“Premiumisation is stalling” – Uncle Nearest CEO on navigating a “correcting” spirits market

US whiskey distiller Uncle Nearest was founded in 2016 by entrepreneur and CEO Fawn Weaver under the privately-held investment company Grant Sidney, which she also owns.

Today, Uncle Nearest sells its products in all 50 US states and the Puerto Rico and Washington DC territories, as well as 12 countries worldwide.

Its portfolio is comprised of eight SKUs, including the 1884 Small Batch and 1856 Premium Aged whiskies, all made at a distillery in Shelbyville, Tennessee. The 458-acre site is named Nearest Green after Jack Daniel’s first master distiller – the first known African-American master distiller and a figure Weaver is looking to bring to the fore of spirits history through Uncle Nearest.

In addition to expanding its presence in the US and globally, earlier this year, the business announced a move into vodka with its purchase of Square One . In 2023, the group also acquired French wine estate Domaine Saint Martin , signaling its entry into Cognac.

Just Drinks sat down with Weaver in London to discuss her plans to grow Uncle Nearest, the future of premiumisation and navigating a tough global spirits market.

Fiona Holland (FH): The US spirits market is seeing pressure on sales right now. Is it a difficult market to work in?

Fawn Weaver (FW) : Every market is incredibly difficult. I don't know that there is a market right now that is not a challenge in spirits. I don't have a counterpart in spirits that will not say this is one of the toughest years that we've had collectively.

Now we've got three things happening. You have the destocking for two reasons. One is theft is so high. You have stores that before would buy 100 cases if you had a really good case deal but it takes them longer to realise something's missing if they've got 100 cases of this brand, 100 cases of [that] brand… They're also destocking because the cost of capital is so high… Take the destocking, take the rising cost of capital, and then add to it a trade-down from the consumer, now you have an entire industry that is trying to re-identify itself in the midst of it and no one really saw it coming.

FH: How do you view the whiskey category specifically?

FW : Every category [in spirits] has been absolutely wild...

For the most part, if you go across the spirits conglomerates, every CEO is only going to be there a few years. They're making very permanent decisions on pricing, because if they keep dropping pricing and doing these big deals then, two years from now, when we're on the other side of this, they can't go back… some of the brands that have come into the UK offered these huge deals, offered all of this money in order to get back bar placement. Well, then the next year they don't want to pay that and the bars are like, no problem, and they're not going to sell the product because you can't buy loyalty.

Our strategy has always been very long-term. We build the relationships with the bars. Even if it takes five years to get a placement organically, we'll do the work for the five years to get that organic placement versus paying to get the placement for a year.

For all the publicly traded companies, the shareholders want more and more and more and more, always more. It’s never enough. They delivered to them insane returns during Covid but, as soon as Covid was over, they don’t remember those returns anymore… I believe that this is simply a correction of the market that had taken a while to hit – but now the market is correcting and it needed to.

FH: How do you see consumer confidence right now in the US?

FW : It’s dropped tremendously. A part of it is, we're going into an election year, and we haven't really seen two sides that are so different. Their visions for America are so different.

For instance, you have a lot of the really ultra-wealthy that a good portion of their wealth is on paper. It's in crypto. They can't really sell it right now…. Well, if the government goes in and regulates that, then all of a sudden, crypto is worth very little… the moment government begins to regulate it, that pyramid comes tumbling down.

Now, on the other hand, you have one candidate who's invested in crypto and so he has no desire to see it regulated. Well, if he goes into office, then all the people who are holding back their money right now are going to start spending it because now it's not just on paper. Now they feel good for at least four years that it's not going to come crumbling down.

FH: Does that uncertainty around the election result worry you? Specifically, how it may impact Uncle Nearest’s performance?

FW : I’m not worried at all because this to me is a long game. The only way that you'd be concerned about an election is if you're worried about what is happening short term because, otherwise, there's an election happening every four years. If I were to be concerned every time there's an election, then all of a sudden, every four years, I've got a major concern.

FH: Is Uncle Nearest more present in the US on-trade or off-trade and why?

FW : It’s equal... in terms of what I schedule, how I'm allotting my time, the majority of it is press and distributor relationships. Those two take up the majority, because in the US, that three-tier system, that second tier, the distributors… We can't get to the consumer without the distributor, which means that our actual consumer is the distributor.

FH: What do you see as some of the main opportunities for growth for the brand in the next year?

FW : We have so much opportunity in so many places. For instance, we're now, as of [this] week, going into 335 airport bars and restaurants. The volume of airport bars and restaurants are really hard to compete with and we've never been in any of them. That's all happening in a one-week span of time.

FH: Do you have a specific sales growth target you’re working towards?

FW : We did but right now I have no idea because it's really impossible. Coming into this year, I said we'll do $100m in sales. I can't say that anymore but I also can't say where we'll land. I mean, truly, just sort of looking at where the market is, we'll probably do $80m/$85m in sales or something like that. But that's lower than what I went into this year thinking we would do, so I don't know...

As an independent, we’re hit much harder than the big guys and so [we’re] just trying to make sure that we continue to grow.

FH: Do you think premiumisation is still a key trend for spirits and one we’ll continue to see shaping the market?

FW : I don't agree with that. No, everything in the market tells us that's not true. Premiumisation is stalling and what people consider premium is coming down. If by premiumisation you're meaning people who used to buy something at $150 are now buying it at $75 and that $75 is now the new $150… then absolutely, but if you're just talking about a person who was buying before at $75 are they now buying at $100? No.

FH: It feels like there’s still some confusion around what the premiumisation trend means. Would you agree?

FW : They're moving the goalposts depending on how they want the story to be spun. But the truth of the matter… is that people are coming down in what they're willing to pay for.

FH: Are you adapting your pricing as consumers tighten their wallets?

FW : No, because by the time all of this gets figured out over the next couple of years and it stabilises, we'll still have an ability to grow at the current price point... During Covid, we never went up on price. Even when tariffs were introduced here, we absorbed the tariff fees. We never increased our bottle cost. We have been very consistent with our pricing.

FH: You’re travelling to promote your book Love & Whiskey , which explores the history behind Nearest Green, Jack Daniel’s first master distiller and how that story ties to the founding of Uncle Nearest. Why is making that history known important for business?

FW : For brand building, there isn't anything more important. When we began this year, it was an absolute dogfight just trying to hold ground… we were absolutely losing volume, like everyone else in the industry was losing volume, and the moment the book came out, we reversed the losses that we had been seeing, and so, we are still very much so a story-driven society. I do think that you're going to start seeing as a trend overall, brands that don't have a story, that don't have a true story, are going to suffer. The consumer that this is moving to –  the Gen X, Gen Z, Gen Alpha, millennial[s] – are requiring to know what's behind the story. They want to know the why of a brand. That's a very new thing.

FH: Where are Uncle Nearest’s top markets?

FW : [Besides the US], [the UK] and Japan are the only two places we have people on the ground… but really, the book Love & Whiskey is going to start going into the market before Uncle Nearest the product does, so people know the story, so they are actually looking for the brand. Then we'll go into those markets. Markets outside of the US, for us are extraordinarily expensive. The return on investment outside of the US is very different for us than in the US.

FH: Why is that specifically?

FW : I think that you have competition for less volume. If you look at the volume of American whiskey sold in London or just in the UK period, and then you contrast that to the volume that we consume in America, it's a fraction but it requires the same amount of people to sell it. It requires more money to market it because, in the US, people get around it, but it’s technically illegal to charge someone to be on your menu. That’s not illegal in London, everybody does it… we don’t pay to play in the US and all of – or most of – the other big brands, they all pay to play. We’re constantly having to work harder to be able to build the relationships and to get the placements organically.

FH: What are your future expansion plans?

FW : We're in the UK, we're already in Japan… we've moved into Canada, we've moved into the Caribbean and, any place where we have a US military base, Uncle Nearest is there… We've started being added on cruise lines and things of that nature, so that as well. But in terms of being in-market, it's really the UK, Japan, and then we have about five other markets that we will go into within the next 12 months…

We’re going to go into South Africa, Ghana, Nigeria and Kenya and then Australia and Germany [in on- and off-premise].

FH: Why did you choose to add those markets to your roster?

FW : It's the markets that have shown that they already know the brand. The brand already has name recognition in each of those markets, people know what the brand is. Now it's a matter of going in, delivering it, and then making sure people are seeing it… I have no interest to go into India or China. They have no idea who Uncle Nearest is. They don't know the story, they don't know the brand, so it will take too much work and too much effort as an entry point, but the places that already know our story already know our brand, that's where we're headed.

FH: Will M&A play a role in growth plans for the brand in the next twelve months?

FW : Not for the next year because we recently acquired a vodka company. We've completely revamped every aspect of that, from the recipe to the bottles, like everything, so that'll come back in the market at the beginning of next year. It comes back as a completely revamped version of the company we bought that was almost 20 years old when we bought it. We also had to allow for complete destocking in the US so that the new product coming out doesn't get confused with the old product that was on shelves.

Then we have the Cognac coming out next year. That's a huge project. Then we've got the remodel of the Chateau in Cognac. We are in contract for a 400,000 square foot factory in Shelbyville, right down the road from our distillery, that will allow us to bring the vodka in-house, and to bring all the bottling and all the rest of that stuff. It's not a small project. It's an old pin factory… we also have to retrofit it for distillery purposes and so, all that to say, I've got enough projects going on right now to last me a few years.

FH: On the new Shelbyville factory, when will it open? How many new jobs will be made?

FW : We're just finishing up the due diligence now… it’ll be a minute retrofitting from a pin factory to a distillery, that's going to take some time… [on jobs] It’s too early to know. For instance, we don't have to bottle in Cognac to be legally called Cognac... and so we don't know yet if we're going to choose to keep our bottling operations in Cognac or if we're going to bring them into Tennessee. If we bring them into Tennessee, that creates jobs just for the Cognac. The vodka right now is scheduled to be made… and bottled and shipped outside of Tennessee. Well, with this factory, we may choose to bring those in, so that's in addition to vodka.

FH: Do you have any interest in entering other categories or new formats like RTDs?

FW : No interest in RTDs, no interest in that sort of innovation. Obviously, we now have some really beautiful Cognac barrels, so the likelihood that you'll see a Cognac-finished Uncle Nearest is high because then it's one of our companies working with another one of our companies. It makes sense.

"“Premiumisation is stalling” – Uncle Nearest CEO on navigating a “correcting” spirits market" was originally created and published by Just Drinks , a GlobalData owned brand.

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