How Haus Capitalized on Vertical Integration and Organic Growth to Become the One of the Hottest Alcohol Sellers in eCommerce
How organic growth and a focus on product development has allowed Haus to disrupt the alcohol industry.
What happens when a techie marries a winemaker?
No, that’s not the set-up to a joke, that’s the beginning of the story of Haus, one of the hottest direct-to-consumer alcohol brands that is exploding in popularity.
“Our goal is to create the next portfolio of alcohol products that reflect how our generation drinks and what they care about in food and beverage,” said Helena Price Hambrecht, the techie of the aforementioned company who co-founded Haus with her husband, Woody.
In order to achieve that goal, Price Hembrecht explained that it took breaking down the three-tiered system of distributors, producers, and retailers who act as the gatekeepers and thus have dominated the alcohol industry for decades. Independent brands couldn’t find a way to break in, so Price Hembecht worked to find a solution.
“We didn’t know that there was a way to go around the system,” she said. “And I started doing research because I was curious about just how our generation was drinking, what were we looking for out of alcohol? Because I was certainly looking for a better alcohol experience, and I saw a huge opportunity. …I was really complaining to Woody about this, saying, ‘Gosh, what a shame that you can’t build an independent brand, like a Glossier or an Everlane of alcohol because of the three-tier system and you have to go through the distributors.’ And that’s when I said, ‘Actually, there’s a loophole that I never thought about until this moment.’”
The loophole involved the amount percentage of alcohol and the base of your drink, which if they met certain levels meant that you could sell your product directly to consumers and sell online, which is exactly what the couple did.
Their idea was to sell aperitifs, a common type of liquor popular in Europe, but relatively unknown in the U.S. So the tough task at hand was in building a customer base strictly through an eCommerce platform with an audience unfamiliar with the product.
“The real challenge that we had was how do we take this type of liquor and make it mainstream?” Price Hambrecht said. “Without having to pitch people in person just through the internet, how do we very quickly educate people on what this is, the problem it’s solving, convince them to buy it, get them to get their friends together and drink it together? For us, our goal was to just approach it as education, right? And bake education into as many touchpoints as possible, not just through the copy on the website, but through photography, through editorial, through different touchpoints post-purchase, in the packaging. It was really about how can we make the most of every single touchpoint that this customer has with our product so that by the time that they receive it, they deeply understand it and where it lives in their life.”
Through all of those avenues online, Haus was able to achieve rapid organic growth. The word-of-mouth from happy customers was the best possible marketing Price Hambrecht could ask for, and it was exactly what she believed the product needed in order to be successful. Haus, she said, is made to be shared, and when one customer shares the Haus experience with her friends, those friends, in turn, have become customers, and the cycle continues. Until recently, in fact, Haus was 100% built on organic growth and with a focus solely on creating an excellent product and stellar customer experience. It was only recently that the company started experimenting with paid marketing.
But still, the paid marketing is not the most important thing to growing the company further. Instead, Price Hambrecht said that at Haus they are trying to capitalize on the fact that they are a fully vertical company. That means that they can focus their efforts on creating and distributing the best products possible for their customers. From a logistics standpoint, being fully vertical made sense because they already owned most parts of the supply chain from the ingredients to the warehouse to the internal talent making the product. But there was another advantage Price Hambrecht saw with the model.
“We also had a hunch that being fully vertical would give us a huge advantage from a product development standpoint,” she said. “We could be super nimble, we could iterate every day if we wanted to based on customer feedback. We could launch new products quickly, we can kill them quickly. We had a lot of abilities that other companies wouldn’t have. And then we would also be prepared for any sort of supply chain curveball that comes our way.”
The premonition turned out to be true, and Haus has been able to endure all sorts of curveballs — including the global pandemic that has disrupted just about every other company is every other industry.
“The pandemic has been a roller coaster for everybody, us included,” Price Hambrecht said. “In February, we saw that it was coming or potentially already here. So we had to do worst-case scenario planning. Like, ‘Okay, what if the economy bottoms out? What if nobody’s buying anything? What if every direct to consumer company burns to the ground?’ So we did a deep dive in our P&L and we cut a lot of costs that felt more like nice-to-haves versus must-haves. We luckily didn’t have to fire anybody, but we wanted to just make our business very core, very nimble and that ended up being a good decision regardless. But pretty soon after, our business started growing.”
Rather than just bask in the growth, Haus is giving back. The company launched a program through which they partner with restaurants and their chefs to develop signature aperitifs and donate the profits of those sales to the restaurants. And even when the current crisis begins to ease, Price Hambrecht sees these partnerships continuing as a way to keep growing for both Haus and its partners.
“It’s a win-win for everybody,” she said. “These restaurants have a new form of revenue, which is great. It allows them to monetize their audience, which is, for the most part, national or international. They can collect revenue from a much, much bigger group than they could before. And we’ve made these products, they’re so good. These are incredible aperitifs. It feels like a new frontier for alcohol in America. It’s really exciting. And so for us it’s great that we can collaborate with these chefs to make these really unique recipes. So I wouldn’t be surprised if we added most of them to our permanent store after the project is over because they’re just awesome and this makes sense. It’s a win-win.”
For Haus, the wins keep on coming. As the company continues to leverage its platform and explore new products to sell online, Price Hambrecht believes that the sky is the limit. And a lot of that has to do with a shift she sees coming in the D2C industry.
“I have a feeling that there’s going to be a new level of scrutiny applied to direct to consumer,” she said. “This is a real moment of reckoning for a lot of companies where if you can’t do business for a month, you have to shut down or you have to lay off a majority of your workforce. It’s probably not great that the supply chain is so fragmented right now. And I think there’s also at the same time a bit of brand fatigue that was already happening prior to the pandemic where there are so many direct to consumer companies being made right now where the founders don’t actually have much expertise in the space. They just had the idea, they were able to get venture capital because they’re connected in that world, and they were able to launch a company. And they can put all that money into it, and they can acquire a bunch of customers. But the problem with not knowing your space is that you’re not able to iterate quickly. And it seems like we’re about to enter a world where we just don’t know what curve balls we’re going to see. So I think at the very least we’re going to see more money going to founder teams that have at least one founder with deep, deep industry experience, whether that’s a generational family heritage or whether it’s a decade-plus of experience in the industry because you at the very least need the connections on that side of things to have leverage, right? You may not have to own it all yourself, but if you don’t have any real leverage in that world, then you’re toast.”
Listen to Helena’s full interview, here.