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A Family Distillate

Posted on  | March 25, 2015   Bookmark and Share
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Heaven Hill Celebrates 80 Years Of Crafting Whiskey & Building Brands

 

Heaven Hill is marking their 80th birthday in an unexpected way, by changing their name. While the switch from “Heaven Hill Distilleries” to “Heaven Hill Brands” might not seem like a huge departure, it does reflect the dramatic way in which this family-driven company has evolved over the last eight decades.

“We are still heavily in the distillery business, but we are about so much more today than American whiskey,” says Max Shapira, President, who has worked for the company his father founded since 1970. “We have an immense range of brands which we’re building for the future, so our new name really describes what we do today.”

Betting on Bourbon

The five Shapira brothers made no small gamble in founding Heaven Hill Distilleries in Bardstown, Kentucky in 1935, on the heels of Prohibition and in the thick of the Great Depression. Their first brand, Bourbon Falls, was just up and running when they were forced to shut down, along with many other distilleries  during WWII, in order to produce alcohol for the war effort. Yet their commitment to American whiskey production paid off eventually, as Heaven Hill went on in subsequent decades to become a leading bourbon distiller, particularly with the introduction of Evan Williams in the 1950s (which remains the company’s flagship brand).

Their passion for bourbon never wavered, in spite of the fickle nature of consumer drinking habits. In the midst of the current American whiskey craze, it’s easy to forget that bourbon has “not always been successful,” reminds Andy Shapira, Director, Sales Analysis/Western Division Sales Manager, referring to the category’s steep decline in the 1970s through the early 1990s. “We survived by developing interesting offerings in many other categories. We have skin in the game with every trend in the industry, which has allowed us to compete against bigger players.”

Change, Accelerated 

The third generation of Shapiras brought a thirst for innovation and trend-setting. When Kate (Shapira) Latts, VP of Marketing, and her husband, Allan, COO, moved back to Kentucky from Cincinnati to work for Heaven Hill in 2001, she admits that, “like a lot of people at the time, I thought Heaven Hill was all about American whiskey, but quickly saw that there was so much more to the company.” Having just acquired Christian Brothers—the number three brandy in the country—the company soon embarked on a period of acquisition and innovation.

An early leader in the flavored vodka world with Burnett’s, Heaven Hill released best-seller after best-seller with offerings like Citrus, Raspberry and Orange. “I remember my dad saying we needed to try vanilla cautiously. It felt like a real risk at the time, which is funny in retrospect,” says Kate. The company was ahead of its time with Sour Apple and Coconut, too.

But the defining moment of the company’s culture shift was the purchase of  Hpnotiq in 2003. “We had to learn how to do so many things differently,” Kate recalls, as they had never before worked on “a high-energy, on-premise promotion brand with a tidal wave of momentum behind it.” In the early days, just trying to figure out how many T-shirts to order was perplexing (“Should we order four or five thousand? In 2004 we ordered a million,” Kate remembers).

“Hpnotiq taught us how to do promotions,” says Andy. “It paved the way for the future of the company. Without that brand, there would have been no Pama or Canton,” the company’s successful pomegranate and recently-acquired ginger liqueur brands. “We have been focused on a very vibrant section of the flavored liqueur category, which captures the enthusiasm and interest of bartenders, which then translates into off-premise sales,” Kate describes.

Cross-Category Expansion

With a small team of decision makers, things move quickly, giving Heaven Hill the ability to stay ahead of trends and bring new products to market efficiently. “Innovation is the lifeblood of our industry, and it usually doesn’t come from the big companies,” says Andy.

The successful launch of Blackheart Rum in 2010 inspired the acquisition of Admiral Nelson, the country’s second-bestselling spiced rum, in 2011, making Heaven Hill a major player in the rum category. Blackheart is a higher-proof rum, with a bolder flavor profile and has been propelled by the ever-strong rum-and-cola trend. “One of the most fun things we do is create a brand from scratch,” Kate shares. “When you create the name, build the equity, figure out how to best support a brand, it feels like your child.”

Bourbon Comes Full Circle

Few companies were better positioned to take advantage of the American whiskey renaissance than Heaven Hill, with its cache of historic brands and vast stocks of aged bourbon. Looking back, how did one of the worst-performing categories reemerge as the fastest growing distilled spirit today? “About 15 years ago, we in the industry got our act together with the launch of single-barrel and small-batch releases, better packaging and flavors,” says Max. “The consumer today demands all these things.” Heaven Hill helped pioneer this trend with the release of Elijah Craig 12 Year Old in 1986, the first “small batch” bourbon on the market.

Heaven Hill’s flavored whiskies continue to grow double digits, and the company has released a steady stream of premium extensions: Elijah Craig 21 and 23 Year Old, Parker’s Heritage Collection, Rittenhouse Rye—“the darling of the mixology community,” Kate says—a wheated bourbon, Larceny, even unaged whiskey, TryBox, among others. For Kate, the most exciting part about today’s boom is that growth is hitting every segment, not just the premium end, and boosting tourism. “It’s fascinating to see the types of visitors we get at our Bourbon Heritage Center, from legal drinking age college kids, to young women on ‘girl’s weekends’ to longtime aficionados.”

Size—and Family—Matters

The Shapiras at the helm today navigate a very different industry landscape than that of their founders. “You have to be so much quicker to market,” says Max. “And pay more attention to carving the marketplace into multiple pieces, it is much more segmented.”

Being smaller than the big suppliers, and family-run, puts Heaven Hill in an advantageous position, believes Andy: “We are nimble, and we don’t have to focus on the quarter—we can think long term. It also allows us to have consistent pricing strategy; our distributors and retailers like the fact that they don’t see end-of-quarter pricing activity with our brands that they do with many others.”

David Sparrow, VP at RNDC in North Carolina/Virginia, has worked with a vast array of suppliers in his 40-plus years in the industry, and never met one that cared more for the people they work with. “The Shapira family treats everyone like family. They possess an unusual amount of character and integrity,” says Sparrow. “For example, when they run sales incentive trips, the winning sales reps’ entire families are invited, including children. I have never seen any other supplier offer something like that.”

The More Things Change…

As different as today’s Heaven Hill portfolio might appear from the original (and payroll, which has ballooned from 12 employees to 600) the company’s culture remains essentially unchanged. “We have always tried to make sure that our employees have jobs that are challenging and interesting day in and day out,” says Max. “And that our products are the highest quality. We are still using the same mash bills from 80 years ago, and have some of the original stills.”

Presiding over the country’s largest independent, family-owned producer and marketer of distilled spirits in the country, Max has a considerable amount to be proud of. Yet he is absolutely certain about his greatest accomplishment: “Enticing the third generation of the family to leave their careers and join this business has been my most significant contribution. I believe having my son, daughter and son-in-law working at Heaven Hill, bringing the same passion and commitment to excellence, has ensured our future like nothing else.” 


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