The New Taste (4)
After spending Christmas with my family just as I had last year, on December 30th, a one-ton refrigerated truck was parked in front of the club NOVA in downtown LA.
The truck was wrapped in an image of ripe pink peaches, with the words The One, Peach Light Soju printed clearly, making it obvious that it was a promotional vehicle for an event.
Stepping inside the club, the Black Eyed Peas’ Pump It was thumping under the red lights, and a large banner hung next to the stage.
[Free Sampling – The One, Peach Light Soju]
Transparent bottles were lined up on the table; it was the Holiday Tasting Night event hosted by Unity Spirits. Usually, young people are short on cash, making them hesitant to spend money on club entry or drinks, but since the first glass was free, no one hesitated.
“What’s this?”
“Peach... soju? What’s soju?”
“I don’t know. They say it’s an Oriental liquor, but who cares? It’s free.”
The expressions of those who took their first sip changed in an instant.
“Is this alcohol? It’s just juice.”
“But there’s a slight... kick at the end.”
“Hey, this is good. Give me another bottle.”
A line began to form in front of the table.
Young women holding glasses laughed and dragged their friends over.
“Just take one sip. It’s seriously delicious.”
“Is this really alcohol?”
“They say it’s 13 percent.”
“Mmm! It’s so good! I’m going to get drunk if I keep drinking this!”
As the peach-scented liquor spread, clubbers enjoying the music flocked to the event table, and it quickly became a madhouse. Malcolm Lee of Unity Spirits watched the scene from a corner, holding a glass.
Beside him, the club manager said with admiration,
“How much is a bottle?”
“We haven’t decided yet.”
To be precise, it wasn’t that we hadn’t decided, but rather that we couldn’t. We had jumped straight into promotional events before Golden Grain Soju House had even determined the supply price for the fruit soju.
Fruit soju is different from vodka. Since Absolut, which dominates the US market, has established a fixed market price, The One couldn’t raise its price even if it wanted to. If we raised the price, we couldn’t win against other competing vodka brands.
But fruit soju is different. Since there is no other fruit soju established in the market, it doesn’t matter much if we set a high price.
The reason we couldn’t settle on a price right now was because the debate over whether we really needed to sell it cheaply was still ongoing.
“I want to put this on our bar menu. I’ve never seen a reaction like this. If I order now, when will it arrive?”
Malcolm burst into a laugh. He had never experienced such a desperate reaction, no matter how good the liquor he brought in was. It wasn’t a famous brand, just some Oriental liquor they were seeing for the first time, yet the club manager was begging with a look of madness in his eyes.
“Hmm... probably next weekend?”
“Isn’t that too late?”
“The distillery that makes this is small.”
“Where on earth is it?”
“It’s a brewery in Sacramento, originally run by a rice farmer. They started the brewery because rice was so cheap that it wasn’t profitable. That’s how they made The One, which we’ve been stocking since last year.”
By now, The One, a Korean-style vodka with a subtle, unique grain aroma, had become quite famous among the youth. Naturally, the club manager knew the brand well; while there was definitely demand for it, it didn’t have the same destructive power as this fruit soju.
“I knew it was the same company because of the name, but I didn’t realize it was such a small place. Okay, but don’t make me wait too long. People who enjoy drinking don’t have the best memories.”
He meant that if we launched too late, today’s promotional event would be meaningless. Malcolm chuckled and nodded.
“I know, I know.”
But Malcolm knew the club manager’s urging was a bit of a lie. Even for people who enjoy partying, a memory of fruit soju like this wouldn’t be forgotten so easily.
He was certain that after today’s event, the kids who visited the club would go to school and talk about the fruit soju.
“So, get it to me as fast as you can. If you bring it, I’ll stock as much as I can. 50... no. I’ll take 100 cases.”
At the mention of 100 cases, Malcolm’s eyes widened in surprise as he looked at the club manager.
“100 cases?”
“Yeah, 100 cases. You don’t expect the wholesale price to be $300 per case (12 bottles), do you?”
“That... I suppose not.”
“It’s just my wish, but I don’t think it’ll be easy to sell if it’s over $25 a bottle. You know the most expensive liquor right now is around $20, right?”
“I know.”
“Don’t sell it too high. I want to sell as much as possible.”
“That’s how I plan to meet with the supplier.”
Malcolm nodded and smiled contentedly as he watched people continue to swarm the event table.
The event was a success. The 50 cases of liquor we had prepared sold out quickly, and people were shouting for us to sell them more, offering money. Especially the women, after tasting the fruit soju, avoided the existing harsh liquors and kept asking when it would be released.
Having finished the promotional event, Malcolm visited Golden Grain Soju House in Sacramento the very next day.
Carrying the contract he had prepared, his heart grew heavy at the sight of a vehicle leaving the distillery. He assumed it was a rival distributor that had finished negotiations and was leaving.
“Welcome. Please, have a seat.”
The scent of peaches, thick in the air of the distillery, made Malcolm’s resolve even firmer.
Malcolm sat in the small, cramped office attached to the distillery, with the two co-founders sitting across from him.
“I heard you held a promotional event in LA. How was it?”
At Jacob’s question, his eyes sparkling, Malcolm used his characteristic, smooth-talking charm.
“It was perfect. Everyone in the club was obsessed with it. It reminded me of the fried chicken my mom used to make when I was a kid. Just like how you can’t stop thinking about that crispy, juicy chicken, this fruit soju is going to become an indispensable drink for the youth.”
“Hmm...”
Jacob, satisfied with Malcolm’s answer, made eye contact with me. His eyes were sparkling with hope, as if success were already right in front of us.
“When I heard the contract terms before, to be honest, I thought they were a bit lacking. Something...”
Seeing my negative expression, Malcolm spoke hurriedly.
“That was just an example. I didn’t mean for that to be the real contract. As I said before, I planned to propose proper terms after seeing the reaction from the promotional event.”
That wasn’t true. At the time, I had liked the fruit soju and proposed terms, but had backed off after receiving a negative reaction.
Since we had to promote the product regardless of which distributor we chose, we had let the distributor handle it instead.
“Is that so?”
“We’ve already become one team through The One. We’re a team. If only Unity Spirits tries to profit, our team won’t last long. Both Unity Spirits and Golden Grain Soju House need to maximize their profits.”
“Oho...”
“Listen closely. Jacob? Brian? We can provide Golden Grain Soju House with a perfect partnership. No other company besides us will be able to provide this level of service.”
Even before he brought out the contract terms, my eyes, already large, widened further with anticipation.
“What kind of services are you considering?”
When Jacob asked, Malcolm pulled the prepared contract from his briefcase.
“First, Unity Spirits will take the distribution rights not only for the West but also for the Central region. In return, we will cover $100,000 in advertising and promotion budgets. This includes magazine ads in Food & Wine, LA Weekly, and the SF Chronicle. If sales here exceed $2 million, we will cover up to $200,000 in advertising and promotion budgets, and if it exceeds $5 million, we will cover all advertising and promotion costs, no matter how much they are.
In addition, we will allocate $250,000 for TV and radio advertising in the first year. We are investing $250,000 from the start. Isn’t that amazing?”
“......”
Jacob, slightly surprised, looked at me, but I stared at Malcolm without flinching. Malcolm continued as if he weren’t finished.
“That’s not all. Unity Spirits will provide an additional $150,000 for tasting event budgets at 50 clubs for one year. This investment in promotion isn’t the end.
Second, we will fully support all logistics costs. From LA to Sacramento, Portland, and Chicago... we will handle all transportation. Well, you might think that’s a given. But you’ll be surprised by the third one.
Third, if bottling production increases, we can outsource the bottling line to a Unity-affiliated factory. We’re preparing for when the volume grows. How about that? This is Unity Spirits.”
“......”
“I don’t know how other companies might have appealed to you, but there probably isn’t a place that will support you as much as we do.”
I hadn’t necessarily tried to look into other companies, but even if I had, I didn’t think anyone else would have promised to spend such an enormous amount on promotion.
Investing $500,000 in advertising at once—including magazine ads, TV, radio, and club promotion costs—was a significant scale, equivalent to half of The One’s annual profit.
“Sounds good.”
At my answer, Malcolm finally smiled broadly and rubbed his hands together.
“We’re a team, after all. So, what kind of wholesale price are you thinking of?”
“We’ll go with $10.”
At the mention of $10, Malcolm flinched.
“$10? Ah... could you lower it just a little bit? Even The One, which is vodka, was $11.”
He meant that if vodka was $11, $10 for fruit soju was too expensive.
Actually, his point had merit. The One, being vodka, is a pure distilled product; while manufacturing is simple, the energy, time, and ethanol loss are high, resulting in a lower margin relative to unit cost. However, fruit soju uses a pre-distilled base (vodka concentrate) diluted with water, so there are no additional production costs. While flavoring and syrup costs are added, the cost of goods sold is still low, around $4–$4.50.
Also, the production speed is 3–4 times faster and the short-term inventory turnover rate is high. Looking at it this way, the retail price should be lower, but since I had set it higher, Malcolm was flustered.
“I think the target customer base and loyalty are different. So I think it’s fine to raise the unit price.”
“Of course, but looking purely at factory operational efficiency, isn’t fruit soju much more profitable? Let’s look at the long term. At $10, there are aspects that make it difficult to run events. To sell it at retail for at least $15.90 or $16.90, $10 is impossible.”
“Then how much do you want?”
He hesitated for a moment before speaking.
“Let’s go with $8.50.”
“Hmm...”
“If you do that, we will promote it with high efficiency. The One Peach Light Soju will be spread all over the marts and clubs in the West and Central regions.”
Jacob and I looked at each other and nodded. Jacob smiled broadly, stood up immediately, and reached out his hand to him.
“Let’s do well together.”
“An excellent choice. It looks like this team will continue for a long time.”
Malcolm shook my hand as well and asked,
“It’s Peach Light Soju for now, but you’re preparing other flavors, right?”
“Of course. Lemon, cherry, grape, pineapple... we’re thinking of them all.”
“Oh—I’m curious about lemon, cherry, and pineapple! But for that to happen, the distillery’s facilities will need to be a bit more...”
Jacob, who had already considered all his concerns, said,
“We were actually planning to gradually expand our facilities.”
“That’s fortunate. You’ll need to expand at least twice as much as you have now. Even then, there’s a high possibility you won’t be able to meet the demand. If I were you, I’d take out every loan I could and increase the facilities first. You’re going to find that 24 hours a day isn’t enough.”
After scaring Jacob thoroughly, he wrote up the contract and left the distillery.
Jacob, who had already shared a mutual understanding with me regarding facility expansion, called in experts for the distillery expansion and simultaneously entered full-scale production of Light Soju.
And in 2007, just as Malcolm had prophesied, Golden Grain Soju House began to catch fire.