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1 DOUBLE CROSS VODKA Mid-year 2013 Investor Update

Transcript of DOUBLE CROSS VODKAfiles.ctctcdn.com/3a67e079001/42cd1b3c-d3ce-486a... · We’ve had a number of...

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DOUBLE CROSS VODKA!Mid-year 2013 Investor Update!

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Dear ONI Investor, Welcome to the Mid-year 2013 Investor Update. This issue covers:

•  Brand and Market Overview •  Sales Progress year-to-date •  New Hires and Consultants •  Marketing Update •  National Accounts •  Product Extensions

As always, you can reach out to me directly and I will forward any inquiries to the appropriate members of the ONI team. With best regards, Malcolm M. Lloyd, MD CEO/Founder

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BRAND AND MARKET OVERVIEW!Double Cross Vodka continues to make critical strides as we develop the most exciting (and fastest growing) vodka brand in the ultra-premium vodka space. Our word of mouth and grassroots approach to building this brand is a cornerstone to our success to-date and will continue to play a key role as we develop this brand. In our study of other successful brands, it is the combination of great people (boots on the streets) and “liquid-to-lips” marketing that ensures a long trajectory of growth and success. While it is tempting to seek that silver bullet marketing idea, we really don’t believe such a bullet actually exists in our industry. We are building a brand that will be iconic for decades to come. In order to do this we have to resist opportunities to push cases into the market that will misrepresent our brand’s position and have a negative impact on the brand’s precious equity. The brand’s reputation is near impeccable and staged for continued growth and success. We often discuss the tipping point for spirits brands and dissect their stories, their strategies and their tactics. A common thread among most of these success stories (e.g., Ketel One, Patron, Makers Mark, Tito’s Vodka) is incubation and seeding. None of these brands were built on advertising campaigns, although all of them deploy some level of advertising investment today. All of these brands were founded on word of mouth and grassroots efforts (whether this was the pro-active plan or not) that led to a tipping point of adoption that rocketed them into million-case territory and beyond. We are building toward this tipping point with Double Cross and have developed a “lean and mean” organization and approach to accomplish our primary goal of making this investment a huge success for all of you.

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SALES PROGRESS YEAR-TO-DATE!Double Cross is now available in 47 of the 50 states. It is also available internationally in Ontario Canada, British Columbia, Alberta, Slovakia and The Czech Republic. Double Cross performed very nicely in the first half of 2013 and is up 45% over the first half of 2012. With growth of 54% in the second quarter, depletions (sales to accounts) are outpacing shipments to distributors. Through June, more than 13,800 six-pack cases were sold to our distributors. Newer markets such as Illinois and Southern California are showing promising growth consistent with our previous experience in the growth of new markets such as the Northeast.  The state of New York, our largest market, depleted more than 1,000 cases in June alone, which is the second strongest month in the state's history (strongest was last December). The seasonality of our business drives a sales acceleration each year as we approach the holiday season. We look forward to this exciting time of year and the sales burst that accompanies it.

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INDUSTRY CONSULTANTS!We are constantly studying our approach to selling and marketing Double Cross Vodka. Earlier this year we made the decision to seek out senior guidance in both of these areas. We were looking for someone with first-hand experience in building sales teams and distributor strategy for early-stage brands in our industry. We were also looking for someone who could bring a raw brilliance and a track record of successful brand positioning to our company in a part-time capacity. We have brought on John Bilello and Cie Nicholson, respectively, in these capacities. A bit more on both of them: John Bilello John joined the team in a full time consulting capacity in August. John was most recently the National VP of Sales for Avion Tequila and was responsible for leveraging the “Entourage Story” and gaining unprecedented early distribution for a new super-premium tequila brand. Prior to that he was the Managing Director for Milagro Tequila, helping them grow from zero to more than 150,000 9-liter cases over a 9 year period. Prior to these entrepreneurial companies, John spent 13 years with Seagram’s, where he began as a Regional marketing Manager and, when he left in 2002, was the Group Vice President, Seagram Spirits & Wine Group (SSWG). Cynthia “Cie” Nicholson Cie joined our Board of Advisors and as a part-time consultant in early August. She has held numerous positions in the past including a 10-year career with PepsiCo where her final post was Senior Vice President and Chief Marketing Officer for North America.  After PepsiCo she was the Chief Marketing Officer for Equinox, which operates more than 50 high-end fitness centers across the U.S. She also comes with a lot of business and entrepreneurial experience, having worked with a number of startups in the past. Among many other honors, in 2002 Cie was named Brandweek's Marketer of the Year.

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MARKETING UPDATE – EVENTS MARKETING !Events marketing remains a major element in our overall marketing effort. Over the years, we’ve become better and better at events selection and execution. We have found events to be a cost effective (generally only product donation) way to build brand awareness, sample consumers and connect with top celebrities and the wealthy and influential people who attend these events. A selection of our events thus far in 2013: Ben Affleck and Sheryl Sandberg (Facebook COO) Poker Tournament in Palo Alto An evening with John Legend and Stevie Wonder supporting the Show Me Campaign Break Bad Screening with Bryan Cranston at UTA in LA Hank Azaria Playing for Good Poker Tournament at his private home in LA Under Armour Preakness Celebration with Kevin Plank at his Sagamore Estate Backstage at the Geffen honoring Billy Crystal Hakkasan Las Vegas with Special Guest rapper NAS National Black Arts Festival in Atlanta Culinary Ambassador Ming Tsai Industry Nights in Boston Atlantic Cup Sailing Race Sponsor LA Times, Taste of LA food and wine festival The Barclay’s at Liberty National Golf Course Some images from the events are on the following page.

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MARKETING UPDATE – EVENTS MARKETING !

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MARKETING UPDATE – PROMOTIONS & TRAINING!One of the most important ways we can turn people on to the Double Cross brand is getting “liquid to lips.” With that in mind, we do literally hundreds of on/off-premise promotions throughout the year. Off-premise promotions center around in-store tastings, which when done well can result in dozens of bottles sold within a few hours. It also deepens our relationship with important store staff. On-premise we do staff trainings to educate bar/restaurant staff on brand as well as staff incentive programs and consumer-facing promotions.

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MARKETING UPDATE – POS AND MERCHANDISE!Point-of-sale items and brand merchandise play in important role in our sales and marketing efforts. This includes everything from large in-store displays to hats and t-shirts to promotional give-away items. There is significant pressure from distributors and on/off-premise accounts to provide endless amounts of POS to the market, but we’ve done our best to be as discriminating as possible when it comes to quality and distribution of these goods. Below are some examples of what we have in the market.

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MARKETING UPDATE – ONLINE MARKETING !We have continued to develop our online marketing platforms during the first half of 2013. The focus online remains our Facebook page and doublecrossvodka.com homepage, but we also expanded our reach into the other major social channels like Twitter and Instagram. Our Facebook following thus far in 2013 has grown from 60,000 likes to more than 80,000, representing consistent brand awareness growth.

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WE BROADCAST ACROSS ONLINE PLATFORMS.

DOUBLECROSSVODKA.COMFACEBOOK.COM61K

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WE BROADCAST ACROSS ONLINE PLATFORMS.

DOUBLECROSSVODKA.COMFACEBOOK.COM61K80K

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MARKETING UPDATE - ENGRAVING !Many of you are familiar with, and even used, The Double Cross Bottle Engraving Program, which allows customers to laser engrave names, logos and other messages on the metal cap of the Double Cross bottle. The response to this program has been overwhelmingly positive, especially during the holidays. During the 2012 holiday season we sold thousands of custom bottles at tastings and via our own outreach. We look forward to expanding the program in 2013 and are currently doing a broad PR push to holiday gift guides, which has resulted in some great future placements. We also have a dedicated engraving page on the website at www.doublecrossvodka.com/engraving where people can fill out a form to place their order.

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MARKETING UPDATE – MING TSAI CULINARY AMBASSADOR !In April of this year, we named celebrity chef Ming Tsai as our first Culinary Ambassador. Chef Tsai is an Emmy and James Beard award-winning chef based in the Boston area where he runs his two popular restaurants Blue Ginger and Blue Dragon. Since the start of the year, Double Cross and Ming have collaborated on a number of programs including appearances at top national food and wine festivals, tastings and industry events at his award-winning restaurants, support for various charity-focused events and development of signature cocktails and cooking recipes Most recently we just wrapped up an in-store Double Cross “Savor the Summer” Sweepstakes that ran across New England (see photo at right for an example of one of the in-store displays). He is very open to creative marketing collaborations and is a resource we can use across the board in our marketing efforts.

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MARKETING UPDATE – PR AND PRODUCT PLACEMENT !We’ve had a number of noteworthy success in the arenas of PR and product placement so far this year. Notable PR placements have included a very favorable 94-point review in The Tasting Panel magazine, inclusion in the annual vodka article in the widely-read Cheers trade magazine and many other product reviews in blogs, newspapers and magazines. In addition, our ongoing partnership with a product placement firm based in Hollywood has landed the brand in a variety of TV shows and music videos. In the first half of 2013, the bottle has appeared in the feature film “Iron Man 3,” the popular TV show “NCIS,” and the popular FX show “Wilfred.”

Double Cross on the TV show NCIS.

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PRESS AND PRODUCT PLACEMENT.

NCIS Iron Man 3 Wilfred

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NATIONAL ACCOUNT SUCCESS!National accounts remain one of the most successful growth areas for Double Cross. Our success in this important sales channel has established the brand as a true player in the national account landscape, despite our relatively small size. In the first half of 2013, we added the the following national accounts: Hakkasan Las Vegas nightclub, Mastro’s steak restaurants, American Cut, Michael Mina (Bourbon Steak), Landry’s Seafood, M&S Grille, RW Restaurant Group, Four Seasons Food Truck (West Coast), Fairmont Hotels and Kimpton Hotel properties, .

WE HAVE GREAT NATIONAL PARTNERS

OUR DISTRIBUTION PARTNERSHIPS KEEP ON GROWING NATIONALLY.YEAR AFTER YEAR...

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MARKETING UPDATE – HOLIDAY VALUE ADDED PACK !Double Cross will release a Holiday Value Added Pack (VAP) for the third year in a row in 2013. The VAP will be an updated and improved version of the one from 2012, which contained a bottle of Double Cross and two logo’d rocks glasses. Though they are a challenge financially because we can’t up-charge for the pack, they remain an essential holiday season sales and tool and are an excellent way to boost in-store presence and consumer trial of the brand.

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PRODUCT EXTENSIONS – 50 ML & 1.75 L !Earlier this year we launched our 50 ML “mini,” which retails for $5.99. Distribution of the mini continues to expand and response to the size is overwhelmingly positive. Later this year, we plan to launch the 1.75 L “magnum” Double Cross bottle. The larger bottle size will retail for $79.99 as opposed to $39.99 for the 750 ML size. Both sizes represent a great opportunity expand our presence in retail stores – 1.75s are often on the shelf next to 750s and 50 MLs are often very visible at the register.

50 ML 750 ML 1.75 L

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Thank you for your time.