Pals founders Mat Croad and Nick Marshall, surfing buddies to RTD moguls - Money Talks

Pals co-founders Mat Croad and Nick Marshall.

“It’s a hell of a burden to have on your shoulders,” says Matt Croad, co-founder of drinks brand Pals.

He could be talking about the tough economy, which he says the company is feeling to some extent.

But he’s not.

In this case, the big stress is picking the new flavours and colours for the Pals RTD range, which has built its brand on a soft pastel palette of sophisticated fruit flavours.

“When it’s finally released into the market. It’s not like a celebration moment. It is for the team, but for Nick and I, it’s just this huge sigh of relief.”

It’s no small thing for a drinks brand that has built its reputation on fresh flavour and a colourful non-gendered approach to look and feel.

“I think the portfolio has to adapt over time, which is quite hard because you get your loyalists who are like, not the pink one or the yellow,” says Croad partner and long-time pal Nick Marshall.

“How can you kill those flavours? But there’s a mixture of data, there’s some intuition, there’s some trend-based stuff.”

Being in a consumer business, you have to be adaptable, he says.

“For us it’s making sure that we’re not always chopping and changing, but we are trying new things and still taking risks...which has definitely been part of our business model from day dot.”

For the record, Croad and Marshall aren’t about to give away what the next flavour will be.

The pair have been friends since they were 11. So the Pals name is pretty apt.

They founded the drinks company in 2019 with another old friend, broadcaster Jay Reeve (and his wife Anna).

But in a sense, it’s a partnership that was forged at Ōtūmoetai College in Tauranga and in years of surfing at Mount Maunganui.

But despite that early connection, the pair have had long and different career paths.

Both studied commerce at university, although Croad went to Waikato and Marshall headed to Otago.

Apart from catching up during summer holidays, that’s where their paths diverged for many years.

Marshall’s career path is a diverse one. He started out in sales – selling HRV air conditioning systems door to door, before moving to real estate and then heading to Australia to work in mining.

“I always, from quite a young age, wanted to do my own thing. What that was gonna materialise into, I never really knew, but I tried a lot of things,” he says.

Croad took a more traditional corporate path. He started straight out of university in marketing roles in the fast-moving consumer goods (FMCG) sector.

He ended up in senior marketing roles for NZ Wine Cellars and Woolworths.

It was from there that the passion for building something in the liquor industry started.

Croad and Marshall had stayed in touch.

“It was sort of like a once every few months [we’d] Skype and talk about different business ideas,” Croad says.

There was always a plan to start a business of some sort, he says.

“It just got to a point, it was like, let’s just start something. It may not be 100% the right option from day one, but it’s gonna give us the learnings to evolve.”

So the pair (with the Reeves) started a wine brand in 2016.

“Wine was really trending and in particular, rosé was trending,” Croad says.

“It was the big rosé boom globally. That was when people were already starting to move out of beer and looking for other alternatives. So we decided to jump into it.”

“We knew at that point it probably wasn’t gonna be our business unicorn.”

But the idea of a drinks brand that appealed across genders was something they started to think about at that point.

It was really tough, he admits.

“The wine business is as hard as it gets. It’s so price-driven.”

He says they created an “amazing brand and learned plenty along the way”.

“And that’s where I guess the idea of something like Pals started to be formed.”

Pals was born of necessity to some extent, Marshall says.

“We were looking at all sorts of things.

“We were quite innovative, doing the first five-litre bottles, we did a collaboration with Stolen Girlfriends Club, which was an amazing brand partnership, we looked at wine-based slushies, wine-based ice blocks, you name it, we tried it.”

Eventually, though, they realised it was selling wine itself that was the problem.

“Growing something that changes every year, and the yields are different and the quality. We wanted to take back that control and actually make something that we were really, really proud of, that we could make consistently the best product that we could.”

Looking back at the almost immediate success of the Pals brand, it all seems quite obvious, Marshall says.

“But at the time, it was actually quite novel.”

There were plenty of RTDs on the market, but people would bring a couple to a party and try and hide them, he says.

“No one really resonated with the brands, that’s where we felt we had real connection with consumers.”

Croad credits the success to a combination of small things they got right with the brand.

“[It was] the little incremental things that were hard, more expensive,” he says.

The goal was to create the best product they could afford to.

“That meant there were no shortcuts in terms of sourcing the most premium spirits, in using real fruit extracts...Central Otago peaches etc.”

When it comes to how they approach the financial side and generally deal with money, Croad says he has a highly analytical approach.

“Not through choice. It’s just how I’m wired. For me to make any decision with a financial implication, I look at every possible scenario there is.”

Marshall admits he started with a more relaxed attitude to money.

“Early on, it was whatever came in went out, and [his spending] was mostly experience driven,” he says.

“For me, money has always been more of a freedom thing than it has been about buying stuff. I’ve certainly stuck with that. But I’ve learned over time that, for a rainy day, it’s good to have some in the back pocket. Mat’s been really good for that.”

“We’ve grown up and we are a proper business now with official titles and proper responsibilities.”

It isn’t always easy and the business environment has been tough.

“I don’t think it’ll be news for anyone,” says Marshall. “That’s rising input costs, less discretionary spending, just the general challenges out there that most businesses are facing.”

“We’ve seen it in our industry. It’s not just us, which makes us feel not alone, which is good. And it just feels like the cycles of business. This is a bit more of a prolonged one, but nothing that we can’t get through.”

Listen to the full episode to hear more from Mat Croad and Nick Marshall.

Money Talks is a podcast run by the NZ Herald. It isn’t about personal finance and isn’t about economics - it’s just well-known New Zealanders talking about money and sharing some stories about the impact it’s had on their lives and how it has shaped them.

The series is hosted by Liam Dann, business editor-at-large for the Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.

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