SB Meets… Frank Lampen, Distill Ventures
Frank Lampen, co-founder and CEO of Diageo-owned investment unit Distill Ventures, on the potential of the non-alcoholic space, category innovation and tackling the US market.
What has the company been working on for the last few years?
Over the last few years we’ve added to the portfolio in a number of areas. We’ve got a good strong portfolio in North America now and that is a combination of brands which are not based in North America but are now launching over there. Like Starward, the Australian whisky that joined the portfolio a couple of years ago.
It’s really exciting for us to be able to help our brands and start tackling the US market. And then, of course, adding domestic US brands to the portfolio like Westward. So North America has been a big theme and we’re really happy with how the portfolio is developing there.
Whisky continues to be a big focus for us. We’re still meeting lots of new whisky companies around the world. We’re very interested in the next wave of whisky in terms of whisky from new provenances, new styles of whisky. It’s still a big focus but we feel like we’ve got a good portfolio as it is.
We have a number of investments in the non-alcoholic sector. It’s pretty early stage investments, so some of them are pre-launch and some of them are only just in market. But across both North America and the rest of the world, we’ve got some really exciting non-alcoholic propositions to keep broadening that choice that’s available to drinkers when they choose to not be drinking.
Are you actively looking for more brands in the non-alcoholic sector?
Yes, we’re actively looking. The reality is you can still go into a bar or a restaurant in many key cities and still not have a great range of drinks if you choose not to be drinking on that particular occasion. We think there’s a long way to go in terms of the quality of non-alcoholic options in bars and restaurants, which should be as enticing as the cocktail menu or wine list.
We think there is plenty of room for more brands to come in and complete that offering really so you’ve got really good alternatives in all the different occasions where you might drink alcohol. Aperitif moments, food moments, casual get-togethers, these are all moments where we think there is still space for more offerings to come into the market. So we’re definitely very active in looking.
Is non-alcoholic a big focus at the moment?
It’s about a quarter of the 15-plus portfolio. So that’s pretty significant. We’re very very selective, given that we’ve probably looked at more than a 1,000 companies each year. We’re very selective around what makes it for consideration to enter the portfolio. But we’re now in that sort of stage with the Belsazar exit, we’ve got brands that are exiting our portfolio because they’ve grown to a significant size. So for Diageo to acquire them outright and start integrating them into their own route to markets, that creates some gaps in the portfolio.
We’re always going to be open to making new investments where we see a great opportunity with a really strong team behind it.
Are there any categories that you would like to enter?
We’re interested in where innovation is going to come through. We’re interested in things where perhaps, someone has got this sort of crazy idea about how they are going to really reinvent the category and make it new and fresh and exciting. So we’re always on the look out and we’re fully broadminded across categories.
There are some areas where we actually see a lot of good opportunities. You look at gin and there’s so much activity that there’s a lot of companies in there but within that there’s more, you can see some businesses where you think ‘I’d really love to work with those’.
Other categories like rum, we don’t see the same level as innovation. There are new things happening but we don’t actually see the same level of energy. If people have an idea of how they are really going to reinvent that category then we’d certainly be interested in looking at that.
There’s definitely differences in terms of the level of innovation you see in different kind of categories and there are definitely some where perhaps we don’t see as many investment prospects as we’d like. Rum is a great example of that, where we’d be really open to conversations with people if they felt that they had something really interesting and would make a real impact on that category.
Do you see a lot of opportunity in gin as well?
We’re still bullish that you may see the pace of new product launches in gin struggle a little but we’re pretty confident that there is still opportunity in the category. One of the really interesting things you’re seeing is that there’s definitely a wave of people exploring flavour in gin, using quite unusual botanicals, and then you have the more sweet flavoured gins.
What we’re starting to see is consumers exploring higher quality and realising that not all gins are made the same and that actually a lot of the brands that have done well in the last few years are brands with quite strong distinctive flavour profiles or fruity flavour profiles. We think that growth in the ultra-premium category is really interesting. We’re optimistic that we’re going to still see gin doing really well as a category.
What are your priorities for the company?
The first priority is always focusing on what you have. We have got a sizeable portfolio, this portfolio is starting to expand geographically so a lot of the brands have been in the market for a few years in their home country are starting to export.
The first priority is to focus and make sure that we do the best job we can for our portfolio in terms of supporting them. The companies are independent, they make their own decisions but we’re there to support them really.
The second priority is to keep our eyes open and to keep meeting people within the industry, who have innovative ideas and help them with investment and support. We want to bring new companies into the portfolio, we’re very open to new and disruptive ideas and we want to make sure we’re out there meeting as many people as we can with the best ideas.
Those two priorities are what we organise the business around – helping the current portfolio grow and finding the best new opportunities.
What are your plans for the company over the next 12 months?
We’ve got a good full portfolio and a full team in North America and we’re really working to support them.
In the non-alcoholic space, we’re seeing some of the new investments we’ve made in the last couple of years come to market. It will be really interesting so we want to enjoy that when they come to market.
In May 2018, Distill Ventures released its Non-Alcoholic Drinks: A Growth Story white paper following eight months of research in collaboration with data analysts CGA and IWSR.