This is an installment of Startup Year One, a special series of interviews with startup founders about the major lessons they have learned in the immediate aftermath of their businesses’ first year of operation.
Haus launched in June 2019 with a line of aperitifs made with all-natural ingredients, marketed toward millennials looking for lower ABV drinks.
Most recently, the company just launched in October a new fall aperitif inspired by the nostalgic feeling of enjoying a Manhattan by the fire at a cozy hotel bar. Rich, fruit-forward, and spicy, with flavors of heirloom cherries, anise seed, fragrant tellicherry pepper, and cocoa nibs, the Spiced Cherry liqueur can be served on the rocks, with a splash of tonic, or with a bit of rye whiskey for a low-ABV Manhattan.
Based in Healdsburg, Calif., Haus was founded by Helena Price Hambrecht, 33, a Silicon Valley brand veteran, and Woody Hambrecht, 37, a third-generation winemaker.
Fortune recently spoke with the cofounders about how the first year has been and what the company plans to do next.
The following interview has been condensed and lightly edited for clarity.
Fortune: Could you tell me a bit about your backgrounds? What were you doing professionally prior to launching Haus?
Helena: We joke that it took a techie marrying a winemaker to start Haus. I’m the techie half; I started my career doing launch PR for tech startups in San Francisco. I was immersed in the tech world and quickly realized there was a huge gap in brand creative for tech companies. Long story short, I ended up building my own creative production studio that worked with everyone from early stage startups to Google and Facebook.
In the meantime, I met Woody, a third-generation winemaker. Through him I got a deep dive into the alcohol industry from the sidelines—the antiquated laws, the inefficiencies. Over the past decade I’d seen every other industry transformed by direct-to-consumer, millennial-focused brands, but there was nothing like this to be found in alcohol. Everything was still corporate, poorly made, and sold through traditional distribution. It seemed like an industry ripe for disruption.
Woody: I come from a winemaking family, and I’ve been making wine and aperitifs for about a decade. Helena and I live on a 200-acre ranch in Sonoma County, Calif., where my family has been farming grapes since the 1970s.
About 10 years ago, I took over the farming of 140 acres of grapes and started making wine of my own, as well as grape-based aperitifs. I did everything right by the traditional standards. I went through the three-tier system; I got picked up by the cool kid distributors; and my wines and aperitifs were on some of the best cocktail menus across the U.S., Scandinavia, and Japan.
But at the end of the day, I had no control over my product or my customer. My products were served at the best restaurants in the world, but they were just a splash in a boozy craft cocktail. I didn’t have a relationship with the drinker, because it had to pass through multiple middlemen first. It’s a hard industry for an indie brand to thrive in.
Haus launched in 2019 and was received as an aperitif, or cocktail, brand for millennials. What inspired the development of Haus? Who is the target demographic?
Helena: We designed Haus to solve a problem: We wanted a better way to drink.
We and most people we knew were consuming alcohol differently than generations before us. We weren’t drinking to get wasted—we were drinking to network, do business, or catch up with friends.
Unfortunately, most booze is not made with our generation in mind. It’s high in alcohol and full of artificial flavors, refined sugars, petroleum dyes, and other ingredients most people know little about. There’s no nutrition facts, ingredient lists, or ways to learn about how alcohol products are made and where they come from.
Market research told us this wasn’t just a phenomenon with us and our friends; it was an entire new generation looking for a better way to drink.
We knew things could be done better. We started thinking: what if we built an alcohol brand for today’s generation from the ground up? What if we rethought everything, from how it’s made to how it’s distributed, to be better aligned with today’s drinker?
Woody: We’re the first alcohol brand to grow like we have without the three-tier distribution system. Most spirits can’t do this; it’s a legal requirement for them. But because our aperitifs are low-ABV and grape-based, we have the option to sell online, like wine. This has allowed us to build a completely different kind of alcohol company.
We also made the decision to be a fully vertical company and own production end to end. We knew this level of control would enable us to create the best possible product: from the ingredients we use, to the final product, to the entire customer experience.
When we aren’t sourcing from our own farm, we source ingredients from farmers we trust and from purveyors who work with Michelin-starred restaurants. We put tremendous care and attention into every touchpoint, whether that’s packaging, our editorial that comes with each shipment, or an email exchange with our support team.
Most importantly, our model allows us to have a direct relationship with the people who are drinking our product. We know what flavors they want more of, what they like, and what they hope we’ll make in the future. Most liquor brands have to pay Nielsen millions of dollars to get that kind of data, but we can just send out an email. This allows us to create the products people really want.
Haus’s first drink was a white wine–based concoction called Citrus Flower, and the brand’s portfolio has since grown to more than half a dozen new drinks. The newest one, Spiced Cherry, is meant to evoke the same flavor profile and feeling as a classic Manhattan cocktail. What goes into the production process of creating Haus drinks?
Woody: When we’re creating a new aperitif, we typically draw inspiration from flavors and spirits that have been a part of drinking culture for ages. Sometimes, we reference flavor profiles you might find in traditional European aperitifs: Citrus Flower was inspired by bianco [white] vermouth, and Bitter Clove was inspired by amaro; other times, we look to American cocktail culture.
But we’re intentionally creating something a bit different. We dramatically tone down the sweetness and bitterness you might expect in a traditional aperitif. This lets the natural ingredients shine through, and makes for something more versatile and easy to drink.
To be honest, each flavor is pretty personal to us. For Spiced Cherry, specifically, we wanted to re-create not just the taste but the feeling of drinking a Manhattan by the fire at a cozy hotel bar. Once we have a vision for the aperitif, we work backwards and think about the recipe and which ingredients will get us to that particular flavor.
Helena: It actually doesn’t take us that long to make a new aperitif flavor, since we do everything ourselves, and Woody has engineered an incredibly efficient system for production. This makes it easy for us to iterate on recipes based on customer feedback and move quickly on huge initiatives like the Restaurant Project.
Forecasts for liquor sales over the next few years are mixed, given the current economic climate. But sales for alcohol delivery services have skyrocketed as many bars have closed, or reopened with limited capacity, and people are spending more time at home. How does Haus factor into this segment?
Helena: Our business has grown over 500% since the beginning of 2020, and we’ve been able to not only sustain that growth but accelerate it in a healthy way. We had no idea what to expect when the pandemic hit. But we’re extremely fortunate that our early decisions to own supply chain, production, and distribution are already paying off. It’s pretty clear that the pandemic is going to have a lasting impact on buying behavior, especially in food and beverage.
Woody: For us, it’s important that we’re always where our customers are. And while wholesale will be a part of our strategy someday too, it’s definitely a good time to be able to sell alcohol on the Internet.
That said, what has it been like to secure funding for Haus? Is it primarily self-funded, VC-backed, or some mixture of both?
Helena: It’s funny because in the early days pitching Haus, most people thought our idea was insane or just stupid. It wasn’t until we signed Gin Lane, who we worked with on our branding, that people started taking us more seriously.
We’ve looked to venture capital as our primary funding source, but we’ve raised in a fairly nontraditional way. We have over 100 investors on our cap table, and many of them don’t typically invest in food and beverage. Rather they’re simply deep believers in what we’re doing and wanted to be a part of it.
Woody: We’ve raised $9 million total to date, which includes a recent investment of $3 million from Coefficient Capital. They’re a partner that’s understood what we’re doing from the beginning and truly believe in our vision. Plus they have the industry knowledge of what it takes to scale a challenger food and beverage brand.
Post-pandemic and five years down the road, where do you see Haus in the market?
Woody: We believe that we can build the next great American alcohol company but with better values. A deep care for product, ingredients, authenticity, transparency. We’d love to prove to the corporate alcohol makers of the world that when you put the customer first, you’ll eventually win.
Helena: We look forward to changing drinking culture for the better.