Blue Run Spirits is just shy of two years old, yet each new release of its bourbon or rye whiskey sells out within seconds. Fans scour the shelves at their local liquor stores hunting for Blue Run and celebrate their finds on social media. The judges of the industry’s most influential spirits competitions are taking notice—Blue Run scored two Best in Category and multiple gold medal wins at the prestigious San Francisco World Spirits Competition and was recognized by the Robb Report as one of the best bourbons of the century.
How does a young whiskey company earn this level of devotion and respect? A blend of ground-breaking strategic marketing, good old-fashioned customer service, exceptional product, and novel financing is propelling Blue Run Spirits in its fast start. The company’s founders—led by CEO Mike Montgomery—draw on experience working at marketing-savvy organizations and have provided the company with a keen understanding of how to engage and mobilize modern consumers. The company tapped 50+ year bourbon industry veteran and Blue Run liquid advisor Jim Rutledge to bring a level of whiskey-making experience and craftsmanship rarely available to a company so young.
That combination of expert branding, marketing, distilling, and blending shows in every facet of the company, symbolized best by the unique butterfly medallion on the bottle that demonstrates Blue Run’s metamorphosis of the centuries-old whiskey industry.
Starting small, aiming high
From the beginning, the founders wanted to create something that didn’t exist in the whiskey world—a brand that satisfies the most experienced palates and speaks to younger, more diverse enthusiasts—a group whose loyalty no bourbon brand had yet secured.
Kentucky Bourbon Hall of Famer Rutledge went to work selecting only the best aged barrels to use in blending Blue Run’s initial whiskey release. While doing so, the marketing team prepared for launch. But as they did, COVID closed the bars, restaurants, and entertainment venues that are traditionally considered vital for a successful spirits brand rollout.
That called for a new strategy that fit the budget for a startup, while assuring the success of Blue Run’s first release, providing cash flow for subsequent releases, and attracting other capital as the company grew. “Other whiskey producers had stopped releasing products during the pandemic, which created a vacuum,” explains Montgomery. “People were looking for products online, and whiskey connoisseurs were missing the treasure hunt of going to a retail outlet, so we created one for them online.”
Blue Run’s viral marketing approach set up limited-quantity batches of each release and teased them online before each drop to generate buzz with whiskey influencers and potential buyers. Montgomery adds, “Clever online tactics during COVID proved to be our catapult.”
Funding barrels for fast-paced growth
Blue Run Spirits generated robust demand and earned the opportunity to grow at a pace that’s rare in the whiskey industry. But without funding to support that kind of rapid expansion, there was no way to fulfill the market’s demands. Like many startups, the company met initial funding needs through equity rounds and a bit of “friends and family” debt, plus some debt solutions that were critical, costly, and unsustainable.
Contract distilling and buying barrels of whiskey for blending from third parties—rather than producing the whiskey at a company-owned distillery, which Blue Run doesn’t currently have—is viewed by some as a risky business model since it’s difficult to predict the availability and price of future barrels. But Cody Matthews, Vice President at Truist, and Joe Goode, Truist Beverage Industry Manager, had developed an approach to funding barrel purchases and providing additional financing as the product aged and the value of the barrels grew.
Truist was looking for a leading company to pilot its barrel financing program and quickly identified Blue Run as the type of standout company they wanted to work with. Goode says, “You could tell that there was a pedigree of thoughtfulness and strategy that went into everything at Blue Run—the product, the brand, and the company.”
At their first meeting, Truist introduced Blue Run to an innovative funding program that could provide the company with the funds it needed to fuel its expansion without expensive equity capital or pricey private debt solutions. Blue Run needed funds for the initial purchase of barrels on the open market or for those produced through contract distilling. And as their whiskey ages and rises in value, Blue Run’s barrels can be independently appraised, allowing the company to access more capital by tapping into the increase in barrel asset value.
Montgomery recognized the potential of Truist’s unique barrel financing program for Blue Run. “It’s really a holistic program that will help Blue Run grow across the board. It provides flexibility and it increases opportunity,” says Montgomery. By adding funding for the company to continue scaling and fulfill its burgeoning demand, “It will allow us to grow at a rate and pace which we did not believe was possible,” he adds.
Blue Run sees access to funding provided by the Truist barrel financing program as instrumental in helping the company realize its aggressive forecasts. “Because of this relationship, we’re going to have a much easier time meeting and perhaps exceeding our growth targets. We're looking at exponential annual growth. And the Truist barrel funding program is going to help us get there.”