Philly Maker Series: Stateside Wants to Be the Yards of Vodka
The craft-brewing industry has been booming in Philly. But craft distilling is appearing in its rearview mirrors with a moment of its own -- the first time since Prohibition, really, that people have been starting up liquor projects in empty Fishtown warehouses, abandoned gas stations, and their parents' basement in Ambler, as Matt and Bryan Quigley did four years ago when they decided one day that they wanted to produce vodka. After early tumult -- namely, being kicked out of the basement -- the two brothers went on to hone their vodka-producing craft, officially opening Federal Distillery making its signature Stateside Urbancraft Vodka about a year ago.
In a market that pegs vodka either to wealthy businessmen who sip on Grey Goose on the rocks or college kids looking for a cheap chuggin' booze, Stateside's product is very much trying to override the predominant public sentiment associated with the liquor itself, starting with nouveau package design relying on handsome typography and white space. You just have to take a sip to be convinced from there.
"Matt wanted to be the Yuengling of vodka."
Hey guys. What were you doing before getting into the vodka business?
Bryan Quigley: I worked for a company outside the city as a stock broker, financial planning, tax mitigation, and Matt was sort of a serial entrepreneur.
Matt Quigley: I was doing different businesses, starting in the restaurant industry. I was recruited out of college to take a concept and start a franchise but quickly realized I wanted to work for myself and not anyone else, so I left and started launching restaurants doing product development, writing business plans, helping people to source equity when they didn’t know how to find it. Ultimately, I ended up moving back here -- I was in California for about five years and Bryan was living in Spain for a period of time teaching business students English.
Bryan: Well, that’s not right -- I was teaching business students cost accounting, financial accounting, and quantitative analysis.
Matt: In English...
Bryan: And in Spanish…
Matt: And we ended up both moving back to the area for the first time in six years from going to different colleges. We ended up finding ourselves in the same city for the first time in a very long time. We shared the same room for 15 years, living in bunk beds basically until high school. One day our parents said, "You know you have your own rooms right?" We were like, "What are you talking about?"
But legitimately as little kids, we were always doing little businesses together: selling baseball cards, selling candy, cleaning gutters. Basically doing anything we could to pool our money together to buy shit that our parents wouldn’t let us have. We had a television and Nintendo in our closet where we would play and our parents had no idea.
When I moved back, Bryan asked me what are we going to do next and I said, “What about vodka?” and he said absolutely. So that was the start of the entire thing, four years ago.
Bryan: Well, we’re both vodka drinkers. And the craft-brewery market is so saturated. We looked at distilling when we first talked about it and there was no one doing it. Matt set out and wanted to be the Yuengling of vodka. When we started, we had no idea what we were doing... we literally Googled how to make vodka. But we’re the type of people that figure out how to do something.
How were the first few years?
Bryan: They were good. We immediately started doing everything that we could, going to different distilleries; we went to a beer shop, bought some parts, and made a makeshift distill in our parents' basement. They had a workout room downstairs that they never used, so there’s no reason for them to go down there. A couple of months went by and we started making some pretty good vodka -- we were really impressed how good it was, but Pops came downstairs one day, I don’t know why, and found our makeshift distill and mad science lab…
I've read in interviews that your parents thought you were making drugs in their basement. They really didn't know what was going on?
Bryan: Oh no... we told him what we wanted to do and he said ABSOLUTELY not. You’re not burning down our new house. So we said OK, sure. Well, he came downstairs, saw what we we’re doing, and kicked us out of the house. He was pissed. After that, I sent Matt to Michigan State -- there’s a distillery out there contracted by bigger distilleries that's a launch pad for high-flying distillers in the industry.
Matt: They select one apprentice every summer and I was lucky enough to get selected as their apprentice. So when Bryan says "I sent him out there," he really means that when I was selected, he financed the whole trip…
Bryan: And he still hasn’t paid me back.
Matt: Probably never paying you back. But I was living and partying out at MSU, living and partying on Bryan’s dollar, distilling everything -- gins, vodka, bourbon -- and came back here and was able to position myself as a consultant in the industry and got picked up by a Polish vodka company doing private research for them here and a bit in Poland. And truthfully, we were running down distillery projects that we wanted to run for our own company. We do a crazy mineralization step here, an aeration step, and that was all things that I got to research for a whole year. When I finished my contract with them, it was right at the point where we were finalizing our investment for this company.
And the whole process took around two years?
Bryan: From the initial idea to funding took almost two years exactly. During that time, we took around 50-60 meetings with investors and across the board it was the same thing: "We love you guys, love the package, love the product, but we know nothing about the industry." So they said they would give us X amount of money, and we’d come back with, "We need 70 to 80 times that." I mean, it’s bad enough being in business with your brother, but to add 60 other decision makers...
How did you ultimately find the funding?
Bryan: We had a friend that knew a lot of people and helped us to distribute our business plan. We put up this terrible crowdfunding video. It was like a stupid cartoon where Matt did the voiceover, which raised like $400, and our goal was like $750,000. Matt loved it though. He thought it was everything.
Matt: But our friend offered to help spread the business plan around and he was going to our now-investor's birthday party, Clement Pappas. He took a business plan with him and left it in his office, and a couple days later, Clement called and asked us over to his house to talk. We went over, ended up whacking a whole bottle of vodka that night. Obviously, there was really good initial chemistry there. We spent a few hours talking about the business, drinking, and what we envisioned for it.
Bryan: Clement’s background, he used to run a third-generation juice company out of Vineland, New Jersey. Big juice conglomerate. And he sold the company a few years ago and had a 10-year non-compete in the juice industry, so this was sort of a way he could get his hands back in the business and share his knowledge of the industry and his network of distributors. Our other investor is his brother, Zack Pappas, who’s our silent investor -- he’s just a fun-loving, really nice guy.
After you were officially funded, what happened next?
Bryan: We had to find a space and looked all over the place -- Conshohocken, where we grew up in the Fort Washington/Ambler area, all around Philadelphia, until we found this place here [at 1700 N Hancock St in Fishtown]. It was a manufacturing facility from the 1850s, and the first day when we walked in, there were eight or 10 dead cars in the building, trash everywhere, holes in the wall. I wanted to leave but Matt said, “No, this is it.” I asked him if he was high, but he had the vision and it’s turned out really well.
From then, how long did it take to get up and running?
Matt: A full year. We signed our lease in August and it was a little more than a year to release the brand -- the distillery is the primary focus, this FDR [Federal Distilling] is just an awesome secondary business that just kind of happened. Stateside is the focal point of our whole organization, and from the day we started doing all of the engineering, it was a year before we released the brand. We “opened" in November of 2015.
Bryan: We had contractors help with some of the heavy work but we did a lot of it ourselves. We laid all the pipes and how the system works, basically all of the engineering of the building. We also did all of the terrible work you never want to do -- power washing, painting... I never want to paint again in my life.
Almost a year since then, how's business going?
Matt: Right now, we’re producing about 5,000 bottles a month, currently distributing around PA, and we just started selling in some stores in Jersey. Our rep, Fedway, has been killing it for us. And we’re probably in around 90% of the restaurants around the city. And maybe 50-60 places that make cocktails specifically with our vodka.
What are the grand plans for Stateside?
Bryan: Matt will tell you he wants world domination, or to make enough money to buy jet packs. We will go everywhere in the US, but we want to make sure that we have the right penetration in each market before expanding too quickly. Play small ball until we feel comfortable enough to expand.
"He wants world domination, or to make enough money to buy jet packs."
What makes Stateside the best vodka you can get in Philly?
Matt: It’s the taste component. There’s a lot of different things when it comes to competing in the vodka industry; it’s really a fierce battle. It comes down to everything -- you walk into a store and have never seen Stateside before, but see it on the shelf. The first thing you will do is qualify if it’s an attractive package, so it’s package design. Then you’re going to look at the price and compare it to other vodkas. And then you’re going to taste it. It’s all three that are going to determine if it’s going to move and we think we’ve hit them all -- we’ve won awards for packaging, we’re priced competitively to the Ketel and Tito's, and the taste component, we go to great lengths in the distilling to create a vodka that has a great taste profile. You can drink it on the rocks with no problem at all. And even the water quality -- we have spent years on water.
Are you using Philly water for this?
Matt: Yeah. Good ol' Schuylkill punch, produces three-eyed fish [laughs]. But we have a 12-step water filter that basically reduces it to pure H20. We put a proprietary blend of minerals back into the water supply, so every bottle of Stateside has an electrolyte composition that makes it very similar to Gatorade or Smartwater. It gives it a good mouthfeel, rounds out the palate, and electrolytes are also good for cellular hydration, which helps to combat hangovers. You can never produce an alcohol that won’t lead to a hangover, but our goal was to create something where you could have a few glasses and wouldn’t feel destroyed the next day. We think we’ve done that.
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