We last caught up with serial entrepreneur Steve Luttmann pre-pandemic following the launch of his rum and rye brand Hercules Mulligan. As Managing Director of Tortoise & Volt Marketing & Ventures, Luttmann knows a thing or two about how to create a loyal brand following. For him, consumers should be active participants in the brand.
With this in mind, Hercules Mulligan has created a vibrant community of fans, leveraging spirits subscription platform Flaviar. As Flaviar’s most rated brand, Luttmann and his team take customer feedback seriously — they’ve even modified the recipe several times based on user reviews. And he’s not simply encouraging consumers to provide feedback, he’s also offering an opportunity to invest directly in the brand.
Read on as we discuss how he’s taking a democratic approach to brand building, what he thinks of crowdfunding, and more.
ForceBrands: We last caught up pre-pandemic when Hercules Mulligan had recently launched as a direct to consumer brand. How has your go-to-market strategy evolved since?
Steve Luttmann: We launched the brand as a direct-to-consumer (DTC) brand in late 2019, and it really took off, selling out 2,000 bottles in less than a month. When the pandemic hit, we decided to focus on the DTC model exclusively, and the brand took off — we sold more than 12,000 bottles in just over a year, all DTC, without discounts and nearly no spending. It’s been a great success.
FB: You partnered with Flaviar, the leading members club for fine spirits enthusiasts. What success have you had with this platform when it comes to building customer loyalty and brand awareness?
SL: The Flaviar community has driven Hercules Mulligan’s success. There is no community of spirits aficionados more passionate and influential than the Flaviar community — they are very engaged on the platform, providing feedback and voting with their credit card. Thanks to this community, we received meaningful real-time feedback, which allowed us to quickly adjust our recipe, and as a result, we are one of the top-rated (and most rated) brands on the Flaviar platform. We have the highest repeat purchase rate of any brand on the Flaviar platform, and we have received over 2,500 peer reviews and ratings on Flaviar.
FB: You’ve said that your DTC model is a ‘democratic approach to launching a brand.’ Mind elaborating on this?
SL: Based on our success with the DTC model and our highly loyal consumer base, we decided to invite our consumers to be a part of our company as investors. By launching a fundraising effort via our crowdfunding platform, StartEngine, we are inviting our consumers to really participate in our brand’s success. And we clearly benefit from their advocacy and involvement in the company. We’re giving regular spirits lovers, not just industry insiders, a rare opportunity to be part of something really quite special.
FB: Beginning Sept. 23, your crowdfunding investment opportunity opens up, allowing people to make a minimum investment of $100 in the brand. What encouraged you to take this route?
SL: We learned from engaging with our consumers via DTC that we had something special, and that our consumers wanted to participate in the journey as more than just consumers. We recently created an online discussion channel via Discord and asked our consumers if they would be interested in becoming investors, and the enthusiasm was enormous. Not only do they want to invest, but they want to be proactive brand ambassadors and influencers, truly contributing to the social diffusion of the brand, and thereby contributing even more to the brand’s success.
FB: How has crowdfunding changed in the past few years? How do you think this will shape the way future brands are built?
SL: Crowdfunding has really grown up in the past couple of years. Initially, it was “perk-focused.” Early adopters and tastemakers would help to fund products and brands in exchange for early access, discounts, “free” SWAG, and the social capital of being “in the know.” In the last five years, equity-based crowdfunding platforms have started to gain traction but have remained limited as there are onerous legal requirements, complicated cap structures, and still small communities. With the crowdfunding legislation passed earlier this year, raise limits have been lifted to much higher levels and there are simplified legal and capital structures available. It’s created a situation where brands with access to a loyal consumer base can raise money from their customers, effectively creating an “army of investomers” who are socially and financially incentivized to market the brand to their friends.
FB: Let’s chat for a moment about hiring and team building, one of our favorite topics at ForceBrands. How have you approached hiring?
SL: In addition to continuing our DTC approach, we are now rolling out our brand into traditional distribution (i.e. stores and bars), and for that endeavor, we’ll need “feet on the street.” We plan on hiring Sales Brand Ambassadors, who will work with our distributor partners and customers to secure meaningful distribution and activate the brand. We just launched in New York City with Empire Merchants, and we are looking for great, enthusiast talent right now. And of course, the first people we are going to reach out to are our consumers — just like the crowdfunding opportunity, we think we can find rock stars who are big fans of Hercules, possibly even an investors, and want to take the relationship to the next level.
FB: Are there any nuances to building the brand and team amid a global pandemic? How has the current climate presented challenges? Opportunities?
SL: I’m not sure what we would have done during the pandemic if we were not a DTC brand. I know from other businesses that it was a difficult time to gain traction in the on-premise during the pandemic, and even the simple act of getting a display and demo at retail was very challenging this past year. That said, things are opening up again, and we are planning for everyone to get vaccinated. But, if things go sideways and there’s another COVID shutdown, we are prepared to focus again on the DTC environment, both with the Flaviar community as well as the “last mile” DTC opportunities in our existing markets. No doubt, flexibility and contingencies are critical in this environment.
FB: What do the next 3-5 years look like for Hercules Mulligan?
SL: We really have a unique opportunity with Hercules Mulligan. The brand has a great story, and the move to more convenient, ready-to-serve spirits is real. Our approach is truly craft, where we have great base spirits, real ingredients, and no fake “WONF” flavors (i.e. WONF means “with other natural flavors,” which is a euphemism in the food and beverage industry for fake flavors). We plan on launching other expressions in the near future, and we also plan on rolling the brand out nationally and globally. Our plans are really big — but our approach is also small and deliberate. We plan on walking before running, building this brand one consumer, one customer, and one investor at a time.