1888: Rogue Baron Q&A: "We stick to areas where we think we've got a competitive advantage"

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The Vox Markets ORG podcast. Nothing in this podcast is intended as investment advice and the people in this podcast may hold positions in the stocks they talk about. Do not buy anything based solely on a tip or recommendation. Please do your own research.

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Hello and welcome to Vox Markets. I am John Human and I'm very pleased to be joined today by Hamish PERSON, who is an executive director of drinks investor Rogue Baron. Welcome, Hamish.

Speaker 224.44s - 25.76s

Thanks for having me. Nice to be here.

Speaker 126.12s - 34.38s

No, good to have you on. Perhaps before we sort of get into the details of some of the recent news flow that you've put out, perhaps if you can introduce yourself, tell us a little about

Speaker 234.38s - 88.74s

yourself and the company. All my background is in investment banking for about 20 years in the UK and Asia. And I've recently gone into the drinks industry in the last five years with Rogue Barron PRODUCT, which was formerly human brands, and we split that company out. Rogue Barron's primary brand is a Japanese, a premium Japanese whiskey called Shinju ORG. We've got a three and an eight-year-old. It's been selling predominantly in the USA, but we've now gone into Europe LOC.We've got some UK GPE sales as well. We've also got a super premium tequila brand called Copraimperiol PRODUCT, which we've got, which is in storage, and it's got super age. It's up to 10 years old, which is extremely old for tequila. And we've also got a dormant brand called Mazaro PRODUCT, which is a gold leaf champagne. But that's, as I said, that's dormant at the moment.We do have stock of that, but that's something potentially for the future, which we can talk about in a bit.

Speaker 189.18s - 104.82s

Yeah, absolutely. Let's start with Shinju ORG, because the recent news revolves around that. And institution investment into that subsidiary. Tell us about the investment and how that sort of affects the sort of financials of the business.

Speaker 2105.94s - 165.36s

Well, the investments, as you said, is gone directly into the Shinju ORG's subsidiary, that sort of massive valuation compared to our current market cap. You know, we're talking, you know, a three million pound post-money valuation compared to, say, 500,000 pounds for the company, which I think just goes to show how valuable industries or the people value the Japanese NORP whiskey space and Shinju ORG in particular.You know, Shinju's gone from having no sales in the space of two or three years into, you know, distribution in 18 states, gone distribution with R&C, with the second biggest distributor in the USA GPE. So I think people will see there's obviously a lot of value there and with some capital behind it can seriously grow. And given it, um, circa, um,most of the major don't have a Japanese NORP whiskey. So it's obviously a big potential to be bought out or, you know, uh, some corporate track transaction now on a decent valuation. So I think that's reflected in the valuation we're able to achieve on Shinji PERSON.

Speaker 1165.84s - 179.14s

Yeah, yeah, very good deal indeed. And, you know, it's not just Japan, where the focus is the USA GPE is obviously a very important market for you. You've appointed a broker there. I mean, this is a very, very sort of unusual move for a UK GPE list and stock. What's the rationale behind that appointment?

Speaker 2180.06s - 229.2s

Well, the rationale for that is a couple of things. One is that America has further. Shindu ORG tends to give a lot big evaluation for drinks companies in our end in the market. Most of our sales are in the USA GPE. That's where our distribution is. Most of our management are in the USA GPE. We're cross-trade on the pink sheets.We're on OTCQB, which we'll probably go back to at some stage. So, you know, we think potentially we can raise substantial amount of money in the USA GPE, which obviously in the UK has been difficult in the last two or three years, particularly on Apple ORG's but also on aim. You know, there's lack of liquidity here. The states provide that.And, you know, already 20% plus of our shareholders are American NORP anyway. So we've got a lot of shareholders over there and a lot of interest in the story because people can see change you on the shelves. Yeah, yeah, absolutely. Hopefully things

Speaker 1229.2s - 234.9s

are improving over here in the UK GPE, but it sounds like a very sensible move. And I guess,

Speaker 2235.02s - 348.46s

you know, the rationale behind a US GPE listing, as you say, the ability to raise funds is, you know, to really back further investment into the portfolio. So perhaps you can talk us through, you know, what opportunities are out there, what investment opportunities are out there, and a recent acquisition that you actually did make, eight vodka. There are a lot of opportunities out there at the moment. You know, drinks industry is a tough business.You know, you can spend a lot of money. You can start a new brand tomorrow and you can spend $10 million to get as far as we have in terms of distribution. It's tough and it's very competitive. and that's why we probably stick more to the premium in where we've got a high barriers to entry Japanese NORP whiskey for example it's extremely hard to enter you know do you try and do a business business with a Japanese NORP distillery most peoplejust can't do it same as our age tequila it's up to 10 years age you can't just go on age you know it's hard to buy the garvey plants, let alone age something for 10 years. So we try and stick to where we think we've got a competitive advantage. So that means we'd be very reluctant, for example, to get involved in trying to sell something where you're competing with,you know, something like Smyrne off or, you know, Johnny Walker PRODUCT, you just can't do it. It's too, it would spend too much money and much in terms of marketing and, and, and, uh, logistics to do that. So we're looking for sort of niche brands, you know, we, something complements our, um, our current range. Obviously for us, if we can go into a distributor or, you know,where there'd be a restaurant or an off license, etc., with Shinju ORG, we're paying the same salesperson no matter what, so we might as well have more than one or two brands. And the buyers will also prefer us to have more than multiple brands. They don't want to deal with 50 different people. They want to deal with a smaller number of brand owners.It just makes life easy for them. So, you know, depending on raising money, we'll definitely look to, you know, add new brands down the track one way or the other.

Speaker 1348.84s - 353.5s

Yeah, indeed. Tell us a little bit about eight vodka, which is a deal you've already done.

Speaker 2355.96s - 391.62s

Well, eight vodka is interesting for a number of reasons. The primary reason we find it so interesting is there's potential value just in the trademarks, obviously given the Chinese connotations for eight, their lucky number, and they, you know, particularly in Hong Kong and China GPE, it's a big thing. So there might be some real value there. But the vendors behind eight are very well connected in terms of some upmarket restaurants and nightclubs, both the UK and Spain.So it's not just the brand of eight that we see the value in. It's being able to assist us in getting some traction in both South America and Spain and the UK GPE. Yeah, yeah.

Speaker 1391.74s - 402.5s

That makes a lot of sense. You mentioned tequila and your age of tequila. Tell us a little bit about this. It's in storage. You know, what's the plan for that?

Speaker 2403.5s - 411.4s

Well, originally, you know, going back a couple of years, we were going to take that out of storage and put it in barrels because you can't sell it from storage in a big fact.

Speaker 0411.5s - 413.48s

You have to, under the tequila rules,

Speaker 2413.56s - 419.78s

you have to actually reage it in a barrel for a minimum of three months to call it Blanco PRODUCT, but we'd have to do it for a year

Speaker 1419.78s - 421.02s

because we'd sell it as a naho.

Speaker 0422.4s - 424.74s

The only reason we haven't concentrated on that so far

Speaker 1424.74s - 426.18s

is because the Japanese NORP whiskey

Speaker 2426.18s - 427.28s

took off so well.

Speaker 1428.12s - 430.42s

But obviously the tequila market is boomed.

Speaker 2430.52s - 450.68s

I mean, it's the second biggest selling spirit in the USA GPE. It's about to become number one. We think we've got something fairly unique because it's so aged. So what the plan would be to that would be to rebarrel it, get him to buy some money. And I then combine that with some more white label of the younger expressions like Blancoand then settle it particularly into the States GPE.

Speaker 1451.22s - 451.66s

Yeah, yeah.

Speaker 2451.82s - 463.44s

But that's, you know, tequila, when we first started, no one wanted to know about tequila. Everyone said to Haymes PERSON, just talk about the Japanese NORP whiskey. And now everyone's saying,what about the tequila? Yeah.

Speaker 1463.78s - 466.98s

And I think that hasn't, that's only just starting to hit the UK GPE.

Speaker 2468.08s - 476.48s

You know, tequila and mezcal now, but suddenly becoming a lot more, a lot more, you know, on the shelves everywhere you go. You'll see a tequila now.

Speaker 1476.74s - 478.66s

Yeah, the George Clooney effect, perhaps.

Speaker 2479.96s - 481.68s

Absolutely, you know, and the rock.

Speaker 1482.48s - 484.6s

You know, it's becoming mainstream.

Speaker 2484.6s - 489.82s

And there's still plenty of space for the tequila to go into.

Speaker 1490.32s - 501.44s

Yeah, yeah, indeed, indeed. Gin, so the one that has been booming over here in the UK GPE is the gin market. Do you have plans for gin, or is that a boom that, you know, may be sort of nearing its end?

Speaker 2502.2s - 551.86s

Well, you've seen all the shelves in a lot of pubs that the number of gin's being carried has dropped dramatically. I mean, the problem with gin is that anyone can make gin. It's like vodka. It's simple. You don't have to age it.I mean, you've got to, you think about tequila. You have to grow the agave plant for seven to nine years, and then you have to wait in a barrel for three years to get a nail. Japanese NORP whiskey is the same. Our Shinju eight-year-olds, eight years aged olds eight years aged vodka and gin you'd have to age you know anyone can do it just get by a cheap still so it's an unbelievably competitive market sowe would the only way we look at a gym if it have to be a premium gym and it'd have to have a very special story to it because it's so it's one of those areas it's so competitive. So it's certainly something we think about, but for us to try and even sell a gin in the UK would be incredible.

Speaker 0553.96s - 557.44s

We'll stick to our knitting and we'll look at super premium brands and premium brands.

Speaker 2557.6s - 561.06s

We think we've got a niche. Yeah, yeah.

Speaker 1561.14s - 568.18s

Makes a lot of sense, very sense, which has a very disciplined approach to taking across the portfolio. Well, no, it makes a lot of sense, very sensible, which sounds like a very disciplined approach to take across the portfolio. Well, no, it's easy.

Speaker 2568.34s - 585.4s

If you're one of the big players and you bring out a new pink gin and you spend $20 million or pounds on marketing, it makes a lot. Their old approach to anything is like, you know, let's just spend more money on marketing.But when you're a small listed company like us, we have to be a bit extremely careful about how we spend our capital.

Speaker 1586.02s - 586.64s

Yeah, yeah, indeed.

Speaker 2586.8s - 598.04s

Because something like Japanese NORP whiskey, you can sell it without a huge marketing budget because it's so hard to get hold of. Whereas when you go into something like gin or, you know, a cheaper rum or vodka, it's a different story altogether.

Speaker 1598.54s - 609.08s

Yeah, indeed. Well, it's, I say, a great portfolio you built so far. I'm looking forward to trying some of the products and looking forward to keeping up with your progress as you add more. Thank you so much, Hamish PERSON, for speaking to us.

Speaker 2609.5s - 611.76s

Fantastic. Thanks so much. I hope that we'll speak again, sir.

Speaker 0612.06s - 626.32s

Thank you. Cheers. The Vox Markets Podcast ORG. Nothing in this podcast is intended as investment advice and the people in this podcast may hold positions in the stocks they talk about.Do not buy anything based solely on a tip or recommendation. Please do your own research.