Bespoken Spirits: Disrupting Distilling
HBS Case #721-419
Posted: 9 Mar 2021
Date Written: January 30, 2021
On October 7, 2020, Bespoken Spirits publicly announced it had received $2.6 million of seed funding for its “sustainable maturation process,” a process that could produce award-winning whiskeys in just days rather than years using a novel technology and data science. The technology dramatically reduced the time, cost, and environmental impact of making whiskey (it required less energy, space, and wood). At the same time, the technology could also be used to enhance a whiskey’s taste profile (aroma, color, and taste) which could allow distillers to charge more for their products. To date, entrepreneurs Stu Aaron and Martin Janousek had proven they could produce whiskey at scale and with desired properties. Having validated the concept, they now had to decide whether to continue making whiskey themselves or use their technology to process whiskey for others. In short, they had to decide whether to be a product-based, B2C company or a technology-based, B2B company, or both? If they decided to be a technology business, should they emphasis the Maturation-as-a-Service (MaaS, faster and lower cost production) or the Customization-as-a-Service (CaaS, creation of customized/bespoken products with unique taste profiles) business in the short term?
This short case has four objectives. First, it illustrates how new technologies can dramatically change industry economics. The production of whiskey, which can take from three to 30 years or more, has a particularly unattractive economic profile from a present value perspective. Second, it shows how a novel technology can create a competitive advantage by reducing input costs, or allowing distillers to increase quality and target specific market segments which should allow them to increase price (i.e., create a cost, price, and/or dual advantage). Third, it forces students to confront a common, yet difficult decision of whether to become a product-based or a technology-based company. As part of that assessment, students must consider both the nature and sustainability of the advantage as well as the investment cost, risk, and feasibility of each strategic option.
Keywords: Entrepreneurship, business strategy, competitive advantage, dual advantage, disruption, Whiskey, low-cost position, environmental sustainability
JEL Classification: M13, L26, L10, O31
Suggested Citation: Suggested Citation