Rambling House Cocktails: Ready-to-drink cocktails made with the best craft ginger beer in Ohio

John Lynch

Founder

John Lynch, our day-to-day operations manager, was named one of the "60 Coolest People in Food and Drink" two years in a row by the Daily Meal - one of the world's leading sites for culinary content.

I invest in innovative, market-changing companies. The hurdles John and his team have cleared to get this product to market at such a low startup cost shows that they are a focused team that can deliver the goods. They have the passion and the work ethic to build a strong company that crafts amazing beverages. Their early entry to this portion of the alcohol market positions them to become industry leaders.

David Wilhelm

Partner & Chief Strategy Officer Hecate Energy

Craft beer and craft spirits are currently monopolizing the market, but don’t discount craft soda! Lately, I can’t get enough of Columbus’ own Rambling House Soda. A tiny spot sandwiched in the south Clintonville/University District region, Rambling House is a music venue with a tasty “pop.” The interior has an antique saloon feel, and has the unhurried aura of a bygone era. The bar hosts live music every night they are open, varying from bluegrass to local bands... Culinary Clue: Don’t miss out on Rambling House’s bottled Moscow Mules. The libations are made with Rambling House ginger beer and Watershed Distillery vodka, ideal for end-of-summer sipping.

Caroline

Founder of Columbus Culinary Connection

Investor Q&A

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What does your company do?

We started as a small-craft soda company that created an amazing, healthier craft ginger beer. In 2017, we pivoted to spirits, bottling a Moscow Mule that we think is a perfect combination of our ginger beer and vodka. In our first year, we sold almost 19,000 bottles and found shelf space in almost every Kroger in Ohio. Now, with a new Kentucky Mule recipe in the works, we're optimistic that our first real marketing push will get us on shelves around the country.

Where will your company be in 5 years?

We have a new drink - a bourbon-based Kentucky Mule made with the same ginger beer - in the works now that should be released in late 2018. By adding this to our product line while expanding our relationship with Kroger, our goal is to distribute to several states by 2020, and by 2021, ten states.

What is Rambling House Cocktails?

Rambling House produces a craft ready-to-drink cocktail. Our Moscow Mule is a perfect combination of ginger beer and vodka, and our second concoction, a bourbon-based Kentucky Mule, is in development. We're now stocked in more than 200 stores in Ohio, including almost every Kroger in the state.

How did Rambling House begin?

We started as a small-batch soda company five years ago. We made several different kinds of soda, but the main focus was on ginger beer. Over several years, we went through more than 10,000 pounds of fresh ginger to create a ginger recipe that we felt perfectly balanced sweetness with a subtle, spicy kick. We’ve sold the sodas to bars and restaurants around town in kegs, and they serve it on draft, but most of the bars would use it to make cocktails. So about three years ago, we started thinking pretty seriously about turning our ginger beer product into a packaged cocktail product. It took about a year to work through the regulatory and manufacturing issues that we knew we were going to face. There are very few companies like us in the U.S., so we were kind of starting from scratch in that area, but after about a year of research we figured out how we could manufacture the product. Then we really began working on a formula. We spent about a year developing the formula with a third-party team of beverage scientists from Kentucky. That included tastings of dozens of different variations of the product by sample groups. We finalized the recipe in October 2016. Once we had a product with the taste we desired, we started taking the cocktail to retailers and distributors to find out if there was interest. We bottled our first official batch in the spring of 2017. Then we started meeting with local shops in central Ohio. Kroger is headquartered in Cincinnati, and one of our four founders has a relationship with an executive there, so he helped us get a meeting with their spirits buyer in early 2017. That was the first confirmation for the team that we were onto something pretty unique, after that buyer put us in just about every Kroger in the state of Ohio. It’s a chicken-and-egg game trying to sign that first major retailer and at the same time pick up a distributor, because neither wants to be the first to get on board, but we ended up signing with Southern Glazer's, which is the largest spirits distributor in the country. Our rep at Southern Glazers said ours was the biggest buy they had seen from Kroger for a brand-new company.

How has the product been received so far?

Kroger reset all of their shelves in early 2018 and we didn’t lose any shelf space, which is a good sign. Despite our status as a new company that really has no marketing budget, we’re doing relatively well compared to other products placed in the section of the store we’re in. We sell just one product in Kroger locations, the Moscow Mule, which is our ginger beer mixed with vodka. The drink comes in a four pack of 375 mL bottles, for a total of 1.5 liters of product, and it retails for $12.99.

Do you have other products in the works?

The second SKU we're working on right now is a ginger beer mixed with bourbon. Traditionally, it's known as a Kentucky Mule. We’ve been able to use our brick-and-mortar bar in central Ohio as a testing ground for some of these potential ideas for products, and the Kentucky Mule has consistently been the bestseller at our bar for the last four years, so we think it'll also be a really nice way to diversify what we're offering on the shelf -- to have a vodka and a bourbon. There are people who, for one reason or another, really enjoy drinking what they consider a clear spirit. Then, there are people who enjoy drinking what they consider a darker spirit. To be able to satisfy both of those markets with our ginger beer, which we think is one of the best ginger beers available in the country, it just makes for an incredible cocktail that beats what's available at most bars. We are also working on a recipe for a canned version of our non-alcoholic ginger beer. Our distributor has indicated they would also be interested in picking up a soda produced by us.

How do you select ingredients?

I worked for a brewery for a long time, and when I decided to go off on my own and open up a soda company instead of another brewery in town, I only had one goal: To produce really awesome soda made out of all natural ingredients. Our ginger beer is actually a very simple recipe. It's a lot of fresh ginger, a little bit of lemon and lime, a few spices, a touch of honey, and organic sugar. That's all that goes into the ginger beer side of this cocktail. We've always felt that any type of product like this, whether it is a cocktail made with actual spirits or whether it's something in the flavored-malt beverage section, they're always way too sweet. You get through half of a bottle and you just no longer feel like drinking it. That also came through in our taste tests. We continued to cut back the sugar, and that accomplished two things. First, there were several people in our tasting groups who were asking us over and over how many calories were in the product and how many grams of sugar were in the product, and we’re really proud of our answer. It also just made for a drink that went down a lot smoother, and you were able to drink a couple and not have a sugary feeling in your gut or have the sweetness interfere with the flavor profile. We're pretty proud that we have fewer calories per ounce than some of the so-called skinny cocktails on the ready-to-drink market, and that it's all done with organic sugar. As for our spirits, we are not a distillery. We don't plan to become a distillery. What we've chosen to do is to be very particular in where we source our spirits. Right now, 100% of our vodka comes from a local distillery. They make a premium vodka out of gluten-free ingredients. It's been a great partnership for us, and we will look to continue to source the spirit side of our cocktails from great companies around the United States. We’re in the process of selecting a bourbon supplier.

What niche does Rambling House fill?

There are really only two dominant alcohol segments in the retail sector: Beer and wine. Of course, there are subsets. For example, there's the flavored beer subset, which is actually a very large market now. What we’re looking to do -- while we do want to siphon off some flavored beer drinkers because we really feel like what they're looking for is a product like ours -- we’re also looking to tap an underserved portion of the alcohol market. These are people who prefer cocktails. We feel there's this third segment of the alcohol market that we're on the cusp of and we can see growing. Up until now, people who like to drink cocktails would buy a spirit and they'd buy their mixer and they make it themselves. That’s fine if you can get great mixing ingredients and you have the time to do it. We provide the best possible ginger beer and the simplest way to pick up your cocktail and go. I think that we're at the very beginning of something happening in the ready-to-drink spirit section. There's not a whole lot of data available on the ready-to-drink cocktail category because it’s still so small. Most data comes from looking at spirit sales, which is very broad. There are some examples of ready-to-drink companies being partially purchased by some larger organizations, but as far as straight sales, this is a sector that the craft players have only been working in for the last year or two.

Who are your competitors?

Cutwater Spirits, which was formerly the spirits division of Ballast Point, has produced a product that's similar in packaging to ours -- and I'm being biased here -- but I wouldn't say theirs or any other is similar in quality. We've tried them all. We've done taste tests against all of them. We only make the one product right now, so you have to enjoy a Moscow Mule to like our product, but we’ve found that very few ready-to-drink cocktails have really refined the taste portion of the equation like we have. Probably the biggest name in this sector is Skinny Girl Cocktails. That company was purchased by Constellation Brands several years ago, and now it's become a multi-national success story in the ready-to-drink cocktail sector. I think that's a little bit of an outlier because it relied on the notoriety of the woman who put her name on the product. It was a bit of a marketing phenomenon. There's a company out of Chicago called Crafthouse Cocktails that probably produces the product closest to ours in quality, but they charge double the price. There's a product called Mule 2.0 out of Texas that seems to have gotten pretty good traction nationwide, and their price is slightly lower than ours, but out of everything we've tasted, it was actually the lowest-quality “craft” ready-to-drink product out there. Then there are a few products made by some of the really large spirit producers, like a Dark and Stormy from Goslings. Most of those are a little behind the times. They’re producing a very low-quality product at a lower price point, but it’s just not something that any Millennial who is going to try one of these ready-to-drink cocktails for the first time is going to be excited about.

Who are your target customers?

For eight years in a row, Millennials have been purchasing spirits and stealing market share from beer and wine. It's clear to us that millennials are looking for something new to drink. I don't think it's necessarily that they're tired of craft beer, because I don't think they've been drinking craft beer long enough to get tired of it -- I think they're looking for something that can be their own, and that's where spirits come into play, especially a new product like ours. The second group of people we’re trying to target are people who buy flavored beer. That market was created for people who didn't necessarily like the taste of beer. We think it's a perfect market for us to go after. Third and lastly, there is a subset of people who are looking for a gluten-free option. We are a naturally gluten-free product that we think can appeal to a lot of drinkers.

What are your goals for the next year?

Our No. 1 focus is increasing sales in Kroger locations in Ohio so that we can cultivate this relationship with Kroger. Obviously, we're going to look to other retailers as well, but Kroger is one of the three largest retailers - with all their subsidiaries - in the entire country and they're headquartered here in Ohio. We really feel like we have a good partner, and if we can demonstrate to them how we're able to grow this section of their store, then we think there's a really good chance they will continue to grow with us in other parts of the country. The distributor we’re with is in 44 states, and they service Kroger and their subsidiaries in all those territories, so that relationship is perfect. We are looking for specific ways to prime the market for a product that's new and exciting in the alcohol world. We’ve already been able to cultivate a specific integration with the music scene in central Ohio through our bar, and we’re able to do some things with music to make our ads look a little more natural on social media. We would like to test market a couple of small areas. For example, we want to pick a specific Kroger, take a three-mile radius around that Kroger, and create social media targeting within that three-mile radius to see how much sales grow in a month.

What’s your ideal price point?

Our goal is to get the price point down to $11.99. We've talked to a couple national retailers who expressed interest if we could get it down to that price.

What regulations are you subject to?

Ohio’s liquor laws actually make our type of product a little easier to purchase than full-proof liquor. There are a number of restaurants that don't have the highest-level liquor license, but they can still purchase our product. It's a very attractive way for some bars that have only carried beer and wine to add a premium vodka product to their menu without changing their license. We are also licensed at the Federal and State level.

What are your costs and profit margins?

We've been producing smaller quantity at this point with our bottling company as we explore the switch from bottles to cans. Right now, it costs around $40 to produce a case of our product, including labor and bottling. We sell it to our distributor for $45. It's a very thin margin, which is why we think it's paramount that we make the switch to cans. Once we do that, the $40 production cost will, as we grow, drop to approximately $24 per case. As we expand capacity, with ingredients and labor, our goal is to get production costs down to $20.

How will you keep sales growing?

Our sales have been small but steady. They definitely haven't dropped, but they also haven't grown much over the last several months. Other than our ongoing social media presence, we have done almost no marketing during that time. What we’re going to embark upon here with the equity crowdfunding raise is to create our first real marketing push that’s not just word of mouth. We have a goal for a percentage growth over the next three years, but we don't expect that growth to be astronomical inside the state of Ohio over the next 12 months. This is a market that we're going to have to make and take. This marketing push is going to be an all-of-the-above strategy. With our distributor, there are different incentives we can offer to help with the placement of the product in existing stores and in new stores. We will be hiring two part-time people to travel around the state and do events and tastings, which we think will be critical to our growth. Once we talk to somebody inside Kroger and explain to them what our product is and that it’s right over there on that shelf, we can create not only one-time, but repeat purchases. We’re also working with a local marketing firm to explore a targeted social media strategy for specific retail shoppers and reach new customers, and to use the online presence we’ve already created to help create brand ambassadors.

What do you plan to do with the money you raise from Wefunder investors?

1) Inventory to get the Kentucky Mule off the ground2) Staffing 3) Strategic marketing

What excites you about the future?

The most exciting thing is that we have a product that, taste-wise, stands up against any alcohol product available in the store, whether you're talking about a spirit, a beer, or a wine. We've met with several retailers, and the fact that the product is truly unique excites every one of them. In a time in the alcohol industry when it's difficult to get shelf space, we’ve had no problem securing shelf space, even in major retailers, because they don't have products like ours. Even those who do have pre-mixed options don’t have craft-based products. We're really on the ground floor of a specific alcohol segment. We have a product that's priced very reasonably and tastes awesome. I see no limit to how much Rambling House can grow.

What are you worried about?

Our key challenge will be marketing this product in a smart way that reaches our target markets and resonates with them. We need consumers to think about a cocktail when they go to make retail purchases. If we can accomplish this, we will have succeeded in our marketing.

1	Sold over 19,000 bottles in our first year selling hard soda.
2	Stocked in more than 200 stores in Ohio, including almost every Kroger in the state.
3	Signed with Southern Glazer's, the largest wine and spirits distributor in the U.S.
4	We were the first ever ready-to-drink cocktail in Ohio.
5	Went through more than 10,000 pounds of fresh ginger to create a ginger beer recipe that balances sweetness with a spicy kick.
6	Founder John Lynch was named one of the "60 Coolest People in Food and Drink" two years in a row by the Daily Meal.
7	Our Moscow Mule is naturally gluten-free, low-calorie, and priced to compete with mixed drinks and wines.

1	The ready-to-drink spirits segment is an emerging market. There is no guarantee that we will immediately attract consumers.
2	Our future success depends on the efforts of a small management team. The loss of services of the members of the management team may have an adverse effect on the company.
3	There can be no assurance that we will be successful in attracting and retaining other personnel we require to successfully grow our business.
4	The Company’s revenue model may be impaired or change. The Company’s success depends mainly on its ability to attract and retain customers. If the Company does not generate revenue, its business, financial condition, and operating results will be materially adversely affected.
5	The company may generate but retain some or all of the earnings for growth and development of its business and accordingly, not make distributions to the shareholders.
6	Class action or other litigation relating to alcohol abuse or the misuse of alcohol could adversely affect our business. Companies in the beverage alcohol industry are, from time to time, exposed to class action or other litigation relating to alcohol advertising, product liability, alcohol abuse problems or health consequences from the misuse of alcohol. It is also possible that governments could assert that the use of alcohol has signiﬁcantly increased government funded health care costs. Litigation or assertions of this type have adversely affected companies in the tobacco industry, and it is possible that we, as well as our suppliers, could be named in litigation of this type. Also, lawsuits have been brought in a number of states alleging that beverage alcohol manufacturers and marketers have improperly targeted underage consumers in their advertising. Plaintiffs in these cases allege that the defendants’ advertisements, marketing and promotions violate the consumer protection or deceptive trade practices statutes in each of these states and seek repayment of the family funds expended by the underage consumers. Any class action or other litigation asserted against us could be expensive and time-consuming to defend against, depleting our cash and diverting our personnel resources and, if the plaintiffs in such actions were to prevail, our business could be harmed signiﬁcantly.
7	Our future success depends on the efforts of a small management team. The loss of services of the members of the management team may have an adverse effect on the company. There can be no assurance that we will be successful in attracting and retaining other personnel we require to successfully grow our business.
8	An increase in the cost of raw materials or energy could affect the Company’s profitability. Commodity and other price changes may result in unexpected increases in the cost of raw materials or other packaging materials used by the Company. The Company may also be adversely affected by shortages of raw materials or packaging materials. In addition, energy cost increases could result in higher transportation, freight and other operating costs. The Company may not be able to increase its prices to offset these increased costs without suffering reduced volume, sales and operating profit, and this could have an adverse effect on your investment.

Director	Occupation	Joined
John Lynch	Managing Member @ Hard Soda Co. LLC	2018
John Stephan	Managing Member @ Hard Soda Co, LLC	2015
John Haseley	Managing Member @ Hard Soda Co. LLC	2015
Aaron Pickrell	Managing Member @ Hard Soda Co, LLC	2015

Holder	Securities Held	Voting Power
John Stephan	20,000 Common Units	25.0%
Aaron Pickrell	20,000 Common Units	25.0%
John Lynch	20,000 Common Units	25.0%
John Haseley	20,000 Common Units	25.0%

$100,000	25% -- Product Development 50% -- Marketing 20% -- Staffing 5% -- Wefunder Intermediary fee
$500,000	10% -- Product Development 45% -- Marketing 40% -- Staffing 5% -- Wefunder Intermediary fee

Class of Security	Securities (or Amount) Authorized	Securities (or Amount) Outstanding	Voting Rights
Class A Preferred Units	20,000	0	No
Common Units	80,000	80,000	Yes

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