175. Tip Top RTD Cocktails, Neal Cohen

Tip Top Proper Cocktails is an Atlanta-based beverage company that is making delicious cocktails available on the go. The company co-founders, Yoni Reisman and Neal Cohen, are music industry veterans who identified quality cocktails as a missing piece in the beverage offering at festivals, music venues and other high volume events.

Join me as I talk with Neal on building the business during the pandemic, launching with Delta Airlines, and testing out product innovation and pack size.

Learn more at https://tiptopcocktails.com/

Startup to Scale is a podcast by Foodbevy, an online community to connect emerging food, beverage, and CPG founders to great resources and partners to grow their business. Visit us at Foodbevy.com to learn about becoming a member or an industry partner today.

Transcript

Tip Top RTD Cocktails, Neal Cohen

Jordan Buckner: [00:00:00] Building a CBG brand is always challenging. Beverage is a tough market to be in because of all the MOQs and distribution. But to then have a alcoholic beverage in a can as well comes with its own unique set of challenges, but also some really exciting things to do there. So for today's show, I've invited Neil Cohen, who is the co founder of Tip Top, which is a line of classic cocktails in tiny cans to talk about.

His journey and with the team of building TipTop and challenges , and some really cool successes along the way. Neil, welcome. 

Neal Cohen: Yeah. Thanks for having me, Jordan. 

Jordan Buckner: So for our audience, tell us a little bit around, you know, why TipTop and how the brand came to existence. 

Neal Cohen: Yeah. Great question. Yoni Reisman, my co founder and I we grew up together.

We met in elementary school in Atlanta and we both had a strong passion for music. We went through a lot of our teenage rites of passage together and we've been best friends since, and we both went into the [00:01:00] white music event space. So he founded the governor's ball music festival in New York, which is.

The largest music festival in that city. And I went to work for a company called Superfly doing the marketing for Bonnaroo and Outsidelands in San Francisco, as well as some food and drink festivals that we worked on. And at Comedy Central Festival as well. So while in that space being lovers of culinary and cocktail specifically we found that we couldn't receive a great cocktail.

Wanted to solve for that. So that was really the impetus for what we are doing. So around 2017 2018 The landscape for ready to drink or prepared cocktails was quite different we've seen a huge tidal wave since, but in looking across what was available, there wasn't really a brand that spoke to people who truly spend time in great cocktail bars and kind of the cocktail enthusiasts.

And so we wanted to really make a viable brand for people who really [00:02:00] identified with cocktail culture. So launching a brand called Tip Top in a 100 ml can. Really looking to celebrate the 200 plus years of cocktail culture via this brand. We thought there was no better way to kick it off than to start with the Private sector of bitter stirred cocktails.

And that was old fashioned Negroni and Manhattan. And that that would really send a signal to the consumer. We were looking to attract that. Like, okay. I've seen a lot of canned cocktails. They're usually watered down or cheap or going to give me a headache. But this one, this one's in this can, it's the right proportions for these cocktails traditionally.

And they're doing a Negroni in a can and an old fashioned. And so yeah, I'll give it a go. 

Jordan Buckner: So I love that. I'm curious why you decided on the 100 ml can as a form factor. 

Neal Cohen: Yeah. It's all about really the, loyal to the tradition. And to where these recipes originated. We work with a guy named Miles McQuarrie the beverage director of the Kimball House, a [00:03:00] really amazing restaurant and cocktail bar in Atlanta.

He's our recipe developer. And so when we go to make any of these cocktails, we originally start with his gold standard that he'll make using the traditional proportions. And that's exactly the way that we want it to read once it's in the can. And so if you go back and you look at recipes for old fashions, margaritas the bee's knees you know, across the board, espresso martinis, it's not showing up as six ounces, 12 ounces, you know, some of what you're seeing in the category.

 You're using about two ounces of spirit, about an ounce of a modifier or a like, like a vermouth or something, or an ounce of juice, like lime juice or lemon juice. And then. There may be a couple of other things, some sweetener, you know, simple syrup that go in there. You're really coming out to what this can is, which is 3.

4 ounces of volume. And you're getting a high proof cocktail in those 3. 4 ounces, 

Jordan Buckner: where some of the image might be just like watering it down, right? They're not just dumping. The drink size, it's [00:04:00] more like watering it down so that it's still a single serving. 

Neal Cohen: Yeah. There's, you're paying for more water.

You're paying for more additives and flavorings. And really just not the cocktail. And that's, when we go and do tastings, one of the first things a lot of people say is like, Oh, it's a real cocktail. Because if they've explored this category at all, they've probably run into a lot that are sort of An approximation where you got to use your imagination and be like, Oh yeah, I guess that tastes like a margarita.

And so, yeah, ours are foolproof. we're a range of 22 percent to 37% right now with the cocktails we're offering. So really in line with the way that you'd get it if you went to your favorite cocktail bar and had a skilled bartender make it for you. 

Jordan Buckner: I'm curious about that because I enjoy a good cocktail myself and or the right going to a cocktail bar is the drink itself and the quality.

The other part is the experience kind of being there, maybe talking with the bartender or watching them kind of make the drink. I guess I'm curious like what you've learned about your [00:05:00] customers in terms of like what they're looking for and uses occasions like enjoying that same flavor profile but just at home and like not having to make that drink themselves right like is this something that they're taking to drinking like at home or in small groups is something that they're taking to parties and events and it's like thrown in the cooler with a bunch of other things.

Like, you know, the White Claws of the world, kind of, how are people using it? 

Neal Cohen: Yeah. When we first started out, the two words that kept coming up with our brand were quality and convenience. And so the piece that you're speaking to is the convenience part. We launched in September 2019, and at the time, convenience meant portability in a lot of ways.

Like, hey, imagine if you can have one of your favorite cocktails at the top of a mountain after finishing a hike. Or, you know, just easy access to a cocktail on the beach. And we still serve some of that purpose, but what's happened, right. A few months after we launched, of course, people stopped going to bars and they wanted the same comfort since they were at home during the pandemic.

And we did find a lot of people [00:06:00] returning to classic cocktails and those comforts. And there was some acceleration that happened to our brand as a result, but even as people went back to their old habits of going out or drinking at home, they were now more educated in great cocktails and we've continued to sort of help them along that journey by both bringing cocktails that they know about and they've always been in demand as well as other cocktails that are traditional, but maybe lesser known.

We're finding that more often. People are drinking these at home and while yeah, some people know how to make these cocktails and even enjoy making these cocktails and I'm one of those people, I don't always want to make them. And when I do go and make them, I may just want to make one round of them, especially if I have friends over and everybody wants one.

It's going to take me five to 10 minutes and then everybody wants another round and I got to go and take another 10 minutes out of my party to do that. So we're really finding that, especially in our marketing, cause you asked about that specifically that we're putting a lot less emphasis on the go occasions.

Cause in a way, what [00:07:00] that means is that our brand is for those times where you have to compromise if we're focused too much on, on the go. And indeed, that's not the case, you know, the integrity of the cocktail itself makes it just as viable as something that you would drink off of your bar when you have everything accessible.

Jordan Buckner: I love that, that makes a lot of sense. So you've been in market for about five years now, which is really exciting. Tell me about your path to growth and the expansion. Did you start in regionally and then slowly expand, right? And now alcohol is challenging because of the three tier distribution system.

Tell me about that path towards sales growth and expansion. 

Neal Cohen: Yeah. Growth for us, given the time that we launched in 2019 was a challenge initially. What happened in March of 2020 is that a lot of distributors Ended up holding the bag on a lot of products that were popular and on premise and they weren't interested in bringing on new brands and building new brands at a time where know events really have been known as one of the primary tools in the toolbox for building a brand.

And it [00:08:00] wasn't available even, nor did they want to clog up their warehouses any further. And with alcohol products, of course, you have to work with distributors. So initially that was challenging. What really propelled it. And so we launched in the state of Georgia, we launched with. A, you know, not the biggest in Georgia, but it is distributor that has some you know, that has some of the, a couple of large spirits, like very large and the most popular craft beer in Georgia.

So you got Tito's, you got creature comforts. And so we knew that they were going to be getting orders from any account that we could possibly want to be in, but that we could also have some share of mine with their sales team. And that was important for us. And it's really worked for us in a lot of markets to look for that type of distributor And then as far as like another piece that really did propel our growth in some ways, is we landed a business with Delta Airlines within the first year and a half of our launch.

And in doing so, we needed to have distribution to all of the low end cities. so we very quickly, when we had that [00:09:00] opportunity, needed to secure distribution. And so we grew quickly as far as our distribution footprint. That didn't mean that just because we were distributing to a state that we were actually going to be servicing retail there 

Jordan Buckner: or yeah 

Neal Cohen: But we did need to engage distributors there in order to be able to load in at the airport.

Jordan Buckner: I'm curious about airlines because it's something I've looked into a lot some airlines look for essentially like Free product to give out as marketing. So we'll subsidize it. Basically one of the costs and others, it can actually be right. Like a profit center could have been buying products from you.

What was this opportunity for your brand? Was it something that was like mostly around marketing awareness or were you actually making money from it a selling chain. 

Neal Cohen: It's evolved over the years, but we definitely went into it with full awareness that this was primarily a marketing plan.

Yeah. That this is not the foundation of your revenue streams for your business. But as a brand that's just launching and is looking for trial and awareness. I think we've calculated like the date that we've gotten somewhere [00:10:00] around 5 million of value. If you see, if you think about what it would cost to do tastings to service as many people that have been served on the airlines you know, yeah, it would have been that type of investment on our end.

So that was absolutely the play from the get go. And it's been very effective. 

Jordan Buckner: One thing that I heard too, and you talked about before is with expanding into some of the liquor stores and retail, you had a strategy of placing the cans at checkout, right? So it's something that people might, this is a smaller format.

It might be a little harder to find on the shelf if you're not looking for it, but maybe checkout is a better scale where someone can actually see it, might be more interested in. Can you tell me about how that evolved? Yeah. 

Neal Cohen: Yeah, absolutely. So we developed a dispenser to sit on the counter adjacent to the checkout that would hold roughly 30 of our cans and allow people to really that impulse purchase.

To just grab them and put, okay, what works really well with that is that it's all incremental for the retailer. When new [00:11:00] products come in, they have to think about what it might cannibalize. In our case, with that placement, it's not cannibalization. It's all incremental. You're looking at your cart size going up, you know, five, 10, 15, 20 as people are just grabbing individual cocktails. And it also means that they have a great opportunity to trial it, lower barrier to entry, and then be able to graduate to a larger pack size. And so as we started to see velocity increase in certain accounts, that's when we knew we had returned consumers and that we wanted to ensure that they were being serviced well by our pack size.

Initially, we thought, okay what are these consumers buying? Otherwise, maybe it's bottle of spirits. So we went with an eight pack configuration, which was 800 milliliters, a little over that 750 ML. That someone might be buying for a bottle of bourbon, say. And, you know, it was right around that price point of a 35 to 40 price point, but you're buying eight servings of one cocktail and really having to commit.

We also [00:12:00] tried a variety pack at that size. And we quickly found out that 40 was far too much in a category where if you're going to be placed on shelf, you're alongside a, you know, a pack size that's probably about 15. Now, it's not as high of proof, you know, it's not as high as premium, but a consumer's just going to get sticker shock.

So we moved it down to a four pack. And what we've seen over this last year is incredible increases in our velocity as consumers have graduated from singled off the counter to those four packs. And we've also expanded our distribution to states where grocery can sell spirits. And so in those states where grocery is selling spirits, we're getting pickup from a lot of, I mean, national chains like Trader Joe's and Whole Foods.

And then a lot of great regional chains as well who are taking advantage of the four pack sizing. 

Jordan Buckner: Yeah, I think that's a really great kind of lesson learned in testing, right? What works best, so you have the single can, that's better kind of a checkout. You have this multi pack. You found that the eight [00:13:00] is too big of a commitment for a single flavor.

And then four is kind of that sweet spot. So I think that another testing. Yeah. 

Neal Cohen: Yeah. Another finding, I think that we're still trying to figure out, but variety pack for a seltzer say, you know, the difference between a mango and a cherry is like, it's a little bit of flavor, but ostensibly the same product.

Jordan Buckner: It's like a juice when you're artificial or some quote natural flavor. 

Neal Cohen: Yeah. Right. When you're talking about a variety pack for cocktails, mashing a margarita and a Negroni and a daiquiri and an old fashioned into one variety pack. It doesn't seem to compute the same way because you're talking about drastically different proof points, different spirits, different occasions, different flavor profiles.

And we found some on e com that if we do a whiskey pack or a gin pack or a rum pack, it does better, but it's still, you know, the difference between a Negroni and a Bee's Knees, both gin cocktails, still very, you know, it's a different consumer in a lot of ways. 

Jordan Buckner: That's really smart. I mean, because [00:14:00] even with my previous brand, TeaSquares, our variety pack was our best seller, but it was a similar situation where there were slight flavor differences, but if you have a four pack of four different cocktails, if someone doesn't like one cocktail within there, like not a fan, they won't buy the whole thing, right?

And so I think that's a really kind of smart learning to figure out, like, how do you make these approachable with like a four pack of a single variety? I'm also really interested because you now have. Was it like, how many cocktails do you have? 

Neal Cohen: Yeah, yeah, we, we have 11 and we're going on 16 and yeah I guess that's a little bit of our, like, naivety and risk taking kind of threshold being greater than people who started and have spent a lot of time in this industry.

You know, conventional wisdom. If you ask someone who's been in alcohol or in really any CPG for a significant portion of the time is like. You know, don't have too many skiers and some will say stick to four. Some will say six or seven is the magic number. In our case, we're up to 11 going on 16.

And I think the data [00:15:00] supports it. I was just on a panel yesterday with someone from three tier beverages. And they said, what are people looking for in the RTD category? They're looking for flavor discovery and taste discovery and to have a journey you know, in the category. And so we're looking at our brand, much like a trusted bar.

Why do you go back? You go back because of consistency. 

Jordan Buckner: Yeah. 

Neal Cohen: Every cocktail I've ever had there is killer. And you go back because you know when you go back, there will be some opportunity for new discovery. 

Jordan Buckner: That's right. And then I found too, right, just some things about drinker, people who are, do consume alcohol.

It's a lot of times people find, they're in early stages of discovery. the finding the drink or a few drinks that you like, then there's consistency. And then occasionally there's some discovery beyond that as well as like, yeah, let me try something different. If I trust the bartender, if I trust the brand if there's something out from there.

And so I think that's a great method. Plus everyone kind of has their drink or a couple of drinks. So if you can find those people, then you're aligning with them. 

Neal Cohen: Yeah, and we're really just trying to make having great cocktail experiences more accessible to the people [00:16:00] who have that desire. And so in doing that, we're also thinking, okay, right now our only vodka option is an espresso martini.

That's more of a coffee drink than a vodka drink. So, yeah. Let's put out another really popular traditional vodka cocktail. So we're coming out with a Cosmopolitan and we're certain that will do well. People want a greater access to that cocktail and it's seen a nice revival recently too, but on the same side.

So we're balancing those sort of more mainstream volume driving type releases like a Mai Tai we put out in April. Cosmopolitan we're putting out shortly looking at July. So but we're balancing that with a couple of modern classics that may be a little bit more familiar just to people who are really paying attention to cocktail culture.

But we're doing it with the original creators of those cocktails. So about 20 years ago when New York City was really starting to generate a lot of activity that has built this cocktail renaissance we're currently experiencing. There's a guy named Sam Ross who invented a cocktail called penicillin and a paper plane.

And if you go to a random [00:17:00] hotel bar and say Orlando and you look on the menu, you'll see old fashions, you'll see your margaritas, you'll see your Manhattans, but you'll also see a paper plane and a penicillin. And so for us, being able to bring that one to a greater audience with the original creator helping us.

To ensure that the recipe is spot on as an incredible opportunity. 

Jordan Buckner: Well, I like your approach to product innovation because I see two sides of product innovation. Some people are like, let me try to create something where like the flavor profile is clearly near the market, right? Like at least as of yet, as of yet, you're not creating your own.

cocktail recipes that are just unique to Tip Top, right? Like, you're thinking about what are the existing recipes out there and mixes that are really great that then we can translate into this form factor and deliver at a high quality so that you don't have to worry about the Like drinking a high quality cocktail that can, is new enough to educate on.

It'll be a lot of more work to educate on like what a unique cocktail would be on top of that. Right. So I think it's a very smart way of thinking about your product innovation and what matters to you. 

Neal Cohen: Yeah. I like to [00:18:00] say that what we're doing is picking cocktails that have always been in demand and making them available on demand.

We don't have to do a lot of market research to know that people like old fashions. They've been drinking them for 200 years. And throughout that time, you've never really been able to find a consistent place to have great access to that cocktail. You need to buy a bunch of bottles and learn how to make it, or you gotta go to a bar and spend whatever cash that it takes, which now it's upwards of 15, 20 for one of those cocktails, to find out even if you just like it.

So I also think a lot about. Who of course we know we're capturing that cocktail enthusiast and that's who we were initially aimed at. But I think when I came out of college about, you know, 15, 20 years ago it was clear as I wanted to like become a more sophisticated drinker. Like, okay, I'll drink.

bourbon and I'll get into craft beer. I don't know that it's as evident to someone in their mid twenties in the like early thirties who are really trying to figure out their identity as a consumer of beverages. Like what do I drink? And so what we've seen since our [00:19:00] launch in 2019, that was around us shake up of seltzers, malt seltzers.

And then we've seen that graduate to spirit seltzers and now. As people have that switch, like, Oh, spirit based, that's good. Malt, that I think there's a lot of consumers out there that have learned that, but they haven't learned what spirit based offers truly. So being a great welcome mat to someone who's cocktail curious, and to coming to like getting premiumizing their choices, that creates an emotional attachment.

The first time I realized I liked in a groanie was because this brand brought it to me in this can. That's going to stick with them. 

Jordan Buckner: I love that. Well, it's definitely sticking with me because I'm going to pick up some as well. I haven't had a chance to try them yet, but I definitely will because I have been on the lookout for really good cocktails and I don't have the time to make them myself anymore.

So, Neal, thanks so much for being on the show. Can't wait to follow you during your success of the Tip Top Tea and try more of your cocktails coming out. 

Neal Cohen: Amazing. This was a lot of fun, Jordan. Thanks for having me.