How We Launched And Grew A Party Punch Beverage To $3M/Year

Justin Fenchel

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Published: June 12th, 2019

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Justin Fenchel

Founder, BeatBox Beverages

$11M

revenue/mo

Founders

164

Employees

BeatBox Beverages

beatboxbeverages.com

from Austin, Texas, USA

started March 2013

$11,000,000

revenue/mo

Founders

164

Employees

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Want more updates on BeatBox Beverages? Check out these stories:

1. Our Party Punch Beverage Brand Exploded From $18M/Year to $100M/Year [Update] (2023) ➜

2. How We Doubled Our Monthly Sales From $250K To $500K Since Last Year (2020) ➜

3. BeatBox Update: We Hit $18M Revenue In 2021 (2022) ➜

Hello! Who are you and what business did you start?🔗

Hey! My name is Justin Fenchel, and I am a co-founder and CEO at BeatBox Beverages out of Austin, TX.

BeatBox is the world’s tastiest portable party punch. Our core product is an 11.1% wine-based cocktail that comes in a 3L and 5L bag-in-box format, as well as a 500ml TetraPak single serve size. We started with only the 5L bag in box, but now 85%+ of our sales come from our tetra-pak offering.

We like to say our customers are really anyone who would enjoy going to a music festival. If you value a weekend with no worries but great music and drinks and sharing experiences with your close friends, you’d likely be a BeatBox customer!

While we are not profitable yet, we’ve grown our sales quite a bit to $2.4m in 2018, up from $1.1m in 2017 and $700k in 2016. YTD in 2019 we have already hit $2m in revenue.

how-we-launched-and-grew-a-party-punch-beverage-to-3m-year

What's your backstory and how did you come up with the idea?🔗

I had the idea with a lifelong friend of mine (co-founder Brad Schultz) to make a party version of boxed wine.

We saw how popular boxed wine, typically Franzia was in college, at tailgates, kickball games, beach trips, etc. But no one was buying it because they loved the taste of the wine. They loved the affordability, convenience and taking the bag out of the box to slap the bag! We also saw the explosion of flavored malt beverages like Four Loko, Lime-a-Rita and Mike’s Hard Lemonade. So we asked ourselves why had no one made a fun flavored version of boxed wine for the millennial consumer?

Don’t just assume your idea is great. Even if your family and friends say so. Get a prototype out into the market. Get people outside of your network to tell you it’s a good idea.

Other than being avid consumers, we had no prior alcohol industry experience. However I was in the McCombs School of Business in Austin for my MBA, and put together a team of people that brought different skills to the group, and this sharing of thoughts ideas and skill sets was important at the start. But man we had to figure out a ton of the crazy alcohol laws along the way.

We followed the Lean Startup model and applied to a consumer products idea. We actually emptied out Franzia bags, and filled them up with vodka, crystal light and food coloring.

We also crowdsourced a logo and packaging designs, and put different packaging concept stickers on cardboard boxes. We then took these makeshift boxes to different parties to see what people thought. And people went nuts for them! We had people trying to give us $20 bills at random pool parties for these boxes, and we knew we were on to something.

I had spent the first 5 years of my career after college as an equity analyst. However I realized I didn’t want to make a career in that field, so decided to go back to school (which I ended up doing at McCombs in Austin, TX.) BeatBox was started while I was in school.

Describe the process of designing, prototyping, and manufacturing the product.🔗

Once we realized people loved the idea, we then had to figure out how we were going to make it.

The alcohol industry has just an insane amount of laws, and every state is different. So the first thing we did is get an understanding of the lay of the land speaking to an alcohol beverage law firm.

They quickly told us that our idea of making a vodka cocktail in a 5L box was illegal, as you can’t put hard alcohol in anything over 1.75 liters. But fortunately they helped us find a flavor company who specialized in a unique wine that drank much more like a spirit and we could recreate our top tested the flavor, a raspberry lemonade crystal light, and vodka.

What has helped make us successful was having such a unique and differentiated product. We got people’s attention from day one. We also had several people high up in the alcohol industry tell us we were crazy, but that just motivated us in that we were onto something the big players just didn’t understand.

We then wanted to outsource manufacturing, but of course, the nature of the laws in Texas made it so that if we outsourced production, we had to ship the product directly to a distributor. The reality was no distributor would give us the time of day with our crazy boxed wine concept (although in reality, we didn’t even really know what a distributor was at first!)

So ultimately the only way to get the product out there was to make it ourselves. How hard could that be?

Well, it was really freaking hard! But we figured it out. We found a winery equipment sales rep who pointed us in the right direction as far as equipment needs and costs. We called several wineries in Fredericksburg Texas to see how they did things such as measuring the alcohol content of their wine before selling it.

We talked to our business school classmates who were engineers to help us set up our facility. We used every ounce of the network we had. As an entrepreneur, you are just always figuring things out.

One key mantra that has held true throughout our story is There is ALWAYS a solution. You just have to find it as quickly as possible. Google is a great resource, your friends/family, linked in, social media. Reach out to people who are in positions that would add value to you and ask for advice. Be vulnerable and passionate and never stop finding a way to just get it done.

This was the first batch of BeatBox we ever made.

The five original co-founders all funded the idea (in various amounts) for a total of $55k. This got us all our market testing, legal advice, our manufacturing “facility” (an 800 sq. ft warehouse that looked like a scene out of Breaking Bad), and our first 2,000 fully produced boxes.

Describe the process of launching the online store/business.🔗

We were able to do our first production run of 160 boxes in March 2013. This was right before SXSW, one of the biggest events in the country that happens to be in our home town of Austin, TX.

We utilized this event to donate boxes to a lot of events to get some buzz (no pun intended!) around town. We had our business school classmates go to stores asking for the product and opened up some stores on our own. We also knew we needed to get exposure at the University of Texas, so we brought on an intern who was a social chair of his fraternity to help us get some more exposure.

It was critical for us with a $20 large format box that we got what the alcohol industry calls “sips to lips”. So anyway we could get people to actually drink our product was the way to go. Additionally showing early retailers you can sell through quickly is very important. So we tried to find every way possible to generate that early sell through.

Over the first 3-4 months, we opened up around 20 or so accounts, all on our own. These were primarily independently owned liquor/convenience stores around Austin. Stores that people told us we needed to be in to reach our initial target demographic of millennials 21-25. And we did a TON of in-store samplings.

You could schedule these through the stores and this was a great way to get the product out there. We learned a lot. Our first box didn't have a flavor name on it because we wanted it to be like Redbull. What flavor is Redbull? It just is. But of course, the first question we would get is “what flavor is it?” and we realized red bull had a $300m marketing budget when they came to the US, so we decided to put the flavor name on the next run of boxes.

It was tough because for the first couple months it seemed like every box that sold was because we personally sold it, but over time we started to see the boxes sell when we weren’t there, which was an amazing feeling.

I remember the first month we reached sales 100 cases (400 boxes, roughly $6k in revenue). It was an incredible milestone. But really we were limited by the fact we were self distributing, and our limited production capacity. It would take us like 2 full days to make 400 boxes.

Since launch, what has worked to attract and retain customers?🔗

The alcohol industry uses the phrase “sips to lips” as a metric of getting consumers to know about your product. The liquid has to be great, with solid packaging at a good price point. Once you have that - then it’s about getting as many people as possible to try it. We did this through a lot of samplings, both in store and at major events with thousands of people.

We also utilized social media, focusing on the platforms that our consumers used the most. For us, that was Instagram and Facebook. As Snapchat grew, we were actually the very first alcohol brand to put a Snapchat QR code right on the packaging itself.

The key for us is that millennials/next gen dont want to hear from brands about how cool the brand is. They want to hear from their peers about how cool the brand is. So getting people to post organically to their social channels was key.

We would recruit brand ambassadors into the company who could post on our behalf, and this spread the word much faster than we could have on our own.

Shark Tank

Perhaps the biggest thing we did was go on ABC’s Shark Tank in 2014. We ended up with a deal of $1M for 33% from Mark Cuban.

When our episode aired, we had just a crazy amount of hits to our website, and our distributor wanted to expand us throughout their footprint. The whole Shark Tank experience was nuts. It was like preparing for the Superbowl of entrepreneurship. We watched every episode, read all the books the sharks had put out, stalked their websites/blogs/social accounts.

We knew things like Lori’s brother liked to drink beer on the golf course, and that Mark used to rip of the labels of Freixenet champagne in college so it looked like more expensive champagne and mentioned that in the filming! We were over-prepared which was a huge key to our success on the show. It was by far the most nervous we had been for anything in our business careers.

We were trying to manage our new distributor, our new outsourced manufacturer, our new retailers like HEB, all while preparing for the biggest entrepreneurial moment of our lives. It was intense with many 18+ hour days.

How are you doing today and what does the future look like?🔗

Our sales are growing quite rapidly now that we’ve got the right team and distribution network. We reached $2.4m in 2018, up from $1.1m in 2017, and have a goal of $6m+ in 2019. YTD we have already hit $2m in Revenue!

We do 100 % of our sales through our distribution partners. You are able to buy BeatBox online, but that is through a retailer who has the licenses to ship it, and they purchased it from one of our distributors.

Having excited distribution partners is absolutely critical in the alcohol space. We are now sold in over 5,000 retail accounts across 10 states, and that number is growing rapidly.

Most of our sales to date have been from independent convenience stores, so we are excited about ramping up our distribution in chain accounts.

Through starting the business, have you learned anything particularly helpful or advantageous?🔗

I think what has helped make us successful since the beginning was having such a unique and differentiated product. We just got people’s attention from day one. We also had several people high up in the alcohol industry tell us we were crazy, but that just motivated us in that we were onto something the big players just didn’t understand.

I wish that as soon as we got the money from Shark Tank that we would have hired an experienced team to help us expand. As founders/entrepreneurs, it’s tough to delegate, but we were doing far too many things ourselves as we expanded, and that is not a winning formula. When we finally decided to hire experienced veterans the sales growth followed. Hiring the best people is probably the single greatest thing you can do for yourself as a founder.

The 10x rule is very real. Everything takes 10x longer and cost 10x more than you think when you’re planning. No one gives a shit about your business at the beginning except for you. So own that and don’t blame others. You can figure it out until others can’t ignore you anymore.

You’ve also got to find time for yourself. The risk of burnout is high in the startup world, so while you’ll be working a ton, find some time to unwind and relax/recharge. It’s critical.

What platform/tools do you use for your business?🔗

We utilize social media quite a bit. We’re active on Instagram, Facebook, and Twitter. We also utilize our email database to send out newsletters on occasion.

As a product almost exclusively sold at retail through our distributor partners, it’s incredibly difficult to track any sort of internet-based marketing efforts and ROI on those efforts. For us, we want to focus on the best in-store merchandising, good pricing programs and distributor incentives to move the needle.

What have been the most influential books, podcasts, or other resources?🔗

I love The Hard Thing About Hard Things. It just puts in perspective how in business there are no easy answers.

I also thought Shoe Dog was incredibly inspiring. It was so crazy to me how even when he was doing millions in sales, that there were constant risks for Nike going under.

No one is greater than the market, and you have to work your tail off every day to win.

Advice for other entrepreneurs who want to get started or are just starting out?🔗

Don’t just assume your idea is great. Even if your family and friends say so. Get a prototype out into the market. Get people outside of your network to tell you it’s a good idea.

Learn everything about the industry you want to play in, who are the leaders and why? How can you be different and better? Read a lot!

Be solution oriented. It’s all too easy to make excuses or give up because getting your business going is too hard. There is always a solution you just have to find it. And once you know there is a market for your product don’t give up! The entrepreneurial roller coaster is real, don’t get thrown off of it.