Joseph Lehane has spent his entire career in the alcohol beverage industry working for two industry leaders, first, Seagram and later Diageo. Now he’s working with a new brand, YaVe tequila. In this interview, we explore:
- how he got into the bev/al industry,
- how after retiring he ended up working with and then investing in YaVe tequila,
- the opportunity he sees for the brand with flavors,
- how he is lining up major distributors,
- how the brand’s expansion is being financed,
- why digital marketing has been so effective,
- why he’s not terribly worried about inflation crimping bev/al sales,
- plans to add employees,
- the importance of focus,
- the most rewarding part of his bev/al journey,
- the one thing he wished he could always have avoided, and
- the key to success in business.
It’s a fascinating interview. A lightly edited transcript is below.
Joseph Lehane: I grew up in Newport, Rhode Island. I attended Stonehill College. The reason I want to Stonehill was my uncle, for whom I was named, who became a missionary priest in the Holy Cross Fathers, went there. He was a terrific role model. Stonehill is a sister school to Notre Dame.
I always enjoyed the beverage alcohol business. I always had an interest in it. When I was at Stone Hill, they had a totally student-run Pub that had over 100 employees. It was open five days a week, run by a board of directors. I applied and got on the board at the end of my freshman year and I was the executive director my Junior and Senior years.
When I graduated from school, I targeted two companies. I was very interested in working in either Anheuser-Busch or Seagram. When I graduated, I bartended in Newport and met some Seagram executives. I went cross-country, and when I was in California, I met some additional Seagram executives. So, when I came back, I interviewed with Seagram and started there in March of 1980, so I guess I’m dating myself.
Joel: Well, I appreciate that. I will date myself too. I started reporting about the alcohol beverage industry in 1983. So, you know, we both have a fair amount of time at the business I guess you could say. Tell us a little bit about your current role at YaVe. How did you get into that job? What’s the product about?
Joseph Lehane: My last job in the industry retiring was with Diageo where I managed the Breakthru Beverage Co. nationally, which was a great job. Very interesting business, really enjoyed it. I left Diageo four years ago in September, I started doing some consulting which was okay, but I really wanted to find a home. So, the folks from YaVe reached out to me. I met the founder Joe Cruz Jr. He’s from Harlem single father, I was friendly with his father because he worked at a distributor in Metro New York. So I met Joe, I love Joe. I tasted the product, and the product was amazing. I met the team and really enjoyed the team, a bunch of very bright young men. And I eventually came on as an advisor, then became a partner. And then about a year and a half ago. I invested in the company as well. And then four to five months ago, I became chairman of the company.
Joel: So, that sounds like a pretty straightforward career path. And it sounds like exactly what I’d expect of a Seagram executive because they all seem to have that very direct linear thing. Seagram must have been an amazing place to learn the business because everybody I know who worked there has done well.
Joseph Lehane: Yeah, it was, it was a great experience. I was very fortunate in that I had eight different, nine different jobs, in 15 years and I think that was part of the culture at Seagram. I moved eight times geographically, had some really good training and learned the business, and had some good bosses and lifelong friends.
Joel: Tell us a little bit more now about the product itself. Can you find a picture of words from how that got started?
Joseph Lehane: Joe Cruz Jr., who you guys should Google or go on our Instagram page, was the founder of the company. He had been in the industry for a while. He started the company with $19,000 on his couch in Harlem, and for three years they sold the brand in New York and New Jersey without a distributor. It’s very smooth. It’s a blend of Highland and Lowland tequila from Jalisco, Mexico.
What attracted me was the flavor opportunity; we all know what’s going on in Tequila. What a lot of people don’t know is the fastest-growing segment of tequila is the super-premium flavor segment. We have the jalapeno, a mango, and we’re just introducing coconut into our market. So when we talk about the brand, we talked about the smoothness, the blend of the highland and lowland, we talked about the flavors which are all-natural 60 calories, and then we talk a little bit about Joe’s amazing story and how much he does in the community.
Joel: Tell us a little bit about why you think the flavors are so popular now with, I guess in all spirits, but in particular, in tequila, and especially true at the super-premium level?
Joseph Lehane: Yeah, I think one of the things that I’ve experienced when I was particularly at Diageo, was vodka. And then what I saw in my last few years with Diageo was explosive growth and whiskey flavors, right? So you have a more discerning consumer, a lot more mixed cocktails nowadays, much more educated bartenders and one of the things that we’ve really focused on is building our business in the on-premise.
I can compare that to when I was at Diageo with Don Julio every month, we tried to have our business be 40% or 50% of the business on-premise. Ours is somewhere between 50% and 60% post-pandemic. So, you know, the brand tastes good, it’s fun for the bartenders to work with and I think that, you know, consumers today want to try new things, right? There’s a very promiscuous consumer. They go from brand to brand or any category, right? I think that’s why flavors have exploded. And again, you know, the younger consumers, they grew up with flavors, right? So, that’s, that’s why we’re seeing across, distilled spirits, and they’re also very experimental.
Joel: They like to try new things and, and experiment. I’m gonna blame that on Apple, the computer people, because they keep coming up with exciting, new products all the time. This is not an Apple commercial; for a long time, I hated Apple, but I’ve come to admire their business process and I think they’ve trained young people to to be looking for something new and exciting on a very regular basis.
Joseph Lehane: I see the flavors with my kids. I have three kids in college, so whether it’s Gatorade or other nonalcoholic or their alcoholic consumption. It’s very much flavor oriented.
Joel: Yeah, and your bosses’ secret back in the day, they grew up in an era where the whole thing was to get people to buy and be loyal to one brand, you know, Seagram’s Crown Royal Or Seagram’s 7 or whatever and you didn’t worry about flavors or anything like that, the whole bit was just to train them to want just that one product. That is completely gone out the window I think in today’s business.
So tell us a little bit about the brand itself. Where do you see the brand being today, where do you want to take it, how do you plan to get there. So where do you see the brand today?
Joseph Lehane: We’re actually doing quite well. As of September, we will be in 12 markets. Our strategy from the beginning was to get to all the contiguous Open State markets on the East Coast that touch the ocean. Obviously, there is a lot of movement from consumers, North and South, in this area.
We started in New Jersey, then we went into New York, then New England then, Maryland. Delaware. DC South Carolina, we’re going into Atlanta and Tennessee in July and August. And then in September will enter Florida, post that we will be focused more on the larger tequila markets. Hopefully looking to expand to Illinois, Colorado, Arizona, and possibly Las Vegas. And then as we build this company, going to Texas and California.
But over the next couple of years, we’re going to be focused on the big markets and then in three to five years, we will be National, we will have full national distribution and hopefully be in two or three international markets.
Joel: That’s terrific. I want to stop you here for a second because if we have any entrepreneurial-type students out there whether they’re actually in college or whether they’re out in the working world but want to start their own thing.
Notice what they did — they picked a string of contiguous states up and down the East Coast? It could have been in the Midwest. It could have been along the southern border and been along the northern border, but they picked a string of contiguous states in which they were going to start to build the brand. And, by getting into those States on a contiguous basis, what did you achieve? I assume you achieve efficiencies and distribution. I don’t know if you do any advertising but you can talk about that if you do. But, you know, I assume there’s method in your madness. Can you tell us what that method is?
Joseph Lehane: I’m lucky, I’m very fortunate to have a lot of great relationships with people in the business that I really like and respect. So when I started working with the YaVe team, I asked some of the people I really liked and respected for advice and pretty consistently they came back and said go slow, focus on the on-premise. Get good investors.
And then one of the things that we’ve been able to do is be very creative with digital marketing geo-targeting, which is a very efficient way to advertise. And, you know, you mentioned people starting the business. I think that’s the one thing we’ve done really well, we’ve been very thoughtful about our distributor Network. We’ve been very thoughtful about our investors, adding value to the business and we’ve been very thoughtful about going deep into our markets.
I’ve heard and I’ve researched other other brands that just went National too quickly and you just can’t get deep into a market if you go that fast. So, so far, so good with our strategy, our distributor partners have been absolutely great and frankly, this whole thing has exceeded my expectations.
Joel: Well, that’s terrific. Now talk a little bit about your distributors. Who did you get as distributors? What type of distributor do you have?
Joseph Lehane: It all came down to a partnership, right? I didn’t go into the distributor and say, “I need a favor. Please do this for me based on our personal relationship.” It was the antithesis, we would go through our brand, talk about our marketing, talk about our investment. And the last thing I said at every meeting was, “Please, we’re friends, we will remain friends. But if the answer is no, okay, you know, we’ll find someone else to work with.”
So we started with Allied in New Jersey, followed by Empire in New York, Hartley & Parker in Connecticut, Martignetti in Massachusetts, and then Rhode Island Distributing in Rhode Island. I’ve had a long, great relationship with the principals of the Breakthru Beverages team. So we partnered with Breakthru in Maryland, Delaware, DC, and South Carolina. Next month we’re with Georgia Crown and Tennessee Crown, and then with Breakthru in Florida in September. The partnerships have been great. And the level of cooperation we’ve gotten from our distributor partners has been really, really amazing.
Joel: As you talked about going down the East Coast you omitted Virginia and you omitted North Carolina, both of which are Control States. When do you plan to bring the Control States into your orbit?
Joseph Lehane: That won’t be until we get into some of the big tequila markets because we want to put our resources against the big tequila markets. And also if you think about it, as we’re raising money, after we have the strategy of going into the East Coast markets. You want to get into a big market because you can grow on a compound annual growth rate, right? That’s what your investors are going to look for. That’s why we won’t use a lot of resources, human resources, while we’re focused on these five or six big tequila markets.
Joel: That strategy makes a lot of sense, at least to me. But, what do I know? I’m a reporter. I’m not out there selling product. Talk to us a little bit about your investors. I detected that you are still adding investors to your organization. What type of person you’re looking for as an investor.
Joseph Lehane: Like most startups, we started with friends and family and, you know, you can only go so far with $20,000 to $25,000 investors. We did our first Series A raise over the past 2-1/2-to-three months, that’s something that Joe Cruz and I spent a lot of time on, our CFO Scott Palumbo as well. Raising money is hard, right? Because you want to get the right match. You want to get people that trust you, and you trust them.
We’ve been very fortunate to find some very influential people in private equity that love the brand, love Joe’s story, really think our strategy is right, who collectively have been a big part of our investor base and it’s really been amazing, how they’ve turned on their friends and their network to support the brand. I couldn’t be happier with the investors that we have. We’re about two-thirds of the way through the series, and we’re trying to raise another million dollars which we have commitments for. So, as I said, we’re really, really fortunate to have the right investors
Joel: Boy, that sounds like a wonderful package that you’ve got there in terms of the distributor and the investor combination. It’s it just sounds to me quite hopeful for you.
How are sales?. You’re doing well, I presume you want to do even better. How are you going to build your sales in the next three to five years? Is this going to be largely by going now into those major tequila markets, or is it going to be by continuing to add sales where you are today?
Joseph Lehane: Yes. So, first of all, as I said, we want to go into the big tequila markets. Second of all, we’re seeing very nice year-on-year growth and it’s very organic coming from the on-premise. Also, one of our partners, Ben Weingarten, has done a great job with finding a digital marketing firm that has been very, very creative in terms of finding premium tequila drinkers. We’ve got a very good agency that creates good content for this digital advertising. And also another piece of the strategy will be off-premise. Sampling, you know, post-Covid. During Covid you really couldn’t sample. Who wanted to take a random drink from someone?. You didn’t know.
So now between our expansion, our digital advertising, our off-premise sampling, and the fourth part of that stool, innovation. We are looking at Innovation, we’re introducing a coconut flavor. Currently, we’re looking at a very super ultra-premium variant, somewhere around $100. Our investors are partnering with us in creating that, which is really a lot of fun. I think all consumers want to go up, right? They want to get premium and we think that’s the way to enhance our perception with consumers by having more items at the top end.
Joel: You mentioned consumers, which leads us to the economic situation of today when we have inflation sort of spiraling upward and so on. Do you think that’s going to have an impact on your brand or on your business plan?
Joseph Lehane: I think it potentially could, although I also think the other side of that is that consumers are pent-up, right? They’re sick of sitting in their house. Sick of looking at the dog sitter, looking at their kids, you know. Look at hotel occupancy rates. Look at the price of hotels, right? So I think there’s a consumer that really wants to get out there and have some fun and certainly, the tequila category is a lot of fun. It’s a lot of discovery going on out there and the whole flavor part of it just creates a great opportunity for us.
So, there’s no doubt about it. The industry’s going against very difficult comps from last year. But I happen to believe that the on-premise will continue to grow because I think people want to get out there and have a good time for themselves.
Joel: Well, I think you may well be right about that, especially about people wanting to get out and have good times. Are you two or three different price points right now? You said you were going to go to a $100 super ultra-premium product, but are you at different price points?
Joseph Lehane: The Blanco and the flavors are one price point. Little over $40. And the reposado is $4 to $5 more.
Joel: Great. So the reason I asked that question is early on, right after I took over Kane’s many, many years ago. Ronald Reagan was President. At that point, he was going to slice the size of the federal government and DC was in a bit of a funk, obviously, because if you cut the size of the federal government, somebody down here, is going to lose a job.
One of the very first distributor interviews I did, if I recall correctly, was with one of the main distributors in this city at that time. And he said to me, he said, “I bet you think that everything’s in the toilet around here, right?” I said, “Well, yeah, you know.” And he said, “I want to assure you, that’s not the case. The nice thing about the alcohol beverage industry is that when times get tough people still keep drinking, they don’t drink more, they just drop down by about one price point.”
So, you know, if you have guys, in your case, drinking the $45 product, they might drop down to the $40, but if they like the product they will keep drinking it. The example he cited was a guy who liked Knob Creek, which is made by the same people that make Jim Beam. When times get tough they hold back on Knob Creek but drop down and buy Jim Beam. So both Jim Beam Distilling Co. (now Beam Suntory) and their distributors continue to do pretty well in the process. It’s a nice business in that respect.
Joseph Lehane: It’s an affordable luxury. Maybe a lot of people can’t go on a ridiculous vacation. But whether it’s a Friday, Saturday, or Sunday, they can go out and enjoy their hard work and also be able to be drinking premium brands, right? That’s a big part of what we’re seeing in the business and that’s why there’s so much price elasticity in our business, as well.
Joel: Yeah, and I think, I think you nailed it right there. So let’s that’s just great. We talked about distributors, we’ve talked about growth plans. We have not talked about employees. Are you looking to add any employees at this point? Do you anticipate doing that over the next three or five months?
Joseph Lehane: We will, probably. We’ve just added a couple of employees. We just hired one of my former colleagues at Diageo. It would depend on the market. We’re either going to a broker model or a regional manager model.
So what we will look for is either really good brokers that we can partner with, or the other model, which would be getting someone that has some experience in the industry and would manage three or four or five states. We’re just not big enough at this point to put a bunch of people into the markets and that’s why this digital marketing has been so efficient for us.
And we’re lucky enough that you know, we understand the business, we have relationships with Distributors so we can manage them from afar versus being in the market per se. So, you know, over time, when we go National, sure we’re going to build a bigger larger organization, but we’re trying to save money so we can activate with our consumers because that’s what is most important.
Joel: And that’s that’s a great point. You do have to pick and choose what you’re going to try to do. You can’t do everything at one time, as nice as it would be if we could.
Joseph Lehane: We been very thoughtful about that and thank God, I have a lot of experience and I tell my partners all the time, if you’re trying to do everything you’re doing nothing. So we’ve really focused on this digital marketing and the off-premise sampling. So, you know–so far, so good.
Joel: Talk to us just a little bit about the digital marketing, you obviously like that. What is so good about digital marketing compared to 15 or 20 years ago to your time at Diageo or maybe further back at Seagram where you bought magazine ads, for instance, or TV time?
Joseph Lehane: The beauty of our digital advertising is it really is kind of Big Brother-ish. One-third of the people in the United States, don’t drink. Tequila is a relatively small category, just about to take over rum, although it is an exploding category. So with our digital marketing, we can effectively find tequila drinkers and premium tequila drinkers and we know a little bit about their income and their lifestyle. So we develop this kind of portrait of the consumer we want to target and it’s been very, very efficient and very effective.
Joel: That’s terrific and I’m glad it’s working well for you, do you think at any point you might go to more conventional advertising, or are you pretty well convinced you’ll stick with the digital and social model?
Joseph Lehane: I think for now we will stay there. When we get into some of these urban markets, you know, we might look at out-of-home possibly, I happen to have a lot of marketing experience, so, you know, it’s kind of interesting for me to be making these decisions with my partners.
Joel: I bet it is and it’s amazing. I’m sure you’re as amazed as I am at how marketing strategy approach has changed in the last 25 years, with the advent of the digital stuff. It’s just, you know, it’s a whole new ballgame. Anything you learned 40 years ago is probably not totally valid anymore, right?
Joseph Lehane: One of the things we’ve done is llave (from which we Anglicized YaVe) loosely means “key” in Spanish. We did a lot of work thinking about how can we leverage that key and what we came up with was “Unlock Possibility.” So everything we do with YaVe, whether it be point-of-sale, digital advertising, the back of the package, each Instagram, everything possibly can mean so many different things to different people, right? I think it’s very, very clever marketing, very well thought out and well-executed. “Unlock Possibility” resonates quite well with consumers.
Joel: Here are the last two questions. Can you tell us as you look back over your experience so far what the most rewarding part of this journey you’ve been on has been, and I’ll leave you to define what rewarding is, and then I’m going to turn around and ask you also, if you had had it to do all over again, what is the one thing you would like not to experience again?
Joseph Lehane: I think one of the things that I’ve really enjoyed is — it sounds strange but I grew up in a small town in Rhode Island, so it was great to get out of Rhode Island and experience the world, right? I’ve moved a lot, I’ve lived in a lot of different areas. I traveled all over the world, traveled all over the country, and have observed a lot of different cultures.
And one of the things that I’m really proud of is, that while I had a great career, I didn’t miss much with my family, right? I coached all the kids’ sports, I didn’t miss any graduations, I didn’t miss this, I didn’t miss that, and as I reflect back on my career, it’s not how much money I made. It’s not, you know, did I make the number? But I worked for two great companies. A lot of great people made a lot of great friends and in an amazing industry while being lucky enough to have three children, a great wife and, you know, seeing them grow up has been such a satisfying part of my life.
Joel: Yes, I can imagine that, and congratulations, by the way, on being able to do that. That’s absolutely terrific. And how about the thing you wish you would never experience again. Anything pop to mind?
Joseph Lehane: Yeah. I guess you know, corporate politics. Obviously, you know, sometimes you feel like you’re running the public relations firm versus doing your job. So, you know, I never really spent much time getting into the politics and I tried to stay above it and out of it frankly. And I think that’s great advice for people that, you know, I didn’t enjoy the politics, I didn’t get involved in the politics, which I think was a really good career move, quite frankly.
Joel: Ye
ah, it probably was. I was told a story by a Catholic priest years ago about when he was in St. Charles Borromeo Seminary in Philadelphia. One of the Cardinals from New York or Boston. came down to visit, and he had this habit of going out for an evening walk and so he was taking his evening, walk around the campus and a whole bunch of the seminarians, of course, want to tag along and see what pearls of wisdom or anything else they might pick up from the great man. At the end of the walk, he says, “Ah, boys, I bet you’ve had a great time walking with a prince of the church.” They all sort of acknowledged that, and the cardinal says, “It’s like being in the artillery. If you want to survive, stay away from the big guns.”
Joseph Lehane: I do executive mentoring as well. And I always tell people, you know, you show up, you follow up, and do what you say you’re going to do. Don’t over-promise and under-deliver, and keep your integrity. I think that’s really good advice for someone looking to build a career.
Joel: I think it is too. If somebody wants to reach out to you?
Joseph Lehane: My email address is JosephLehane24@gmail.com.