A New Category of Whiskey—100% American-Grown Sorghum
We’ve created an exceptionally smooth and rare whiskey from the gluten-free and environmentally friendly sorghum plant, one of the world’s finest natural sweeteners.
Sorghum, or sorgho, has been the primary ingredient of the oldest spirit in history, Chinese baijiu, for over 5,000 years. Today, Chinese baijiu is by far the most popular alcohol in the world, with 1.1 billion cases sold in 2016.
The American Market for Sorghum Spirits is Untapped
And we are proud to say we're one of the first sorghum whiskeys on the shelf.
In early 2016, James F.C. Hyde Sorgho Whiskey was officially approved a “whiskey,” and we are already propelling sorghum whiskey to become a rival of bourbon and rye.
Our customers LOVE the taste of James F.C. Hyde Sorgho Whiskey
"Smooth, versatile and delicious! I've recommended James F.C. Hyde to many of my friends who swear they don't like whiskey, and they find they LOVE this whiskey.
- Geri Miller (5-Star Facebook Review)
"I was a Jameson Irish Whiskey drinker until I tried James F.C. Hyde. It goes with everything, especially a good cigar. I would highly recommend this unique spirit."
- Randy McAdam (5-Star Facebook Review)
The Whiskey Market is Booming
The time has never been more ripe for a revolutionary new whiskey to enter the arena.
The global spirits market is worth $100+ billion and is growing at 4.5% annually. American whiskey (Bourbon, Tennessee, and Rye) was up 7.7% in revenue in 2016. As a sorghum spirit, we also plan to tap into the $80 billion market of Chinese baijiu.
Cases of super premium whiskey sold per year
super premiums market annual growth
We're making rapid and continuous progress in the market
We've secured distribution in ten states, including the 4 largest U.S. spirits markets (California, Texas, Florida and New York). Our sales are exploding with Sorgho Whiskey volume nearly tripling in 2018 vs 2017.
rating from The Whiskey Wash (Best in Category)
What's next for Sorgho Whiskey?
We're planning to add at least 3 additional states in 2019
We are using technology neglected by traditional whiskeys, such as social media and crowdfunding, to rapidly build up a community of brand ambassadors. Our board member, Brian Van Flandern, named America’s Top Mixologist by Food Network, will also actively promote our product by building relationships with the nation’s most prominent writers, restaurants, bars, and mixologists.
Use of Funds
Having acquired the distiller of our Sorgho Whiskey - Jersey Artisan Distilling - we're now turning our focus and resources to build up our barrel aging inventory and to further develop the James FC Hyde Sorgho Whiskey brand.
Together, We'll Disrupt the Whiskey Industry
James F.C. Hyde Sorgho Whiskey is not just a whiskey like no other–a new gluten-free American whiskey of remarkable smoothness and the highest quality, made from nature's miracle crop, sorghum, and possessing unlimited and untapped potential. It is a whiskey hell bent on revolutionizing two American industries, forever changing the landscape of both 1) the American whiskey market with a new Sorgho Whiskey "category" akin to bourbon and 2) the American agricultural landscape by launching sorghum as a mainstream ingredient in the American spirit market.
Most people would be content to revolutionize ONE. Why do we think it's within our grasp to revolutionize TWO?
Here's what we see that illuminates our revolutionary vision:
- Nature's miracle crop, sorghum, is remarkably environmentally friendly, produces a spectacular gluten free new American whiskey, and is untapped in the American market, yet possesses unlimited potential.
- Sorghum is the primary ingredient of the most popular spirit on earth (Chinese baijiu, with over 1.1 billion cases sold last year).
- We've been making substantial technology investments in the sorghum seed to bottle supply chain since 2012. Those investments have gained us a royalty free license to the Sorghum Production technology used to plant, harvest, extract, clarify and dehydrate the "rare and delicate sugars" with unprecedented efficiency in terms of both volume and cost.
- America's sorghum growers, through the National Sorghum Producers & United Sorghum Checkoff Program, and at the grassroots level, are lining up behind our effort.
Call us cocky, or arrogant or simply crazy. But we believe: 1) the global economic potential for a new American Whiskey made from sorghum is near limitless and 2) if we can capitalize on that economic potential, we have intellectual property protection in place and control the strategic choke points along the supply chain, which will deter potential competitors.
Should that vision become reality, the result? A new American whiskey which will forever change the whiskey market. And a new, high value add cash market, forever improving the life of America's sorghum growers.
You can help us leave our footprint on the world. Join us and our nearly 38,000 Facebook fans in the Sorgho Whiskey Revolution. Help us get to the next level by investing your hard earned dollars. And if you appreciate great American whiskey, try Sorgho–we're confident you'll become a loyal customer, an advocate and a brand ambassador spreading the word of this revolutionary new American whiskey–James F.C. Hyde Sorgho Whiskey–a whiskey like no other.
The adventure goes on. Become a part of it and come along for this exciting ride.
Meet the Founders
and the rest of the team
From 385+ Investors
It's the most unique and innovative American whiskey – since the Civil War, a whiskey like no other - made from American grown, gluten free sorghum.
Armed with trademark protection for Sorgho Whiskey, our ambition is to catapult Sorgho Whiskey success into new whiskey category status, placing it on equal footing with bourbon whiskey, scotch whiskey, rye whiskey, etc.
In that context, our James FC Hyde branded Sorgho Whiskey is the tip of the spear. The original brand launching Sorgho into the mainstream of the American whiskey market.
We like to refer to it as “nature's miracle crop”. Why would we say that? Well imagine a crop that produced both an abundance of sugar like sugarcane, AND an abundance of grain like corn, but can be grown in places neither can AND is gluten free. That's sorghum.
Environmentally respectful and spartan in its use of inputs yet generous in its bounty.
Biologically, sorghum bicolor, is an ancient grass (at least 10,000 years old)
indigenous to dry semiarid regions in places like Africa, China, Australia and India. It is the fifth most important cereal grain on earth. Because it can grow in harsh environments, and is usually grown without fertilizer or irrigation, it is one
of the most important staple foods for millions of poor rural people in the semiarid tropics of Asia and Africa. It is an incredibly efficient user of sunlight, water and soil nutrients. It can grow from seed to 12' – 14' in around 100 days.
Agriculturally, the United States Department of Agriculture (“USDA”), classifies
sorghum as a grain. In 2015, the US planted over 8 million acres and harvested nearly 600 million bushels of grain (aka “milo”).
First record of sorghum in the US comes from a Ben Franklin journal in 1757 in which he writes about using sorghum to make brooms. Nearly a century later, sweet sorghum entered the US in 1854 when the US Patent Office, seeking an alternative to southern grown sugar cane made with slave labor, imported seeds from China. The plan? Hand out sweet sorghum to “free state” farmers, north of the Mason – Dixon line, and have them develop a sugar industry independent of
Three years into this effort a Massachusetts horticulturist, penned the first authoritative “best practices” book for planting, growing, harvesting and processing sweet sorghum. The book, “The Chinese Sugar Cane”, published in 1857, and the horticulturist turned author, our namesake, Mr James FC Hyde. Hyde would later become Newton MA first mayor in 1874.
I would be remiss if I didn't talk about Chinese baijiu in the context of what is sorghum and its presence in spirits market? Chinese baijiu is one of the oldest spirits on earth, dating back at least 5,000 years. And shockingly to most Americans, it is the best selling spirit on earth. Its primary ingredient is sorghum.
In 2016 baijue sold 1.1 billion cases globally. Second place, vodka, less than half baijiu's volume with just under 500 million cases.
First, Yogi Berra is credited with having said, “It's tough to make predictions, especially about the future”.
That said, let's start with a few historical facts to consider when thinking about the potential for Sorgho Whiskey. According to the Distilled Spirits Council the “American Whiskey Boom Continues”. “American whiskey – Bourbon, Tennessee and Rye – continued to captivate U.S. consumers with volumes up 6.8 percent to 21.8 million cases and revenues up 7.7 percent to $3.1 billion” in 2016.
1) We've developed a disruptive spirit. What we call, “The most unique and innovative American spirit since the Civil War – a whiskey like no other - made from 100% American grown sorghum”;
2) Its exceptional smoothness; its uncanny quality, it's made from one of the most environmentally friendly crops in the world, and it's gluten free;
3) We've been granted trademark protection for “Sorgho Whiskey“ and our ambition is to elevate it to new American whiskey category akin to bourbon or rye;
4) We've made substantial investment in a our Sorgho Whiskey supply chain,
securing a strategic choke hold on the critical sorghum technology necessary to scale Sorgho Whiskey production to several hundred thousand cases per year;
5) While the American market for sorghum spirits is virtually untapped, sorghum is the primary ingredient used in the globe's most popular spirit, Chinese baijiu, shipping over 1.1 BILLION cases in 2016.
We like to think we've exercised a lot of foresight, anticipated the evolution of the disruptive market we're developing and we've laid a solid foundation capable of supporting a tall skyscraper. If we're as successful as we expect, we expect to be acquired by one of the big guys. And because we're a whiskey company that's built on a cornerstone of intellectual property, and because our potential is nearly unlimited, we expect the acquirer to acknowledge such with an unprecedented price multiple.
We started with some early experimentation in late 2013. We already had the sorghum farm and thought we were going to make biofuel. Then these cool sugars came out and it suddenly seemed like it would be a waste to burn them in cars. It made a lot more sense for us to say we should try to make a spirit out of this. If someone can make a good spirit out of sugarcane sugar, and our sugar's better than theirs, we should be able to make a good spirit out of sorghum.
We started doing some experiments with different distillers, and different leafs, and different leeching techniques. We did a bunch of that and finally settled on a formulation. It not only specified the sorghum syrup but the kind of yeast to use and the proof when it comes off the still. Then we put it in barrels. We always use new American oak, like what’s required for bourbon. With the exception of starting with corn, we follow all of same the rules as the bourbon guys.
Our first label was approved as something other than whiskey. We had a legal label, bottled up some samples, and took them to an event called the Security Traders Association of New York. They were hosting a bootlegger event and it was the summer of 2015. It became our coming out party. We didn't sell anything and just shared samples. At that time we were calling the product sorghrum, a name we had trademarked. And when people asked us what it was we said it was kind of like whiskey. Mentally we had started to already position it as a whiskey. Next we applied to change our label and get into the whiskey family, and that happened very early in 2016.
When we launched on Wefunder in July 2017, we were a company with a great new innovative product - Sorgho Whiskey (a sorghum whiskey) - with nearly unlimited potential, and a plan to build a successful national brand. But it was early in our journey. We had but limited distribution in four states (NJ, NY, MD & FL), and limited brand recognition.
Since, then we've expanded into more major markets. We've added Illinois, Massachusetts, Texas, California, Kansas and Nevada. We've added hundreds of points of distribution (on and off premise accounts) throughout those states. Many, nationally recognized retail brands like Total Wine, Shop Rite and Applebee's.
We've acquired the distillery - Jersey Artisan Distilling - that produces James FC Hyde Sorgho Whiskey and we've achieved several milestone accomplishments that are clear evidence of dramatic progress on the brand recognition front. We're beginning to appear in cocktail recipe books, and in our proudest moment as a brand, James FC Hyde Sorgho Whiskey made its TV debut with "free" airtime on a KSNV (NBC affiliate out of Nevada) segment on "Great Whiskey Cocktails".
In short, we've made dramatic progress from being merely a great, innovative idea and product, to achieving our goal of becoming a nationally recognized craft brand. A lot of the things we said that we were going to try and make happen, we're making happen.
We now have distribution in 10 U.S. states, including the 4 largest spirits markets (California, Texas, Florida and New York).
As a result 2018 Q4 case volume of James FC Hyde Sorgho Whiskey exceed ALL of 2017 volume, and full year 2018 nearly tripled 2017.
With the acquisition of Jersey Artisan Distilling behind us, we're now able to invest additional resources into marketing, selling and brand development. As a management team, we remain as committed as ever to deliver "exponential", top line revenue growth. We intend to continue that effort into the foreseeable future
Even before we began Crowdfunding - back when we depended on Reg D private placements - our valuation has been based largely on the unique potential we have to make our disruptive and trademark protected Sorgho Whiskey an entirely new whiskey category - akin to bourbon, scotch, and rye whiskeys. Success, and there are many challenges to overcome along the way, will make us a very valuable company.
Considering George Clooney recently sold Casamigos tequila for nearly $1 billion, the upside is dramatic if we succeed. As we execute more and more of our business plan to turn James FC Hyde Sorgho Whiskey into a nationally recognized brand, we get closer to our goal. Each milestone achievment takes some risk out of our project - effectively increasing our value.
We began "Offering" equity shares via Crowdfunding with an offering at Wefunder in July 2017 with a fully diluted Valuation Cap ("VC") of $3.6 million. We concluded an offering at Startengine, nearly a year later, on April 30, 2018 with a VC of $4.8125 million.
Since then, in addition to having raised over $700,000 from nearly 1,000 new owners / brand ambassadors, we've acquired the distillery that produces James FC Hyde Sorgho Whiskey, and continue to make dramatic progress in sales growth (2018 volume nearly tripled 2017 volume), brand awareness (appearances in whiskey cocktail books and NBC Las Vegas TV segment on "Great Whiskey Cocktails") and market penetration (now available in ten states including 4 largest U.S. markets of CA, TX, FL and NY). All important milestone achievements as we strive for long term success.
With our recent progress behind us, and our key goals and objectives looking forward, we believe a fair valuation to be $7.15 million, but preceded by an early bird discount valuation of $6.5 million for the first $100,000 invested.
In addition, we've specifically chosen to offer a convertible note, with a 6% interest rate accrual, and a 2 year term. By doing so we are assuring investors a 6% per year appreciation of capital invested, and two years of price protection in case we have overvalued our offering price.
It's a long haul kind of approach. Brand building is a long deliberate exercise.
What's new is the power of social media. We use a layered hybrid model. A heavy dose of online brand building / brand awareness campaigns, paired with a support the brick and mortar folks on the ground campaign. Think in military terms. The online campaign is the air force preparing the ground or battle field for the army and marines, to make their job on the ground a lot easier.
It means we're running a coherent campaign. Every ad we run, has clear goals and objectives. We may not succeed with what it is we're trying to accomplish with an ad, but we know exactly why we're doing it. And every ad, complements every other ad.
What does that mean in plain English. Consider a typical state - Tennessee - we're trying to break into because we perceive a home field advantage (our sorghum comes from Memphis). Even though we don't yet have a TN distributor (permitting legal on the ground sales), we're running general brand awareness ads. Purpose? Create the conditions on the ground such that a TN distributor will want to distribute James FC Hyde Sorgho Whiskey.
Once we acquire a distributor, we'll continue with the same statewide campaign, only amped up. Purpose? Help distributor sell to retailers. As retailers come aboard, another layer is added to the campaign. We bring a layer that is geographically targeted to consumers that live in the surrounding area to the retail establishments. Purpose? To help the retailers sell Sorgho Whiskey to consumers.
The case can be made, that my lack of experience and knowledge of the old formula for success in the spirit business, is an asset and not a liability. Why? Because the future path to success in this business is almost certainly dramatically different than the old formula. And I came into this with no preconceived notions about the right way to do it, only a desire to do it, an open mind and a great deal of insight into what was possible with digital marketing and advertising.
That's probably true.
I'm guessing there are few other leaders who are Internet geeks, including the necessary Internet patent (granted 1999, USPTO #5884309). I'm also guessing there are few other leaders who were sitting governors of a national Stock Exchange – the American Stock Exchange, where I chaired its Technology Committee and served on its Audit and Finance Committees from 2005 – 2008.
But maybe – just maybe, given the world we live in in 2019, having a heavy Internet background plus a heavy Wall street background, are big pluses when trying to launch a new spirit? If one thinks about it, launching our new Sorgho Whiskey spirit requires building a brand. Plus it requires an inventory buildup because necessary time in a barrel aging delays time to market. And both brand building and inventory accumulation require substantial capital.
A leader, not so steeped in Internet technology or at home with Wall Street, the Securities and Exchange Commission and securities law would likely approach the brand building, and financing task, relying on traditional methods.
But in 2019, we're living in an age in which digit brand building and marketing, with social networking (like Facebook) and search (like Google & Bing), has fundamentally altered the dynamics of advertising. We're all familiar now with the concept of something going “viral”. I'm not implying we're relying on “viral” behavior to drive our campaigns, but I point to the phenom of “viral” to illustrate the full potential of the digital world. Unknown content can go from standing start, to huge “consumer” awareness, in an accelerated fashion, at a near zero cost basis.
The key, is to have a coherent strategy which takes full advantage of digital capabilities, to accomplish marketing / brand building campaign goals at an accelerated pace, and a minimal cost, relative to more traditional practices
Equally as relevant is how to approach the financing challenge in 2019. In
a word, Crowdfunding. With nearly 3 years of history behind it now, its becoming clear it is the perfect tool to both raise capital, and to build a retail brand. We've not only raised $700,000+, but we've built an army of about 1,000 owners / brand loyalists / brand advocates - all contributing to our project both capital and energy / enthusiasm, and helping us gain success. In short, Crowdfunding has evolved from an interesting idea when we first approached it in 2017, into a linchpin of our going forward strategy.
In Robert Browning's world of literature, "a man’s reach should exceed his grasp". But in the real world, if a man's got an 8' gap to cross a chasm below, his reach better not be 7'11" or tragedy will follow.
The biggest worry I have, is the scope of our challenge / opportunity, and its potential to be beyond our grasp.
The nature of what we're doing developing the James FC Hyde Sorgho Whiskey brand, requires us to drag along the developing sorghum molasses supply chain. Developing a new whiskey brand, within a new whiskey category is a pretty heavy lift. Having to drag along the supply chain to insure available raw materials adds another layer of difficulty and another potential point of failure.
While I was developing ground breaking Internet technology, I followed one simple philosophy: buy what we can, invent what we must. That philosophy hasn't changed. The reality is, if we don't develop the supply chain for our raw material, nobody will, and our growth will be constrained. It's a non optional mission that goes hand in glove with success building the James FC Hyde Sorgho Brand.
But if we're able to successfully build the Sorgho Whiskey brand AND carry along the supply chain, our strategic advantage in the spirits industry is unmatched. And we should expect a sales multiple even more attractive than George Clooney's Casamigos Tequila.
Success means achieving many of our 2019 business plan goals and objectives:
It means continuing to build up our “community” of owners / brand loyalists / brand ambassadors;
It means continuing our trend of exponential sales growth (nearly 300% in 2018 vs 2017);
It means gaining brand recognition and traction in the 10 states we're already distributed in, with a special focus on developing the 4 largest U.S. markets (CA, TX, FL & NY);
It means stimulating consumer demand and expanding brand awareness;
It means adding several key markets to our distribution list (Michigan, upstate NY, Connecticut and Tennessee);
It means further strengthening our relationship with America's sorghum growers, in the form of potential market development resources from United Sorghum Checkoff Program;
It means continuing to build up our barrel aging inventory to support surging demand for James FC Hyde Sorgho Whiskey;
And it means making progress utilizing our technology license to scale the production of sorghum by transplanting it to the America's Sorghum Capital - the great state of Kansas.
The baijiu and the sorghum point, is that the largest selling spirit on earth is made from sorghum. In the U.S. sorghum is barely known. The concept that the world's most popular spirit - baijiu - is made larely from sorghum is a well kept secret.
If we can get that point across, there's a huge untapped opportunity, and there's no real competition. We've got all of these advantages to dominate the space. It's a no brainer if you're betting on futures, which is really what it's about.
We'd like to think we laid the right foundation by having deep involvement, a core competency and a royalty free license for the production of sorghum molasses (the must have ingredient required to produce sorghum whiskey), and then having the intellectual property - a trademark on sorgho whiskey - assuring a defensible competitive advantage.
We really like to think we've done a lot of forethought and that we've laid a lot of the foundation in preparation for building a really tall building. If we're successful I expect to get bought out, because I'm not going to run this thing. When it turns into just running the trains on time, you need another leader. You need somebody not me.
Presently, Epec has a proprietary interest in the following companies in Delta Bio Renewables, LLC, The Sorgho Alliance, Inc., Epic Spirits, Inc., and Jersey Artisan Distilling, Inc. More information on each entity is provided herein.
1. Delta Bio Renewables, LLC
The foundation of our SCP effort began with our investment in Delta BioRenewables, LLC (“DBR”) in 2012. DBR has entered into a license agreement with Epec under which DBR and Epec collectively establishing quality standards for the sorghum syrup that can be used to make licensed Sorgho Whiskey® and DBR is required to pay Epec a 5% fee on all syrup sold for the production of licensed Sorgho Whiskey®.
Since 2009, DBR's focus has been to develop technology to enable production of high volume and quality, low cost sorghum sugar/syrup. It's been doing so by first incorporating as much sugar cane automated production equipment and technologies as practical into its own sorghum sugar processing operation. Further, it has developed proprietary technology, methods, best practices and techniques that are sorghum sugar extraction/processing specific (not necessarily applicable to sugar cane industry).
DBR, with our cooperation, is in the process of seeking a suitable sorghum grower to transplant its technology to further scale production.
2. The Sorgho Alliance, Inc.
The Company formed a wholly-owned subsidiary, The Sorgho Alliance, Inc. (f/k/a the Sorghrum™ Alliance, Inc.), for the purpose of launching our Sorgho Whiskey® brand and to handle all future licensing opportunities of the mark to sorghum sugar producers and Sorgho Whiskey® distillers, which will then be responsible for: 1) developing product standards (for both sorghum distiller's sugar and Sorgho Whiskey® spirits); 2) licensing use of the trademark to producers of sorghum sugar and distillers of Sorgho Whiskey®; and 3) managing compliance and the enforcement of its mark and licensing agreements. The Sorgho Alliance, Inc. will receive license fees from trademark users and other companies seeking to market Sorgho Whiskey® spirit products.
The Sorgho Alliance, Inc. (“SA”), on July 18, 2015, entered into a licensing agreement with Jersey Artisan Distilling, Inc.. Since then, JAD has been producing Sorgho Whiskey for us. With our acquisition of JAD, the license agreement has effectively been rendered moot
3. Epic Spirits, Inc.
The Company formed Epic Spirits, Inc. (“Epic Spirits”) as a wholly-owned subsidiary to ensure that the first effort to launch the Sorgho Whiskey® spirit will be well resourced and highly dedicated. To that end, Epic Spirits will manage the production, marketing, and distribution of its own branded Sorgho Whiskey® – James F.C. Hyde Sorgho Whiskey®.
4. Jersey Artisan Distilling, Inc.
Jersey Artisan Distilling, Inc. (“JAD” or the “Distillery”) is a craft Distillery founded in 2011 and by its Master Distiller Brant Braue. JAD has been the exclusive producer of James F.C. Hyde Sorgho Whiskey®. JAD has produced more sorghum based whiskey than any other distillery in the U.S. The Distillery is located at 32C Pier Lane West, Fairfield, NJ 07004.
On May 17, 2018, Epec completed the acquisition of JAD.
The Distilled Spirits Council has determined that several factors are contributing to the spirits industry’s steady growth, including:
• the American Whiskey trend has plenty of room for growth, with the country trending back to historic levels of whiskey consumption.
• Consumer demand for brands with authentic, interesting backstories.
• Local distilleries drive interest in overall spirits category and help modernize state and local laws.
• Cocktails uniquely positioned to meet adult millennials’ demand for unique experiences.
• Spirits are now a fixture in popular culture and have become part of the norm.
Over the past decade plus, the U.S. wine and spirits industry has undergone dramatic consolidation and realignment of brands and brand ownership. The number of major importers in the U.S. has declined significantly. Today there are eight major companies: Diageo PLC, Pernod Ricard S.A., Bacardi Limited, Brown-Forman Corporation, Beam Suntory Inc., Davide Campari Milano-S.p.A., Remy Cointreau S.A. and Constellation Brands, Inc. A proliferation of new products and new expressions of existing brands within some of these companies, such as Smooth Amber by Pernod Ricard and Westland Distillery by Remy Countreau, demonstrates strength of the industry.
The beverage alcohol industry is highly competitive. We believe that we can compete on the basis of a unique product, quality, and by building brand recognition. Sorgho Whiskey® is positioned as a super premium brand – a category showing significant annual growth in revenue and volume sales, with room to grow. Our product will compete with other alcoholic and nonalcoholic beverages for consumer purchases, retail shelf space, restaurant presence and wholesaler attention. We will be competing with numerous multinational producers and distributors of beverage alcohol products, many of which have greater resources than us.
We have four direct competitors in the sorghum whiskey space, including:
1. SS Sorghum Whiskey, distilled by Still 630.
2. Southern Revival Brand Sorghum Whiskey, distilled by High Wire Distilling Co.
3. Queen Jennie, distilled by Old Sugar Distillery.
4. Brown Dog Sorghum Whiskey, distilled by AeppelTreow.
Of all the commercially produced and sold spirits today, we are not aware of any that require a feedstock as scarce or as expensive as sorghum sugar. Those facts alone, are enough to drive our management’s decision to position James F.C. Hyde Sorgho Whiskey® as a super-premium whiskey.
Premium and Super Premium spirits of all kinds generally justify their premium pricing because of expensive production costs and supply scarcity. Some premium spirits, like Tito's, claim to distill its Vodka six times – the effect: improve product quality and add to production cost. Others, like single malt scotch producer Macallan, use extended barrel aging periods to add to production costs, improve product quality and create supply scarcity. A recent price for a bottle of Macallan 15-year-old scotch carries a suggested retail price of $100 per 750ml bottle.
Also, by tracing sorghum's sugar history back to its abolitionist roots, and bringing prominent sorghum advocate, James F.C. Hyde, back to life with our brand, we are injecting a sense of ‘old and traditional’ into the whiskey – again to appeal to consumers of other super premium whiskeys.
Our plan is to focus our marketing effort on a our home state of New Jersey, and neighboring New York City, while preparing the ground for other states we believe afford us a “home field advantage”. Within New Jersey our campaign will target opinion leaders in the spirits industry – while expanding our multi-tiered integrated digital advertising paired with our brick and mortar, distributor friendly strategy. Success in our test markets of New Jersey and NYC, becomes the blue print for success – in derivative form – in other home field advantage states in which ground preparation activities are presently underway.
The challenge any new consumer brand faces is the need to simultaneously stimulate consumer demand while driving product availability throughout a distribution channel. In that context, we view our marketing, advertising, brand development & brand awareness activities as part of a larger campaign to serve to stimulate consumer demand. To meet this demand, we plan to increase product availability via our increasing distributor network who will promote and place the product for retail purchase and consumption.
Our go to market strategy is predicated on the unprecedented capability and value of digital advertising. From the capability perspective, social media platforms such as Facebook enables us to: 1) tailor messaging to various targeted audiences based on demographics, interests and geography; 2) build a database from the targeted audience that offered a positive response for future harvesting; and 3) execute on a cost basis that is a mere fraction of traditional media. Search advertising offers a different kind of targeting and conversion, for example by "interest" predicated on search terms, such as “sorghum whiskey” or “gluten free whiskey”—direct descriptors of our James FC Hyde Sorgho Whiskey®. Again at an deeply discounted cost compared to traditional marketing methods.
With an exclusive focus in the U.S. Market, our campaign to drive brand awareness and demand will continue to depend on digital advertising, and on an increasingly larger scale. We will continue with Facebook as the foundation, both tapping into and growing our almost 38,000 Facebook "Like" fans.
Our on the ground, brick and mortar activities are prioritized according to states in which we believe we possess some kind of Home Field Advantage ("HFA"). Examples include New Jersey, the state in which we manufacture our product, Tennessee, where our sorghum is sourced, and Kansas, the country’s leading producer of sorghum. Once a state is classified as having a HFA , we work to identify potential distributors who may be a good fit with our brand and mission. We target distributors that specialize in selling craft brands as opposed to the well-known, national brands. In pitching to distributors, our goal is to be the most distributor friendly brand in the industry. We then work to support our distributors by intensifying the relevant digital ad campaign, facilitating the movement of Sorgho Whiskey® from the distributor's warehouse to retail outlets.
In addition to our integrated strategy of digital ads supporting on the ground brick and mortar distributors, we expect to do "traditional" on the ground event and activities. These include trade shows, whiskey tasting events, distributor sales force training, bartender events, and product tastings organized within retail outlets. While we believe there is still a need for these events, and there is value in them when properly utilized, we fully expect the lion's share of our marketing budget will will be invested in our integrated campaign of coordinated digital advertising supporting actual events on the ground.
The United Sorghum Checkoff Program (“USCP”) represents America's sorghum growers nationally. It is a “producer-funded organization dedicated to improving the sorghum industry through research, promotion and education.” See http://www.simplysorghum.com We have been a participant in USCP'S Cooperative Branding program since 2016 and recipient of a $5,000 grant in 2016, $2,500 in 2017 and additional $5,000 in 2018. The Cooperative Branding program affords advertising grants to active participants.
As our progress with James FC Hyde Sorgho Whiskey® has advanced, our relationship with USCP has strengthened. Witness, our recent invitation to attend the 2017 Commodity Classic in San Antonio, cosponsored by USCP, and to pour samples of our Sorgho Whiskey® in their booth. Our intention is to continue to strengthen this relationship, striving for the greatest level of advocacy we can earn from USCP. With USCP in the lead, we believe we can gain vast and endearing support within the sorghum grower community through this network.
We also intend to pursue co-marketing relationships with other producers of sorghum value added products. An example is Silver Palate Kitchen of Dumont NJ, which is now marketing a cereal brand, Grain Berry, with ONYX Sorghum. We believe anybody that spreads the word of the virtue of sorghum benefits the sorghum community as a whole. Our goal is to coordinate these campaigns and activities to leverage up the value of each advertising dollar invested.
The Company and JAD are also subject to U.S. regulations on the advertising, marketing and sale of beverage alcohol. Labeling of spirits is also regulated in many markets, varying from health warning labels to importer identification, alcohol strength and other consumer information. All beverage alcohol products sold in the U.S. must include warning statements related to risks of drinking beverage alcohol products. The distribution of alcohol-based beverages is also subject to extensive federal and state taxation in the U.S. The Distillery’s licenses and permits could be revoked, suspended, or denied renewal cause at any time if the government determines that the Distillery’s conduct violates applicable regulations. The Company believes that it and JAD is/are in material compliance with applicable federal, state and other regulations. However, the Company and JAD operate in a highly regulated industry which may be subject to more stringent interpretations of existing regulations. Future compliance costs due to regulatory changes could be significant.
The Distillery is dependent on the following regulatory approvals:
• Distillery’s TTB Basic Permit, which was first granted in 2013.
• Distillery’s NJ Craft Distillery license, which was first granted in 2013.
Expenditures for compliance with federal, state and local environmental laws and regulations are fairly consistent from year to year and are not material to the Company and/or JAD. Such expenditures were approximately $1,000 for JAD in 2016. No material change is expected in fiscal year 2017.
Ongoing Reporting Compliance
The Company has not previously been subject to the ongoing reporting requirements of Regulation Crowdfunding and, as such, has not previously failed to comply with the requirements of Rule 202.
On December 30, 2018 the Company had approximately $50,000 in available cash and averages a burn rate of approximately below $15,000 per month. Our current runway is approximately three months.