SIPPING ON START-UP SUCCESS
Written on the 8 August 2014 by Laura Daquino
WHAT started out as a side beverage has become the main meal for husband and wife entrepreneurs Manolo and Silvana Lopez.
The couple stumbled upon their latest business while working at their long-held Fortitude Valley restaurant.
It started as a casual complement to their tapas menu and averaged at one bottle for every six tables.
It didn’t take long before it became the restaurant’s main attraction, overtaking even its most savoured Spanish delicacies, with small tables ordering between two to three bottles of the beverage between them.
“We were producing 900 bottles a week and just couldn’t maintain demand in the restaurant,” says Mr Lopez.
“The cool room was just fridges and we felt like we were starting to compromise food for beverage.”
Closing up shop seemed like the only way forward. Following a successful stint at being restaurateurs, the Lopez’s wanted to try their luck at being mixologists and SKA Sangria was born.
In fact, they already had mastered the mix, but it was a matter of taking it from homemade to manufactured without comprising product quality in the process.
To ensure this, the development phase of SKA Sangria took what Mr Lopez refers to as a “never-ending” three years, with reference to the countless challenges encountered by any start-up, yet alone an alcohol start-up.
“The most difficult part was trying to find a manufacturer that would work with us,” he says.
“Manufacturing is basically non-existent in Australia unless you’re producing a very high volume of items in a production run.”
After searching far and wide, the Lopez’s found a manufacturer right on their doorstep. Cleveland cordial producer Alchemy came to the party, accepting of the Lopez’s 500-1000kg ‘small’ batches.
Lopez attributes the difficulty in finding a partner that will work with a small brand as a key reason that Australian bottle shops are dominated by big brands.
He also proposes a reason why many of the brands found in our bottle shops have offshore head offices.
“The regulation here is extremely complex,” says Lopez.
“The legislative requirements and laws that must be followed to sell an item that comprises alcohol are phenomenal,” he says.
Due to this, it’s been a two steps forward and one step back tango to get SKA Sangria into the marketplace.
“You move in one direction and then someone asks if you’ve done something else, which means there is always a time delay factor as you fill in one application after another.”
Moreover, formulating SKA Sangria as a ready-to-drink beverage has made product development trickier than it would have been if it was classed as a wine.
“On a legislative basis, a product must have at least 70 per cent wine to be classed as a wine,” says Lopez.
“Ours is only 6.9 per cent, which sets it apart from wine-based sangrias, but has made launching the product into the market more challenging.
“It is also a disadvantage from a taxation point of view because we actually have to pay the tax before we move stock, whereas wine producers can enter the market without paying the tax beforehand.
“That’s dollars that we could put toward the product.”
However, amid the muddle of legislation, Lopez says there has been a silver lining.
“When you have at least 70 per cent of wine in a beverage, you can’t work with it too much,” he says.
“The wine manufacturers of sangria have to add preservatives and artificial flavourings because they don’t have much room to add other ingredients.
“We can therefore develop a higher quality product that is also safer to drink.
“It’s the reason we were in development for such a long time, as a product with six months shelf life and no preservatives is quite a big feat.”
What’s next for the Lopez’s could be anyone’s guess, seeing as having a sangria business was never on the cards.
SKA Sangria is currently sold through a number of Brisbane outlets and the team has been developing other varieties to complement its original red cinnamon-tinged sangria.
One thing’s for sure – quality control will always be number one.
It’s the reason that the Lopez’s shut down a profitable restaurant, and have taken triple the amount of time that other companies would to launch their product.
“Our business is based on fusing together Spanish roots with an Australian upbringing,” says Lopez.
“So we are considering leveraging this and branching out into essences by region as the traditional sangria brew differs across Spain.
“Whatever we do, it won’t be a slip-slop project – we want people to enjoy the product as it was intended.”