Allison Evanow had been eyeing Europe’s burgeoning market in organic goods when she sent her first load of spirits to the UK. It did not go well. The founder of Square One Organic Spirits explains that the problem wasn’t that Britons did not like her signature organic spirits; they almost didn’t get the chance to try them. “It was quarantined as soon as it got there. The entire shipment!”
That one word on Square One’s labels — organic — nearly torpedoed the whole venture. Although they are aligned now, when she exported the spirits in 2007, American and European Union treaties didn’t jive over which products could be labeled organic. Square One, organic by US standards, barely missed qualifying under EU regulations. Eventually, the bottles made it into consumers’ hands, but only after sitting in a British excise warehouse for the better part of a year and having new labels plastered over the old. Between daily customs holding fees, fines, new labels, and labor, those additional unplanned expenses ran around $9,000.
Speaking at the recent Bar Convent show in Berlin, Evanow was sanguine about that first misstep entering the UK market. “It was disappointing and it cost a lot of money, but at the end of the day, I’m very happy to be in the UK. Organic is huge there. They really like our stuff, especially the cucumber vodka; it makes an amazing Pimm’s cup.”
Three things are noteworthy about Evanow’s experience for craft distillers thinking about exporting to the United Kingdom.
First, she had done research. According to International Wine and Spirits Research, a London-based analyst, vodka accounts for nearly 30% of total UK spirits consumption, a rough parallel to US figures. Botanic spirits — essentially flavored vodkas — were well within the comfort zone of UK drinkers who want to try something new, but not too new.
Second, not just any spirit would do. Imported American liquor sells at a premium in the UK and local vodkas are both plentiful and affordable; craft spirits that stand out — with great packaging, outstanding flavors that don’t quite fit expectations, and unique selling points — stand to do better.
Third, she worked with an established importer. Just as American distillers must be intimately familiar with TTB compliance issues, those who plan to export to the UK need someone on the other end who knows Her Majesty’s Customs and Revenue regulations and has experience importing spirits. Eaux de Vie, Evanow’s importer, have been bringing spirits into the United Kingdom since 1984 and represent a number of American distilleries, including High West, Roughstock, Copper Fox and Leopold Bros. Despite the label glitch, the firm’s founder, Neil Mathieson, knows HMRC regulations, transport logistics, and buyers. He was also willing to split those unexpected costs.
We Love the New American Stuff!
There’s a fourth point about Square One’s success: American brands are selling well in the UK. London is one of craft bartending’s undisputed capitols and its practitioners’ enthusiasm for American whiskeys, gins, and other spirits is spreading to consumers. Overall, the United Kingdom’s alcohol market is a mature one. In fact, per capita alcohol consumption has declined about 13% since 2004, but the spirits category has grown in that time, fueled in part by a resurgent cocktail culture.
Hawksmoor bartender Peter Bienge is smack in the middle of that trend. “We love the new American stuff!” he enthused from behind the restaurant’s long marble bar. “That Smooth Ambler guy was here last week. He’s got gin and fantastic old American whiskeys. Give us more of that.” Hawksmoor does not have any of John Little’s Smooth Ambler spirits, but American gins Death’s Door and Junipero held prominent spots on the back bar. They, along with Few and Aviation gins, show up time and again in London bars. Bienge wasn’t just blowing smoke. British bartenders have been instrumental in introducing American craft spirits to their customers who in turn look for them in shops. “Niche spirits and high-end products give you a definite edge. Those can help get you in the members’ bars and the cocktail bars. Once you’re there, it’s a bit easier to get into Harrod’s and Selfridges,” says Francis Weier, founder of the London import firm distillnation. “Then you can do really big volume.”
Specialist liquor stores have also picked up on American craft spirits. Staff at Gerry’s and Amathus, both in central London’s Soho, have deep knowledge in spirits. While they cater to the general public, they also see heavy traffic from those in the trade. Increasingly, the spirits their customers want are familiar, but with different flavor profiles. Lance Winters of St. George Spirits likes sending his gins to the UK for exactly this reason. “When you get into England and former British colonies, the gin and tonic has a footprint that won’t wash off the street. If there’s a way you can put a fresh spin on it, like with a New World gin, then you’ve been able to change the game a little bit,” taking a small slice of the UK’s £38 billion alcohol industry.
It’s not all gin, though; American whiskeys — and rye in particular — are hot now. Winters, who had just attended the Boutique Bar Show in London, is especially chuffed about exporting St George whiskey to the British market. “It’s a childhood dream of every whiskey distiller to sell their product, especially a single malt, back into the UK.”
The Liquid is Paramount
When he was conducting market research on the feasibility of launching a gin in London, American importer Michael Vachon was told that a hundred gins were born — and had gone to their deaths — there. Vachon wasn’t deterred. “All of those gins live in a very narrow taste profile range: London dry. Of course, they failed; there was almost nothing to distinguish them from all the others that already exist. Who cares if you’ve got a craft spirit that’s an almost perfect clone of Bombay Sapphire? I can buy actual Sapphire at a third of that cost. I have zero interest in those. The gins I want to sell are not in that narrow little London dry range. They are, first and foremost, excellent spirits, but they live way over on a different part of that gin flavor spectrum.”
Vachon had early success bringing Ransom’s Old Tom gin to friends in the UK and then later as a sole proprietor importing FEW gins from Chicago. This year, he volunteered at the American Distilling Institute’s annual spirits judging in part to get a behind-the-scenes taste of hundreds of US craft spirits. Of the forty other brands he thought could make a go of it in the UK, none of the distillers wanted to come to London, Manchester, or Edinburgh to help work accounts, meet the press, and teach locals what was special about their spirits. For Vachon, that was a deal-killer. “This is a long-term relationship, not just sending pallets to Britain. If I can’t see myself representing a brand in ten years, I’m not going to go for it.”
In late 2012, the Maryland native launched Maverick Drinks as the craft spirits division of importer/distributor Master of Malt. To date, he represents five American brands in the UK and another half-dozen from other countries. For him, the liquid is paramount, but it has to come in great packaging. “If it doesn’t grab buyers’ attention in the first two seconds, you’ve lost them, but it’s what’s inside that will bring them back for a second bottle, and a third, and so on.”
Render unto Caesar
For visitors to the United Kingdom, the cost of liquor can be a shock. It’s not unusual to find American spirits priced 50-70% higher than in the States. Leopold Bros. New York Apple Flavored Whiskey runs about $35 in the US, but retails for $66 in the UK. Why? Shipping is cheap enough (about £1/bottle), but importers and distributors add layers of cost. Specialty shops, grocery stores, and bar owners all get a piece of the action. Before any of them will ever see American craft spirits, though, the Queen will want her cut. In 2012, almost 80% of the cost of a bottle of vodka in the UK was excise.
“UK taxes are ridiculous,” says Francis Weier. The alcohol duty runs £28.22 (about $45) per liter of pure spirit, that is, 100% abv. No quaffable spirits have that high an ethanol concentration, so the actual amount is lower. Still, though, it’s stiff. A standard bottle of 40% abv will have an alcohol duty of around £8 (almost $13), plus import taxes and VAT, the variable value-added tax tagged onto many purchase in the European Union. In the United Kingdom, a 20% VAT is assessed on spirits’ total value, including other taxes. “That’s right,” Weier clarifies, “Here, you’ll pay taxes on your taxes.”
A Matter of Size
The bottles are not just more expensive in the United Kingdom; they are smaller. Or at least they are supposed to be. Standard European Union liquor bottles hold 700ml, not even two ounces less than America’s 750ml bottles, but the costs of doing an export pack just for the EU/UK markets with different labels, bottles, and sometimes equipment can be daunting for small American distillers. There is, however, some wiggle room. The UK does not always follow EU regulations. Britons do, after all, still drive miles, drink pints, and reckon their weights in stones. 750ml bottles occupy a grey space in Britain; not strictly illegal, they’re not wholly legal, either, and those who sell them may be subject to fines.
Nevertheless, export packaging could lead to stronger sales. Christian Krogstad of House Spirits describes 750ml American bottles as a barrier to entry in the European Union, but in the UK, “It’s only a barrier to volume.” Because fines and additional duty can be attached to the 750ml American bottles, most large-volume retailers will not carry them, though specialty shops and bars may accept larger bottles. “Especially,” says importer Vachon who does deal in larger American bottles, “when I explain that bartenders get an extra 50ml and they realize they can make another drink or two from that bottle.” Krogstad’s solution? Underfill his newly redesigned Aviation bottles to 700ml and use different labels. Conforming to EU standards boosted Aviation’s sales — and makes exporting to the larger markets of Continental Europe easier.
A Little Help
Distillers concerned about the costs of exporting spirits should take heart that help is available. Financial assistance and rebates can be had from state and regional trade groups. The federal government offers subsidies and reduced taxes on some exports. Agency and program funds can be tapped for some business expenses that promote American products in oversees markets. All these are worth investigating.
Allison Evanow of Square One, for instance, was one of nearly a dozen American craft distillers who attended Bar Convent Berlin in October, an event heavily attended by UK bartenders and a few importers. Their trip was sponsored by the Distilled Spirits Council of the United States and underwritten by the US Department of Agriculture through its Market Access Program. Members of DISCUS can take advantage of what vice president Frank Coleman calls “a whole hallway of lawyers” in the organization’s Office of International Issues and Trade who can point out such resources.
Sometimes, assistance can be as simple as favorable terms. When Neil Mathieson of Eaux de Vie approached Brian Ellison about bringing Death’s Door gin into the UK, he offered to pay cash. Ellison’s response? “You just met my terms.”
The United Kingdom and the United States do enormous amounts of business together. The US is, in fact, the UK’s highest-volume trade partner. While figures are hard to come by, anecdotes from American distillers indicate more are exporting to the UK and that a taste for their craft spirits is on the rise. Certainly their brands make strong showings in London’s cocktail bars and high-end stores. For distillers willing to make special packaging and on-site support to their import partners, the UK represents a modest, but growing, market and a springboard to even greater sales in Europe.