42 Below

What it lacks in size, 42 Below Ltd more than makes up for with its entrepreneurial approach and creativity, growing exports of its super premium vodka and other beverages to $9.6 million in FY06, up 30 per cent on the previous year.

42 Below produces award winning spirits and spring water that are uniquely New Zealand. Established in the late 1990s by advertising supremo and now company CEO Geoff Ross, it starting exporting in 2003 and today its products are sold in the top bars around the world. Significantly, says Commercial Manager Andrew Steel, export sales surpassed domestic for the first time in FY05.

The company’s original product is the country’s only super premium vodka 42 BELOW, a brand that is “unashamedly New Zealand”, says Mr Steel.

“We have created the cleanest vodka because we have one of the purest water supplies in the world and we are the most awarded vodka in the world because of our pristine environment.”

42 BELOW has grown to include four varietal flavours – feijoa, Manuka honey, passionfruit and kiwifruit. Product innovation has also seen the introduction of South Gin, another award winning product, Stil Vodka, Tahiti Dark Rum, Seven Tiki Rum and 420 Water.

Operating on a shoestring budget and up against some big international brands, the small New Zealand company has had to be a bit maverick in order to make its mark in a very competitive market.

While most spirit brands tend to market themselves directly to the end consumer, 42 Below targets bar owners and bartenders, initially with its super premium vodka, introducing other products once the relationship is established.

It enters a new market through the most influential bar in the city. A team of brand ambassadors, typically expat Kiwis passionate about the brand, then sells 42 BELOW to every top bar and restaurant in the targeted area.

“It’s a matter of convincing bar owners to give the vodka with the most unique story a go,” says Mr Steel. “We’re not afraid to make comparisons between our brand and others, we’re very confident and we’ve won enough gold medals to back us up.”

Once traction has been gained in the market it seeks an importer/distributor to take the brand to the next level, allowing 42 Below to reduce its own costs and gain the benefit of a larger, more experienced local partner.

Education is another key tool in 42 Below’s arsenal to engender brand loyalty. It holds regular Vodka Universities for bartenders and the annual Cocktail World Cup in Queenstown where competing teams of elite bar tenders from around the world fight it out to make the most original 42 BELOW-based cocktail.

The company increased total sales to $15.8 million in FY06 and Mr Steel says that growth is coming from increasing sales in existing markets, in particular the UK and USA, and expansion into new developing markets in Asia and the rest of Europe. Sales are also growing strongly in its important home markets, New Zealand and Australia.

“Expansion into new export markets is costly and in the beginning it means investing a lot of money,” cautions Mr Steel.” It’s a risk and you have to be very careful about where you choose to put your product. But the reward is a huge audience and the great feedback we get from the rest of the world.”

In order to take advantage of the direct channels to markets it’s created, 42 Below is expanding its product portfolio. “In this way we believe we can continue to grow while protecting ourselves from cyclical or faddish changes in the market,” explains Mr Steel.

As an entrepreneurial company it encourages staff to take sensible risks. “In order to stay on top of that risk, we constantly monitor the situation in each of our markets. This also allows us to react quickly and effectively, minimising negative effects and maximising opportunities.”

42 Below has 25 staff in its Auckland office, the heart of its marketing and product innovation and its offshore Brand Ambassadors. Bottling and distribution are outsourced. The company listed on the New Zealand Stock exchange in October 2003 and in late 2006 liquor giant Bacardi offered to buy it.

“That’s a fantastic development for the brand; it will give us access to their global distribution network and put some real muscle behind the company,” exclaims Mr Steel. “They want to help us grow and stay true to what the company is now.”

He says a challenge will be to grow carefully to make sure 42 Below doesn’t lose its strengths.

“It’s very important to us to stay fresh. To make sure we don’t rest on our laurels, to stay slightly hungry.

“We treat exporting like warfare; we never hold our position, we are always advancing, because if you’re not going forward you’re going backwards. We’re getting out there and hammering it.”

Image: A 42 Below vodka professor.

Contact:
Andrew Steel
Commercial Manager
42 Below
Phone     +64 9 920 9430
Email:     Andrew@42below.co.nz
Website: www.42below.co.nz