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Young gun proving the party trade is big business

It’s the quintessential party scene in countless American movies since the 1990s: exuberant youths sprawling over a house in the burbs, sipping mystery liquids from red tumbler cups.

Thousands of kilometers across the Pacific, the red cups have come to take on a cult status. To many, the cups say ‘we’re hosting a party, and we mean business.’

Enter REDDS Cups founder, Myles Sgammotta – the man to bring red cups to Australia.

Five years ago the 27-year-old entrepreneur was in Mexico enjoying the backpackers rite of passage. Sipping from a red cup at a party one night, Sgammotta had his light bulb moment. Scribbling ‘red cups!’ on a napkin and shoving it in his backpack, upon returning to Australia Sgammotta turned his 2am idea into a serious business.

With some previous experience in consumer products, Sgammotta had little knowledge in in manufacturing or distribution but began trading August 2010 and learned steeply on the job.

“All the manufacturing, logistics and importing side of things I had to learn through a lot of reading and calling up people who were in business and asking them for coffee and basically just trying to pick their brain,” Sgammotta says.

Another key ingredient behind getting the business off the ground was self-belief and perseverance.

“I’d always had ideas growing up, but it was this one where there were no other competitors in the market, and it was the market which was just waiting for someone to come in and open it up.

“It was also already a product that already had complete product awareness, so I thought that the risk of buying this product and entering was quite low, plus I knew that I was at going to be able to sell my first productions. So I worked on a very lean model and still do to this day. Anytime I do anything I always try to minimise any risk, and I think that’s the best way to do it,” Sgammotta says.

Knowing that his business success was reliant on hitting the mainstream and selling the cups in the major liquor retailers, Sgammotta set about not taking ‘no’ for an answer. To make it more marketable, he also redesigned the cup from its original pint size to be 425mL, and more suitable to the local market.

“I was incredibly persistent. I’m pretty sure I was a thorn in the side of the Woolworths representative because I was just constantly calling. But I had a goal in mind and I knew the business wouldn’t take off unless I got one of those major retailers on board. So after six months of basically ringing the guy from Woolworths, sending him pictures, sending him emails, and I even sent him a screenshot when we were on the news one day – someone was holding a red cup in the background – and he eventually called me and said ‘Ok I’ve seen these cups around enough, come and have a meeting. We signed in June 2011, and started selling in October 2011.” Indeed three years on from that first win, Redd Cups are now also stocked by Coles, and are sold in some 3,000 liquor stores throughout Australia as well as a number of independents.

The supply chain has proven to be a very in-depth and stressful process. Sgammotta needs have stock planned and prepared up to 4-5 months in advance. Alongside this, perfecting the finance, production and logistics sides of the business has involved a lot of trial and error. “To know exactly which companies are best to work with, and which shipping lines are the fastest – it’s taken a long time to really refine it.”

What’s more, while the younger demographics are more than familiar with the product, a further challenge for Sgammotta has been convincing people who have never heard of a red cup that they should stock it on their shelves.

As to whether it’s a passing fad, Sgammotta says he’s based his forecasts on what’s been happening in the American market, where red cups have been continuously stocked in every conceivable retailer since they rose to popularity in fraternity houses, and became mainstream.

Although his product and concept is youthful, Sgammotta’s approach to work is ‘old school’. Upon starting his business, he was given the advice to treat it like a 9-5pm job, which he says has put him in good stead.

“If you recognise that there is something you really want to do, you have to plan it out and treat it like a job. You have to sit down and start working at 8:30am in the morning, take a one-hour lunch break, and finish up around 6pm. Also perseverance is essential. I see so many people who tell me they have a great idea, but they might put 3-4 hours a week into it, and that’s just never going to work.”

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Stephanie Zillman

Stephanie Zillman

Stephanie is the editor-at-large of Dynamic Business. Stephanie brings with her a passion for journalism, business, and new ideas. On her days off, you might find her reading a book on the beach.

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