While he and his friends were attending their final semester at the Yale School of Management, they had a plan. They all loved tequila. Their favorite drink was tequila and soda. And they had a fair amount of exposure to the beverage alcohol business through early career jobs, Yale’s connections and various internships.
They looked around them and saw their peers indulging in the current trend of spiked seltzers. They looked at the marketplace and saw an opening for a new kind of spiked seltzer, this one with tequila instead of the malt liquor used in most seltzer brands. Name? They chose a word that has several meanings in Spanish. Technically, “onda” means wave. But in practice, “Que onda” means “What’s up?” Or as Gray likes to describe it: “What’s the vibe?”
The product and marketing plan were locked early in the year. The original business model for Onda was to launch at retail. The plan was to use the summer for sampling in some of the summer hotspots like Montauk, New York and the beaches near Los Angeles, where some of the team members are now located post-graduation.
“We were planning to spend our summer, like, boots on the ground, and getting as much as they say in the industry ‘liquid to lips’ as possible,” Gray said. “Obviously, we found ourselves in an environment where the last thing anyone wants to do is take a sampler of a foreign liquid from a stranger in a store that’s exposed to the air and try it. So that strategy was completely taken away from us. So early this spring when we really understood the impact coronavirus was going to have, we shifted a ton of our investment and the efforts and energy of our team to standing up a direct-to-consumer model.”
The pivot sounds easy, but it wasn’t. The regulations surrounding alcohol sales are complicated and strict. To sell alcohol directly from a website is illegal. Any sales must be routed through a distributor and eventually a retailer. So, the spring was spent setting up these moving parts to get Onda out to the public.
Gray and his team are currently selling lime and grapefruit flavors through their own website, with delivery powered by its distribution network. The retail distribution has been limited to a handful of stores in the New York metro area. Gray said he thinks he can be patient with retail.
“And that is perhaps the silver lining of everything that’s been going on,” he said. “We’ve been given a little bit of extra time and breathing room. You know, we earlier saw a possible world in which Onda would need to compete with Tito’s and Patron for attention in Montauk this summer. But that kind of socializing just isn’t happening. There’s a lot more focus on at-home consumption and out-of-home consumption on the beach or maybe outside with friends on rooftops. And those occasions are really where Onda shines. The extra breathing room and the shift in socializing is in line with the kind of product that we’ve created.”
Gray and his team have also mixed in a bit of celebrity. One of the founders is Shay Mitchell, best known for her role on “Pretty Little Liars.” She is an entrepreneur in her own right, and according to Gray, a tequila aficionado. She has also cultivated a mammoth social media audience with 28 million users in her Instagram following. Celebrity and tequila are a popular pairing, with George Clooney and former Van Halen front man Sammy Hagar also representing beverages. Mitchell will be part of the Onda marketing effort, but not a dominant presence.
“She will help to guide our marketing strategy as an executive in the company,” Gray said. “She may also play a role in the marketing as a content creator herself. So, none of our ambition is for it just to be Shay’s face on Onda. It’s a more holistic involvement in activating the brand that we all would like her to have. There’s something about beverage brands in the way that consumers interact with them that I’ve found fascinating for a long time. And I think [what] separates them from snacks or other things that you eat — there is a lifestyle component. If someone holding a Voss water in their hand versus a Fiji water versus a Poland Springs, it says something different. And for whatever reason, my belief is that people like to be seen holding these different accessories and signaling something about who they are.”
More traditional marketing efforts will accompany the rollout. Gray describes it as a hybrid strategy that will allow Onda to continue to build the DTC beachhead as well as support activities for its wholesale channel. Having launched July 1, Onda will be able to ship in the New York area for 24- and 48-hour delivery — just in time for what has been an unpredictable but exciting summer for a team of Yale grad students.
“And it’s true that the wires were all connected in the last few days,” Gray said. “Maybe we had 36 hours to go when we placed our first trial order, but that order was successful. So now we can breathe a sigh of relief.”