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503 Distilling expects production to increase tenfold through 400 more stores in Arizona, Northern California, Nevada, Washington, Nebraska and Idaho

Oregon City's own 503 Distilling had a successful meeting with Walmart buyers last month, which 503 CEO Dave Schleef said will result in the company's canned cocktails being distributed in 400 additional stores across six Western U.S. states.

COURTESY PHOTO: WALMART - Oregon City-based 503 Distilling co-founders, CEO Dave Schleef and COO Rusty Caldwell, celebrate Walmart announcing they will distribute their company's vodka and canned cocktails to more than 400 stores.503 Distilling currently has four full-time employees, and Schleef expects to add 10 more employees by 2020, when distribution to Walmart begins.

"This a big deal for us," he said. "It's going to allow us to add some jobs, and it's going to bump us a level for sure."

Beginning cocktail production in December 2017, 503 Distilling reports about $200,000 gross revenue in 2018, but is on track for $400,000 this year. Next year, Schleef sees 503's annual revenue topping $3 million.

503 Distilling's Wicked Mule was the first canned cocktail to be distributed in Oregon. After a 40% increase in national canned cocktail sales in 2018, 503 currently represents about 1% of the industry's $40 million in annual U.S. retail sales.

Schleef predicts that 14 total employees will be necessary by the time Walmart's distribution begins in April in part because he will be hiring sales people who could "capitalize on this canned cocktail boom." In addition to the 145 Walmart stores in Arizona, for example, that will soon be carrying 503 products, he said that 503 will have a "foot in the door" to talk with other major retailers in those other Western states, like Kroger and Albertsons.

While the state of Oregon doesn't allow packaged cocktail sales outside of liquor stores, most U.S. states would allow 503 Distilling's products in grocery stores. In addition to Arizona, Walmart stores will be carrying 503 products in Northern California, Nevada, Washington, Nebraska and Idaho.

503 Distilling's canned cocktails are manufactured in a 3,000-square-foot location in Oregon City's Hilltop area, and Schleef is looking to expand by more than 1,500 square feet in the area.

Hilltop was chosen as a location for a new Walmart store, but the company eventually abandoned all its plans for an Oregon City store. In 2012, Walmart had proposed a 60,000-square-foot grocery store on Molalla Avenue that was a fraction of the big-box project it envisioned in 2003. In 2014, Walmart pulled the plug on its slimmed-down concept, made necessary by Oregon City's revision of its land-use master plan that rezoned the site for mixed-use development.

Walmart has committed to purchasing an additional $250 billion in products made, sourced or grown in the U.S. by 2023. 503 Distilling was one of more than 500 companies from across the country to participate in Walmart's sixth-annual Open Call.

Walmart CEO Doug McMillon, who once worked as a buyer for Walmart, addressed the hundreds of representatives of companies who gathered recently hoping to be distributed through Walmart. McMillon's speech explained why buying local products makes economic sense for Walmart.

"If we can create great local jobs, we're going to have better stores and better, stronger communities," McMillon told the crowd on June 19.

More than 100 U.S. products were selected for distribution, and 503 was the only company from Oregon selected at this year's Walmart Open Call.

Schleef added a cocktail lounge to 503's 275 Beavercreek Road facility in March so customers can try the "latest concoctions on tap." One of those recent forays into expanding 503's product line caught Walmart's eye, or more accurately taste buds, since Schleef sees a lack of other "quality canned cocktail options" in the beverage industry.

"We were at Walmart's Open Call to present our canned cocktails, but we brought some of our new vodka along, and the buyer said Walmart wanted the fifths of our vodka on Walmart shelves as well," he said.

In addition to the bottled vodka, 503 has three canned cocktails. Schleef is still working out the details as to which of the three cocktails Walmart will distribute, and he's hoping for all three.

This story has been updated from its original version online with a higher number of U.S. products Walmart selected for distribution.

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