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Interview, Part 1: Phillips Distilling CEO Mike Duggan

August 13, 2019

Minneapolis-based Phillips Distilling Co. has been in transition mode over the past few years, as it looks to boost growth for its Prairie Organic vodka brand while stemming the decline of its much larger UV vodka. Last year, Prairie Organic increased 3.6% to above 100,000 cases, while UV slipped 7% to 700,000 cases, according to Impact Databank. SND associate editor Shane English recently spoke with Phillips CEO Mike Duggan to get an update on those efforts.

SND: Prairie Organic (around $20 a 750-ml.) has more than doubled in size over the past five years. What’s next for the brand?

Duggan: We know from our research that 65% of spirits drinkers will pick an organic option if they know it’s available, and that’s where Prairie has really fit in. We recognized that there was an opportunity for organic spirits. We like to point out that consumers don’t have to make any concessions with us. Prairie has award-winning liquid, a great package, is family-owned, craft distilled, non-GMO, and gluten-free. We check all the boxes of what’s been selling. And then the last box, which no one else is checking, is the fact that it’s organic. We’re positioned perfectly to see some great growth, both in gin and vodka, and from an innovation perspective. We’ll be adding more organic offerings to the portfolio next year.

SND: UV is in a challenging segment of the vodka market, retailing around the $10 mark. What’s your strategy on that brand?

Duggan: We’ve spent a lot of time thinking about what UV is going to look like in the future, because it’s a hugely important brand for us. We came to a few strategic decisions. One was to pare down the flavors that weren’t selling and focus on our core flavors. Previously, we had 19 flavors out there, because historically flavors were about 80% of the brand. Now we’re also increasing our focus on the core unflavored vodka, and that has grown to become about 40% of the business.

SND: How are you marketing UV to consumers?

Duggan: We started seeing a sparkling water and vodka trend a few years ago, so we launched “UV Plus One”: grab a UV flavor, add it to sparkling water, put it in your Red Solo cup, and you have a party. We’ve embraced that go-to-market strategy and it’s starting to work. We’ve also launched UVGO canned cocktails ($10 a 4-pack of 12-ounce cans), which we’re extremely excited about. A lot of the growth in canned cocktails has come from malt-based products; we have a real point of difference with our spirit-based product. It’s made with real UV vodka, and it still has only 5% alcohol and is packaged in a can. Everybody says flavors are dead in vodka. I would tell you they’re not dead. They just come in a can now.

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