Editor's note: This story is part of Southwest Michigan Second Wave's On the Ground Battle Creek series.
When Lucinda Wright was asked if she wanted coffee to get her through a tedious budget meeting at JPG Resources in Battle Creek her response led to the creation of a first-of-its-kind product within the domestic distilled spirits market and the startup company that developed it.
“We were in this meeting and I’m a known coffee diva and very snooty about my coffee and I can go from coffee to cocktails with nothing in between,” says Wright co-founder, President and CEO of Cask & Kettle.
“It was not a fun meeting and Pete leaned over and asked if I wanted coffee and I said, ‘not unless it has booze in it to get me through this meeting.’”
The Pete she mentions is Peter Borozan, another co-founder of Cask & Kettle. He spent a combined total of 26 years working for Nestle, a Swiss-based food and beverage company, and Kraft, now Kraft Heinz, a U.S.-based food company, before relocating in 2014 to Battle Creek after his wife took a job with the Kellogg Co. at their worldwide headquarters here.
Rather than dismissing Wright’s comment as little more than a witty response, Borozan says, it got him thinking about the possibility “to make really good drinks with alcohol in it.”
Borozan, Wright and two other consultants working with them at JPG Resources
began doing some informal experimenting. A food developer was brought in to professionally develop their concept along with another developer from JPG Resources. They were able to take the product from concept to launch in Fall 2018 of the company’s K-POD cocktails, which contain a blend of coffee and spirits.
Where the K-Cup pods contain non-alcoholic coffee and tea blends that become hot or cold beverages when brewed in a Keurig or similar machine, the K-POD cocktails are liquid concentrates that contain exacting amounts of coffee and spirits, including whiskey and tequila, that produce a decaffeinated coffee cocktail that does not require a Keurig-type machine but can be used with one if desired. The K-PODS are designed to be mixed with hot or cold water, which releases the concentrate.
Wright says the responses from consumers to the K-PODS were overwhelmingly positive. “The last thing we want to do is launch something and find out that only two other people care about it,” she says.
Since the initial product launch five years ago, Cask & Kettle is selling 600,000 K-PODS annually and is closing in this year on just over $1 million in annual sales, Borozan says. That money will be put back into the company, which is actively seeking investors to take it to the next level via an active Crowdfunding campaign on their website.
They have a goal to raise $2 million, which will open the doors to bigger-money strategists who want to see them hit that benchmark before investing. In March, the company switched from doing business as an LLC (Limited Liability Corporation) to a Delaware C Corp
“in order to grow and bring in new capital,” Wright says. “It was painful but necessary.”
In the midst of the Crowdfunding campaign and a focus on new investors, Borozan says, “We are trying to crack the northern California market and we see Florida as another potential market. The challenge is to get our message out and how do we penetrate a country as big as ours with this message. We are heavy into bloggers and influencers. Getting some scale will be a challenge.”
Wright says the concentrates used in the company’s K-PODS are technically difficult to formulate because they have to withstand high levels of dilution. She says it took 18 months to develop the right formulation, secure manufacturing partners, and single-serve machines like Keurig’s that had the capability to create drinks from the K-PODS as an option for people who wanted to use this as a way to make their drinks.
At the same time, she used the skills she had amassed during her careers in the corporate sector to gauge the public’s thirst for coffee cocktails.
They found a market ready for the beverages they wanted to create. “Forty-percent of Keurig users also drink spirits regularly,” Borozan says.
Wright, who lives in Sparta with her husband who is the Superintendent of Schools in Newaygo, began consulting with JPG after working as the Director of Private Brand Innovation for Meijer. She began her career with Whirlpool Corp. in Operations and rose to Operations Manager. She left that job to earn a Master’s degree in Business Administration from Michigan State University.
She says she “begged” her way into a job with the Kellogg Co
and began a marketing career there in Brand Management. During her 10-year tenure there she rose to Vice President of Marketing and served in key leadership positions on large global brands and emerging businesses as well as led the innovation team and played a key role in the acquisition of Kashi
Although there are four co-founders of Cask & Kettle — Jeff Grogg, owner of JPG Resources, and Lynn Townsend, an independent consultant are the others — Wright says she and Borozan are the two involved in the day-to-day operations of the company.
“Each of the founders ran a practice area at JPG. Mine was marketing sales, strategy, and innovation, and Pete’s was supply chain,” Wright says. “Pete likes to say that all of our previous professional experiences made it so that we could manage this startup.”
In Michigan, the K-PODS are available at larger retailers such as Meijer, Mega-Bev, and Total Wine stores, in addition to some smaller stores. They are sold in cartons of five for $13.99. In neighboring states and New York, they retail for $14.99, which Wright says is what you might pay for one drink in many of those states.
“It’s not easy for us to sell our K-PODS at that price,” Wright says. “We worked really hard to make it affordable, accessible, and delicious so that people can afford to keep buying it.”
The K-PODS are produced by Temperance Distilling
, located in Temperance. The irony of the name and location of the company is not lost on Borozan or Wright.
“They are our manufacturing arm,” Wright says. “We develop all of the recipes and the packaging and they do the brewing and package it up.”
Currently, Cask & Kettle offers five varieties of coffee cocktails: Irish Coffee, Spiked Dry Cider, Mint Patty Coffee, Mexican Coffee, and Hot Blonde Coffee. Borozan says Irish Coffee is their number one seller followed by Hot Blonde Coffee, which he tells his wife was named for her. (One online retailer describes the drink this way: Beautiful sable color, decadent aroma, and notes of malty vanilla swirling through a blend of lightly roasted coffee and full-bodied, crisp vodka.)
Depending on the recipe, Wright says eight or more ingredients go into each of the 40 ml. K-PODS which are produced in large kettles.
“Our formulas are very touchy. We’re layering flavors with eight or more ingredients to produce a cocktail,” Wright says. “It’s not just coffee and a shot of whatever.”
In his consulting practice, Borozan works on a lot of different plant-based drinks for clients that require concentrates. “If you have a K-Cup product that evolves into a full drink it has to have concentrate in it,” he says, explaining why the concentrate is key to their drinks.
Before they become the final product Borozan says, “There’s a mixing process where you have to batch the drinks and once they’re batched in a syrupy highly-concentrated form, they go through a filling machine that fills and seals the cups.”
Each K-POD contains close to one ounce of a spirit, mixed in with the coffee and other ingredients. Before they’re diluted, Wright says they range between 25 and 38 percent proof alcohol.
“Once diluted, the proof is more like 4 to 6 percent alcohol depending on the amount of alcohol used, so it’s similar to a beer or a glass of wine,” she says. “We like to say that ‘The proof is in the pod.’”
Disrupting the spirit world from Battle Creek
From concept to launch to startup, nothing like Cask & Kettle has ever been done before, Wright says. She calls this “disruptive.”
“In the distilled spirits world there are no hot spirits and everyone is specialized” — companies that produce spirits like vodka, gin, or whiskey, typically focus strictly on one particular spirit, Wright says. “We are creating a segment within a category that didn’t exist. Within the distilled spirits, the segment of a hot cocktail or a warm cocktail didn’t exist. For us ‘disruptive’ means that we are the first to market and the only one to market these types of beverages.”
In addition to the coffee cocktails, Wright says the product launch was unique because the K-PODS were made available first to retailers like Meijer and then to bars and restaurants, the opposite of what normally happens.
Although she and Borozan are looking to expand their sales area, they say they are committed to a Michigan-First approach when it comes to the suppliers.
“Anything we can buy in Michigan, we do,” Borozan says. This includes the cider that will be used in their spiked ciders, coming from Pux Cider
The ingredients, the manufacturing, the distillery, and the packaging represent 60 percent of Cask & Kettle’s costs.
“We seek out Michigan suppliers or vendors first. A high percentage of the people we have business partnerships with are Michigan suppliers,” Wright says. “We could get cheaper cider outside of the State of Michigan and if it was all about getting cheaper suppliers, we could do that, but that’s not what it’s about for us. I have made an entire professional career here in Michigan. I’m proud of the fact that I’m from here, I built a business here and my family has roots here. I’m super-proud to be from here and hopefully, we will make Battle Creek and the state of Michigan proud.”