A drop of the hard stuff

BY GREG NINNESS

42 BELOW founder Geoff Ross believes many Kiwi businesspeople are timid and lack self-confidence and describes many companies' marketing campaigns as "impotent."

Ross famously started making 42 Below vodka in the garage of his Wellington flat in 1998 and went on to sell it around the world and list the company on the NZX, before it was sold to global drinks giant Bacardi for $138 million in 2006, a move which netted Ross a cool $32m for his shares.

He is now involved in the float of scented candle and toiletries maker Ecoya, and his wife, Justine Troy, has written a book detailing 42 Below's history from its earliest days in their garage until it was sold to Bacardi.

The title, Every Bastard Says No, is a reference to all the doors that were closed in Ross's face and the general negativity he encountered as he embarked on his ambitious plan to produce a vodka that would be sold at a premium price around the world.

The couple hope the book will inspire other budding entrepreneurs to realise their dreams and bang down a few of the doors that block their path along the way to eventual success.

With a shoestring budget in its early years, 42 Below relied on its irreverent and edgy promotional campaigns which could be regarded as hilarious or distasteful depending on your sensibilities, but either way, they got the brand noticed in fashionable bars from London to New York.

The book is likely to be no less controversial because of its use of the "C" word (that's right, the one with four letters) in one chapter heading and repeatedly in the text, a taboo in most publications and surely a first for a book about business.

That chapter is about the company's entry into the Australian market so the use of the word is probably justified on the grounds of truth and honest opinion, although Troy and Ross debated whether to include it, with Ross worrying about what his nana would think if she read it.

Equally controversial will be an accompanying reference to a marketing ploy in Australia which involved giving away polished pieces of aluminium the size of a credit card, with the message "42 Below, the most pure thing you'll do all night" etched onto the surface.

The cards served no other purpose than cutting up lines of a substance going by a name also starting with "c", a name which can be printed in newspapers – cocaine – providing a way for the company to get its brand under the noses of potential customers on Australia's cocktail circuit.

The book is unapologetic about such stunts. "All those poor cocaine consumers who for so long had been forced to use eftpos and credit cards finally had a stylish purpose-built alternative courtesy of 42 Below," it says.

It would be easy to think that the company's ebullient promotional campaigns were simply a reflection of Ross's own personality, but that appears not to be the case. As they sit in their home in Auckland's Herne Bay, a magnificently restored colonial mansion overlooking the harbour, there is nothing to suggest a penchant for outrageous personal style. The house exudes comfortable conservatism and Ross comes across as reflective. Troy, by far the more outgoing, goes as far as describing him as introverted, and says he is uncomfortable with conflict.

That does not mean the couple have lived a quiet life. The book details how they were high-school sweethearts from the back blocks of Papakura, south of Auckland, where Ross, who came from a farming family, would capture wild goats and eels and sell them to raise extra pocket money.

But even then, another side of the farm boy was starting to emerge. "Geoff had a taste for luxury. In this we were united," Troy writes in the book. "We wagged school and took his father's car into town; not the local suburban sewer town but the big metropolis. Downtown. We drove to the poshest hotel we knew, the Regent of Auckland. Acting all highfalutin' we walked into the foyer, flopped into armchairs and ordered a luncheon for two. We had strayed a long way from home. We were sixteen and seventeen and that lunchtime we planned the biggest life we could imagine."

It didn't take long to arrive.

After university Ross embarked on a career in advertising and by 1992, eight years after their lunch at the Regent, the newly married couple were living in Wellington where Ross had landed a job at Saatchi & Saatchi, at the time the hottest agency in town. There was plenty of cash, they worked with interesting people, had cool friends, went to all the latest bars and restaurants and partied hard. Among the city's bright young things and its emerging cocktail culture, they were front and centre. By the time Ross got the idea for a luxury brand of vodka in 1998, he didn't have to research the target market. He and Troy were the target market.

Troy: "The re-emergence of luxury brands, we were well aware that was going on because we aspired to have them."

Ross: "All our mates talked about the Gucci shop in Milan or something."

Troy: "We were mixing with these people who were aspiring to these luxury brands, we were exposed to the category,

we were partying. We understood the cocktail business was coming back and emerging as a strong growth category."

Ross: "So who should we target [with 42 Below]? It was our friends, really."

While Ross may have had a good understanding of the market, much of the creative energy that developed 42 Below's distinctive promotional voice came from his friend Darryl Parsons, whom Ross met when he and Troy moved to Auckland and he took a job at advertising agency DDB, initially running 42 Below as a business on the side.

The book describes Parsons running around Ross and Troy's backyard late one night, "naked, nimble, determined to get into the search beam of a police helicopter hovering above our house.

"He gave an almighty finger to the PC mafia. Like the voice behind Bart Simpson, Darryl became the voice behind 42 Below. He put his famously irreverent personality into the 42 Below brand."

Ross said the pair had often wanted DDB's clients to adopt some of the advertising strategies they were later to use with such great effect for 42 Below, but none was brave enough to give them a go.

"The emergence of the 42 Below brand was a symptom of Geoff and Darryl's combined frustration with clients who said no, who weren't bold enough and not brave enough," Troy said.

Ross believes such timidity and an unwillingness to rock the boat or take risks is a major drag on business in this country.

Compared to their Australian counterparts, New Zealand managers were often lacking in confidence, particularly with their marketing efforts, he said.

"Just because Unilever in the US and Proctor & Gamble in the UK does it a certain way, it doesn't mean we have to follow in exactly the same way. Unfortunately we've read all the same text books they have and are doing things the same way, which is typically formulaic."

"In the corporate world, everyone is covering their arses and no one is putting themselves on the line," Troy said.

"And that's very unfortunate because those sorts of cultures stifle creativity."

Ross believes many marketing departments have become "impotent" as a result, producing work which is safe but sterile.

But Geoff Ross the polished, sophisticated ad man came down to earth with a thud when he had to become Geoff Ross the salesman, hauling his samples of 42 Below around bars, trying to convince bar managers and owners to buy a few bottles of this new vodka.

"It was very hard," he said. "I thought I knew all about sales, but I soon realised once I was out on the street selling, that I wasn't as sharp at it as I thought I would be."

And there were financial worries. Getting the business up and running had used up all of their money and they moved into a workers' cottage on Ross's parents' farm to save money. By then they had started a family and there were times when money was so tight Ross couldn't bring himself to tell Troy of the latest setback.

Ross said one of the biggest mistakes young entrepreneurs make is underestimating how much capital they will need to grow their business, and he was no exception.

A major turning point for the company came when Ross met Grant Baker, who decided to invest in the company.

Baker was a hard-nosed businessman with expertise in sales and financial management. He already had a number of successful start-ups under his belt, including electricity retailer Empower, which, at the time he met Ross, he was selling to Contact Energy.

As well as additional capital, he brought much-needed skills and a structure to the business which allowed it to ramp up its export sales. He also brought a confidence, some would say cockiness, which saw 42 Below offer shares in a public float in 2003 and list on the NZX, considered an audacious move for a company that was still to turn a profit.

But the confidence of Ross, Baker and all the small investors who paid 50 cents a share for their stake in the company when it floated, was rewarded in spades three years later when global drinks giant Bacardi decided 42 Below would sit well alongside its other brands, which, as well as the famous rum, included Dewar's Scotch and Martini vermouth, and offered shareholders 77c a share to take the company over.

Ross stayed on for nine months but admitted that was difficult, even though he got on well with the Bacardi team.

Building up the business had given him the most exciting times of his business career and handing over the reins to someone else was like giving up your child and watching someone else raise it.

But he has no regrets about selling. As well as being financially compelling for all shareholders, the sale brought in $138m to this country, he said.

"For this economy to grow, we need more growth businesses. We don't need one 42 Below, we need hundreds of them. I think the talent and the desire is out there in people. I think the blockage is in the capital markets and a lack of cultural understanding of growth businesses. That's what I'd like to see change."

IN THE SPIRIT OF SPIN ...

Perhaps no incident in the book Every Bastard Says No better illustrated 42 Below's edgy advertising and ability to spin bad publicity to its advantage than the infamous James Dale agony uncle column. 42 Below had produced an ad aimed at the gay community which featured an image of the bottle against a pink background bearing the words "Drink it Straight or Gay".

John Libonati, the gay owner of a chic New York bar, took exception to the ad and emailed 42 Below's US president James Dale, saying he found the ad offensive and desperate. A series of increasingly heated emails were exchanged until Dale lost the plot and sent Libonati an expletive-riddled email which ended with the words "I'm James Dale so f--- you." Inevitably the exchange ended up in the press and posted on websites and 42 Below was being talked about for all the wrong reasons.

It would have been a PR nightmare for most companies, but the response of Geoff Ross and his creative powerhouse Darryl Parsons was to create a website featuring a series of emails puportedly from famous figures such as Fed chairman czar Alan Greenspan and vice-president Dick Cheney, alongside aggressively foul-mouthed responses from Dale.

The website was inundated with hits, allowing 42 Below to take control of the debate and reinforce its position in the market as an irreverent foil to its more traditional rivals.

- © Fairfax NZ News