash cycle is a whole thing. I would this point. It's full on and actually the big one of the lot of really good platforms you can apply for for to reduce that with any of them. Yeah we've done we've applied for all of can't work with hemp CBD and we're like oh my god it's just
Brad Ebenhoeh:
There's a ton of hurdles you're going through, a this space, but there's unlimited opportunity like with super cool. So didn't know about that. And then regarding the any specific challenges on like payment terms or you know, 3PLs freight. Within the space like like how does your supply chain the challenges like so far?
Craig "Lewie" Lewis:
Yeah, so we have, you know, like 20 vendors, 15 different ingredients per SKU. Luckily though, the know, outside of the hemp, they're all just standard natural ingredients, and, you know, the ascorpic acid and actually you can use from any vendor. The challenges of that previous networks to be able to work with some of the best in are some of the world's biggest and we are as small as it gets all of the clients. We're continually trying to fight the versus Goliath and trying to get the payment terms and then to, if there's any delay, you know, they prioritize, versus ours. So our first production run, we had delays of delayed our entire launch, just because of like two vendors that sorry, you know, we had a short run on this particular get it in two months time and we're like, well, okay. And then know, for us, we worked with a few different brokers and they and some of them won't touch hemp just because their So yeah, they have to be pretty selective in the ones that I can them to justify an increased price and freight is already you add on that, like curated carriers that are only that work expensive just to move you know, pallets from one state to another.
Brad Ebenhoeh:
Yeah, you definitely have increased costs your landed cost is gonna be higher. So then, like from like standpoint, from pricing, you know, direct consumer as well as your pricing compare, like to other CBD drinks or even just, know, high end craft beer, things like that, and what's in
Craig "Lewie" Lewis:
Yeah, yeah, totally. So we were lucky. Well, part of the plan. But we, we knew that if you build a premium obviously to be able to claim the title of the world's most takes quite a lot of effort and time and money. And that allows price for our products, and that allows us to achieve the margins know, we're a smaller can or an eight ounce can, but that also efficiencies because of the weight. So while you're getting versus a six pack of 12 ounce cans is very different terms. So model perspective. And also from a freight perspective, we can in terms of the weight, we can also achieve a lot more units. realizing that you know we our six packs are $38 online with then on shelf, we also have six packs for $38. And then when it channels will determine the price point. So we'd like to ask pay for a CBD cocktail or cannabis cocktail. And they give crazy, but it's like $15-16. So you know, we have our cocktails off the out of the bar at $10 a pop. And obviously, that bar can that we can provide it to them. And then same thing with retail, double, so whatever you sell to them, they'll just double the So the channels determine the price point, we that being a milligrams of full spectrum CBD hemp, and that's actually an basically the fastest in the market. So it actually works in start to feel it fast onset and fast offset. So that's a really to communicate that when you're sitting on shelf, you know, with like this founder next to you telling the story and the create, like, lean into the design element to show that it's milligrams, and then it's a, you know, sophisticated, elegant, replace your alcohol consumption, but still get that being and get, you know, take the edge off, maybe on a
Brad Ebenhoeh:
Interesting. So but you know, we've talked a payment processing challenges on your website, your direct to the lack of apps you can use and all this stuff. What has been you know, in more stores and on the shelf and what have been you know, within that within that sales channel.
Craig "Lewie" Lewis:
Yeah, so, our first round of design we in you know, we focused on DTC and the idea is that the on through the website and then you receive the can in the box that and you feel it, you see and then you taste it and it's because of that customer acquisition cost challenges we up on wholesale and retail, but with the same packaging and so became our can with 100 other beverages on shelf. And we have compared to like typical 12 ounces mostly cans. And, you whereas now we're on shelf with this, I call it like, rainbow brand is just these pastel colors of the whole deal. And and like it's working for a lot of them. But, you know, we tried little bit from that, but we're still being a small can, with a busy, we don't stand out on shelf or we're not popping on quickly pivot and adjust on that and optimize our, like the clarity on shelf, and we've done that, you know, we turned that going forward with like, updated packaging, maintaining our brand for on shelf.
Brad Ebenhoeh:
Yeah, as a consumer, you don't really think When on your website, all I see is your product versus going to it's literally a lot more. And from your perspective, I'm like, that like, oh, no, we didn't think about that. So hence the also a CPG founder of once you get into different aspects, iterating, you're changing, you know, you're enhancing all of within the space. So then how are you like measuring success year less than 12 months or so going? How are you measuring revenues or KPIs? You know, within each sales channel at
Craig "Lewie" Lewis:
Yeah, so there's a few factors to it. One that you're in, but then more important, that is the velocity learning that, you know, obviously, different channels velocity. And it's really hard to we've tried to put our ear to people and be like, alright, what is the average kind of really have an answer, because it's just different for every if you're ever you know, you're a coffee in the morning, people if you're a cocktail, it might, it's not gonna be every day. And work occasion, right? You're not going to be that. So in cafes, because people aren't drinking margaritas, you know, 10 o'clock people are, but most people aren't. And so that's kind of alright, that channel is maybe not the right one for us. But we alcoholic stores--perfect, on premise restaurants--perfect, product with these flavor profiles, it's going to be the hangover, and so when we look at that velocity, we have average velocity per channel, what is the what would we want month on month forecast for revenue, which is we continue to like every couple of days, I'm like checking into seeing like, in terms of our forecast, what the different channels are we that we're either on track or further behind, or ahead of what actually is what then drives us from a forecasting perspective. going to say it's nearly impossible to get forecasting, you know, a few pallets left, and then you get a new customer. of pallets and banger and want a lot less pallet and you've got next production run, because your lead times are eight to 12 we've sold out of every production run to date so far, But it's just a matter of us, because the lead times are so putting in those orders for inventory a lot earlier to have your cash flow actually gets stretched even further. So manage this like constant flow of like, alright, your own cash revenue, forecast, your sell through rate, your velocity, and you have, and then also your components for production and components. And then payment terms, obviously for every for model, I think when you make a forecast in one thing, you know But if you can keep continuing to iterate and get closer and going to help you be able to make those decisions. If you you no data to go from and now we're nine months in. Yes, we have opening up new channels so we have no data for that channel, after year one, then we'll probably have a few data points decision making but before that, it's it's kind of like a bit of
Brad Ebenhoeh:
Yeah 100%. That's definitely, 100% agree like forecast in place and not consistently look at an updated and not look at it doesn't make any sense. I guess you know about like your challenges on cash flow on you know, cash flow right money to finance this business like how has the you investors and different folks like that, how has that from an in relation to, hey, this is different I can't just go get to from Shopify or PayPal or AMEX or ClearCo or whoever right like
Craig "Lewie" Lewis:
Yeah, it's been really interesting. But I advantageous is because there's some additional barriers to probably be a lot more players in the space because there's a bit higher risk. And the main piece is because big beverage beverage cannot enter this space, there isn't really an investors, you kind of like, hey, here's where we anticipate what we're doing. This is a unique opportunity that you can of the question like, yes, they're aware of the risks and like, well, you know, this is kind of like, it's all heading regulations are always improving and getting better and better. know, one of the biggest some of the biggest distributors moving Southern Glazers, like Sprouts are doing CBD beverage trials, data points like on major major distributors and chains moving like another wind in the CBD world. And so that kind of conversations with investors early on, when we were having bit easier, because we're kind of like, hey, this is never this happened before. None of these big beverage companies can but they will be able to soon.
Brad Ebenhoeh:
brands and different stuff, or you know, products, wherever so like even just diversifying the portfolio opportunity, high risk space is probably a preference for them. forecasting inventory standpoint, you said, initial, days, or whatever it is, you know, from buying inventory and actually receiving it? Do you see that any point, you know, if so, like, is that just because of regulatory lifts because you're getting bigger, so you get you know, better know, etc?
Craig "Lewie" Lewis:
Yeah, so, you know, I think until we can platforms that help manage that cash flow, it's probably going might go the opposite way. Because we can achieve economies we're really, really ramping up and doing biggest production time. And next year, we can look at ordering like blanket orders year, and then pulling from those commitments. So we've got now, they'll let us do that. But they might sit on inventory, and But we know we're committed to that inventory. So that is going year. And we know at the moment, you know, the lead times are the these challenges with supply chain of these raw materials. run with that we're pretty efficient with that. And then we really quickly as well. And then we get, you know, obviously our So, net net was still 180 day range. That's kind of where year. And if we can start working with some of these that's going to be really, really helpful. But until then, gonna work.
Brad Ebenhoeh:
So you know, you're, you're in retail and on York area, like what is what's next, like, what, where are you
Craig "Lewie" Lewis:
Yeah, so we're actually, you know, we did here in, in Brooklyn that was an event on a Tuesday night, and on 3,000 people at that event. And we outsold all sodas and non-alc time. And we're only in two bars out of the nine bars in those know, in the evenings, especially on weeknights, people drinking less, buying less alcohol. As people with bars, really like making cocktails. And we know that currently, offering that, you know, like ours, particularly something non alcoholic space. So those events and theaters, there's also on premise, we know that, you know, people are looking to they don't innovate and adapt, they're going to be able to customers. But bars typically end up being a social place. So that help with that social lubrication is going to be restaurants as well, you know, when you go out at night, you're that's complimentary to the, to the food that you're, that where we're really going to fit in. So those are kind of the states, we know that like, the big cities are kind of the Obviously, we're in the East Coast brand based out of there's massive opportunities. And this, this macro trend is but around the world, people drinking less and less, you and Gen Z, even more. So everyone's had that three day want to have anymore. And now they're actually thinking about, focus a little bit more on taking charge of their own is a piece of that puzzle as well. So it's more about, you opposed to just completely abstaining from it. And that we that, you know, people still want function during their alcohol locations, and that is to one an adult complex drink.
Brad Ebenhoeh:
Yeah. Now, um, it makes sense more choice, you choice. And we'll see what happens. And, you know, it's restaurant you go to now has a space in their menu for non And, you know, et cetera. So, yeah, it's definitely getting
Craig "Lewie" Lewis:
So, yeah, we envision this feature, you good, you know. used to have menus where there was a meat menu, and then there menu on the side. Now, when you go to a restaurant, you'll see there's vegetarian options, concoctions, but it's all on the is going to work with non alcoholic, low alcoholic and going to be able to be in the future where they have might be having an non-alc, you might be having a cannabis having an alcohol or like or low alcoholic beverage. But we're We're all drinking together. And so that's the future that we're
Brad Ebenhoeh:
Awesome. And then from on your website. Right? United States.
Craig "Lewie" Lewis:
Yeah. So 35 states at the moment, there's haven't made it an answer to the FDA about how they feel about it brands within this states that are operating and selling just states.
Brad Ebenhoeh:
Awesome. Awesome. So yeah, you have three SKUs idea of the brand expansion or the you know, the SKU expansion?
Craig "Lewie" Lewis:
Yeah, so we got some really exciting the line, we were going to be moving into the THC versions of is exciting. And obviously in the legal states. And that's THC version. So you're going to be able to achieve that a little high, but be able to continue, like your conversation, and other pretty unique products that we're making, which you'll months time. And then outside of that is like the flavors kind of in terms of flavors, like what are the cocktails and people be able to have a non alcoholic version of it that really tastes about that, like, alright, what are the what are the morning what about, you know, we haven't, we haven't landed on moment, it's kind of like, alright, imagine an espresso but you still kind of you're feeling and he had just taken the mule look like? How does what is in the morning is the of the world? How do they you know the people looking for non there's a little bit of consumer testing a little bit of like like. And then, you know, next year, we'll be turning all those
Brad Ebenhoeh:
Super cool, I'm sure the, the taste kind of a fun little process in terms of let's see here and see taste good. What's your take, like, let's compare it against Like, I'm sure it's a it's a probably a pretty fun venture.
Craig "Lewie" Lewis:
You're spot on, and we were lucky enough to America's most awarded mixologists and Chief Flavor we worked on them for six months, we need 45 rounds of averages, right. That's why it took forever. And, you know, know, we were able to achieve all those awards, because we've know, whatever the next products are, it's also going to take right. And we're, you know, we're all perfectionist on that release anything that's not absolutely spot on. So I'm It's also very, it's awesome to be running a startup, it's can end of the day, your own product is something that helps you you can relax, you're not gonna be hungover, you're still gonna what you need to do the next day, but that can enjoy. Like, I three or four old fashions, I'm going to be really rusty the Brooklyn Gold. Couple of them in the evening feel good. It's like go.
Brad Ebenhoeh:
Yeah, yeah, when I go home, I can't do any more take the edge off. So I need something else, you know?
Craig "Lewie" Lewis:
Exactly.
Brad Ebenhoeh:
Awesome. Awesome. Well Lewie this was a fantastic two questions that we always end every podcast on. So give us one
Craig "Lewie" Lewis:
So to me, I would say take, take everything apply your own lens to it. And I think that's particularly there's a lot of conversations about there about margin and a really in year one, you are you have to prove that your problem can solve it at scale. So you've got to do everything you can to absorbing margin or providing like heavier, deeper promotional drive velocity, velocity is the number where it's going to be a lot of after year one, you know, margins, obviously really, there's a lot of people that are just banging the door about an element where I'm like, okay, year one though. It's actually you've got to grow and prove that your model is going to work Then you'll unlock economies of scale and you'll be able to able to produce 10 times as much and so for me, it's kind of like and then just take it all with a grain of salt and put your own relevant for me where I'm at, in my own stage of the business?
Brad Ebenhoeh:
Yeah, 100% agreement, and that just from got to figure it out, be a problem solver, you know, everything, but again, you know, through your own lens. Alright, industry don't?
Craig "Lewie" Lewis:
So that would be to me is anything that don't expect that that is going to stay the same. You've got to iterative process and the build, test, learn model, and know that experience, you're going to get market feedback, you're going to you're going to pivot and you just, if you build that in from test, learn and iterate, then you're going to be able to product market fit. And obviously, that's going to be business.
Brad Ebenhoeh:
Awesome. I'm really enjoying the chat, Lewie. By the way, everybody like Lewie has an unbelievable background, of stuff, right in your history if you Google Craig Lewis, I'm up. But again, great brand Flyerscocktail.com. Correct?
Craig "Lewie" Lewis:
So it's Flyers Cocktail Co. and our
Brad Ebenhoeh:
Awesome. Yep, drinkflyers.com and coming to a in New York, check it out. I'm sure there's a lot of stores. So Great chatting with you. That's episode 24 of The Month End, and care.
