Natural Distilling Co – The Whole Story

A family distillery in Gippsland Victoria is creating homegrown cannabis spirits with Hemp Gin & Hemp Vodka. Founder Rhys Staley told us the whole story.
Bottle of hemp vodka with lemon

Rhys Staley doesn’t just work hard – he works smart. With experience in the medical cannabis industry and a passion for DIY spirit distilling, he combined his areas of expertise to found The Natural Distilling Co in order to create Hemp Gin & Hemp Vodka (with more soon to come – details below). With a vertically-integrated production strategy and a family-run business, they’ve quickly become renowned as the best producer of Hemp Spirits in Australia. With a community focus and a creative approach, there’s a lot of lessons to be learned here for budding cannabis entrepreneurs – read on to find out what they are.

Hey Rhys, thanks for your time mate. So how did the Natural Distilling Co begin life and who formed it? What milestones brought it to the point it’s at now?

The Natural Distilling Co was formed through my desire to create a legacy, this meant a passion through a business my friends, family and I could work in while living outside of the city. I would say it started (as a whisky label, Sons of Gippsland) three years ago when trying to make whisky on my mum and dad’s dairy farm. Milestones have evolved over time, but I initially allocated tasks into three tiers that needed to be achieved over the first two months to help prioritise. All while keeping cash burn to near zero.

  1. What do we need to do to get a website live and sell our products?
  2. What do we need to do to gain credibility, reach authentic consumers that can help us build our brand and build diversified sales channels?
  3. What do we need to achieve in our first six months, to get us to where most distilleries or brands are in 24 months?

What are your goals for NDC? Can you conceive of a “finish line” and what does that look like?

I have always been one to set a goal, hit it, then double it. NDC runs off an oily rag, none of us are taking any money out of the business so that everything we bring in can be used to accelerate the growth and build the brand. I have specific goals around unit sales, market penetration etc, but the speed at which we are smashing these rapidly changes the finish line. I would like to build the brand to a point that we can work on what we are passionate about and support ourselves (eight people) through NDC while not impeding its growth whatsoever.

We have decided to prioritise the consumer, build a community and act with authenticity. We only do what is in the customers best interests, we focus especially on building relationships and the brand with consumers directly, not through distributors or reps. I see our customers as our shareholders and am always looking for ways to provide them with extra value through experiences, insights or exclusive offers.

– Rhys Staley, Natural Distilling Co

There are many different approaches to business, but a huge part of the progression depends on one simple thing: cashflow. How did you guys finance getting started and are you still privately held by the same initial owners? Is the intention to seek external investment or is it all about self-funding?

I find everyone focusses on revenue and high cash burn just seen as the cost of doing business. We are purely seed funded so don’t have the luxury of burning investors’ cash, to build a solid foundation and IP we have moved as fast as we can as frugally as we can. Having said that we have developed seven revenue streams, but our expenditure on sales or marketing activities is purely based on ROI.

We are owned by me, a good friend and two brothers-in-law. From the sales activities we have tested we have built a scalable recipe for success, so to accelerate our growth we are looking at crowdfunding. I feel this is a good fit for us as it will allow more family and friends to join us on the journey, while attracting like-minded individuals.

What are the milestones in terms of financial sustainability? When did you figure out that you could make this your “real job” and not keep one eye on the job seekers listing!?

Gin is a saturated category; many products do not have a point of difference making them hard to remember. I realised this could be a real job when I saw how people engaged with our story and products. Our online repeat purchase is unlike anything I have seen or could have expected. Sharing the story and seeing how much consumers enjoy our drinks is also the most rewarding part.

In terms of milestones, I am trying to grow the business in a sustainable way. To me this means minimising the amount of risk we are exposed to, while still testing a variety of strategies and achieving growth every single month.

I am proud that we were able to amortise our set up costs in the first six months, that we have purchased a company vehicle (affectionately called Mary Jane), invested in developing three new products to be launched this year and that we continue to find ways to deliver value and reward loyal customers. I try to call new Founders Club members to tell them about the business, we do hand deliveries where we can to meet customers, free goodies in deliveries like tonic/kombucha to make cocktails at home and good ongoing discounts so that customers can always buy their drinks from us at the cheapest price).

Rhys Staley standing with hemp spirits products

How do you figure out if things are going in the right direction or whether you need to correct the course?

Fundamentally it comes down to focus and sustainable growth. If we try to do too many things at once we inevitably will not have the headspace to be great at one thing. Sustainable growth means consistently making more than we are spending, while still strategically investing to grow the business down the track (i.e. we are considering an 120k investment in a new product line that we wont be able to commercialise for around three years).

To get to this point I dissect every detail of expenditure as well as revenue generation, where does it come from, is it diversified, what does it cost, how does it change each month, what are others doing that works/doesn’t work, how can we differentiate ourselves and what is it our customers want next.

What’s different about your brand and how you do business? This can be anything – relationships, innovations, unique aspects of your products or operations, whatever speaks most effectively to your motivations and aspirations.

We have decided to prioritise the consumer, build a community and act with authenticity. We only do what is in the customers best interests, we focus especially on building relationships and the brand with consumers directly, not through distributors or reps. We are building long term value and a community, so a focus is also returning value to our Founders Club members (an NDC membership for those with a special interest in the business). I see our customers as our shareholders and am always looking for ways to provide them with extra value through experiences, insights or exclusive offers.

Millennial & Gen Z consumers are more conscious than any previous generation about who they are giving their money too; how do you guys feel about transparency and is it something you personally find desirable in the businesses you support?

Yes absolutely, everyone wants to know where their buck ends up. At events we do like the Eltham Farmers Market, consumers will often see myself and my wife sharing the story with AM tasters!

We are very transparent that this is our passion and customers can see the authenticity. I often get calls and text messages from customers that want to know which markets we are attending and what we are thinking about doing next.

As you know my day job is medicinal cannabis, the company I work with is building a pharmaceutical brand. I think during the next couple of years we will see many companies fail and be replaced by others with stronger cultural fundamentals and long-term value propositions. I hope we see a clear definition of medicinal vs recreational, stricter regulation around packaging and elimination of stigma from prescribing decisions.

– Rhys Staley, Natural Distilling Co

Some brands try to provide the lowest cost, others try to provide the highest quality. The interaction between both defines where you are on the value scale between budget and luxury. Where do you situate NDC and why did you choose to set up camp there? 

All Australian spirits end up in the “boutique” price range due to Australian alcohol excise. If you enter the market aiming at anything less than the best product you are destined to fail. Outside of brand, our category and price point were the result of a careful analysis of the market and our where our value proposition and product fits in. However, through our referral program and initiatives like the Founders Club, we are focussed on making our drinks accessible for anyone.

Once consumers try the product, meet the makers and hear the story, they understand why a bottle of local gin made from sustainably sourced ingredients from their postcode might cost a bit more than their usual Friday night litre bottle of Gordons. Then they are happy to continue interacting with a brand they can feel and be part of, the cheap & cheerfuls stay in the past.

What do you feel is the best thing about your brand? What has the most room for improvement?

Our USPs, authenticity, using the highest quality natural and sustainable ingredients, sourcing local, grassroots and community.

I will always feel like there is endless room for improvement! In start up there is always a million priorities, I wish there were more thought space for experimentation and blue-sky thinking.

The way we manage our time is also a constant focus, we need to value our time and outsource some tasks so that our families are not ultimately the ones who suffer.

What’s your biggest challenge in terms of making NDC the best it can be? If you had a magic wand, what barrier would you remove?

Time, there is never enough time to do everything, I wish I had 48 hours in each day.

Who is the community that surrounds NDC? How involved are they – active, passive, a mix?

First and foremost, our dedicated partners that help day-to-day in the business and manage family life to give us the ability to scale the business.

We want our community and consumers to be active and have ownership, we are very transparent and provide updates on the growth of the business. Our consumers have helped shape our next line of drinks being Manuka Honey Gin and Manuka Honey Vodka. We asked many of our Founders Club members what our next natural hero ingredient should be and the majority said honey. After a few months of experimentation, we have developed them.

We are organising an event for our Founders Club Members, family and friends later this to test their hand at a few simple distillation techniques and bottle their own brew.

How would you describe the cultural landscape of the cannabis industry? What are we doing well and what do we need to do better?

As you know my day job is medicinal cannabis, the company I work with is building a pharmaceutical brand. I think during the next couple of years we will see many companies fail and be replaced by others with stronger cultural fundamentals and long-term value propositions. I hope we see a clear definition of medicinal vs recreational, stricter regulation around packaging and elimination of stigma from prescribing decisions.

A bottle of hemp gin with oranges

In terms of community, have you entered any partnerships or co-promotions with other brands who share similar goals? Are you open to this or do you have plans to do so in the future?

Not yet but very open to do so. I think we always need to take care to be true to our own community, knowing that are diverse and we are focused on building our own brand first.

Do your suppliers influence operations (beyond simple supply & demand), and how do they fit into your ecosystem? 

Not at all and never, we are not under any time or pressure to make hasty decisions or work with anyone whose values are not aligned to our own. We work with Australian suppliers from ideally the Gippsland region to support our local community. All of our hero ingredients come from our local area in Gippsland.

Does NDC give back to the community or planet in any way?

We make decisions every day to recycle and reduce our carbon footprint. This includes a 4-hectare trial crop of hemp, with hopefully much more next year. We prioritise supporting local business and fundraisers. It was also in my business plan to implement a local community infrastructure program in our second year.

How does cannabis enter and leave your ecosystem? E.g., where is it sourced from and what goes into the process while it’s “under your roof” before hitting the shelves?

We are growing hemp on my parent’s dairy farm near Wilsons Promontory to create the drinks. Our trial crop recently harvested was a good start but will not be used for the first batch purely due to timing. I think provenance is important and while the climate isn’t suited, I will also set up trial crops of wheat in the future.

We source hemp protein from Gippsland to help ferment our base spirit, but because it is incredibly low in natural sugar needed to create ethanol, we also use local wheat and barley.

We use Australian cannabis terpenes to distil with, this is what provides the flavour.

People are increasingly aware of their footprint in terms of sustainability. Have you been following the potential packaging applications around cannabis and is this something that you could see benefitting your brand?

There are so many amazing applications for the plant and consumers are demanding them! While we are limited with our glassware, we are currently exploring ways we can integrate hemp cloth into our packaging, use hemp cups for tastings and provide accompanying goodies that highlight the versatility of the plant. We were also giving away local hemp seed oil with purchases earlier in the year.

What’s your biggest challenge in terms of sustainability?

I think understanding your footprint to start with. If quantifying emissions at the embryonic stage of your business is not a focus its hard to catch up. I understand how some business can put in the too hard basket but it still needs to be a priority.

Have you got any steps planned to improve your sustainability footprint and when do you expect these to be complete?

Constant education of our team is probably the best measure – if they are passionate about it, it rubs off on others too. We are moving towards zero waste for events that we attend. We are exploring moving into a new site which will be powered by renewables only. We plan far in advance to create efficiency and minimise travel emissions.

Thanks for the the interview! To finish up then, what’s coming next for Natural Distilling Co?

  • Key focuses for us are raising funds to accelerate our growth, including crowdfunding.
  • Launch of new product lines this year to further the Natural brand
  • Hiring and some of us relocating to NSW and QLD to do more markets and share the story.
  • Continue building our community and returning value to them.
  • I have set up a separate business that will create whisky from local ingredients called Sons of Gippsland, so am looking for a site to get started.

Do you have any questions or comments about the Natural Distilling Co? Let us know below!

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