‘The implementation of circularity in an industry as traditional as spirits is incredibly complex’ – EcoSpirits co-founder & CEO Paul Gabie speaks to Global Drinks Intel

It sounds like geography was the kernel for your idea.

Absolutely. One of our oldest partners on the distribution side is Plantation Rum (renamed Planteray by owner Maison Ferrand last year), which is aged in France. We considered whether a competitively-priced product for its quality like Plantation could be more affordable in markets such as Hong Kong and Singapore if there was a way to reduce the packaging costs and the logistics at such long distances. What if you could ship in bulk and then have reusable packaging at a local level?

At first, we thought this was a simple idea. We spent the first couple of months looking at the US and European markets to see what was out there in reusable packaging. We quickly realised there was nothing for premium spirits, so we set up an incubation project to trial something here in Singapore.

The idea of a reusable glass packaging system was a logical next step, and that’s what we embarked on with EcoSpirits.

How did the conversations go with premium spirits brand owners, for whom a heavy glass bottle is a traditional premium sales cue?

Having been involved in brand building as distributors, we realised from the very beginning there were two conditions precedent to a successful technology that could overcome resistance from brand owners. One was, we looked at many materials for the reusable packaging, we settled on glass, which has such a long tradition in spirits because of the fundamental trust the industry has in glass for having the highest performance in terms of flavour preservation.

We had to produce a system that guarantees the spirit tastes just as it would if it was in a glass bottle.

The second is the retention of the consumer experience – the bottle carries the story of the brand and often carries decades of investment in that story. Our system was designed to cause as little disruption as possible to the brand experience.

We’re in more than 3,000 outlets around the world now, and the consumer doesn’t even know that EcoSpirits is operating; they’re seeing the bottle poured in front of them, what they don’t know is the whole supply chain between distillery and bar has been reshaped by the EcoSpirits technology. For the vast majority of time, our technology is invisible to the consumer. That’s been essential in overcoming any resistance, because we can help brand owners to achieve their sustainability goals without putting the consumer experience at risk.

How did you source funding for launch?

At the start, EcoSpirits was an incubation project within Proof & Co, so we were able to self-fund the first year of development and trial. We honestly never imagined EcoSpirits would get such a reception. We were trying to solve a problem that we had within spirits distribution.

Within six months, we realised we had a much bigger idea, so after a year we decided that rather than keep it within the larger company, we should spin it out as a specific packaging technology company. We’ve got a good network in Singapore, where one of the leading technology venture capital firms, Wavemaker Partners, jumped at the opportunity to be EcoSpirits’ capital partner. They came on board in 2020 with a small financing round of about US$1.5m that got us started. They helped us not only with capital, but also with expertise.

As EcoSpirits began to get this surprisingly warm reception, we were able to run a bigger series A funding round in 2023 led by Closed Loop Partners, an institutional investor in New York. We also opened up the investment opportunity to some of our customer partners that were making longer-term commercial commitments to deploy and scale the technology. Pernod Ricard was the first, through its venture capital division, Convivialité Ventures.

In November, Rémy Contreau launched a new venture capital fund, RC Ventures, and we were the launch investment for that vehicle. Both companies have made small but meaningful investments in EcoSpirits as we’ve grown. We’ll keep that option open to other customers that are betting on the technology to drive their sustainability goals going forward.

I won’t say it’s been easy; fundraising is never as simple as it may seem, and it’s become more difficult in the last year or two as technology markets have endured turbulent times. In hindsight, we wouldn’t have had anything close to the momentum or the fundraising success we’ve had if we were trying to do this ten years ago. I don’t think the industry would have been ready for it.

What mistakes do you feel you’ve made along the way?

I get this question a lot! The idea of reusable packaging at a superficial level sounds brilliantly simple, and that’s part of why people latch onto it. There’s almost no one I ever meet who doesn’t understand how it works.

The implementation and execution of circularity in an industry as global and as traditional as the spirits industry, however, is incredibly complex. When we started this journey, I was overly focused on having to come up with a nice-looking packaging solution. What we didn’t realise is we essentially had to reshape every part of the value chain, all the way back to the distillery; how spirits are packaged at source, how they’re transported, how they’re costed and imported, how they’re stored and then how they’re processed locally.

We’ve had to set up a network of local processing centres, for example.

Instead of just sending a bottle out and knowing it’ll end up in a landfill or recycling, we have permanent assets that have to be stewarded and tracked for up to 15 years. That’s led to a whole new software layer.

We work with Diageo, who have a lot of experience of this with Guinness – we’ve learned a lot together about how to apply that to spirits. Some of our other customers haven’t had experience with a permanent reusable asset in their global accounting system and supply chain, so you can imagine the complexity we have to work through. Just the changes to the ERP systems in global companies can take six months.

The biggest challenge we’ve faced – and continue to face –  is the level of complexity involved in such a revolutionary change to the supply chain.

How have you navigated the balancing act of having competing brand owners as co-investors?

That’s the crux of it. Our mission is to eliminate single-use glass in the spirits industry. That’s an ambitious, multi-decade mission that we will not be the only catalyst for.

To become universally successful, we can’t end up working with just one player and be a captive technology or proprietary format. Look at the beer keg; no one beer company uses it to the advantage or disadvantage of others.

From the very beginning, we set a principle of EcoSpirits as an open-platform approach. We would not give priority or exclusivity to any customer in return for any commercial advantage. There is no place that EcoSpirits is in use that a brand partner would not be allowed to use it because some other major player is doing so.

To their credit, that principle was accepted by our major customers early on. They realised that this would be of great benefit to the industry and the planet overall and not, like some innovations, to keep closed and captive.

The investments give them the visibility on how it develops, as well as a reassurance that it won’t be purchased from under them and that we’ll be around for a while. Our goal is to remain an independent company and become something that’s a standard format.

How is EcoSpirits performing at the moment?

Business right now is turbulent for all of our customers, but the level of commitment to continue to deploy and grow this technology has been unwavering so far. It’s a tough time in the industry right now. We’re in one of those down cycles, certainly. There are a lot of shifts underway that we’re all still trying to figure out in consumption patterns and generational shifts in drinking. Politics is also shifting globally.

I’ve been reassured by the level of commitment our customers have maintained to continue their progress towards their 2030 goals (as part of the United Nations’ ‘2030 Agenda for Sustainable Development’). Despite the difficult capital and earnings environment currently, we’ve not had a single partner cancel or put on hold its EcoSpirits projects.

What’s the best piece of advice you’ve received?

We have an independent board member who’s a technology guru, and his warning was that the complexity of being a small, external innovation partner to big global companies – and the time it takes to introduce innovation at this level – should never be underestimated. And I think that’s been true.

We’ve ended up with very deep partnerships with our customers. But I don’t think for them, or for us, it’s been as easy or fast as we might have expected at the outset. I wish I’d known that at the very beginning.