Sales of gin in the UK are predicted to reach £1Bn in 2016 according to The Wine and Spirit Trade Association, with the number of gin distilleries in Britain doubling in the last six years. London based Sipsmith can take much of the credit for the explosion of interest in gin as their successful two-year legal battle with HMRC over licensing paved the way for a succession of British craft gin distilleries to follow suit. Co-founder Fairfax Hall previously worked on brand strategy for Diageo, before leaving to launch Sipsmith in 2009 with childhood friend Sam Galsworthy. In this interview, Fairfax discusses the inspiration for Sipsmith, their long battle with HMRC and how they intend to scale the business.

What was the inspiration for Sipsmith?

The early 2000s was a time when brands were big and brash and there was a real movement across the world towards globalization and megabrands. Suddenly, in 2002 two or three little distilleries in New York State popped up that seemed to buck that trend. They were making spirits in small batches and really valuing the love and care that went into producing them. We were impressed not just by the products, but also by the reaction from people to these products. That was the catalyst moment for us and we thought wouldn’t it be fantastic if we could bring this idea to the UK.

What has been the biggest obstacle you’ve faced as a business?

One of the benefits of starting out on your own is the wonderful naiveté that you have. We thought we would simply quit our jobs, apply for and receive a rectifier’s license — something that hadn’t been granted for over 200 years — and start producing gin. The reality is it took almost two years. We were told by the Government of legal acts that existed from the 1750s that would prevent us from producing gin in the small quantities we wanted. Sam and I had both sold our properties, moved elsewhere and our business funds were fast running out as we entered a long process of legal negotiations with HMRC. It was emotionally tough, but also incredibly exciting each time we heard a new piece of legislation had been overturned and we were a step closer.

What is Sipsmith challenging?

Sipsmith is standing up for things well made in counterpoint to an increasingly disposable culture. Products are so often made today that won’t last tomorrow and were never intended to last tomorrow. What we’re creating here is not just a brand, but a liquid and everything that is wrapped around it which represents the days when objects were made with the vision that they would last for hundreds of years. In that same essence, we don’t compromise on anything.

How does that belief impact business decisions?

Just like we don’t compromise on the liquid by stretching a concentrate for efficiency purposes, nor do we compromise on anything. Each bottle is individually dipped in wax, sealing it by hand, which can’t be mechanized. We’ve also embossed ‘SIPSMITH’ on the back because people were stripping the labels off and using them to hold water or candles – at least now we get some benefit. Much of these processes have almost become a barrier to entry for the mega brands looking to copy, as they would rightly consider the impact of producing millions of bottles a year. Our perspective was, let’s make it as fantastic as possible and then calculate the cost of goods down the line.

What has been your approach to marketing Sipsmith?

We’re about discoverability rather than advertising. Even if we had the money to advertise, which we don't, we’re not at the stage of a brand life where it would feel appropriate to shout about what we do. This is more about the experiential and reaching people through word-of-mouth recommendations. It’s all the little elements of the experience that add up to what the brand represents. Even on the inside of the label, we’ve printed juniper berries to catch people’s eyes.

Another example is rather than just having the usual non-slip ruts on the bottom of the bottle, we’ve embossed our motto in Latin, ‘Cygnus Inter Anates’, which means a swan amongst ducks. It’s something that people hardly ever discover but it’s a wonderful little surprise for those that do. It so happens that in the seven years we’ve been going social media took off and that’s contributed to word spreading about us very quickly and cost effectively. Fifteen years ago and prior to social media, we wouldn’t have been able to compete in an industry so reliant on advertising to reach people.

What has been the single most effective marketing initiative?

The traditional brand-building model was built around the on-trade first and ignoring consumers, initially at least. The thought being once the trade is onside they’ll promote the brand for you. We decided to deliberately eschew that model at launch and instead spent our entire marketing budget on the distillery. We wanted to offer tours and tastings that would bring people in and lift that veil on the mystery of distilling, offering a real understanding of the difference of our product and process, compared to the gin available on the high street. Food writers and bloggers started reviewing the experience so we received a huge amount of organic press as a result. We now have visitors to the distillery from all over the world.

How would you describe the Sipsmith consumer? 

We really haven’t gone for a particular demographic or customer profile. It’s more about a mindset that reflects what we love and appreciate, which are things that are well made. That goes hand in hand, with discernment rather than necessarily status. It’s for people who are passionate about provenance. That was what really got us going in the first place. We just thought if people care so much about food and where it’s made then so they should with spirits. We tapped into a bit of the public consciousness with that and if anything that movement has only got stronger.

How do you intend to scale Sipsmith?

We could grow without compromise, and that is of course more expensive to do than to grow with compromise. What we’ve always, passionately, stood for, however, is being well made and hand-crafted. So we want to be as big as possible, but the way we would get there would be with more stills and more people to run those stills.

In light of SAB buying Meantime and muscling in on craft beer do you have a view on what constitutes craft?

The whole craft debate is an incredibly difficult one. Just because a brand has been taken over by a big company, I don’t think that necessarily changes the way it’s produced. Those changes may never happen, or they could happen in 15 or 20 years’ time. What it will do is put more onus on the team to stand up for themselves, and make sure that they don’t compromise the methodologies that made people fall in love with them in the first place. The pressure I presume will be there from the parent company for operational efficiencies, for example.

Why is there such a lack of innovation at many of the big companies?

In order to actually move the needle for a mega-company, you have to produce so much profit from the first year of operation, that it’s always going to look more attractive to the finance guys at the top of the organisation just to do a line extension. It’s lower risk, it’s more guaranteed volume, it’s a recognised brand, and you’re just producing something that goes hand in hand with that, rather than trying to create a new product from scratch. I suspect that, as a result, the big companies will, effectively, continue to grow their existing brands and then just acquire new ones as and when they hit scale.

#3BitsofAdvice

Fairfax Hall on growing a challenger brand

1. Hire for raw talent and energy over experience. Experience can be gained on the job but passion for a subject is harder to acquire.

2. Give individuals on the team a long leash. We’ve always provided opportunities for staff to implement new ideas. Even if they fail, they will learn for next time.

3. Constantly keep pushing the boundaries in terms of what is possible. Businesses can easily get complacent without that creativity.