Old Line Spirits
Mark McLaughlin (MBA ’12) was roughly two years into his post-Darden career as an investment banker at Stifel Nicolaus when he quit to pursue his dream of manufacturing his own craft spirits.
Although he largely enjoyed the work and found investment banking a critical postgraduate financial education for someone who had spent most of his adult life as a Naval aviator, a full-time job was not conducive to developing a business plan on the side.
Mark McLaughlin, center, with the Old Line Spirits team.
“I had to cut bait and quit my job and take the risk,” said McLaughlin, who had first sketched out his rudimentary plans to launch a distillery in Professor Saras Sarasvathy’s “Starting New Ventures” class. “It was time to sink or swim.”
Before starting to swim in earnest, however, McLaughlin had a wedding to attend in Seattle and decided to head out a few days early to attend a conference hosted by the American Distilling Institute with the goal of shaking some hands and learning a bit more about the industry.
At the conference, McLaughlin had the good fortune to sit next to the owner of Golden Distillery, Bob Stilnovich, a boutique spirits maker in remote Samish Island, Washington, who casually mentioned he and his partner were planning to exit the business.
“They were Vietnam veterans, and I’m an Iraq guy, and we just hit it off,” said McLaughlin. “I didn’t think much of it at the time, but we stayed in touch.”
As the two continued to talk and McLaughlin realized that one could literally pick up and move the for-sale distillery, he and his partners — fellow veteran Arch Watkins along with Class of 2012 Darden classmates Rob O’Sullivan and Ben Pfinsgraff — began kicking the tires on the business in earnest, culminating with McLaughlin raising the needed capital and moving to Samish Island for two months to learn how to make whiskey, before packing up the still, recipes and formula and moving it across the country to Baltimore.
“One of the really interesting things that Golden Distillery was doing that we’ve adopted is they were pioneers in a new category of whiskey: American single malt whiskey,” said McLaughlin.
The product involves the same grain as single malt scotch — malted barley — but ages the spirit in new oak barrels in the style of bourbon. It’s an American-style aging process on an old-world grain concept.
If the recipe was a winner, the process of opening a distillery in Baltimore included its share of setbacks, but Old Line’s 25,000-square-foot production facility — which also includes a cocktail bar and event space — in Baltimore’s Highlandtown neighborhood is now ramping up to full production.
"I had to cut bait and quit my job and take the risk. It was time to sink or swim."
MARK MCLAUGHLIN (MBA '12)
Making a delicious whiskey is not in and of itself enough to keep the business healthy and growing, however, and McLaughlin said introducing a new product in a nascent category is an enduring challenge.
The flagship single malt is not quite bourbon and not quite scotch, and at $50, priced above what many customers are prepared to pick up on a whim — although still the lower end for single malt products.
That means the most effective marketing strategy is still often a personal one. McLaughlin, his partner and sales employees regularly pour samples at stores, restaurants and bars.
“With the craft spirits market booming, there have been enough companies out there that have put a $50 bottle on the shelf that may not be that good, and I think people get burned once on that and they don’t get burned twice,” McLaughlin said. “We need to get people out there to taste our product because that trial lets people know there’s quality in the bottle and they are much more comfortable reaching for it.”
When possible, Old Line seeks placement in liquor stores and bars alongside bourbons instead of scotch, as the former group tends to be a bit more adventurous in their purchasing, McLaughlin said.
And how does it taste?
“Obviously, I’m incredibly biased, but it’s a phenomenal product,” McLaughlin said. “What I love about it is it is very familiar to all whiskey drinkers, because it has some element that almost everyone is familiar with, it has a lot of characteristics of a Highland single malt, but it also has a lot of characteristics of bourbon because it ages in that fresh oak, so it’s got lots of caramel and vanillas.“
But McLaughlin points out, you don’t need to take his word. Old Line recently took home Best in Class for American Whiskey at the 2017 Seattle International Spirits Awards.
With a significant portion of future whiskey revenue resting in barrels, Old Line also offers an aged Caribbean rum, which is a critical cash flow generator.
Although getting to this point has cost twice as much and taken twice as long as McLaughlin originally anticipated, he’s thrilled to be in the position in which Old Line currently finds itself. A recent equity investment by Constellation Brands, owner of household names like Corona and Robert Mondavi, will aid the company’s marketing and distribution efforts.
One additional sign of maturity?
Startups looking to get into the spirits industry have sought McLaughlin and his partner’s advice on the business. It’s a service others — including industry veteran and Altamar Brands founder and CEO W.L. Lyons Brown III (MBA ’87) offered McLaughlin when he was still formulating his model, and one that Old Line tries to pay forward.
“We think it’s good for the industry in general, and we would never be where we are if it wasn’t for the generosity of others,” McLaughlin said. “So it feels like the only right thing to do to help others get started as well.”
Frísco Brandy
Charlie O’Connell (MBA ’08) was first bitten by the pisco bug while studying abroad in South America, becoming enamored of the light, clear, grape-based spirit.
Unable to find it in the U.S., he made a brief attempt to get into the importing business, before byzantine rules around alcohol dissuaded him from pushing further. Instead, O’Connell went to Darden and graduated at the height of the Great Recession, eventually landing a job with the restructuring and leveraged finance firm Houlihan Lokey before moving to Singapore to work for a shipping container company. O’Connell was director of M&A for a multibillion-dollar company by the time he was 30, but the pisco business continued to weigh on his mind.
Moving to the San Francisco Bay Area while winding his shipping container career down, O’Connell hooked up with a cousin who was learning to make wine at the University of California-Davis and convinced him to help get his pisco project off the ground.
“We would go to his parents’ garage in Petaluma and just attempt to make brandy,” O’Connell said of his product’s earliest days. “We had a crazy contraption lined up all around the garage.”
Eventually, the recipe became palatable, and then good, and with the ethos of companies like Uber and Airbnb in the air, O’Connell realized he might have the makings of a spirit and a company without the need to actually invest in much physical infrastructure.
“Instead of setting up our own distilleries, we started researching others to partner with and eventually we found some candidates who let us use their machines, using our recipe,” said O’Connell. “So we started this asset-light distilling model. We came up with a pretty good recipe, but we’re not experts and that is not the value-add I bring to this process. So we get to work with these guys who are just incredible.”
The product — a clear, unaged brandy made from sustainably farmed muscat grapes from California’s central valley — is made at the Charbay distillery by a 12th generation distiller, O’Connell said.
Seeking to market an American pisco but barred from using the word outside of its home countries, O’Connell tapped into pride for his adopted hometown to name the new spirit: Frísco. Shocked that no one owned the rights to the name, O’Connell said he now holds the trademark for Frísco — accent over the ‘I.’
“Like most stories in the Bay, my intellectual property might be worth more than anything else at the end of the day,” O’Connell said.
"Like most stories in the Bay, my intellectual property might be worth more than anything else at the end of the day."