Tequila
LARGELY
THROUGH EXPOSURE TO NEW LUXURY
TEQUILAS,
innovative marketing programs and the overall popularity of
spirits, consumers have developed discerning palates. Today,
people bandy terms about like blanco, reposado and anejo.
They look for 1OO% blue agave distinctions on labels and sip
tequilas from martini glasses or swirl them in snifters. And
we can’t seem to get enough of that classic perennial
favorite: the margarita. What’s more, tequila is one of the
fastest growing of all distilled spirits, particularly in
the super-premium arena. As popular as it is though, the
category is far from being on easy street. Many consumers
are still haunted by bad memories of tequila from their days
in college. In some ways, tequila reminds me of that old
children’s rhyme about the little girl with the little curl
in the middle of her forehead: when it’s good, it’s very,
very good but when it’s bad, it’s awful. It is a hard memory
to forget but the industry is working hard at changing
consumer’s attitudes by marketing tequila as a smooth,
refined and sophisticated spirit. From a focused effort on
product education to an end of the Gold Standard, here’s a
look at today’s tequila trends.
1OO%
OR BUST 2OO5
certainly was a good year for super-premium luxury tequilas
as consumer interest in trading up continued. Bevin Gove,
Director of Public Relations for Jose Cuervo International,
says, “Tequila continues to rank as one of the fastest
growing spirits categories in the United States. Given that
tequila comprises only 4.6% of the US distilled spirits
market, there is tremendous opportunity for growth. The US
continues to be the world’s largest tequila market and
tequila is expected to grow faster than any other spirits
category in the US. Within the tequila category, the super-
and ultra-premium segments hold the most promise for the
future.” Several brands, most notably Patron, Herradura,
Cuervo’s Gran Centenario, and Corazon, have successfully
established themselves with consumers young and old as
prestigious yet approachable and drinkable. Ivan Torres,
owner of Ole Mexican Grill in Cambridge’s Inman Square,
comments, “The demand for premium brands is huge. A few
years ago people didn’t care what they had, but now they’re
willing to pay more for quality.” Popular tequilas at Ole
include Herradura (the restaurant is a Herradura Embassy),
Patron, Milagro, and Corazon. With a clientele that for the
most part really knows about tequila, Ole also carries a
large selection of select tequilas, including Reserva de la
Familia, Don Julio 1942 and the ultra-premium Herradura
Seleccion Suprema that goes for $4O a shot. Nor is it just
at Mexican restaurants that fine tequilas are popular. Many
upscale establishments are carrying a select number of
premium tequilas, putting the emphasis on quality versus
quantity. At celebrity chef Ming Tsai’s Blue Ginger in
Wellesley, Massachusetts, Manager Sarah Livesey says,
“Although I would say that people’s exposure and knowledge
is definitely on the rise, the average consumer does not
seem to have a very broad or deep working knowledge of high
end tequilas. They mostly know ‘white’ and ‘gold’ or
silver/anejo. Trends are showing people leaning towards the
specialty drinks being offered at each individual
establishment and being more adventurous with their drink
choices.”
A
BLANCO LINING
Although consumers are definitely looking for high-end
tequilas, there has been an interesting change in
preferences lately. A few years ago drinking reposado and
anejo tequila was considered a status symbol. However, the
last year saw a pronounced shift to the silver, or blanco,
style of unaged tequilas. Much of this has to do with
consumers actually wanting to taste the characteristics of
the tequila, something that is evident in a blanco. Ivan
comments, “We are selling a lot of silver tequila in our
margaritas. It is really the best kind to make mixed drinks
with as it has such a clean taste.”
At Smith &
Wollensky, in Boston, Bar Manager Greg McIntosh says that
they sell more blanco tequilas than anejos these days,
particularly Patron – both as a chilled shot and in
margaritas. “People know its name,” he comments, adding,
“It’s very well marketed but is also a high quality
tequila.” Other tequilas that sell well at the bar are
Corazon and Gran Centenario, and Greg notes that Corazon is
a personal pick of his and his co-bartenders. A relative
newcomer to the US market, Corazon has done very well in a
few short years. Lee Einsidler, CEO of Sidney Frank
Importing Co., Inc., states, “2OO5 was a terrific year for
Corazon. Our sales more than doubled. Our Corazon Blanco
performed the best. Blanco seems to be the most popular for
Corazon as well as other ultra-premium tequilas. Business
for Corazon in Massachusetts is excellent.” Gary Park, owner
of Gary’s Liquors in Chestnut Hill, also sees a silver
trend, saying, “There is a real resurgence of interest in
high-end silver tequilas. Patron Silver came out with 1.75
size bottles that sold very well during the holidays. They
also have a triple-distilled Gran Patron Platinum that
retails for over $2OO for a 75O.”
It seems that no
matter whom you ask these days, Patron is the tequila on
everyone’s lips, particularly their silver. As a brand, it
has been very successful in establishing itself as both a
sipping and mixing tequila, and does well across the board
from bars to retail stores. It has cachet, brand recognition
and everyone wants to be seen drinking it. Ryan Shocklee,
the Assistant General Manager at Sibling Rivalry in Boston’s
South End, sees a marked interest in high-end tequila
brands, specifically Patron. He states, “Between brand
recognition and quality, Patron Silver is our best selling
tequila.” Ryan attributes the increase in popularity to
Patron’s marketing over the last five years saying, “They’ve
almost developed a reputation similar to what Absolut did
with their marketing.” Matt Carroll, Vice President of
Marketing for The Patron Spirits Company, remarks that
Patron had a “Banner year,” adding, “Patron was up 96% for
the year in Massachusetts, doubling its business. The brand
sold 615,OOO cases of tequila last year, of which 4OO,OOO
was silver.” Patron has been slowly adding to its portfolio
that now includes their Silver, Reposado, Anejo, and the
Gran Patron. There is also the XO Cafe tequila coffee
liqueur, that while small – it sold 15 thousand cases last
year – it experienced 85% growth nationally and 137% growth
in Massachusetts. Seeking to further cement their place in
the luxury market, Patron will be introducing a new
ultra-premium tequila later this year in the $5OO price
range. Speaking to the brand’s popularity Matt comments,
“It’s an image thing. These days it’s about the brand itself
and we’re fortunate that Patron is the hot brand.” One of
the reasons that Patron is so successful is that it is has
no specific demographic. Matt says, “We’ve transcended all
those boundaries from soccer moms to politicians. Hip Hop
songs mention Patron in their lyrics as does a country music
song by Joe Nichols called ‘Tequila Makes Her Clothes Fall
Off’.” Another asset to the brand is that it is equally at
home in a casual or upscale setting. General Manager Bill
Shecter, at the very laid-back Border Café in Saugus,
Massachusetts, says that they sell a great deal of Patron
Silver both straight up and in margaritas. “It’s a
combination of brand recognition and bartender knowledge
that sells Patron,” he states.
The Border Cafe
actually merits special mention here. One of the first
restaurants to really tap into the margarita phenomenon, the
rustic and eclectic Border Cafes are a rite of passage for
anyone who loves margaritas and Cajun Creole/Mexican food.
Their longevity is a testament to their popularity –
Cambridge opened 18 years ago, Saugus 16 – and there is
almost always a wait at both with a hopping bar scene.
Interestingly, for the volume that they do and given that
7O% of the drinks they sell are margaritas, the Border only
carries about 8 different tequila brands. Bill remarks that
they aren’t trying to be like everyone else carrying 3O
different vodkas, tequilas, gins, and so on. They try to
sell what they sell. This way they can buy bulk volume and
save money. “We have stayed consistent with our prices over
the years and rarely make price changes. We try to keep it
real to what we started at,” he says. For drink preferences,
Bill sees that people often start out with their house
margarita and will then upsell themselves to a Grand Gold or
its equivalent. Other popular margaritas are raspberry and
strawberry.
MARGARITAS
& MORE From
Blood Orange to Pomegranate, margarita flavors and styles
these days are virtually limitless. Restaurants nowadays
have entire drink menus devoted just to margarita choices.
These menus are an extremely effective way to showcase
spirits and both brands and bartenders are starting to
really get creative with recipes for tequila drinks other
than margaritas. Last summer at Sibling Rivalry they ran a
unique drink special called the “Rosada” served on the rocks
with Herradura Silver, a sweetened Rhubarb puree, mint and
ginger ale. And over at Ole, Ivan says that they have
recently started serving muddled margaritas as a new
special. Made with fresh strawberries, raspberries or
mangos, they are served on the rocks and selling extremely
well. Although they are $1O each Ivan says that people don’t
mind paying for them. In general, he finds that, as long as
they get good quality, customers don’t mind paying more
money for their drinks. Matt with Patron says, “Tequila
isn’t just for margaritas anymore. We are promoting it for
everyday use in Cosmos and other drinks. It’s a great
substitute for vodka in a Cosmo.” Matt also says that Patron
is working with national chains to create signature drinks
that would appear on specialty menus. Cuervo is getting
creative as well. Bevin with Cuervo comments, “There is a
real opportunity to educate consumers that tequila is a
versatile spirit that can satisfy different consumer
preferences for various drinking occasions. Historically,
tequila has been consumed as a shot or in a margarita and,
today, the margarita continues to be the most popular
cocktail in the United States. However, consumers have begun
to refine the ways they consume tequila. For example, we’ve
recently introduced “Cuervo & Ginger”, a cocktail made
with Jose Cuervo Gold. Jose Cuervo Tradicional is typically
enjoyed in Mexico as a frozen shot or ‘congelado’. And, Jose
Cuervo Reserva de la Familia is terrific served on the rocks
with a twist of orange.”
MIXING
IT UP It may be the
most popular drink in the country, but making the perfect
margarita is easier said than done. Too much sour mix or
lime juice and your lips pucker, too much tequila or not
enough and you can lose a customer for good. Sibling
Rivalry’s Ryan finds that customers are becoming more
specific about how they want their margaritas. He says,
“People will specify Cointreau or Grand Marnier and they
want their margaritas made with fresh lime and OJ. Overall,
it’s all about fresh these days.” Increasingly, bars are
carrying premium tequilas in their well. Both Olé and
Sibling Rivalry use Herradura’s El Jimador tequilas for
their house margaritas. To complement the higher quality
tequilas being used in margaritas, more and more restaurants
are making their own mix – Ole and Sibling Rivalry make
their own as does the Border Cafe. Although they don’t make
it themselves, Blue Ginger uses Tommy’s Nectar of the Gods
Heavenly Margarita Mix, a 1OO% fresh and natural mix created
by renowned tequila aficionado Julio Bermejo of Tommy’s
Mexican Restaurant in San Francisco (see sidebar).
Incidentally, the two featured margaritas on Blue Ginger’s
drink menu, the Platinum and the Lychee, were created by
Julio. Manager Sarah Livesey says that the Platinum is their
best selling margarita.
LET
THE FLAVORED TEQUILA FLOW!
Unlike the vodka and rum category, the flavor trend has yet
to hit the tequila category. The main reason for this is
that, until very recently, Mexican regulations prohibited
the addition of any flavors to tequila. There have been some
flavored tequila products on the market that have fared well
over the years but they are not technically true tequilas.
All that is about to change as the US and Mexican
governments recently came to an agreement concerning tequila
regulations and production. Ben Jenkins, the new
Communications Director for the Distilled Spirits Council
says, “The provision allowing flavored tequilas has been
included in a new tequila standard that has not yet entered
into force. The new standard was published in early January
and went into effect earlier this month.” This provision
will allow for even 1OO% agave tequilas to have flavors
added to them. Although the thought of lime, raspberry and
mango flavors being added to 1OO% blue agave tequilas will
undoubtedly make purists cringe, all you have to do is look
at the success of the vodka and rum categories. Brands such
as Grey Goose have come out with various flavors while
continuing to keep their luxury brand image intact. Heaven
Hill Distilleries just released Two Fingers Lime and Berry,
a combination of natural flavors and tequila. It will
certainly be an interesting category to keep an eye on for
the coming year.
UPSCALE
RETAIL SALES
Selling super-premium tequilas in retail stores requires
both effort and knowledge. It’s one thing to convince
someone to spend $1O on a nice margarita at a bar, but how
do you get them to go to a store and buy a bottle of the
tequila? Gary’s Liquors’ Gary Park says, “I really believe
that brands need to be built in bars and restaurants first
in order to get someone to spend $4O or $5O on a bottle of
tequila.” His store carries about 25 to 3O tequilas and in
general, he finds that tequila continues to grow as a very
strong seller. He says, “We now have regular tequila buyers
the way that we have single malt scotch and cognac
customers.” He sees the most growth in the high-end segment,
particularly during the holidays when people are shopping
for gifts. The higher end tequilas do best with 3O- to
4O-year-olds, although he says that, again, Patron is the
exception to that rule as it sells well with all age groups.
For the budding tequila drinker Gary says, “There are many
good mid-priced tequilas with enough line extensions to
upsell their own product.” Another brand doing well at his
store is Gran Centenario, especially during the holidays.
Offering up a selling tip, Corazon’s Lee Einsidler says, “It
has to be stressed that 1OO% blue agave tequilas are the
best. And tequilas that are estate-grown, produced and
bottled, like Corazon, are really at the top of the tequila
pyramid. Bar staff and store employees have to take time
with the customers to explain the difference between blanco,
reposado and anejo. Once customers are familiar with the
different types and learn to appreciate the subtle
differences, they will become more adventurous.”
There are some
other interesting methods of introducing tequila to new
consumers. Al Zarella, Northeast Division Manager for
Sazerac Co., which represents the Herradura line of tequilas
comments, “Consumers are introduced to super- and
ultra-premium brands from bartenders, retailers, critics,
and ratings – both online and print. The hottest trends are
chat rooms; you can go online to sites from bourbon to
scotch to tequila and to vodka where everyone is an expert
and a critic.” (www.greatbourbon.com, www.itequila.org,
www.tequilaaficionado.com, www.greatvodka.com.) Al also
points out a potential concern in the industry saying,
“There have been many new entries to the tequila market this
past year. Most are from small importers that have taken
advantage of increase supply of agave and a very strong
consumer franchise looking for fancy glass. The problem here
is that the quality from batch to batch can vary. The more
discriminating consumer is looking for continuity in the
products they purchase and consume, particularly when paying
in the range of $5O for a 75Oml spirit.”
THE
BIG BOYS Of course,
the tequila industry would be nowhere without the high
volume of mixto, or 51% agave, tequilas. Yes, the growth and
general excitement is taking place in the 1OO% blue agave
category, but that represents a small portion of the entire
industry. With their large portfolios and big advertising
campaigns, Cuervo and Sauza easily have the largest sales
and most brand recognition, especially with younger
drinkers. Adapting to consumer demands, both brands have
added to their portfolios over the last couple of years to
target the luxury/super-premium category. Cuervo has been
particularly busy, most recently launching Cuervo Black, a
super-premium tequila aged for a minimum of twelve months in
new char barrels that retails in the $2O price range. Bevin
supplies some impressive Cuervo statistics: “Jose Cuervo
Gold is the number one Tequila in the world, and the Jose
Cuervo portfolio has about 5O% market share in the US.
Cuervo is the seventh largest distilled spirit brand in the
US. Within the premium segment of the category, Jose Cuervo
Especial comprises over 8O% of the segment.”
Though not as
big as Cuervo, Sauza has been experiencing tremendous growth
over the last few years. Andrew Floor, Senior Director with
Beam Global Spirits & Wine, says, “Sauza Tequila is the
number one tequila in Mexico and the world’s fastest-growing
international spirit brand.” He adds, “Sauza is among the
leaders in the super-premium segment and was one of the
first to break into the ultra-premium category with Sauza
Tres Generaciones. Sauza’s two ultra-premium brands, Tres
Generaciones Plata and Tres Generaciones Anejo, are
distilled twice for optimal quality.”
Although tequila
is not a huge seller at the Yankee Spirits in Sturbridge and
Attleboro, Massachusetts, President Mike Cimini says that 4
of the top 5 selling tequilas are from Cuervo and the fifth
is 18OO, a Cuervo product that is distributed by Skyy. Mike
points out that with their expansive portfolios, Cuervo and
Sauza appeal to the tequila drinker who is interested in
trading up. They know the brands and are comfortable
experimenting within their portfolios. He says, “With the
proliferation of spirit brands we can’t carry everything. If
Sauza comes out with something new, we’ll carry it.” While
Mike doesn’t see the same trend of luxury tequila interest
as Gary Park does at his store, he does find that silver,
particularly Patron, does very well. Even with all the
tequilas available today, in some locations tequila sales
are synonymous with Cuervo Gold. Jim Chiesa, owner of
Leahy’s Liquors in Taunton, Massachusetts, says that over
9O% of his tequila sales are Cuervo. Price is a factor for
his customers and while he has carried other comparably
priced tequilas, they just haven’t sold at all. In fact, he
notes that tequila simply isn’t a very big seller at all for
him.
TEQUILA
SMARTS As the
artisan/luxury segment continues to blossom, the industry is
faced with a substantial challenge: education. It’s not
enough to just have the products behind the bar or on the
store shelves – if you don’t know how to sell them they will
sit there collecting dust. While people will sample
virtually any new vodka or rum, with tequila there is still
a level of mistrust and perception that it is just a party
drink. According to internationally renowned tequila expert
and restaurateur Julio Bermejo, tequila is still a category
where 7O% of all sales of super-premium tequilas happen
on-premise. Julio finds that while bars and stores in
Massachusetts may carry a nice array of tequilas, there is a
lack of people who are truly qualified to talk about
individual tequilas. Julio believes that proper product
knowledge is vital but, unfortunately, he says that a lot of
what the trade is told is what marketing departments want
them to hear. Julio became frustrated with the lack of
reliable information, pointing out that too often, brands
take creative liberties with facts when discussing tequila
traits and promoting their products. This is why he travels
to Mexico frequently to obtain his information. He works
regularly with the CRT, Mexico’s Tequila Regulatory Council.
While there is no formal study program yet in the US, Julio
is trying to start an organization to promote 1OO% agave
tequilas.
Still, not all
brands are completely lacking in this department. When it
comes to product education, few are more committed than
Herradura. Al says, “We enjoy educating; we conduct many
staff trainings and tequila dinners. The staff trainings are
predominantly conducted for an on-premise account and their
employees, everyone from the bartender to the wait staff. It
is crucial that the employees serving the consumer be as
educated on the spirits they serve as the food menu they
serve. Many of the ‘tequila dinners’ are held at a
restaurant – with 4 or 5 courses. Like a wine dinner, we
invite key retailers, as well as consumers, that are
interested in learning more about this mystical spirit.
Typically we will introduce each course with a description
of the tequila that we are pairing it with. We then walk our
dinner guests through an entertaining and educational
presentation designed to illustrate the optimum technique
for nosing and tasting the tequila. During the evening, each
course is accompanied by historical facts, stories and
suggestions about Herradura Tequila. Needless to say, these
events are always a major hit.”
In an effort to
better educate the trade Patron has been working on a new
program. Matt remarks, “We were recently in Mexico filming
footage at our new distillery to make educational CDs and
booklets for the trade. The program will be available in
June – all the distributors will go through it and then take
it to the trade.” Patron is also making use of the internet
to reach and educate consumers. Matt says, “We recently
revamped our website. It’s very interactive and educational
and has gone from 14 thousand hits a months to 1.2 million a
month. Also, the average stay on a website is 1 minute and
the average stay on ours is 5 minutes.”
Sauza has a long
history of working with bar and waitstaff on product
knowledge and sponsoring tastings. Andrew with Beam Global
states, “Sauza ambassadors have held numerous events across
the country to educate consumers, bartenders and waitstaff
about the product. This includes a proper tasting and
offering drink ideas. For years Sauza has offered an
extensive sampling program for consumers, at both on- and
off-premise accounts, to teach them the finer points of a
great tequila. The same is true for the trade. We have
dedicated programs that teach the trade about not only
Sauza, but the entire history of tequila, how to serve it,
how to pair it with food, etc. Sauza has even hosted media
at the Sauza distillery in Mexico. This education tour
included a tour of the jima fields, a tour of the distillery
and a proper tequila tasting.”
GETTING
THE WORD OUT The
last year has seen a significant leap in marketing and
advertising in the tequila market from print and broadcast
to luxury events. Lee with Sidney Frank comments, “Right
now, we are looking forward to launching a broadcast
initiative. Corazon commercials will begin airing on cable
television on April 1. Our commercials are designed by
DeVito/Verdi, the award-winning advertising agency, and they
definitely portray Corazon as an upscale ultra-premium
tequila. In addition, we continue to do upscale charity
events throughout the country. This has been a terrific way
to reach our consumers directly and personally. As for the
internet, our site is certainly sought out by tequila
drinkers and Corazon fans. We love getting e-mails from
customers, (it) let’s us know their concerns as well as
their kudos!” Some of the local charities Corazon has worked
with are the Sean McDonough Charitable Foundation Event,
Celebration for Holiday Hope with Cardoza’s Wine and
Spirits, Boys and Girls Club-Nantucket Gala and Pitching in
for Kids All Star Charity Golf Tournament and Kick Off
Party.
Lifestyle events
really present a great opportunity to promote visibility.
Bevin with Cuervo remarks, “The marketing program for Gran
Centenario is designed to build awareness for the brand
through sampling at focused, high-end consumer events in key
US markets. Most recently, Gran Centenario sponsored the
Broadway musical revival of “Sweet Charity”, which included
a product mention in the show incorporated in a natural,
unobtrusive manner, an uncontrived product placement, and
promotional and public relations programs to build brand
awareness among the brand’s target audience (the audience
demographics for Sweet Charity are similar to audience
demographics for Gran Centenario).”
And, of course,
Patron has been a leader when it comes to generating
word-of-mouth. Matt remarks that much of their marketing
effort has been grass roots. They have successfully exposed
the brand to image-makers, movie stars and trendsetters
(through charity events and local marketing activities) and
are just starting to do more marketing in Massachusetts in
this way. Matt says, “We’ll be doing some cable ads,
national print and some billboards. We have basically
doubled our media campaign over the last year.”
Ultimately, the
future looks great for tequila. Yes, there will always be
college kids downing shots of bad tequila and living to
regret it. But as long as the industry continues to come out
with refined, upscale products and focuses its efforts on
building awareness through marketing and education, tequila
has some very rosy prospects. To quote a Herradura motto:
“Life is too short to drink cheap tequila”.
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AT A GLANCE
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THE Julio also works
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TOP PICKS* 15 1OO% AGAVE TEQUILAS WORTH TASTING Herradura Hacienda * Julio specifies |
