On this episode of Christopher Lochhead: Follow Your Different, we have a conversation with John Spagnola, CEO of Ublendit, about innovation and category creation in the spirits industry.

John shares his journey, emphasizing the strategic advantage of creating new categories rather than competing in existing markets. He discusses the success of Hideout Vodka and introduces a new agave spirit, the “77,” designed for health-conscious consumers.

The episode also explores the impact of celebrity endorsements and meaningful partnerships, such as Hideout Vodka’s initiative with the National Parks.

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John starts off the conversation by reflecting on the challenges faced by smaller brands in a market controlled by a few large companies like Diageo and Constellation Brands. These giants can easily undercut smaller brands on price, making it difficult for them to compete. John emphasizes that merely trying to fit into the existing market is a trap that many fall into.

Instead of competing within established markets, John advocates for creating new categories. This approach not only differentiates products but also attracts attention from larger companies, who view category creators as innovative rather than as threats. He cites the success of brands like Screwball Whiskey and 21 Seed, which created unique categories and achieved significant valuations.

John shares the story of Hideout Vodka, which gained traction by securing a partnership with MGM properties in Las Vegas. This partnership allowed Hideout Vodka to become the vodka of choice in several MGM hotels, marking a significant win for a smaller player in the industry. However, as the brand began to grow, John realized they were falling into the trap of merely trying to fit into the existing market.

Recognizing the need for innovation, John and his team brainstormed a new product idea involving Cheech and Chong, the iconic duo known for their association with cannabis culture. They conceptualized a vodka product called “The Judge’s Water,” which cleverly ties into a memorable scene from Cheech and Chong’s movie “Up in Smoke.” The product not only serves as vodka but also converts into a bong, appealing to their fan base in a novel way. This product sold over 5,000 units quickly, showcasing the power of category creation.

John believes that aligning with well-known figures can turbocharge category creation and drive consumer interest. He shares his excitement about developing an apple pie whiskey, initially inspired by Martha Stewart, but now considering other celebrity partnerships that could elevate the brand even further.

John then discusses the potential for high acquisition multiples in the spirits industry, noting that companies can achieve impressive valuations, especially when they have a unique product and a celebrity endorsement. He highlights the average revenue multiples in the spirits sector, which can reach as high as 21x for celebrity-backed brands, making it an attractive space for innovation and investment.

To hear more from John Spagnola and his ventures in Category Creation, download and listen to this episode.

If you want to hear about our previous discussion about the Custom Spirits Category, check out this previous episode at FYD 212.

John Spagnola is the CEO of Ublendit, LLC. Ublendit is a pioneer in the custom spirts category. They are the first to create custom spirits for hotels, bars, nightclubs, restaurants and special events.

John is also Managing Partner at Venture Santa Cruz, where they identify new markets to make a difference in and disrupt them.

He’s based in Santa Cruz, CA.

Follow John Spagnola!

Ublendit.com | LinkedIn

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