Rivulet-Artisan-Pecan-LiqueurLouisville has a new luxury spirits company, yet another endorsement of the city’s evolving and expanding reputation as a distilling center.

But the story of Rivulet Artisan Pecan Liqueur is as multi-layered and complex as its taste profile. Which its creator, retired 3M corporate attorney James Marshall, says is formulated to appeal to at least half of the world’s spirits consumers.

“In the world of high tech, it would be called a ‘category disrupter,'” Marshall said, with spirits industry analysts already giving Rivulet high marks.

The small-batch, handcrafted Rivulet debuted today with a theatrical flourish at Stock Yards Bank & Trust’s Main Street headquarters, with a security guard in a Brinks truck bringing in the secret recipe, which Marshall locked away in the bank’s giant vault.

Mayor Greg Fischer was there, pronouncing Rivulet as fitting neatly into his administration’s econ-dev focus on building the food and beverage sector, a sector that already has global spirits giant Brown-Forman.

The question is, how does this entrepreneurial saga – creating a new liqueur brand from scratch, raising the capital, then taking it to market – finish?

James Marshall opens the metal briefcase to retrieve the secret Rivulet forumla.
James Marshall opens the metal briefcase to retrieve the secret Rivulet forumla.

Even Marshall said he doesn’t know, but vows to take it as far as his skill sets will take him … potentially a long, long way. Sophisticated startups start with sophisticated business plans, Marshall said, a plan that includes an exit. If Rivulet is successful, Rivulet’s destiny could be either as an acquiring company for other brands, or as an acquisition for a competitor looking to round out its portfolio.

Rivulet’s story is far different from most Louisville startups. For starters, Marshall is smarter than the average bear, having spent 20 years as a corporate attorney for 3m Corp., the Minneapolis-based consumer goods and industrial products conglomerate, ultimately becoming manager of the global firm’s legal department.

Mayor Greg Fischer was on hand to pronounce Rivulet exactly the kind of startup Louisville hopes to attract.
Mayor Greg Fischer was on hand to pronounce Rivulet exactly the kind of startup Louisville hopes to attract.

He has several other degrees, including an MBA. Even the liqueur’s name is brainiac esoteric, referring to Thomas Jefferson giving George Washington pecan trees, which the first president planted along a “little river,” or – in French – a rivulet.

Marshall didn’t create the liqueur on a whim. He developed the Rivulet concept for more than a year, then spent another year traveling the world, doing market research, including analyzing which cities have the highest concentration of resources — distillation facilities to cooperages – for such a venture. Candidates included Seattle, Denver, Austin and Apple Valley, Calif., where he lived at the time.

For a while, Auckland, New Zealand, looked like the place. In Auckland, two Russians had set up a distillery they were using to launder money. They got caught, “but they had a great facility,” Marshall said.

Then last year, he moved back from California to his hometown of Louisville, where Marshall hooked up with spirits formulation pioneers Dave Dafoe and Marty Snyder and their product development team at the Distilled Spirits Epicenter at Seventh and York streets, south of Rivulet offices at Seventh and Main streets.

“No other city I looked at had this resource,” Marshall said. “It was this resource that sealed the deal for me to relocate to Louisville.”

With Dafoe and Co., Marshall took Rivulet from concept to market in one year, with National Distributing Co. as his distributor. Currently, the 60-proof liqueur is available only in Kentucky, but with plans to expand into neighboring states. It retails for $35 per 1.75 ml bottle.

In his opening remarks today, Marshall said Louisville is also the only place he could have spent time with master distillers such as Willie Pratt at Michter’s and gotten historical input from Michael Veach at the Filson Historical Society. “I promised myself I wouldn’t make the same mistakes others have,” Marshall said, “and he had the historical perspective on what makes success in the spirits industry.”

(True story: Marshall has been to several Insiders Meetups, but has never divulged a word about Rivulet, saying only, “I might have a story for you…”)

Okay, let’s get down to business: The money.

Marshall declined to say how much he has invested, or give details about investors. Though he promised to sit down later for a more in-depth interview.

We’re guessing it’s an interesting capital stack since Rivulet has to be one of the few startups to qualify for senior secured debt from Stockyards Bank & Trust Co., arguably Louisville’s most, well, cautious lender. Stockyards President Ja Hillebrand said bank client Paul Paletti, a Louisville tax and M&A attorney at Sturm, Paletti & Wilson and co-owner of Dumante pistachio liqueur, brought Marshall and his project to the bank.

Any startup is risky, of course, and in an interview, Marshall said, his own bottling supplier only gave him a 25-percent chance of success.

But part of Marshall’s strategy has been to take Rivulet to prestigious spirits competitions, where the liqueur has done stunningly well. “I think (the bottler’s) raised my chances of success up to 90 percent,” Marshall said, laughing.

He conceded that with a liqueur, Rivulet is swimming against a tide of bourbon. But Marshall said his research shows that tide may be receding a bit, with consumers returning to the once-popular category.

In his part of the launch event, Hillebrand said he told Marshall, “When you need more capital, call me, email me, tweet to me … whatever. We have lots of money to lend.” Hillebrand added that once Rivulet is successful, come back “and I introduce you to our wealth management people.”

The details:

• The base spirits for Rivulet is California brandy aged in bourbon barrels, rather than neutral spirits, with a pecan distillate added. It is not a flavored liqueur.

• Rivulet awards include a Double Gold Medal from the San Francisco World Spirits Competition.

• Marshall said he chose to develop a pecan-based product because 95 percent of pecans are grown in the United States.

• Oohology, based in Louisville, programmed Rivulet’s website. Bisig Impact Group created the collateral and marketing materials. Ted Wathen and Bob Hower at Quadrant did the photography.

• Former Brown-Forman executive Scott Reid provided brand development and marketing expertise including copy for the website.

• Rivulet is owned by C88 Holdings LLC, with Marshall as the managing director. The liqueur is made at the Distilled Spirits Epicenter and aged in Bardstown.

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Terry Boyd
Terry Boyd has seven years experience as a business/finance journalist, and eight years a military reporter with European Stars and Stripes. As a banking and finance reporter at Business First, Boyd dealt directly with the most influential executives and financiers in Louisville.

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