On this episode of “Next Round,” host Adam Teeter chats with Stephanie Gallo, CMO of E&J Gallo Winery, and Alix Peabody, founder of canned wine company Bev. They discuss how Bev’s position as an unapologetically pink, women-owned, women-targeted brand is the crux of its success. Stephanie, an alcohol beverage industry veteran, and Alix, an industry newbie, talk about how their partnership is a learning experience for both women. Alix credits Bev’s popularity to her identity as a consumer first and a founder second. She knew next to nothing about the beverage world before diving into it, she says, and now she’s fussing over minutiae like the particular sound Bev’s cans make when they’re cracked open.

Tune in to hear about how Bev secured $21 million in investments in its infancy, and why you can expect to see more of it on shelves near you in the coming months.

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Adam: From Brooklyn, New York, I’m Adam Teeter, and this is a “VinePair Podcast” “Next Round” conversation. We’re bringing you these conversations between our regular podcast episodes in order to give everyone a better picture of what’s been going on in the alcohol beverage industry this year. I’m really excited to be talking with Alix Peabody, the founder and CEO of Bev, and Stephanie Gallo, the CMO of Gallo, because they have a really interesting partnership that’s just begun. Stephanie and Alix, thank you so much for joining me. So before we jump into why you’re both on the podcast, I think everyone who listens to VinePair is probably well familiar with Gallo, but they may not be super familiar with Bev. So, Alix, if you could tell me a little bit about Bev and yourself, that would be awesome, to get us going.

Alix: Yeah, absolutely. Bev is a little bit of an enigma, I suppose. I think Stephanie would agree with me there. But it’s a crazy story — I started the company just about three and a half years ago, but honestly, it was a brand and a mission long before it was a product. I knew nothing about the alcohol beverage business whatsoever. I started the company actually out of a need to pay some medical bills because I was going through some health problems. I ended up throwing these parties that were really female-centric, female-focused. I come from a background and a history of being in very fratty places, male-dominated industries, and stuff like that. As I started throwing these events, I really loved the idea of what happens when you change the narrative a little bit around whose base that really is, and how do you make that more female-friendly and female-owned? I’ve never been an angry person by nature. I always like approaching these things with joy and unity and all that good stuff. So I started looking into different ways that I could spread this brand vision and mission before anything else. I landed in this industry by accident because I was like, “This is the lowest common denominator of any party you’ve ever been to, or any event.” I wound up making canned wine simply because I had some friends in the wine industry. I didn’t know much about it. I knew that it was going to be very hard to find some amazing supporters like Steph, given that it is such, it’s such a mysterious industry for a lot of people. I ended up picking wine because I figured that we needed to have some proof of concept and a customer base before we could really prove that there was a huge market for this. This was before canned wine was a big thing. So I cashed out my 401k at the time. I bought 300 gallons of rosé from — I don’t even know if Steph knows this — a guy I met on a dating app who just so happened to be in the wine industry, and then off we were to the races. And I got to meet Stephanie last year and it’s just been the best. I can’t say enough amazing things about Gallo and our relationship. I would call it a friendship at this point, too. It’s just been wonderful.

A: So tell me, why canned wine? So obviously, you were doing parties, but what made you see an opportunity in canned wine as opposed to bottled? I mean, now I guess it’s a little bit more obvious that RTDs are all the rage and things like that. What was it about canned wine that got you interested, and what specific brand did you want to create around canned wine?

AP: Oh, my gosh. It’s such a funny question because I get asked this a lot, like, “How did you know about the RTDs?” I knew nothing. My whole thought process behind it was, “Well, wine is the only product that I can sell direct-to-consumer. Therefore it’s the only product that I can understand who my consumer is. We can sell without distribution because I figured that was going to be really hard.” I was Googling three-tier liquor laws. That’s how little I knew at the time. I put it in a can simply because I had no money. I thought to myself it’s really hard to pour something into a glass and be able to identify what that brand is. You don’t know what it is if it’s in a glass. So I put it in the can because I was like, “If it’s cute, and if it’s marketable, and people want to take Instagram photos with it, it will start to market itself.” At the time, it was very hard to find someone who would even can wine, so I was just lucky.

A: Was the goal of the brand always direct-to-consumer?

AP: No, the goal has always been to be a mass-market product, and to be everywhere and anywhere consumers are. I just knew that we were going to need a proof of concept, and I knew that we were going to need to be able to show distributors who are looking at products in terms of scan data that there’s actually a market for this. There’s a customer, and I can tell you where that customer is. I just figured that it was going to be my only way to really prove the concept of a brand new product. I’m glad we did because it’s quite hard to launch a new product in the middle of a pandemic.

A: Did you find that also helped in fundraising?

AP: It did eventually. In the beginning, nothing really helped in fundraising. It was so much work. I mean, I’ve told Steph this, but I spoke to over 400 people just to get a few checks at the beginning, because it’s such a tough industry for people who know nothing about it. That’s something that hopefully Bev can start to make more approachable. I’m really excited that the Gallo team sees what we’re doing and values it, because trust me when I say it has been a long journey and that has not always been the case.

A: The beverage industry is really hard, and obviously Stephanie can tell you that. There’s a lot of ideas, and a lot of people trying to raise money. There have been some brands that are buzzy right now that we could talk about that are also DTC — some that I’ve had on this podcast — but a lot of them haven’t raised (and correct me if I saw different things) $7 million. Or $14 million?

AP: First 7, then 14.

A: So $21 million’s a lot of money to raise. What do you think is it about Bev, and your story, and what you were selling that caused these investors to say, “We will totally go in on this,” when a lot of other beverage companies cannot do that and have had a really hard time raising funds?

AP: That’s an awesome question. I think it was a few things. My grandfather always said luck falls on the shoulders of those prepared to receive it. There was a lot of preparation. Part of the reason that we were not able to raise capital in the beginning from traditional beverage or CPG funds is because they want to see metrics. They want to see traction. This is such a catch-22 for young brands because you have no metrics, you have no traction, and it’s a capital-intensive business, and you need the capital to to get it off the ground. I leveraged my relationships in Silicon Valley from my time working there, and we were very lucky to be the first-ever beverage and/or CPG product backed by Founders Fund. The only thing that was very difficult about it, that I think a lot of people don’t realize, is a lot of these funds that play in the fast and loose space or form of investing, they have vice clauses, so they’re not allowed to invest in an alcohol, tobacco, firearms, or sex toys. I don’t know why rosé is lumped in with firearms per se, but a lot of them just can’t even do it. So the number of people that you’re actually allowed to try to raise capital from is even smaller, which makes it even more difficult. I was lucky in that I was able to get someone who said, “I see your vision, I see your brand, I see your passion, and I’m going to invest in that,” pre-revenue. That was frankly crazy, but good on them. I am so grateful for that support. It wasn’t until we really started to show traction, metrics, and repeat rates, and get some major retailers behind the brand as well, that we were able to say, “Look, there is a real market for this,” and go to the more traditional sources of capital. I think that is one of the major issues. The major catch-22 for young beverage brands is that there’s not a lot of capital available for beverage companies without solid metrics.

A: I’m sure there’s a lot of people who are listening to this podcast right now, like you, who also have beverage brands, or who are thinking about beverage brands. We also have one of the most accomplished CMOs on this podcast with you, so I don’t want to only keep asking you questions, but I have one more before I come to Stephanie.

AP: She’s someone that knows all the good stuff — she’s the one to listen to.

A: Who was the market for Bev, and what did the growth look like? So when you first started going to market, what metrics were you looking for? Were you trying to go from 100 cases to 1,000 cases to 5,000 cases? Who were you targeting? I’ve read a bunch about the brand, but I don’t want to give away what I’ve read. Instead, I want you to tell the listeners who you thought the audience for the brand was, and were they the people that actually became the audience for the brand?

AP: Another fantastic question. I used to walk down a liquor aisle or a beer aisle or whatever, and you see all of these branded products that are highly emotionally branded and targeted towards the male consumer, or, in my opinion, the male consumer trying to buy drinks for the female consumer. It’s not necessarily speaking to and with the female consumer. Or you have fantastic brands that are more artisanal in nature where it’s really about the craft, it’s about the winemaking, all that kind of stuff. For me, there’s really nothing that a woman can hold in her hand in a can that’s almost like wearing a brand T-shirt that says, “This is what I stand for.” For us, it’s always been about exciting women to have not only the permission but the joy of celebrating themselves and being themselves. That’s what we hope to communicate. At the beginning, I thought given the bright packaging I’d get asked a lot like, “Well, why do you make it pink if you’re a feminist-forward brand and blah, blah.” I was like, “Because it’s my favorite color, and I don’t need to apologize for that, frankly. That’s why I did it.” Then I started putting in more of my favorite colors and stuff like that. I think the authenticity of the brand has really resonated with the consumer through and through. That said, the consumer base has been far more expansive than I expected. I was expecting us to really hit that sort of late-20s, maybe early 40s range. We’re seeing tails all the way up to women in their mid-60s pretty equally distributed, and also pretty equally distributed throughout the country, which has been very exciting. A lot of those people, they’re looking for it in stores. They’re looking on our store locator to find it. That’s where Steph comes in.

A: Thank you for that, Alix. So Stephanie — how did you first discover Bev? I understand, somewhat to your point, that there aren’t a lot of brands that are very female. But then you have other people who will say, “Isn’t that all of wine?” I’m wondering from Stephanie, who has so many brands and has been in this business for such a long time, I feel like that’s a stereotype that all wine is female-focused. That’s what I hear all the time from other winemakers: “How do I bring in men to my wine?” (I don’t know why I just did a weird Italian accent.) I hear more and more like, “How do I get men to drink Prosecco? Only women drink Prosecco.” So I’m curious if all of us are just wrong and we’ve all stereotyped wine for too long. Also, Stephanie, when did you discover it, and what attracted you to it in the first place?

Stephanie: On a personal level, I discovered Bev, believe it or not, through a mutual friend on Instagram where she actually went to go visit the Bev headquarters and talked about meeting Alix. I had been following Bev since its inception. During Covid, actually, my brother reached for it along the pitch deck and basically said, “Hey, I think this is something pretty interesting. Why don’t you follow up with Alix to see if there’s something here.” So personally, about three years ago. Professionally – Alix, what, about six months ago? Seven months ago?

AP: I didn’t know you knew us that early. I’m flattered.

S: I’ve been following Bev just as a regular consumer. To answer your question specifically, the reason why we were interested in Bev — and it goes back to what you were saying — is that from an innovation pipeline perspective, I have always wanted to develop a brand that was very not necessarily female-centric, but one that really spoke to a cultural trend that we’re seeing around women’s empowerment, around women founders and female entrepreneurship. I think that is something that is super on trend, and I think it’s here to stay. I really felt that authentically, Gallo, we didn’t have the permission to tell that story. So when we met Alix, I felt that if I were to create an organic brand, it would have been Bev. I think that what has always appealed to me about Bev is that it is extremely mission-driven. It has a very strong purpose, and I think great brands that are going to go ahead and accelerate in growth are ones with a strong purpose, combined with great mission, and with things that are culturally relevant.

A: First of all, explain to me what the partnership is, for those that aren’t aware. How did it come about?

S: So the partnership is pretty darn simple. Today’s the day actually— I texted Alix this morning at 6. Today is the day where the Gallo winery will basically be the distributor of Bev. We’re basically going into a distribution arrangement. Alex is going to continue doing what she’s doing. She’s still the owner of the brand. She’s still going to market the brand, and she’s going to continue doing what makes Bev successful, and Alix’s team will continue to run the operation.

A: OK, so you’ll be the ones getting it in-store. How will that work? Is Bev going to be able to take advantage, obviously, of Gallo’s access to great wine and things like that as well?

S: Eventually. But for right now, it’s working. When Alix and I talked about this partnership, I knew that she had a lot of opportunities and looked at many different arrangements. But I remember having a conversation with her and I said to her, “What makes Bev Bev is, quite candidly, the founder’s story and Alix’s involvement.” I think it’s critical to the success of this brand. For the health and success of what Bev stands for, we just think it’s absolutely critical that Alix and her wonderful team continue to stay involved and do what they do.

A: So what will marketing for this look like now? Alix, is that all of your team still running the message, running the Instagram, doing ad buys, things like that?

AP: Correct. One of the things that was so compelling to me about the Gallo team, and Steph in particular, is that she really believes (and I don’t mean to put words in your mouth) that us operating independently, and really being able to own that narrative and build the brand the way that’s created so much traction, is so important. When you talk to a lot of different strategics — for lack of a better word — and stuff of that nature, it tends to be like, “OK, great, you did this thing, I’m going to take it and I’m going to build it myself.” And the thing about the partnership with Gallo that’s just been so awesome is that Steph doesn’t believe that. She’s like, “What you guys are doing is working. It behooves the brand, and it would be painful for the brand to stop that.” I think partnership is the best word for what’s going on; it really is a partnership. We’re going to help every way we can in terms of having our ambassadors out there and stuff like that. But there’s no one better out there than Gallo when it comes to execution and wholesale. That’s a place that most brands falter, because it’s so expensive and it’s so difficult. Having that opportunity is just beyond… I get emotional when I talk about it.

A: So I will be honest; Stephanie is very famous for asking tough questions. So I have one for her, which is: So for the person that’s looking at this situation, is this like Casamigos? So is Gallo ultimately going to acquire Bev, and that this is sort of a middle position, where you guys can kind of see how it goes? Is this something separate? Is this a partnership that if you both don’t like it in a few years, you can walk away from? The first time I ever met Stephanie, she said to me, why haven’t you sold VinePair yet? I was like, “Because I’m not ready!” So, I mean, she asked me those questions. I have to ask her these questions.

S: Alix and I have had a lot of what we’re going to call “spiritual conversations” about this topic. For us, we’re just getting started. Ultimately, I think it really depends on what Alex wants to do with the brand moving forward. Right now — I honestly mean this — we’re very happy simply with the partnership around the distribution agreement. I think we have a lot to learn from Alix, and Alix has a lot to learn from us. I think that there’s value there.

A: That totally makes sense. Very good answer. So Alix, I think it’s interesting that you didn’t have a background in wine because I’m wondering if your experience around canned wine is actually the way we see most consumers experience it. I talked to somms who started canned wine brands. Every time we talk about the wine, they talk about how the wine is still poured into a glass. I think to myself, “I don’t know anyone who drinks canned wine that drinks from a glass.”.

AP: You’re speaking my language.

A: Like, no one drinks it out of a glass — come on, it’s canned wine for a reason. I’m curious, how are you seeing your consumer drink canned wine, and what do you think the wine industry is still getting wrong about canned wine? What are the stereotypes or the misconceptions people have about canned wine that are just flat wrong?

AP: It’s funny, because we joke in the office that our favorite compliment is, “Oh, it’s actually good.” We get this all the time. It’s funny because like I said, I had no money when I started out. So the can, in a way, was going to be our biggest marketing tool. I was like, “I need people drinking this out of the can. I need it to be directly consumed from the can because I need them holding the cans so that people can identify it and see and see what that is.” For me, it was a canned product from the get-go. Steph will probably roll over in her grave one day about this, but the first time that I went to a winery knowing nothing about anything I said the word I’m looking for is “chuggable.” I’ve since learned that the word I was looking for is “sessionable.” Anyways, I didn’t know any better. I think as someone who is simply a consumer, the way that we developed the product itself was just, I went to the store, I bought every rosé, every canned wine I could find, and I blind-taste-tested them. The results probably got significantly less detailed throughout that process of the tasting. It was just like, “What do I want to drink?” For our red wine, for example, I put that thing back into R&D three or four times because I was like, this, I don’t want to drink this straight out of the can. I don’t love this straight out of the can. Red is a tough one to crack. So I was like, “I need this to be one of the things that I want to drink every day.” Or every other day — it depends if Dad’s listening. So that was something that I thought was really important: what tastes good to me. We’re not vintage. We are the consumer of the brand. I think what a lot of people tend to miss in this category in general is that the can in and of itself is approachable. There needs to be an approachability to these products that are new in a way and that is fresh and that is really from the consumer’s perspective. I think that that was actually a huge edge that we had, in a way, because I didn’t even know what the three-tier liquor law was. I was Googling it. It’s very hard to find on Google. It turns out also it’s very hard to figure out when you know people who know everything about it. The other thing, too, is we did a couple tests, for example, with still canned wine. Ours is effervescent, slightly carbonated. We call it “a lil’ fizzy.” When we were trying different things, it was like, “Well, for example, people really expect that sound when they crack it open.” Things like that, where we really wanted it to be able to drink like something that you would normally drink out of a can, even though we’re still a still wine. When you pour it into a glass, that carbonation kind of goes away. I think that that’s the thing. People oftentimes are creating their canned wine as if they’re creating a bottled wine. To me, it’s a different category. I was asked a lot, especially at the beginning when there was not much of a market for canned wine, “What’s the market cap?” My response was, “Honestly, there was no market cap for energy drinks before Red Bull. Why should it matter what that looks like for us right now?” Because at the end of the day, if you do it right with the branding, if the product is delicious, you can create that market. I think that’s something that, together, we’re really going to be able to do.

A: So, Stephanie, I’m sure you see more new products than even I see. You’ve probably seen a ton of canned wine since the first ones started exploding five years ago or so with Underwood and stuff like that. Was it for you really about the brand, too, that made this such a compelling sell for you? Something that the wine industry — a lot of the wine industry besides, actually, your brands — don’t get: the understanding of brand. We think it’s just about the liquid in the bottle, or the can, etc., and that’s all that matters. But consumers love brands. So I’m curious if that is what caused Bev to stand out?

S: I think one of the hardest things about Covid — Alix and I talk about this all the time — is that we’re an organization that loves being what I call “boots on the ground.” Let’s get out. Let’s go talk to customers about it. Let’s go sense it firsthand. There are a lot of canned wine brands, but at the end of the day, based on the due diligence that we were able to accomplish, this one had the velocity that made it interesting for us in the accounts that they were in. I think that at the end of the day, it really does come back down to: It’s all about the brand. And the work that Alix and her team are doing to drive awareness in a very focused manner with the right audience. The rest is history.

A: As of today, because we’re recording this on March 1, you are saying you are now officially the distributor of the brand. Will we be able to find it pretty easily across the country soon?

S: It’s a great question. We are starting small, believe it or not, small for Gallo. So our aim is to expand the availability of these wines right now in targeted retail accounts and on-premise accounts in the United States. We have what we call a concentrate and breakthrough rollout. As far as we’re concerned, it’s still a very young brand. I think that Alix and our organization have a very common vision, and a shared vision, to grow in a responsible manner, and to grow where consumer demand is. And we’re able to identify where the consumer demand is based on the DTC sales that she’s been able to generate.

AP: If I can add to that super quickly: Small for Steph is huge for us. That’s what’s super exciting all around. I think the DTC portion is so interesting because it’s a new model — you don’t have to go in blind to these markets. That’s something a lot of brands don’t have the luxury of. It’s really awesome to see my team and Steph’s team work together and consume all of that information and be able to say, “Hey, we know we’re going to be successful in these places. Let’s go there.” That’s been really interesting. I think we’re learning on both sides, because I sure as heck don’t know how to execute like these folks do in the markets.

A: Well, this has been really fascinating. Alix, Stephanie, thank you so much for taking the time. I wish you great success in the near future as this thing really rolls out.

AP: Thank you. Thank you. And me, too!

S: Adam, all the best from the Gallo family. We appreciate all you do.

Thanks so much for listening to the VinePair podcast. If you love this show as much as we love making it, please give us a rating on review on iTunes, Spotify, Stitcher, or whatever it is you get. It really helps everyone else discover the show. Now for the credits. VinePair is produced and recorded in New York City, and in Seattle, Wash., by myself and Zach Geballe, who does all the editing and loves to get the credit.

Also, I would love to give a special shout-out to my VinePair co-founder, Josh Malin, for helping make all this possible, and also to Keith Beavers, VinePair’s tastings director, who is additionally a producer on the show. I also want to, of course, thank every other member of the VinePair team who are instrumental in all of the ideas that go into making the show every week. Thanks so much for listening, and we’ll see you again.

Ed. note: This episode has been edited for length and clarity.

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