1,000 Entrepreneurs: Merrilee Kick on Putting the Buzz in Cocktails and Serving Up Millions of Drinks Worldwide

Our sixth profile covers the founder of Buzzballz and Southern Champion

Dec 30, 2019

In 2010, Merrilee Kick founded Buzzballz with her MBA project. Since then she has seen sales in 45 states and 21 countries around the world. Last year alone, the company sold 1.2 million cases in the U.S. and even manufactures its own packaging.

Buzzballz, the ready-to-go cocktail, is not the only venture Kick is involved in. Alongside the single-serve cocktails, she has also started Southern Champion. Here they produce gin, bourbon, rum and vodka. This combination makes Kick the only woman in the U.S. to own and run a winery and distillery.

Thanks to these two ventures, Kick has taken the business from a one-woman operation to employing 100 employees in Dallas alone. They produced 30 million plastic bottles for themselves and partners in the last year and brought in $50 million in revenue.

Before the buzz

Prior to Buzzballz, Kick, the mother of two boys, found herself working around the world at a multitude of jobs. Her career path initially started in the field of computer science. Working at Electronic Data Systems, she would meet her husband of 33 years. The couple would begin their journey around the world in South Africa.

Kick found herself transitioning to the film and television industry, doing commercials and acting, before they would eventually move to Stockholm. After Stockholm, Kick would make her way back to Dallas and find work as a newscaster for CBS radio. Coming full circle, Kick recalled her childhood on a farm in Montana. “And went bankrupt when I was a child. So I think part of that is one of my reasons for wanting to be an entrepreneur and being very independent. Very much a survivalist,” Kick said.

Eventually she would become a teacher and found herself struggling to connect with her husband after being apart for so long. In a tough situation and seeking a way to escape a lifetime in an apartment, Kick took the school up on getting another degree. During her MBA program, she found herself sitting next to the pool grading papers and was struck by the idea for a small disposable cocktail that would be at home next to a pool, but would not make the drinker feel full and would give a good buzz. The idea for Buzzballz was born.

Starting a business

Kick started the journey to starting her business and found herself in the deep end. She had no money, no collateral, no expertise and no network to lean on. However, there was no going back. In her words, failing “would be like death.” She knew that she was on the right path and that she had to find a way to make things work and support her sons. A career change in your mid-40's is not an option for most, and many called Kick crazy.

Secretly on the weekends Kick would find herself in a warehouse, one funded entirely on the $3,000 a month she was making as a teacher, testing potential products. The warehouse was a necessary expense as it is required to get permits for alcohol manufacturing. On top of the rent, Kick was required to have insurance for the warehouse, furthering her expenses.

Waiting for her permits, she began to seek out bank loans to get the business off the ground. However, with nothing to offer up, she was denied by every bank she applied to. Unfazed, she sought out potential distributors to give her support for her product. A constant stream of cold calls would eventually land her a trial run in Dallas with a distributor. This was the break she would need. With the agreement of the distributor, she was able to secure a Small Business Administration Loan for $178,000. She had to use her car, home and even cows from her parents’ farm as collateral. The bank also required her to get a life insurance policy for the same amount of the loan.

With a “first chance and check,” Kick was able to seek out both equipment and supplies to make her idea a reality. It would still take nine months for her to acquire permits to sell her product. Alongside the wait for permits, Kick had to find a way to make the bottles to put her drinks in. As it was impossible to supply the bottle manufacturing herself, she sought out help from Alibaba (BABA, Financial) in China and hired people off of Craigslist.

During this process, Kick still held her job as a teacher. She would work until around 1 p.m. at the school, eat lunch on the way to the warehouse and then work the warehouse until 7 p.m. before heading home to feed her boys. Her nights would be spent on Skype talking with her Chinese manufacturers. The end of the 2011 school year saw both jobs become too much to handle and she transitioned to working Buzzballz full-time. In the first year and a half of business, Kick had also paid off the loan she had taken.

Where does the booze come from?

2011 also brought Kick’s venture to profitability. However, at this time all of the bottles for Buzzballz were still being produced overseas. Come 2012, everything would be brought stateside. The company now produces everything in house with a fleet of custom manufactured machinery.

The company's current operations are housed in 300,000 square feet of warehouse space that accommodates their bottling line alongside pot stills for infusion and smaller batch spirits. While Kick distills her own spirits, she explained that for producing Buzzballz, they outsource ethanol:

“Even Tito’s, big companies, unless you own a farm and are making corn, you are probably not making your own ethanol because it is too expensive. You gotta have these giant grain silos and giant ethanol tanks. The people that make grain neutral spirits have giant silos and it's like a refinery almost. What happens for Tito’s and for me and almost everybody is a couple of big suppliers will make the booze in bulk and you bring it in in a tanker truck or railcar and bring it in and put it in your tanks,” said Kick.

She continued to explain that this is where the fun part of the process begins. The team takes the neutral spirit and continues to refine it to create the exact taste that they would like. For Buzzballz, they filter it five more times, on top of the eight distillations it has already gone through. Then the team makes it into the fun flavors Buzzballz is known for. They start around 4 a.m. each morning. The prep team adds the sugar and juice to the mixes and begin the infusion and distilling processes. From there, things kick into high-gear and the plant uses its high speed lines to fill 1,200 Buzzballz each minute.

Moments of misfortune

As with any venture, there are obstacles to be overcome. Initially the Buzzballz were bottled at both 15% and 20% alcohol by volume. However, every state has different laws regarding what can be sold and manufactured. When Buzzballz found a partnership with Spirit Airlines (SAVE, Financial), the two different percentages caused major issues. As Spirit stops in many different states to refuel, they were placed in a difficult position carrying the Buzzballz as the 20% alcohol by volume product was not legal everywhere. Kick took the path of least resistance and simply eliminated the higher percentage product to maintain the partnership as well as simplifying the product line.

Eliminating the product was a simple fix for Kick. However, she recalled instances of hiring mistakes that made daily production difficult. Employees getting drunk on the job and sleeping under desks were a laughing matter for Kick. It would be a truck driver that would cause one of her bigger headaches in the last 10 years of business. The problem at hand was that the driver was leaving keys in the truck at the end of his shift:

“We finally fired him after disciplining him and about six months later, I remember being in a meeting and my plant manager came in and he said, ‘We think that some of the trucks are stolen.’ We looked on the cameras and saw some guy in a hoodie coming out to the cars. Well what had happened was this driver, from way back when, has been ‘Enterprise rental car-ing’ all of our vehicles and had copies of all the keys made. So while we were closed at night or on the weekends, he was renting out our trucks.”

In the words of Kick, the problem was “not so fun” to fix. In the grand scheme of things, it had a simple solution. The most egregious and expensive problem she would face would come from another hiring mistake that Kick recalled with a grimace. The man in question was a “very smart guy,” as stated by Kick, and was an entrepreneur like herself, having made his own vodka before selling it. She sought him out and brought him onto the team as he could play a strong role within the company.

He joined the team after some convincing from Kick and she noticed an odd occurrence of him bringing a second computer to work even though she had provided him with one. As he had mentioned some work he was doing with Raytheon (RTN), Kick dismissed it as a firewalled computer that he had to keep for his other work. After about six months with the company, the man asked if he could be an owner. With some deliberation with her sons, Kick decided to allow the man to work his way into the position and eventually become a partial owner. A week later the man quit, claiming he wanted to spend time with his young children.

Dismayed, Kick went on running her business. Three months later, she saw an article in the paper where the man had joined forces with another company and was seemingly making Buzzballz for them. Working for her competition, the ex-employee had used his secondary computer to copy all of her intellectual property and bring it to her direct competitors. Needless to say, Kick took legal recourse and sued the company. They would eventually win and she would create a bourbon inspired by the man, cleverly named Crooked Fox.

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An early breakthrough leads to success

With struggles came success for Kick. The one moment that really stood out for her came early on. Initially, Kick was cold calling distributors and googling names to find potential contacts for additional sales. After asking one of her contacts for help expanding, he asked if she was attending the Wine and Spirits Wholesalers of America Tradeshow. Having no idea what he was talking about, Kick quickly did her research and secured the final booth at the tradeshow. She packed up her car “Beverly hillbillies” style and drove across the country with her son.

During the tradeshow, there is a competition where brands can submit their creations. Kick entered her Tequila Rita flavor to be taste tested by a panel of judges. Every one of the 50 judges awarded the drink double gold, the highest valuation of the contest, and she won the top prize and a spot in the trophy case at Ceasar’s Palace. With a smile on her face, she sent pictures to her 15 employees at the time, yet the success was not over.

Alongside the trophy, Kick gained 15 new states for distribution during the two-day tradeshow. This vastly expanded her clientele and she felt for the first time that they were truly going to make it. Since then, the company has almost continuously doubled its profits over the years. In this last year alone, her 10th year in business, the company saw revenue grow 56%.

While Kick has forged her way to success through hard work and solid marketing, she also has a leg up on her competition. First and foremost, her drinks are real cocktails. In every one of the Buzzballz, there is tequila, vodka and rum. In comparison, the majority of her competition is selling what is considered a malt-based beverage. In other words, it is a flavored beer according to Kick. Even the hard seltzers that have become increasingly popular in the last several years is using this type of process.

For the unaware consumer, they are caught thinking they are drinking a mixed cocktail in some fashion, when in reality it is not. The competition comes in that beer is much cheaper to produce than liquor, therefore the drinks can be sold at cheaper prices. However, a much more obvious difference comes in the alcohol percentage of the Buzzballz. As mentioned previously, the Buzzballz clock in at a whopping 15% alcohol by volume. The entirety of Kick’s competitors come in below 10% and are at 5% on average. To go even one step further, the Buzzballz are all gluten-free and kosher, further appealing to those who have been left out of the drink market.

Wide open doors

Looking to the future, Kick is excited to reach out globally to expand sales of the product. Currently, the company's international distribution only accounts for 1% of total sales. While they have “small campfires” around the world, Kick is expecting things to take off in 2020. Alongside international sales, Kick has begun working with companies to create private labels and packaging for its products.

She hopes that she can work with these companies to show the benefits of using plastics and recycling properly. Currently, the issue is that waste management does not know how to handle the majority of the plastic that they receive. Kick hopes that by working with these companies, she will be able to create a more sustainable future for the beverage industry.

Locally, the company has been doing its own expansion, having purchased the adjoining warehouse to its facilities. This has allowed the company to install a new high-speed bottling line that it is currently running tests on. To go along with this, it has started a building project to create a new mezzanine and bar within its facilities. This will house both parties and entertainment and Kick hopes to be able to start hosting tours of the facilities.

While Kick has ideas of what is feasible for the future, she remains hesitant to set any expectations. However, she does foresee that the company will likely sell around 1.7 million cases in the U.S., up 500,000 from the current year, and that future production will likely rise. She said:

“Anything can happen. You know maybe we come up with a barbeque sauce and completely switch and do something different. Being a beverage plant and having the ability to pasteurize and high pressure test things and having our own chemists on site, we have a lot of capacity and capability to do almost anything on the liquid filling side. You never know.”

Question and answer

GuruFocus: Where do you look for inspiration when you are feeling stuck?

Kick: I attend Harvard business school. I just got back from a three-week course there. I am a part of the OPM program. The Owners, Presidents, and Managers program. It is filled with entrepreneurs from all over the world and it is really inspiring to get to meet them, network with them, find out about their business and find out that we have all of the same kind of personality traits. Which is kind of funny. When you are an entrepreneur, you feel kind of lonely sometimes. You feel like I am so dominant or I am so driven or I am so this or that. Then you find out other entrepreneurs are exactly the same way. You are not alone.

GuruFocus: What are you most grateful for?

Kick: I am grateful that my business is successful. That is really great. I am grateful that my family is very close to me. My boys I get to see every day almost and they are such a part of my life. It just makes me smile that they are around. It is special to get to work with your kids every day. A lot of parents have their kids move away, move far away, and they do not see them often and it is sad. I am happy for that and I am happy for my health and I am happy to pull up to my job every day and see that I am providing 100 people with a job. It makes me happy that the business is successful and people see us as a fun company.

GuruFocus: Would you consider selling the business?

Kick: Like I said, my whole family works for the company, so that is part of my legacy. You never say never to anything. It depends on how much the money is and it depends on how much I would have to write to the IRS too. I am having so much fun doing it right now that that is not really a question that I am entertaining, but we do get calls. Once a week we will get calls asking: ‘Do you want to sell? Do you want to sell? How much would you sell for?’ That kind of thing and there is a lot of money out there that could be it for sure. I am just not ready yet and I do not know when I will be, but when I will be I will do it.

Kick’s advice for entrepreneurs

Know the difference between owning a business and being an entrepreneur:

Kick describes this as following rules versus breaking the rules. Her example was as follows: You can own a Jiffy Lube and work nine to five everyday doing things just like everyone else and own a business. In comparison, you can go out, start something new and break the mold of what has been established. To truly be an entrepreneur, you have to push the boundaries and take the road less traveled. It may take a great deal of work and sacrifice, but the payoff is worth the risk. Decide whether or not you want to create your own path or follow the parameters established by someone else.

Know your product and your marketing:

You need to know your product or service inside and out and be able to explain exactly what you do in five words or less, according to Kick. To be successful, you must know exactly who you are going to sell to and how you are going to do it. Know where your product is going to be. “You can not go it is available for anybody anywhere because you may not have product there,” Kick said. You need to know exactly where it will be placed and how it will look on the shelf as well. When you are approaching a new distributor or retailer, if you can tell them what it will look like and how to display it, they are much more likely to be interested in your product. Intentionally place it next to other products and make it an easy decision for the retailer and customer alike.

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Watch the video of the entire interview here: