“There’s no perfect time,” says co-founder Dan McLaughlin of plans for rapid growth at the spirits company.
When Dan McLaughlin first pitched the idea for what would become iconic New Zealand spirits company Scapegrace to his brother-in-law Mark Neal in the early 2010s, it fell flat.
“I told him I was keen to start a liquor or a gin brand – initially, he thought I was crazy,” McLaughlin recalls in the latest episode of Common Grounds, an NZME podcast in collaboration with Nespresso Professional giving you the inside scoop on some of Aotearoa’s most beloved SMEs.
While the pair both had experience in the liquor industry, launching their own spirits brand would be a tall order. There wasn’t much of a precedent for it in New Zealand, and they would be a small player in a sector made up of “global brands with big budgets”.
But McLaughlin sensed an opportunity to fill a gap in the market for a locally owned spirits distillery – and, with time, so did Neal.
“I just chipped away at him for a few months, and he eventually came round to leaving his cushy corporate job and getting stuck in with me,” McLaughlin said.
“Back then, there was [vodka company] 42 Below, but there wasn’t much else going on in that space… We realised New Zealand spirits were pretty underrepresented on the world stage.
“You only had to look at the New Zealand wine industry, which … had grown from $20-odd million in export sales in the 1990s to north of $2 billion now. A lot of the key criteria to make good-quality spirits were pretty abundant in New Zealand – good water, climate, materials and ingredients – so we thought we’d give it a crack.”
Alongside a third co-founder Richard Burke, they made the plunge in 2011 under the name Rogue Society – but almost immediately, the challenges of running a spirits business became apparent.
It took two years for them to get a product to market – perfecting the recipe, brand and design taking longer than anticipated – and then, early into their existence, were forced into an unexpected name change.
“We got challenged by a big American brewery… They wouldn’t let us sell Rogue Society in the US, Europe, UK, a bunch of markets in Asia and Canada and the like – so we had to make the difficult decision to change our name.”
McLaughlin changed the name to Scapegrace – a reference to “an independent, free-thinking person that … carves [their] own path”.
“That’s the number one fundamental of what the brand represents… we always try to do everything a little bit unconventionally,” McLaughlin told Common Grounds. “It’s fitted quite well.”
An appetite for growth is at the company’s heart, with the company scaling “quite significantly each year” from a trio of co-founders at the beginning to 23 staff now.
Having launched with a single gin in 2013, Scapegrace’s range is now extensive, spanning whisky, vodka, gin and RTDs. In recent years, its Black Gin has gone viral globally for its world-first natural colour-changing properties, and its flavoured whisky brand Thunder Donk has proved a hit on both sides of the Tasman.
The company has never been scared of taking risks. Case in point: they built their Central Otago distillery six years ago in the midst of an economic recession caused by a worldwide pandemic.
“We had good momentum at that point, and the business was growing with good scale,” McLaughlin recalls. “We were exporting to 30-odd markets and we had a big ambition to really put New Zealand spirits on the map across gin, vodka, and single malt whiskey.
“It was a big undertaking, and we literally built the distillery at the worst possible time in the history of building distilleries – right in the thick of Covid and all those lockdowns and cost fluctuations.
“It was a pretty stressful time trying to get the distillery built in that period – and then coming out of the back of that, who knew we’d have all these economic headwinds?”
The location of the distillery, in Wanaka on the eastern shore of Lake Dunstan, was hand-picked because it lies directly on the 45th Parallel – a line of latitude that generates “fiercely intense summers and deeply frigid winters”, the perfect conditions for good whisky.
Scapegrace has installed a Nespresso Professional coffee machine in their distillery, and McLaughlin credits it with breaking down communication barriers and bringing the team together ahead of their morning meetings, at which they make some “key decisions”.
“It’s a little bit more informal – there’s not so much structure [during coffee meetings], and people can just ad hoc throw ideas and different thoughts into the mix,” he says.
One of those big ideas recently has been to undertake an “aggressive” growth strategy – even in the face of the uncertain state of the economy.
“We’ve obviously had a couple of years of pretty tough economic climate,” McLaughlin told Common Grounds. “From our side, we got sick of sitting around waiting for the economy to get better and the market to improve – so we did a completely new five-year strategic plan.”
That plan, which Scapegrace has just finished its first year of, has seen the company establish its own sales and marketing division in its quest for global growth.
“We’ve just finished our financial year and and delivered a really good result – 20% growth on last year, which is a pretty solid result in this current climate,” McLaughlin told Common Grounds.
“This coming financial year, we’re looking to grow that again by 50% on this previous year. So we’ve got pretty solid big ambitions to grow the business over the next few years.”
McLaughlin says their success to date is a lesson that “there’s no perfect time” to make big and bold calls.
“Sometimes you just have to do it and back yourself.”
Discover how Nespresso Professional can transform your workplace coffee experience here: www.nespresso.com/pro
Listen to the full episode here: