Ken Lewis is regarded as a master marketer who helped to reshape the liquor retailing business and reinvented himself along the way. His creation, The Party Source megastore, is the largest outlet of its kind in the multi-state area known as “greater Cincinnati,” and his most recent venture, New Riff Distilling, shines like a bright new star in Kentucky’s bourbon firmament.
Paul: Before you became a local lord of liquor, you were into something totally different; you were a teacher?
Ken: I still am at heart. I LOVE teaching. It’s the best part of starting this new business. Building the distillery is one big teaching experience–mentoring and sharing what I have learned about entrepreneurship and what it takes.
P: You’ve had 30 years of practical retail experience. Who was your teacher?
K: I badgered my father to let me work in his department store. I learned everything in retail. Later, my father set up my uncle in a small liquor store, but he ruined it. So my father asked if I wanted to take it over. I never looked back.
P: When you say “inner city” and “liquor store” –that just sounds like an invitation for trouble.
K: Unlike other liquor store owners, I came to know my customers. For a kid from the suburbs who went to top universities (the University of Michigan and Harvard) I can honestly say those years were the best PhD in life I could ever have hoped for. I learned about the “street” and how to work with and respect people. I became part of the community. I think, perhaps a bit naively, that is why I was never robbed or attacked– I cared about the community I was doing business in. I was there for seven years. Then, as soon as the fixed price laws changed,
I opened Kentucky’s first discount liquor store in an old A&P.
P: Other than sheer size, how was your big new store different from what you had been running?
K: I used what principles I’d learned at my father’s store: buying in quantity, selling at a discount, providing tremendous variety…the principles of operating a successful business and life don’t change–but the technology and operations, of course, change dramatically over the years.
P: And how did you alter the landscape in terms of the consumer experience?
K: For Kentucky, I brought alcoholic beverage retailing “into the light” by creating The Party Source; attractive, friendly stores that women would like to shop in. I got credit cards and Sunday sales legalized. It was lifestyle retailing for our industry.
Before, liquor retailing reflected the public’s ambiguity about alcohol–a bit dirty and an unseemly way to make a living. Our stores became bright, lovely places to shop for a party or a positive, “enjoy life” lifestyle.
P: Was it an overnight success story?
K: When I was just starting out with the first liquor outlet, the whole concept of discount liquor and big stores, self-service, etc. was new and little understood in Kentucky. I did everything myself–including data entry. I was so exhausted I made several pricing errors, accidentally selling a few items under cost. My competitors turned me in–the state ABC came to cite me and, totally by accident, a newspaper reporter was there when I was cited for selling below cost. I made the front page several days before Thanksgiving, and that lead to instant credibility and success.
P: How did discounting fit in with your general approach?
K: Women control the family budget and demand quality retailing. I was the first to copy high-end grocery style retailing for lifestyle and alcohol products.
P: What about that old dictum about what’s most important in real estate, “Location, location, location”…did that apply in your case?
K: Yes–at the time Ohio ran their own state stores (badly)–it was natural to locate right across the river in Kentucky with the first Party Source. Later, Ohio liberalized (liquor laws) but we were well established for selection, service, knowledge, pricing, sophisticated lifestyle retailing. If you are having a party–we are a one stop shop for alcohol, party goods and gourmet foods–we were the first to do so in our area. The Party Source is the biggest alcoholic beverage store in the U.S. (80,000 square feet with over 20,000 products).
P: And yet you exited The Party Source to start your latest venture, New Riff Distilling. How was that transition made?
K: I’d become something I didn’t like—a manager. I like retailing and being part of the action, not in an office hidden away with lots of problems. Due to the three-tier system in our industry, it was necessary for me to divest my retail business. So I sold (The Party Source) to get back to what I loved and was best at–I call it “jumping off a runaway capitalist train”–bigger for bigger sake–to what end: die rich? I re-established control over my life.
P: But you did it in an unusual way; it was your idea to have the employees own the store. What was that ––a “friendly takeover”?
K: We built the business together–certainly they should take it over and retain some control over their economic lives. They have done a great job of sustaining the business–they run it with the same values I did.
It costs more to sell to an ESOP (Employee Stock Ownership Plan) but, again, the bottom line is about a lot more than money. I want to do my small part to chip away at the raw income disparities in this country which threatens the ‘American Dream’. I’ve never doubted the decision to create an ESOP and sell to my employees.
P: So you left a highly successful business and, literally, walked right across a mutually shared parking lot to build the New Riff distillery…
K: To start a distillery at 64, most would say that is a foolish way to spend your time and fortune when I had it so easy with The Party Source. But I didn’t really realize how burned out I was after 38 years of retailing. A new challenge–a new riff in my life– has been a tonic. It gives me renewed purpose and meaning. Getting back to a start-up has been fun ––and scary.
P: What will you do at New Riff?
K: My job is to put together a phenomenal team, clarify their mission and give them the tools to get the job done, then get the hell out of the way. They run the distillery on a day-to-day basis. I don’t do much, but what I do is important: vision, big picture, finance, legal, politics, etc. I have promised to protect them from partners, venture capitalists, etc.–anything that would compromise our absolute drive to make great whiskey. So they make the great whiskey and I’m their cheerleader.
P: I don’t believe that it’s quite as simple as that. Running a distillery, even a small one, is a complicated business in a complex industry. Are you a bourbon authority?
K: I claim no expertise. I grew up in the 50’s and 60’s and that was a cocktail time of life, but my family and their friends liked alcohol without much interest in their provenance. Being a Kentucky native, I do think it is part of our culture, but given what a religious state Kentucky is, our culture is conflicted about celebrating bourbon.
P: “Celebrating” sounds more like The Party Source…
K: There are tastings and a cooking school inside The Party Source AND now we have a whole event center on two levels above the distillery.
P: Your website www.newriffidstilling.com says New Riff “wants to become one of the great small distilleries of the world.” Does that mean that there will be a limited line of products other than bourbon and rye?
K: We are involved with lots of interesting one-offs and product innovations. But, in our business, it takes four or five years to see what you have wrought! We are also working on some interesting collaborations where we will make bourbon for, say, a Spanish sherry company, and then ship it to them for secondary barreling in their sherry barrels.
P: So, in crafting New Riff, you’re learning and teaching as you go?
K: I particularly like mentoring and teaching, so I guess I will finish my career the way I started it—feels perfect to me!
For more information:
95 Riviera Drive
Bellevue, KY 41073