What did it take to become a Certified Public Accountant 30 years ago? Basically, just be able to handle a bank reconciliation, says Jeff Eakes, the new chief financial officer at Social House Vodka. The Raleigh, N.C., craft distiller hired Eakes after he retired after a 30-year career at Sas Institute, a Cary, N.C., producer of analytics software, where he was the top financial executive.
Sas “was going through a lot of growing pains” when he joined. But the life balance and the culture “is just second to none, and I was there for over 30 years,” starting as one of the few CPAs on staff – “it was myself and the CFO,” he recalled. The finance department grew to 80 people, all CPAs handling all the tax and financial reporting work.
Why would the North Carolina State University graduate give up such a nice gig to go to work for a start-up? we wondered. “Sas offered a retirement package,” Eakes said. “I saw that as an indication it was time to move on. I’d always wanted to do something different.”
After he retired from Sas, a friend mentioned Social House. So Eakes met with Cary Joshi, Social House’s CEO, “about maybe coming in and kind of helping out on the finance side. “They were very young and needed some more seasoned accounting help, and maybe helping them avoid paying some taxes.”
“I did that for a couple of months after I retired. I just wanted to try something new. I feel like I’ve got a few years left in me, and this seemed a perfect fit.” His wife noticed that he seemed to be having fun. Eakes came on board July 1.
Why Social House? First, his friend remained very enthusiastic. Second, “anything with craft in it had a nice ring to it.”
Joshi and the other founders were through a lot of time and effort to get the flavoring just right, Eakes said. Test batches were actually distilled at NC State in the food science department. It’s locally sourced from a third-generation farmer and distilled in Kinston, N.C., a former textile mill city, about 90 minutes from Social House’s Raleigh headquarters.
Why Kinston? The 20-acre distillery is an old coal plant that was decommissioned in the 1970s and sits on the Black Creek aquifer, which runs from Rocky Mount, N.C., through Kinston. “We’ve been told by geologists that it takes 10,000 years for water to pass through that porous rock to get to us,” Eakes says. “We had it tested and it’s really pure water.”
Where does Eakes see the brand today, and where does he expect it to go in the next three to five years?
“The plan is to take over North Carolina, first and foremost,” he said. Social House is No.1 vodka sold in the state. “I think after five months we’ve had a very successful launch, and we continue to outpace the smaller distilleries. We’re in most, if not all, ABC stores in North Carolina. Our focus is to ‘take over’ North Carolina and be the brand people recognize in North Carolina.”
The idea of dominating a home market is usually a wise strategy, and Eakes told us of a local company that quickly went into 11 states. “They’re suffering right now,” he said. One of the problems for the other company is that it is tied into distributors.
“We have the largest direct sales force in North Carolina, covering all the territories, and we have a lot of good data about sales in individual bars and restaurants. If a company wants to increase its purchases – or drop Social House – we can have that conversation,” Eakes told us, adding: “I love the fact that the company is very data-driven.”
Eakes noted that the craft market is a little over 2% of the overall vodka market. “So if we could capture just 2% of that current vodka market, we’re talking about $100 million in sales.”
How does Social House plan to do that? Part of the key is in the Kinston distillery, where inventory is being built up in a new, larger warehouse. “If we enter another state, and they want to start with a 3,000 case order, we want to be able to fulfill that right away.”
Existing customers are the bedrock upon which expansions are build, and Social House is seeking legislative changes to make it even easier to do business in the state, such as being able to sell unlimited bottles from the distillery, opening up distribution channels, having more trial encounters with the public, so they can try the product.
There’s some thinking that North Carolina might move from a state store system to a private stores, or being allowed to sell spirits in groceries.
The current ABC system is tough for smaller distributors, who aren’t making enough product and don’t have the marketing dollars for the sales to justify their shelf space. “With the explosion of new products and all sorts of categories, that shelf space has become more valuable,” Eakes says.
Social House recently hired a new master distiller, Grady Knight, a biochemist and chemical engineer, and Marina Queen, who has 14 years of Alcoholic Beverage Control experience, as vp-sales.
In addition to the Kinston facility, Social House will have a smaller distillery in Raleigh.
Eakes said Social House was talking about some flavor extensions and new brands. But right now the focus is on selling vodka. Also on the agenda: Doing some events in Kinston. One possible venue is an abandoned coal plant that was decommissioned in the 1970s. The plant is attached to the Kinston distillery. “I’ve walked through it,” Eaves said. “I thought it was decommissioned in the 1870s.” But, he added, that’s “very long term.”
Social House might also move production in Kinston to a 100,000-square-foot abandoned cotton mill. It seems better suited for production because it’s the right height for semis to back up to it.
North Carolina was one of the last states to embrace Prohibition and one of the last to come out from it. When it did, it decided to let each county decide whether to permit alcohol sales.
Social House is privately held and is going through another Series B offering. For the next offering, it has engaged Charles Towne Holdings, an investment banking firm based in Charleston, S.C. The hope is that that offering will close before Thanksgiving.
When might we see a gin or a whiskey from Social House? “We’re not going to get too far ahead of ourselves,” Eakes told us. “But I think that’s a natural progression.” Eakes noted that Social House’s founders have been “very measured in their approach.”
The embossed label is beautiful, he said. “It’s just a beautiful thing sitting on the shelf. And I think they really got the brand identify down.”
Millennials are looking for a bit “more style and some substance. They want companies that are socially responsible and socially active, and we check those boxes and are catering to them.”
WE noted that Eakes went to school at North Carolina State and wondered about his colleagues in the C-Suite. “Are you basically an NC State company?” we asked.
“Well, we got our master distiller, Grady Knight. He’s from Ohio State.
With the growth plans, we wondered what the employment outlook was. Eakes told us he is looking for a business analyst “because we are data driven.”
“On the production side, we’re not yet at capacity,” Eakes said. “But once we are, we’ll probably need a couple of more bodies. Also, the events team.”
The key for the events team is that new hires be “customer facing. They can tell our story and we can see conversions from that. We have this thing called “Social House at Your House” where we will come in and help throw a party. A good friend of mine had one for his wife’s birthday. They set up and we had a great time.”
The greatest challenge Social House faces right now is opening up Western North Carolina for more sales. The distillery recently hired Marnina Queen as vp-sales. “She’s killing it,” Eakes said.
You can hear the full interview here.