Russ: This is the BusinessMakers Show heard here and online at thebusinessmakers.com. And it's featured guest time on the show, and the topic is adult beverages, and my guest is Charlie Paulette, the CEO of Dulce Vida Spirits, Inc. Charlie, welcome to the BusinessMakers Show.

Charlie: Thank you for having me, Russ.

Russ: You bet. Well, let's start by you telling us about Dulce Vida.

Charlie: Well, Dulce Vida Spirits is a startup tequila company based in Austin, Texas. We're a distiller, importer and marketer of handcrafted tequila, which we produce a blanco, a reposado and an añejo. Our business has been in development for about two years, but we only recently launched the brand in San Antonio and Austin. We plan to expand to Houston and Dallas in the state of Texas by the end of this year and then start our national expansion in 2010.

Russ: Cool. I'll drink to that, man.

Charlie: Yes, I will, too.

Russ: All right, great. Okay, you call it handcrafted. What does handcrafted mean?

Charlie: Handcrafted means that every step of the process from the harvesting of the agave plant – actually, the growing of the agave plant and then harvesting the agave plant to the distillation process and even the bottling and finishing of the product are all done or overseen by a master distiller and really done so with our own authorization and guidance. You can actually go out and in Mexico make your own tequila and have somebody do everything for you from beginning to end and put your label on it and call it your own, but by overseeing the entire process from beginning to end, that really makes it handcrafted as well as the fact that it's a small batch of tequila.

Russ: Okay. When you talk about being overseen by a master distiller, can somebody go to Mexico and arrange for tequila to be made and not be overseen by a master distiller?

Charlie: Absolutely. In fact, there's quite a few brands out there that do that and we just don't believe that that's going to get the product that you really envision and dream about from the very beginning, which is how Dulce Vida started. It was actually a couple of agave enthusiasts out of Austin who really got turned on to really tequila that you can only buy if you went down to Mexico and brought it back in your car and that's how they got interested in agave true, 100 percent organic agave tequila, and that's how the company got started a couple of years ago, and I came in about a year ago.

Russ: Okay. Now you used another term that was interesting, 100 percent organic tequila. What's non-organic tequila?

Charlie: Well, non-organic tequila would be agave that's harvested from fields that pesticides are used to keep weed control out and agave plants take six to eight years to mature before they can be harvested, so they spend a whole lotta time in the ground. Therefore, going the organic route, which means that you don't put any pesticides on it and you end up with fields that have a lotta weeds, but you can, you know, obviously manage those fields properly, means that nothing's ever gonna touch your agave plant except for, you know, the rain and the soil. And we feel like in this case organic means even more just because of the fact that it's six to eight years before that agave plant is ready to go.

Russ: Is that rare in the tequila world?

Charlie: It's rare, but it's starting to change. In fact, the organic segment is a growing trend within the alcoholic spirits business, and there are more and more companies that are either creating new brands using only organic certified processes and plants, but there's a lotta companies that currently make products that are starting to use organic as part of a added value to the consumer. A lot more people are more green oriented and appreciate the fact that you're doing something that's good for the earth and also appreciate the fact that you're getting something that's pure.

Russ: That's right. Well, if I'm gonna be drinking tequila, I certainly don't want any pesticides in it.

Charlie: You might as well have the best.

Russ: That's right. (Laughter) Now, so it's handcrafted and 100 percent organic. It sounds like you're going to a lotta trouble here.

Charlie: We're going to a whole lot of trouble to make really great tequila, and I failed to mention the other little selling point that we use is our tequila is actually 100 proof and what that means, Russ, is that we don't add anything to it after it's distilled. Most tequilas are 80 proof and in order to get to 80 proof you actually have to add water to your tequila to get it down to that level, and we're confident in the fact that what we distill out originally is so good and so pure and so smooth that it doesn't need any water added to it. Now the other side of that equation is that when you make a margarita or a mixed drink or even drink something straight with Dulce Vida, you're gonna get a little extra happy in your drink, so you just have to watch that. (Laughter)

Russ: My, oh, my, Charlie. It's 100 percent. Is that – that 100 proof, is that legal?

Charlie: It is legal. It is legal. You – I believe you can go all the way up to 115 proof, which is not 115 percent. It's about – 100 proof represents about 50 percent alcohol volume.

Russ: Okay. I am certainly aware of how serious tequila and agave plant is in Mexico knowing that you can't come over and start growing agave in the United States and even call it tequila, but I noticed in the beginning you said, "Well, at Dulce Vida, we're a distiller, importer and marketeer." So that means the company actually owns property in Mexico?

Charlie: We don't own the distillation plant and actually that works out better for us because that would be a capital investment that would be even more of a challenge in terms of getting off the ground. The good news is there's quite a few distilleries in Mexico that you can go over and, again, with the watchful eye of our own master distiller, who is one of our founders, you can go in and you can make – it's almost like having a kitchen. If you're a foodie, you can go into this incredible kitchen and bring all your ingredients and just make something very special using the services of that kitchen, and it's sorta the same process here in that you can go into a distillery that'll agree to do it and actually make your own product from beginning to end using their equipment.

Russ: Is the actual land yours or are you able to outsource and say, "Look, I want 100 percent organic agave. Grow it for me and I'll buy it from you"?

Charlie: The agave plants that we harvest are secured in advance and the harvesting rights are owned by our company so that we can oversee, you know, when they're harvested, where they're grown, how they're grown, but we don't own the actual land itself. We have – again, we have – three of our founders of our company actually live down in Mexico, and they've actually had relationships with some of the farmers down there and established these relationships over time. And as part of our company strategy, again, we have taken the time and the commitment to these growers and harvesters to secure the rights to agave plants that'll get us going at least for the first few years, if not the first five or ten years, and as long as we continue those relationships, we should be in good shape.

Russ: Cool. Well, I just want to make sure. If I drink some straight up one time, I want to know all this before I do it. (Laughter)

Charlie: You won't be disappointed.

Russ: That's right. We're talking with Charlie Paulette, the CEO of Dulce Vida Spirits, and we'll be back with more with Charlie after this. You're listening to the BusinessMakers Show heard here and online at thebusinessmakers.com.

[Aflac Commercial]

Russ: This is the BusinessMakers Show heard here and online at thebusinessmakers.com and once again continuing on with Charlie Paulette. Our topic is adult beverages, specifically tequila, because Charlie is the CEO of Dulce Vida Spirits. Now, I'm pretty sure there's not just one bottle of Dulce Vida.

Charlie: That's right. We do three traditional styles of tequila. The first is our Dulce Vida blanco, which is the traditional white or silver tequila. That is as pure as tequila as you're going to get because it really comes straight out of the distillation process and goes straight into the bottle, and it really makes or breaks who you are as a tequila brand in that there's no room for error when it comes to white tequila. Really, you're gonna taste everything about pure tequila that you can in a white tequila.

Russ: Okay. So does that mean that that's the top of your line or the bottom of your line?

Charlie: Believe it or not, that's the least expensive side only in that the other two, which are the reposado, which is our tequila that's aged in Kentucky whiskey oak barrels for 12 months, takes a little longer obviously to produce. And then we have our añejo, which is aged for 24 months in Kentucky whiskey oak barrels. Those two products, just because of the time and TLC that it takes to make them, are a little bit more expensive –

Russ: Interesting.

Charlie: – and worth it, by the way, 'cause you can drink those really straight or on the rocks and enjoy them like a single malt scotch. They're pretty amazing.

Russ: Okay. Is aging them in oak barrels – is that sort of a common thing in the tequila world?

Charlie: Fairly common for añejos and reposados, although the great thing about the ultra premium tequila segment is that people are starting to get a little bit more experimental, and our plans are to do the same, not just do traditional methods but maybe play around a little bit with some barrels that come from unique places such as perhaps a winery or a vineyard rather than using whiskey barrels. Now some tequila companies don't go to the same lengths that we do in terms of putting it into single barrels and treating the barrels properly beforehand, sourcing the barrels from the same place to make sure that you get a nice consistent flavor over time, but we feel like our process in aging both our añejo and reposados are second to none.

Russ: Okay. Now, I think probably the whole world, or at least the whole country and the whole state of Texas, knows and has a lot of experience with margaritas, which is – I would think is where most tequila is consumed, but you mentioned straight up, and it does seem like some of these finer tequilas now are actually sipping tequilas.

Charlie: They are and, Russ, that's really the opportunity that the super premium tequila segment presents for Dulce Vida and our competitors in that tequila has been a fairly misunderstood spirit over the course of the last 20 or 30 years. Most people have experienced tequila through a margarita, which, you know, quite honestly, margarita is a great drink. They're typically not made traditionally, and they are many times over-sweetened so you don't really taste the liquor in the drink or you've done a shot at some point in your life, and there's nothing wrong with a shot, but a shot is really an–

Russ: It's easy, though, to do – it's easy to do some misunderstanding, though, if you've done a shot.

Charlie: Well, you do a lotta misunderstanding after you do shots but, you know, a shot is sort of an American invention. If you consume tequila in Mexico, traditionally it's been sipped, and the great thing is that people in the United States and in a lot of these startup tequila companies like Dulce Vida Spirits are starting to expose consumers to a new way to enjoy tequila and that is through sipping or really through mixing it through something other than a margarita. There are some amazing signature cocktails that can be made aside from a margarita that we're using as part of our business strategy to kinda open the eyes of people out there that maybe haven't had a high-end tequila before.

Russ: Well, that's interesting that you mention your business strategy 'cause I want to understand that. Are you saying that you might take your product into a bar and along with introducing it actually introduce some new mixed drinks that it would work well with?

Charlie: Absolutely. It – for us, it's about expanding the usage occasions for the consumer, so whereas you're gonna be limited to doing either a shot or a margarita, when you go into a new account, you can sell them on the quality of Dulce Vida tequila. One of the things that goes along with that – it's really two-fold. Number one is showing the bar how to make some additional type of cocktails that span the seasons and span usage occasions so that you're not just doing margaritas and shots. The other side to that is training the wait staff about the product attributes and doing tastings and letting them know and understand how aged tequila is made. Many people don't know that it's aged in whiskey barrels or in oak barrels just like many great spirits are or many great wines and really bringing that education to the retail account because when you leave that bar or restaurant and you've sold them your tequila, that's really just the first step. The second step is making sure that those wait staff and bartenders become your brand ambassadors and go out and start talking to the consumers that they interface with about your brand.

Russ: Well, I'm sure that can be a challenge, too.

Charlie: It's a lotta hard work, and it's a step that a lotta companies, especially new companies that get into this business, are not really willing to go to that level of detail, but it's absolutely necessary with the amount of competition that we have in the segment.

Russ: Okay. Obviously, you know about the adult beverage world, and I think that your background in that business precedes Dulce Vida, correct?

Charlie: That's correct. I spent 15 years in the beer business, and I started off in the early 1990s. I actually spent my entire 15 years in the beer business with one company called the Gambrinus Company out of San Antonio, Texas, and Gambrinus at one time was the fifth largest beer company in the United States. They were the company that brought Corona Extra into the United States –

Russ: My goodness.

Charlie: – in the late '70s, early '80s.

Russ: My goodness. I love those TV commercials.

Charlie: They were – they're pretty amazing. They also became known for – and this is where I came in. They bought a small little craft brewery in 1989 here in Texas called the Spoetzl Brewery. It was about to go out of business, and the owner of the Gambrinus Company bought the brewery in hopes of bringing it back up to speed and making it relevant again, and I started shortly thereafter and worked on the Shiner Bock brand for most of the '90s, and we grew that brand over a 6-year period from about a little under a 400,000-case brand to 5 million-case brand in a fairly short period of time.

Russ: Well, it's obviously done very well and brewed, isn't it, in Shiner, Texas?

Charlie: Still brewed in Shiner, Texas, and in fact, 2009 is the 100th anniversary of the brewery, and it's a true testament to the passion and the commitment that the people in Shiner, Texas have for their brand, and it's one of the things that we felt like was underserved when we purchased the brewery and started really going out and marketing Shiner, taking something as wonderful as this little town that had so much passion and commitment and really taking it to the consumers, the beer consumers around the United States and making a name for Shiner Bock.

Russ: That is so cool. Well, I'm gonna talk a little bit more about that after this. We're talking with Charlie Paulette, the CEO of Dulce Vida Spirits, and you're listening to the BusinessMakers Show heard here and online at thebusinessmakers.com.

[Aflac Commercial]

Russ: This is the BusinessMakers Show heard here and online at thebusinessmakers.com and continuing on with Charlie Paulette, CEO of Dulce Vida Spirits. Well, Charlie, the Shiner Bock story, my goodness, and those numbers you were talking about and hundredth-year anniversary, those are all initiatives that you personally were right in the middle of leading, correct?

Charlie: Really was. It was my first marketing experience outta school, and I can tell you that it was an amazing ride to be a part of a brand that was so special, that you knew was special, that you just had to bring the special qualities of the brand and the brewery out to the consumers.

Russ: Right. That is so cool. I'm familiar with Shiner, Texas, and I know how important that brewery is to that very small town. I mean it's like population is 3,000 or 4,000, isn't it?

Charlie: It's actually about 2,200 people.

Russ: Twenty-two hundred.

Charlie: It doesn't grow very often, so.

Russ: Okay. That's right. That's right. (Laughter) Now I also know that for a while you were still sort of in the adult beverage industry, but you got out of the product itself and got into high technology, right?

Charlie: I did. It was a turning point in my life. I in 2007 had recognized that it had been a good 15-year stint and had had that entrepreneurial bug going at me for a while, and I decided to jump off and leave a very good job, a great job, actually, and go do something for myself. And I got hooked up with a couple of technology gurus out of Austin, Texas, and we did a startup called Barfly Interactive Networks, and we started that in the middle of 2007 and actually got acquired in September of 2008, and so it was a whirlwind technology tour for me. Barfly is a technology that goes up on TV screens, in bars no less, and is an incredible technology that we grew to about 15 markets and then ended up selling it to a larger company that came in and swooped us up.

Russ: Cool. Wow. That's – so that was fast. (Laughter) So then along came Dulce Vida opportunity, right?

Charlie: Yeah, I actually met the founders of Dulce Vida while I was working for Barfly and after we had been acquired at Barfly, I was already starting to get the itch to go do something else, and they knew my background, and I met them in Austin and when they found out I worked on the Shiner brand, they asked me to come over and help lead them off the launching pad, and I didn't even blink. I knew that it was the right thing to do, and I went and jumped at it and that's how I got to where I'm at today.

Russ: Cool. We wanna stay in touch and see how well Dulce Vida does.

Charlie: Absolutely. Well, we're excited, and we're ready to take this brand to new levels.

Russ: Okay, cool. Before I let you go, though, Charlie, we do this regularly here on the BusinessMakers Show. We feel like we have a pretty big audience of aspiring entrepreneurs out there and people that have done what you've done, we like to ask them what sort of advice would you give to a young, aspiring entrepreneur.

Charlie: Well, for me and me personally it was about focusing on my strengths and not getting too encumbered or intimidated by my weaknesses and really taking that challenges and hurdles that might be in front of me that could very well intimidate me but just being confident in my own strengths and making sure that I focus on those and everything else would take care of itself.

Russ: I appreciate you sharing that with us.

Charlie: Well, thank you, Russ.

Russ: And, Charlie, thanks a lot for the time this morning.

Charlie: Enjoyed it.

Russ: You bet. We've been talking with Charlie Paulette, the CEO of Dulce Vida Spirits, Inc. and you're listening to the BusinessMakers Show heard here and online at thebusinessmakers.com.