Yukon distillery inks a deal with a dragon

Who knew booze could be such a burdensome business? Not Karlo Krauzig, that's for sure.

Who knew booze could be such a burdensome business?

Not Karlo Krauzig, that’s for sure.

Five years after the Whitehorse resident decided to launch Yukon Shine distillery, Krauzig says, if he knew then what he knows now, he never would have made that decision.

“Knowing all of the risks and challenges that couldn’t have been predicted even by any industry experts, I probably would have gone somewhere a little less risky,” Krauzig said.

“I started a family at the same time, and that was too much risk. They’ve been along for this whole rollercoaster ride.

“That being said, I’m not complaining. It’s gotten me this far and I’m going to take it all the way,” he said.

That roller-coaster hit a high point this fall when Krauzig finally inked a deal with Canadian business tycoon Arlene Dickinson after a year of negotiations.

The partnership will see Dickinson on board to provide financing and marketing expertise to back up Krauzig’s blossoming vodka and gin business.

Krauzig said the talks took as long as they did in part because of Dickinson’s hectic schedule.

“Arlene being as big as she is and being involved with many businesses, she’s very tough to pin down. People who work closest with her have a hard time to sit her down and get signatures,” he said.

Along with her job as the CEO of Venture Communications, Dickinson is a self-made millionaire and one of the stars on CBC’s popular reality show Dragon’s Den.

Krauzig met Dickinson on the set of that show where, after theatrically stripping off a Canada Goose parka, Krauzig first pitched his plan for a made-from-scratch Yukon vodka.

The pitch was an almost instant success, or so it seemed on the broadcast version.

When he first proposed the idea, Krauzig got an offer from Dragon Jim Treliving, the owner of Boston Pizza.

“They filmed me for almost an hour, and ended up cutting it down to about seven minutes. In the part that they cut out, I tried to negotiate Jim and Arlene coming together for a deal. I kept telling him we needed Arlene, and this company wouldn’t survive without marketing. He said if we need marketing we’ll hire Arlene,” he said.

Krauzig hoped that by bringing Treliving on board, he could get his Yukon Winter Vodka placed in more than 500 Boston Pizza and Keg restaurants.

“Even if you only did one bottle a month at each location, which is considered really poor, you’d still be doing almost 1,000 bottles a month. Most places go through a bottle or two a day,” Krauzig said.

Considering that his beverages retail for $50 a pop, the potential was huge, he said.

But Treliving apparently had different ideas.

“I never spoke to Jim after the show. He had one of his investment advisors – who was half my age – dealing with me. I was trying to push things along and it just wasn’t moving,” Krauzig said.

Eventually, Krauzig learned that Treliving had wanted to pitch Yukon Shine to global corporate liquor heavyweights Bacardi (which owns Bombay Sapphire, and Grey Goose) and Diageo (which owns Smirnoff, Baileys, Johnny Walker and Guinness).

But it turns out that neither were interested and Treliving nixed the deal with Krauzig.

“Bacardi bought Grey Goose for $2.3 billion. We’re just not at that stage yet. I would have thought that was something Jim would have known. Had he been upfront about that, I would have said I wasn’t interested,” he said.

That letdown was the lowest point on Krauzig’s roller-coaster.

“I was actually kind of ticked off. They had essentially wasted months of my time from the filming in April to the airing in October (2012). He canceled the deal two weeks before the airing of the show,” he said.

But rather than give up, Krauzig decided to press on, going back to Dickinson and pitching her again.

She said yes almost immediately.

“When I spoke with Arlene, she completely agreed and started giving me contacts to call right away, before we even signed the deal,” he said.

Yukon Shine is already in liquor stores here at home, in B.C., Alberta, and Ontario. With Dickinson behind him, Krauzig is now setting his sights on the wider Canadian market. Soon his booze will be in Saskatchewan, Manitoba and Quebec, and he has designs on the East Coast as well, he said.

And if first Canada, why not the world?

“She’ll get international contacts and open doors that I wouldn’t be able to on my own. She’s also got financial resources to help get to that place,” Krauzig said.

In order to meet the demands of those markets, Krauzig is looking at quadrupling his production, but says his system can handle the increase with only modest upgrades.

It’s been a long and frustrating ride, but Krauzig is determined to find the end of it successfully.

“I thought I’d be a lot further than this, to be honest. I’m at the start-up stage, and it’s taken me five years to get to this point. But now that I’m here, I’m not stopping. It’s going to be a very large company when I’m done with it,” he says.

Contact Jesse Winter at

jessew@yukon-news.com

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