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Interview: Mike Duggan, CEO Of Phillips Distilling Owner USDP

October 4, 2016

Mike Duggan came over from Diageo North America early last year to become CEO of Minneapolis-based United States Distilled Products Co. (USDP), including its subsidiary Phillips Distilling Co. Phillips had gone through five consecutive generations of Phillips family leadership, most recently with Dean Phillips, who remains chairman. Duggan has been given free rein to push the envelope in terms of new products and strategies, and to combat recent downward sales trends at Phillips. The company’s biggest brand, UV vodka, which rocketed to well over a million cases after launching in the early 2000s, has struggled lately, falling by 5.7% last year to 1.25 million cases. SND’s Lee Murphy recently interviewed Duggan at the Phillips headquarters in downtown Minneapolis. 

SND: Sales have been falling at Phillips Distilling Co. What’s the update?

Duggan: When I arrived in early 2015, our sales were down by 10%, sometimes more. We weren’t headed in the right direction. But over the past year, our sales have improved every month, and today we’re down just 2% year-on-year. We hope to soon be in positive territory as we continue to invest. One problem is that a third of our sales are in vodka, a category that has struggled.

SND: When you arrived, a once-promising brand, Canadian whisky label Revel Stoke, also was struggling. How have you turned it around?

Duggan: Two years, ago the company was ready to discontinue Revel Stoke. Now it’s among the fastest-growing flavored whiskies in the United States. We’ve rolled out new flavors—Roasted Apple and Pineapple—and Pumpkin Spice is out this fall. We’ve also launched a root beer-flavored Revel Stoke.

SND: Phillips discontinued its spiced Irish whiskey entrant, Feckin. Are you still interested in the category?

Duggan: We’ve returned to the market with Hell-Cat Maggie, an Irish whiskey retailing at $20-$25 a 750-ml. in most markets. We import the whiskey from Ireland and bottle it here. It’s growing fast and shipping to all 50 states.

SND: You also import the Cabrito Tequila brand, which retails at around $22 to $24.

Duggan: Cabrito is one of the most popular Tequila brands in Mexico. It’s rising here, and we’re expecting more. We’re the importer for both the U.S. and Canada.

SND: How is Prairie vodka doing?

Duggan: Prairie was launched in 2008 as the first farm-crafted organic vodka to be distributed nationally. We’re the distillers, and we know every farmer who supplies our grains. Prairie is up 63% in the latest IRI sales data, and our Prairie gin is up 89%. It’s a priority brand for us.

SND: What’s new in other categories?

Duggan: We just signed an exclusive marketing and distribution deal with rum brand La Hechicera, which is made by a family-owned company in Colombia. It features a 12- to 22-year-old Solera retailing at $44.99 a 750-ml. We’re working on two other new partnerships that we hope to wrap up soon.

Phillips Distilling Co. – Leading Brands
(thousands of nine-liter case depletions)
Brand Type 2012 2013 2014 2015 Percent
Change
2014-2015
UV* Vodka 1,610 1,610 1,325 1,250 -5.7%
Phillips Vodka Vodka 425 395 380 375 -1.3
Phillips Cordials Liqueur 185 182 175 170 -2.9
Prairie Organic Vodka 24 39 80 120 50.0
Revel Stoke Canadian Whisky 22 23 30 35 16.7
Total Leading Brands 2,266 2,249 1,990 1,950 -2.0%
*includes RTDs

Source: IMPACT DATABANK

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