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Business Observer Friday, Jul. 15, 2016 2 years ago

Good batch

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After success in its homeland, a Polish family looks to grow in the States with a spirit distillery. At least $10 million in sales by 2020 is on the goals list.
by: Mark Gordon Managing Editor

Executive Summary
Company. Kozuba & Sons Industry. Distillery, manufacturing Key. Company has big goals for distillery after moving it to St. Petersburg from Poland.


Matt Kozuba learned an important business lesson in nearly a decade of helping his family run a successful small-batch spirit distillery in Poland.

The lesson: Put significant time and resources early on into finding the right sales strategy and team to execute that strategy.

Kozuba, 40, along with his younger brother Jacob Kozuba, 34, and their father, Zbigniew “Papa” Kozuba, moved their distillery operations from Poland to St. Petersburg last year. The company, Kozuba & Sons, locally produces and sells a line of sprits that includes aged rye vodka, fruit cordials and 100% malted rye whisky. The lesson from back home, about the right team, say the Kozubas, was a significant factor in the move.

“The big challenge is distributing,” says Kozuba. “Even if you have the greatest product in the world, if you can't get it into people's hands, you can't have any sales.”

Kozuba & Sons is run out of a 20,000-square-foot converted seafood storage complex on Fifth Avenue South in the Warehouse Arts District, just north of Tropicana Field. Counting buildout and inventory, the Kozuba family invested at least $4 million into the business — one of several new distillery operations in the Tampa-St. Petersburg region.

For example, similar in family-business makeup to Kozuba & Sons, Dominic Iafrate Sr. and his sons, Steve and Dominic Iafrate Jr., founded St. Petersburg Distillery in 2014. Also with a facility in the Warehouse Arts District, the company produces vodka, gin, whiskey, rum and liqueur. Southern Living magazine named St. Petersburg Distillery's Banyan Reserve Vodka the Best in the South for its 2016 Food Awards.

“We feel like we are at the front end of the trend,” says Paul O'Renick, vice president of sales and marketing for St. Petersburg Distillery. “We just have to get our brand out there.”

Part of the burgeoning distillery scene stems from changes in state laws for small-batch manufacturers that make it easier to sell directly to consumers. The new distilleries also come on the heels of a widespread regional boom in craft beer breweries.

“The Tampa area has kind of become a mecca for craft beer and distilleries,” says Dan Stone, a real estate investor who co-owns the building where the Kozuba family leases space.

The drive at Kozuba & Sons, says Jacob Kozuba, is to capture the boom and produce at least 400,000 bottles, equal to about $10 million in annual sales, by 2020. The brothers also want to build a brand behind the bottles.

“We don't want to be only a distillery,” Matt Kozuba adds. “We want to be a tourist attraction.”

Get back up
The industry buzz was on full display at Kozuba & Sons June 23, at a grand opening event that drew more than 350 people. The guest list included State Sen. Jeff Brandes, R-St. Petersburg, and St. Petersburg Mayor Rick Kriseman.

But up until the week before the event, Matt Kozuba says he was losing sleep over finding a top shelf distributor, going back to his lessons from Poland. Says Kozuba: “I was terrified we wouldn't find the right one here.”

The company, with persistence Kozuba says bordered on crazy and desperate, eventually found its mark, Tampa-based Johnson Brothers Liquor Co. Johnson Bros. will sell Kozuba & Sons products in higher-end bars and restaurants in the Tampa region, in addition to independent liquor stores, ABC Fine Wine & Spirits, Total Wine and Publix. Johnson Bros. signed a deal with Kozuba & Sons in mid-June.

Getting Johnson Bros. was a get-knocked-down-get-up-again experience for each Kozuba. First, Matt Kozuba wrote letters to every distributor he could find in Florida, touting Kozuba & Sons' products. (Florida's alcohol laws are run under a three-tiered system of manufacturers such as Kozuba & Sons, independent distributors and retailers. Craft brewing and distillers face other regulations. “The barriers to entry in this business are huge,” says Kozuba & Sons spokeswoman Katie Hale.)

When no distributor bit, the Kozuba brothers drove to every liquor store they could find in Tampa. They set up tastings, giveaways and happy hours. They later hit St. Petersburg's rejuvenated nightlife scene.

Then one day a Johnson Bros. executive, while eating lunch at World of Beer in downtown St. Petersburg, tried a Kozuba & Sons sample. He loved it. He found out who made it, and emailed Matt Kozuba — eight months after an initial rejection. Kozuba & Sons had its distributor.

Matt Kozuba estimates the door-to-door liquor store and bar runs to find a sales distributor cost $100,000. “You have to be a show-off and you have to do some risky things to get noticed,” he says. “We just kept calling and bugging people.”

Steady growth
Determination like that is how the family built its first success in small-batch distillery, in Poland. That was back in 2005, after patriarch Zbigniew Kozuba, a biochemist, retired from a career operating blood labs. The elder Kozuba, mostly for a cure to boredom, made fruit cordials from a home distillery system. He gave out the drinks to neighbors and friends, and even the occasional priest and policeman who dropped by the house.

Matt Kozuba, who worked with his dad in the blood lab industry, in marketing and sales, soon joined the growing business. It expanded steadily from there, building a brand in Poland.
Wild thoughts about someday going to the States turned closer to reality in 2008, and again in 2010, when the company won awards from the Beverage Testing Institute in Chicago.

The Kozubas looked at Miami first, and found some buildings they liked. But the brothers looked into the west coast of Florida, too, says Jacob Kozuba, mostly because they sought a better place to raise their young children. Tampa had a few possibilities, but through a friend of a friend they connected with Stone, the St. Petersburg landlord.

After the lease, more challenges awaited the Kozubas. While some relaxed zoning rules helped, the company had an extensive buildout. It also had to find the right team of contractors who understood and could execute the mission. It was a grueling process. Quips Jacob Kozuba: “People say Florida happened to us.”

While Matt Kozuba says obtaining final permits was a bit of a “nightmare,” he's glad it was nothing like his native country. “Poland is regressive,” he says. “They wait for you to make a mistake, then they pounce on you.”

Stone says Kozuba & Sons now fits nicely with the trends in the Warehouse Arts District. And not being a startup was a bonus in terms of tenant risk. “They have an established product,” Stone says. “They fit what's in the building more than just making a widget.”

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