Six years after nearly losing his house, Steve Perez has transformed GBL International into a £60m-a-year success story. Mark Stretton reports.
Steve Perez says Vodka Kick (VK) and the string of other spirit-based brands in the drinks market should be lauded alongside real ale as a great British product.
He told Gordon Brown as much recently in front of 500 people when he scooped Entrepreneur of the Year at the CBI's Growing Business Awards in December. He had several things to say to our esteemed chancellor, who earlier last year decided to slap a 65 per cent hike on all spirit-based products, including VK. "Vodka Kick is a great British product that has created 100 jobs," says Steve, owner and managing director of GBL International. "The UK drinks industry is a great trend setter. Everyone looks to Britain for new products, designs and innovation and the chancellor has hit a great success story."
That success story applies as much to GBL as it does to the proliferation of the ready-to-drink (RTD) sector. The company has ridden the wave of a booming market, growing sales from a modest £226,000 in 1997 to more than £60m last year.
An entrepreneur from central casting, his is a classic tale that started from the back of a van and now exports to 35 countries and employs more than 100 people.
His skills for enterprise emerged at school, aged 15. He used to sell steak sandwiches to his classmates, cooking the meat over a Bunsen burner in the school lab. Steve's Spanish father, who died when the GBL boss was 19, was a restaurateur - one of the first people to bring foreign cuisine to Derbyshire - so Steve spent his childhood collecting glasses, peeling potatoes and washing dishes.
Steve left his first "proper job", working in sales with Tetley, when he was told he would never make an area manager without a degree.
During his Tetley tenure he had noticed the growing popularity of foreign bottled beers in pubs and clubs.
He set up the Global Beer Company in 1986, importing beers like Grolsch and Budweiser into Derbyshire pubs, persuading landlords that big hairy men did indeed want to drink from a bottle. He worked from the back of a £600 van, covering an area around Chesterfield. Steve enjoyed growth and success for a number of years but brewers cottoned on to the trend and started to by-pass him and approach the beer manufacturers directly.
Despite a shrinking customer base, Steve persevered but when the EU duty-free rules were relaxed in 1993, cheap booze flooded the UK. "We had a highly geared business using invoice discounting, we had a lot of bad debt and cash flow problems," he says. "Eventually the bank called in receivers."
He handed the keys of his BMW over to the bank. Steve had secured loans for the business using personal guarantees, which meant his home was also on the line.
Undeterred, he resolved to try again. "I made a decision never to build a brand on behalf of someone else again," he says. "When we started over, we said it would be our own product.
"I noticed people were mixing Red Bull and vodka," he says. "I went to flavour companies and said I wanted something like that." He also thought the fledgling RTD sector could use some competition. "We felt that companies like Bacardi were ripping off publicans. There was no reason why these type of drinks should be more expensive than beer but customers were often charged £6 more per case."
He launched GBL on a shoe-string, working out of a shed in Hasland, near Chesterfield. Steve recruited four people from his previous company who agreed to work for nothing until he could afford to pay them. People loved the product but like all small businesses, cash flow was a problem.
On one occasion, Steve thought he had enough money coming into his account to cover some cheques he had written to suppliers. "I got it wrong and went to visit my [bank] manager at Midland," he says. "I begged him but he was adamant that unless I deposited £5,000 before the end of that day he would return some of the cheques. It would have ruined me."
That afternoon Steve sold his car. The cheques were paid and he promptly closed the account and caught the bus to a local branch of the Royal Bank of Scotland. "I'm now their fastest growing business," he says. "Back then it was very stressful. Anyone who has had serious debt knows it's bloody awful - I was starting a business and trying to do a deal with the bank to stop it taking my house away."
Six years on, GBL ships 3.5 million bottles of VK each week. Steve plans to continue the company's rapid growth by concentrating new product launches away from spirit-based RTDs following the new tax laws.
The company's phenomenal success would seem to stem from making sweet-tasting alcoholic beverages designed not to taste alcoholic as well as intoxicating shots that will take consumers the other side of sober very quickly. Other products in the GBL locker include Fire & Ice liqueur shooters, VK Slammas and Corky's vodka shots.
Despite this GBL is not an evil empire built on the foundations of under age and anti-social drinking, says its founder. "VK is an adult drink," says Steve. "When we started GBL we recognised that people did not want another alcopop and what was needed was a serious adult brand."
Steve, 46, says under-18s are more likely to drink cheap cider and strong beer than VK. "Any drink attracts under age drinkers," he says. "The problem is the popular press do not understand the drinks market and have invented this awful phrase 'alcopop'.
"It's very easy for the government to blame manufacturers for underage drinking but the issue stems from culture. If young people were introduced to alcohol sensibly it would solve a lot of the problems." Steve's 15-year-old nephews are allowed to drink VK at home but only ever one or two bottles. "Alcohol is one of the great enjoyments of life - like food or music. The message should be let's drink sensibly, not, let's ban alcohol."
"I travel quite a bit," he says. "It seems the further north you go in Europe the more of a problem alcohol becomes. In England and Scandinavia, where there are draconian laws and high taxes you see a lot of outright drunkenness. In southern Europe, where there is a liberal approach, the attitude is much more sensible."
The GBL boss also says that RTDs are here to stay, and are not a passing fad. "People have been drinking mixed drinks like vodka and orange since the 1920s," he says. "It's like ready meals - unheard of 20 years ago but now commonplace. It's convenient and unlike a cocktail, people know how much alcohol they're drinking. This market is not going to go away."
On the back of that market, Steve owns 90 per cent of a £60m business, drives a Ferrari, lives in a handsome country pile and has more money than he'll ever need.
Cars are a particular passion. In addition to the Ferrari, he has started a classic sports car collection and has four Porsches. GBL sponsors a rally team that recently finished 34th in the Network Q Rally of Great Britain - with Steve behind the wheel - and last weekend he was to be found driving sports cars on frozen lakes in Norway.
The GBL boss ensures his staff have fun too and recently took all 100 away to Spain for three days. "That's the beauty of being a private company," he says.
Steve says that Vodka Kick is the RTD for the on-trade. "I think a lot of the large drinks companies rip off on-trade retailers," he says. "Stella is marketed as reassuringly expensive yet it's reassuringly cheap in the supermarkets.
"That's why we aren't really in the supermarkets. We talk to them all the time but we are not prepared to sell to them at the prices they want to pay. Why should we sell cheaper to major supermarket chains than we do to on-trade retailers and wholesalers?" Steve says he loves to be a thorn in the big boys' side - be it expensive rivals