Carlos de Aldecoa sips coffee like he’s savoring the moment. For him, coffee is an experience.
De Aldecoa was in his early 20s and a recent graduate of the Cullen College of Engineering at the University of Houston when he bought the shuttered Uncle Ben’s Rice manufacturing facility on Clinton Drive in 1998. With his family, he turned it into a world-class coffee plant, growing the family business started by his grandfather in Spain 70 years earlier into one of the largest privately held coffee companies in the country.
His group of Houston-headquartered companies now operate in roughly 800,000 square feet of warehouse, silo and manufacturing space and sells premium brand Aldecoa coffee to retailers nationwide. But the global coffee industry is just one aspect of the business ventures for this UH engineering alumnus-turned-entrepreneur. Two years ago, the man dubbed the “Coffee King” decided to expand his beverage imperium with the creation of Gulf Coast Distillers.
“We’ve done a lot of different coffee operations and to diversify, I found it interesting to take a long look at the consumer side. Consumers are not pursuing the same old brands,” said de Aldecoa, whose four sisters, two of whom are also UH graduates, have pivotal roles within the family’s group of companies. Carlos serves as president of all the family’s companies.
Much of the shift in focus has been driven by millennials, who experts say aren’t as loyal to specific brands as previous generations. In the beverage market, they are flocking to cold brew and ready-to-drink coffees, as well as wine, craft beer and craft spirits.
“They are looking for an experience,” said Chris Taylor, director of the beverage management program at the Conrad N. Hilton College of Hotel and Restaurant Management. “It’s the idea that a product needs to have a story. The new generation of alcohol consumers aren’t interested in that big name product that their fathers drink.”
The shift in consumer behavior has opened a vast market for new products, and de Aldecoa recognized it as an opportunity to expand beyond granulated products, such as ground coffee, and into drinks in liquid form.
Now, hundreds of thousands of square feet of the warehouse hold floor-to-ceiling bags of coffee; next door, it will be whiskey and bourbon barrels as far as the eye can see.
“Everything we’d done in the past had been coffee and granulated products. This was an opportunity to not only get into distilled spirits, but also ready-to-drink coffee products,” said de Aldecoa, who pursued his engineering degree at UH because of a “love of manufacturing.”
It took about a year to design and build out the industrial-scale liquid manufacturing capabilities, and de Aldecoa has since launched a ready-to-drink coffee brand, Cappio Cold Brew, and a portfolio of 14 distinct distilled spirits brands, produced and bottled under Gulf Coast Distillers.
De Aldecoa took a different approach to his spirits line, hiring two master distillers. One is from the craft side and the other from the industrial side—someone with the knowledge to scale up production.
“We wanted to be a local craft distiller, passionately made with great, regional ingredients and great care to the processing. At the same time, we needed the ability to scale it up. My goal is not only to provide the best quality with the best possible price to the consumer, but also to be the largest distiller in Texas,” said de Aldecoa, whose company already ranks among the top 5 percent nationally for proof gallon shipments.
Gulf Coast Distillers primarily produces vodka, gin, rum, bourbon and whiskey. Despite decades of experience in the beverage business, personally pitching retailers and wholesalers on his coffee products and services, de Aldecoa said the biggest challenge in the spirits business has been managing through complex and “archaic” industry regulations, which differ state-to-state.
Taylor said it goes back to Prohibition. “When states got the right to determine liquor laws following Prohibition, spirits were still the one thing you couldn’t make on your own,” he said. “Beer, and especially wines, are considered more of a farm product. Spirits is a chemical process. There is a lot of craft in it, but it’s a chemical you are making and it’s much higher in alcohol. It remains extremely regulated.”
“If you don’t convince a distributor to bring your brands to the market, and there are only a handful of distributors, then you don’t get to play,” said de Aldecoa. But despite the hurdles, he said the new venture into spirits has shown that Texas is a good place to do business because the state name, itself, is its own brand that resonates with consumers.
Texas vodkas Tito’s and Deep Eddy are multimillion–dollar brands with national, and even global renown. In 2012, only three Harris County businesses had permits from the Texas Alcoholic Beverage Commission to distill spirits, and today there are 12. Statewide, there are 117 permits issued, compared to just 14 in 2010.
“If we did it in Oklahoma or New Mexico, it probably wouldn’t have the impact,” de Aldecoa added. “Texas has its own brand power behind it.”