Purpose At Work: How Greenbar Distillery Crafts Spirits With a Sustainable Twist

In today’s highly competitive market, brands that deliver quality goods and give back to the planet have a competitive edge. Consumers want to feel like they’re part of the solution by leveraging their purchasing power for the greater good.

A brand that’s weaving purpose into its business strategy to scale both profits and purpose is Greenbar Distillery. The organic, Los Angeles based liquor-maker plants a tree for every bottle they sell. They’ve also been making hand sanitizer during the pandemic for caregivers on the front lines.

I had the opportunity to speak with Greenbar Distillery’s co-founder, Melkon Khosrovian, about how he leads with purpose. Here’s what we talked about.

Simon Mainwaring: Tell me about your process of becoming a purpose-led company.

Melkon Khosrovian: My wife and I began to make things at home. It took on a life of its own when all of the people we knew and people they knew got into it. When we started to make spirits in 2004, it was more of a professional hobby. We kept doing that for about four years. We’d go to the farmer’s markets to buy our fresh produce. We would ask them, ‘What’s the most flavorful thing you guys sell?’

We were chasing this idea of flavor. About four years into the business, we started to have one batch after another go off the walls. One flavor was much more prominent than we were used to. We were buying the same thing from the same farmer and putting it into the same alcohol at the same portion. So we called up the farmers. We said, ‘We love working with you, but the products we buy from you don’t taste the same. What do you think is going on?’

They said, ‘We know you guys are into flavor. Recently we made our farms organic. We sell you the organic stuff at the same price as the old stuff without telling you. We thought you would like it.’

It blew our mind. It’s so much stronger in flavor and aroma than the conventional products. So we decided to go organic. We came to sustainability by chasing quality.

SM: Why did the farmers go organic?

MK: They were getting ready to retire. They were in their sixties and seventies, cleaning up the farm to pass to their kids and grandkids. They told us, “We can’t do what our grandparents did, which was pollute and then get another piece of land. There’s no other piece of land, especially not in Southern California. We’re cleaning it up so our kids and grandkids can keep the family tradition alive.”

This affected us deeply. Here we were chasing flavor and making fun stuff. These guys were worried about sustainability.

We changed our packaging to lightweight glass and recycle paper labels. We minimized our footprint as much as we could. We decided to give back by planting a tree for every bottle that we sold. I’m Armenian and my wife is Indian. Typically when a baby’s born, the grandparents or uncles and aunts plant a tree. This business is to some extent like kids to us. So we decided to do something to maybe set an example for our customers and plant a tree every time we sold a bottle. We’ve planted over 840,000 trees.

SM: Did you see a benefit out of marketing your sustainability credentials?

MK: When we converted to organic we took a bit of a hit. So much of our business depends on restaurants and bars. Those types of customers have a threshold on price. Once you reach a certain price point, you might be on the back of the bar but you won’t be on a menu.

Initially, we lost some margins. We knew the product tastes better. It smells better. We knew we’d eventually find efficiencies and grow our market presence.

We were met with a lot of skepticism. The restaurant and bar side of the business felt like it was gimmicky. They said, ‘You’re just making excuses. You want us to buy your alcohol because you’re doing the right thing. Does it even taste good? Can it make my customers happy?’

When they tried it, they were blown away by the quality of organic ingredients and the way we manipulated them in making our alcohols.

After we got to know the customers fairly well, we would tell them these stories. We felt like we had to get them to buy based on quality and price first before trying to sell them on sustainability.

SM: Do you now lead with your purposeful kinds of proof points in sales and marketing?

MK: We still lead with product quality. However, the conversation about sustainability happens at the same time. That’s huge progress for us. Before it felt like we were trying to dress up something that no one cared about. Now it’s more visible.

SM: How do you help your customers tell that story at the point of sale?

MK: They don’t let us do any sort of point of sale. Restaurants, hotels and bars pride themselves on personalizing customer experience to their brand. But what they do allow us to do is tell them certain things like, “Put on the menu that every time you drink this drink you’d become carbon negative for a day.”

I know that makes them feel like they’ve done something good. It makes them feel like they’re part of the solution. We are launching nationwide with Neiman Marcus. On their menus they will let consumers know they are planting one tree for every bottle they buy. Normally, that would never occur to a national restaurant account to put on their menus.

SM: How do you see the other side of this crisis?

MK: I think that as more companies like us become visible, the more it’s going to force customers to make the right choices. Every human being, except maybe a handful of politicians, understands what’s at stake. The planet. It’s actually the younger generation that’s most passionate about making a change. Everyone needs to compete on that basis. You can’t just say, “Hi, I exist to make money.”

We hope to inspire other companies to do something similar. It could be something that makes sense for their businesses. Doing good is not a silver bullet. You’ve got to have a competitive product. But it is a foundation and it doesn’t have to cost an arm and a leg either.

SM: What advice would you give to brands that are sitting on the sidelines?

MK: The danger if you do that is you will be left behind. You will become irrelevant and less profitable. Because the flip side of all this sustainability is waste and waste is money. If you’re overdoing something, you’re burning cash. At least waste less because every time you waste less, your impact shrinks. So shrink your footprint by being more greedy.

Consumers also want quality. But if a company’s the same level of performance, what’s the value add of making the world a little bit better? That solution will make you more relevant to your customers.

SM: And what are your ambitions for Greenbar Distillery?

MK: To become a national brand. To help change the conversation. To put a smile on our customers’ faces because they like what we make and what we do.

We’ll start with our canned cocktails. We are launching through Whole Foods nationwide. We are looking to find a balance between places where you would drink a cocktail and places where you could buy cans and bottles. We’re on a fast growth trajectory and we’re hoping to become a cool medium-sized company over the next four or five years.

SM: Are you shifting your balance between ecommerce and retail?

MK: e-comm is tricky for us. We don’t have the ability to sell to the public. Even if we went to e-comm, the number of middlemen would increase because then we would sell to wholesalers who sell to retailers. We worked with an e-comm overlay, which takes its share of the margins. It wouldn’t mean that we would get a wider distribution, more sales or more profits.

Our focus is on expanding our presence in the retail space with canned cocktails. We tried to teach consumers how to make easy drinks. People don’t want to go through all the hassle. So we shifted to canned cocktails as a solution to bring the level of quality we were making possible at restaurants and bars to the public wherever they are. Many national restaurant groups and hotel groups are finding our products to be compelling. Not only do we give them the perfect cocktail to serve, but the perfect message to deliver with a cocktail.

Simon Mainwaring: Do you think this will be the new normal?

Melkon Khosrovian: I think the voice of this generation is reverberating with all generations. If you’re not with us, you’re against us. If you’re not part of the solution, you’re not visible. You don’t exist. You’re going to be losing ground to all the other brands that are attempting to do well by doing.

CEO We First Inc, author NYT's bestseller We First, strategic corporate consultant and trainer, father, Australian, optimist.