Belmont, CA

Old World Spirits (OWS) is fast becoming an established distillery in an area best known for its high-tech startups.  In the middle of Silicon Valley, its founder, Davorin Kuchan, has quietly built a company based on ancient techniques that bring new versions of old-world flavors.  As befitting its surroundings, this distillery is operating with ingenuity that can rival the leading edge tech firms surrounding its tiny space. 

Davorin Kuchan exists in two worlds.  As founder and head distiller of Old World Spirits, he is carrying on a multi-generation legacy of producing small-batch, locally sourced spirits.  When he isn’t firing up his still and producing old world favorites like brandies or his barrel finished gin, Mr. Kuchan is the CEO of a high-tech data analytics firm.   One would think that a tech CEO in The Valley should be more concerned with investors and P/E ratios and less about specific gravity and yeast propagation.  However, Davorin has a very simple reason for his distillery: family.

As Davorin describes it, making spirits in the San Francisco Bay Area keeps him connected to the family he left when he moved to California from Croatia in the mid-1980s.  He has fond childhood memories of running through his family’s farm just north of Zagreb, picking grapes and peaches, and (as he grew older) working the 200 year-old slivovitz copper pot still.  He recalls the joy of cleaning the still, making wine, and learning the intricacies of distilling and barrel aging from family and friends.

Speaking with Davorin about the business of Old World Spirits, sentimentality gives way to market insight and knowledge that his tech career has given him.  As much as being a distiller is about a connection to his heritage, Davorin is very aware that running a modern spirits company in the competitive Bay Area requires much more than fond memories.  To him, succeeding in the spirits business means recognizing there are two forces that can slow OWS's growth: consumer demand and government regulations.

Starting a consumer product brand sounds much less romantic than the idea of crafting fine spirits and working in a distillery, it sounds like something that marketers work with and not spirit makers.  However, the success of Old World Spirits has only come about because Davorin spent time studying the market and figuring out how customers respond to products and packaging.  It also meant a lot of time visiting stores and restaurants, building early buzz and finding key distributors who would support the brand.  He is still the brand's best ambassador, but finding the right market fit for his products has turned customers into advocates.

Government regulations have defined the growth of Old World Spirits in several ways.  First, a distillery is considered a high-hazard operation, forcing OWS into an industrial space.  The only problem is that, when your neighbors are the largest tech titans in the world, industrial space is precious and all real estate is priced like every tenant is a publicly traded company.  Tight quarters certainly describe the operating space at OWS.  More than rent, the level of environmental and public safety regulations governing a distillery kept Davorin up at night reading public codes and regulations.  As he says, the local governments around Silicon Valley are very knowledgeable of commercial real estate zoning and what it takes to bring technology infrastructure into a new development.  However, a distillery in the area's midst was new and that meant educating everyone.  Davorin is proud to say that he did not hire a consultant to help him through all of these hurdles.  He researched the questions from the city so that he would know how tightly regulated his new business was to become.  

Expensive real estate, difficult zoning issues, and tight environmental regulations were no surprise to Davorin as he started OWS, they served only to slow down his distillery’s inevitable start.  One regulation, though, continues to stymie his growth (and that of many small California distilleries): the inability to sell bottles from his tasting room.   In California, a distillery must sell through a licensed distributor, whether it be for its first bottle or thousandth case.  For OWS, that meant getting people into the distillery, bringing them to their tasting room, having customers fall in love with their product, and then leaving empty handed.  If a new customer was created by the tasting, they would have to visit a separate store to purchase an OWS product.  This makes creating a lifelong customer even more difficult. It also means great competition to fight for a distributor’s attention, both to be picked up and to be sold to accounts.

Business concerns and governmental problems can describe many industries, however few can transport a customer to a land thousands of miles away like distilling.  Tasting OWS’s products highlights the tradition that Davorin is preserving and also the future he is building.  Like many craft distilleries, OWS creates exceptional gins.  The “Blade” line of gins include a clear, fruity gin and a barrel aged version called “Rusty Blade,” that really highlights the oak.  OWS has also begun releasing an organic rye whiskey made from North Dakota golden run rye.  OWS’s brandies and eau de vies really put the Old World into a consumer’s glass.  Using his grandmother’s recipe, Davorin makes a black walnut liqueur, using Zinfandel grapes and locally sourced walnuts.  He also makes an absinthe that is different from the French style currently dominating the category.  According to Davorin, Croatians have a long history with wormwood (absinthe’s key ingredient), having used it in traditional liqueurs.  OWS is trying to honor that traditional style, making two kinds of absinthes.  New styles of gin and old style liqueurs highlight the dual personalities of OWS's founder.

Whiskeys from North Dakota grains made by an immigrant from Croatia.  New World gins and Old World liqueurs. Unique dualities describe the business that Davorin Kuchan has created at Old World Spirits.  He’s built a brand using lessons learned from high tech industries to promote products that honor three generations of farm distilling.  What else could be expected from someone as comfortable in a Valley boardroom as he is at a farm table just north of Zagreb?

For more information on Old World Spirits visit its website at http://oldworldspirits.com