Five minutes with Mode seltzer founder

We speak with the local seltzer hero about how Mode came about, what he learned from his time in the US market, and why Australia has flavour to spare.Inside FMCG: Do you want to start off by talking me through Mode, and what it’s doing that’s a bit different in the Australian market?Michael Clifford: My background is in alcohol. I worked in London at SABMiller for about seven years, and then worked on the takeover by Anheuser-Busch InBev (ABI). Then I moved over to a business called Quintessential Brands, which in the UK is one of the biggest manufacturers of independent spirits – it does white labels for companies like Tesco and Sainsbury’s, as well as its own gin and whiskey brands. I spent Christmas [2019] in LA with my brother, and had come back to Australia just before the pandemic kicked off. I had always wanted to start a business, and while I was in the US, we saw Whiteclaw exploding and realised there really isn’t a market for seltzer in Australia. It seemed to me that we were importing US brands, or locally producing US brands, for the Australian market, which is still mostly the case.After spending a bit of time looking at the market and doing tastings and things like that, I felt like I could do better, that we have flavours in this country that are as good as, if not better, than something like a watermelon. This country has its own flavours and culture, we don’t need to import something like that from overseas to produce something that’s original and tastes great. The other thing is that there are a lot of root seltzers in the market. You can have a discussion around whether it produces the best taste, I don’t personally think it does, but there’s a larger elephant in the room related to that, which is the punishingly high excise that we have here in Australia. It’s not a cheap category for consumers in Australia, so I felt like breweries had been making the cheapest possible product and charging the highest possible price, and that there was room in the market to do something that looks very different from everyone else’s and is focused on taste rather than on the lowest CODB and the highest margin.You touched a bit there on how the seltzer market is more mature in the United States than it is here in Australia. What’s been happening in the market lately?So what happened in the US, and I can already see it happening here as well, is you had Whiteclaw released in the states, which was hugely popular, and then you had a lot of larger breweries jumping on board. Then, about two years ago, there was an article that came out about a Sam Adams earnings result, and their seltzer arm didn’t do so well.And what they saw was customers deciding they’re going to spend their money on something that is a bit different and isn’t just a brewed seltzer with a brand name on it. If you look at the IWSR data, there’s been a move toward premiumisation across most alcohol categories over the last 20 years. That’s reflected in what was happening in the United States. The market has probably moved on from mass-produced seltzers to something a little better. There’s clearly a move toward premium drinks, and you see that in Australia as well.I think people will want something different in due course, and what I’m trying to do [with Mode] is produce a product that hits that mark now. It took us a long time to get the recipes and taste right, but I think we’ve succeeded. It’s just a matter of selling it to everyone else now. I know you’ve really made it a focus to use Australian flavours – can you talk me through that? I feel like making another watermelon seltzer is solving a problem that no one has. How do you differentiate yourself in the alcohol market? I thought long and hard about how you would produce something that fits within the culture, and I thought the natural extension of that was focusing on local flavours – things like Tasmanian pepperberry, and Davidson plum. There’s starting to be a recognition that we have flavours in this country that no one else has, and seltzer starts with flavour. Part of what makes it such a good category is the potential for flavour. You can have a product that is much more fizzy, and doesn’t have a huge amount of flavour at the front end, but it can be really flavourful at the back. Or, you can have something that’s big in the mouth and really punchy.I think we were looking for a flavour-forward Seltzer. It’s also just a great opportunity to highlight some of Australia’s best tastes.