Tequila’s Rising Sun

‘€œTequila continues to grow in the U.S., and across the globe, as more people come to discover that it’€™s truly a sophisticated, flavorful spirit,’€ said Jennifer Long, Patrón brand director for The Patrón Spirits Company.

Since hit with an agave shortage a decade ago, tequila sales have surged in the U.S., growing 76.2% in the last nine years according to the Beverage Information Group’€™s 2011 Handbook Advance. Granted tequila’€™s growth rate may have slowed in recent years as a result of the recession and adjusted consumer spending habits, but those are not stopping, or slowing, the changes, introductions and developments within the marketplace. Clearly, the appeal of tequila to U.S. consumers continues to include the many iterations of the Margarita; however, there is much more to it than that, particularly in a category that keeps offering new prestigious products with heady price points.

‘€œThe superpremium tequila category is experiencing impressive growth trends today,’€ said Alain Barbet, president of Palm Bay Spirits which imports 901 Silver Tequila to the U.S. So are blancos’€”at least in the U.S.’€”as consumers discover its versatility as a mixer.

Overall, the category gained 3.7% in 2010, to 11.6 million 9-liter cases, with some of the top performers notching significant double-digit percentage increases, including Sauza (up 12.8%), 1800 (up 28.1%) and El Jimador (up 23.5%). Other brands showing positive sales figures, among the leading tequila brands, by volume, were Patrón, Juarez, Margaritaville and Pepe Lopez.

New Year, New Look

Maybe it’€™s the new decade. Maybe it’€™s to follow ever-evolving fashion. Whatever the case, tequila brands in 2011 will look as pretty on the shelf as they taste out of the bottle.

Among the category’€™s leaders, The Patrón Spirits Company continues to update its line-up and hopes to launch something this year. ‘€œWe’€™ve recently introduced an elegant new package design for our Gran Patrón Platinum and Gran Patrón Burdeos tequilas, and last year we updated our bottle design for Patrón Citrónge orange liqueur,’€ explained brand director Long. The company also added a 200 ml bottle for its tequilas and a 1.75 liter size for its Patrón XO Café that will be distributed nationwide.

In its latest introduction to the tequila category, Heaven Hill’€™s Lunazul Añejo stands out from the crowd with a 750 ml bottle, tribal and tattoo-like detailing, and packaging that echoes the category’€™s traditional homage to the wolf and agave.

When Palm Bay International became the U.S. importer of 901 Silver Tequila beginning in April 2011, the 100% Blue Weber Agave triple-distilled tequila got a new look. You’€™ll still see the same signature tall, angular bottle with silver cap, but now there’€™s a red ribbon painted on the front that holds a white logo. It’€™s all part of the new look to go with the new importer. Retailing at $40, the brand has already seen tremendous success in only two years on the market.

At Skyy Spirits, the focus is on the relaunch of Espolon Tequila in the U.S. after a three-year absence. Andrea Conzonato, Skyy Spirits chief marketing officer, explains that its packaging depicts Mexican street life through famed Mexican artist Posada’€™s ‘€œDay of the Dead’€ representations, a departure from traditional tequila packaging. ‘€œThe response has been outstanding, easily surpassing our sales expectations,’€ Conzonato said. Retailing between $20 and $25, it delivers one of the lowest-priced 100% blue agave tequilas that’€™s high in quality, and available as reposado or blanco, he said.

With Gold and Silver already in the fold, Sauza Blue is the latest addition to Beam Global’€™s portfolio, and Sauza’€™s first 100% agave tequila. Previously, Beam’€™s other brands, Hornitos and Tres Generaciones, boasted the 100% agave tag. Launching for Cinco de Mayo, Sauza Blue comes in Silver and Reposado and offers an attractive price point, approximately $12, to mix a 100% agave margarita.

Whether it’€™s to maintain its top seed among the tequila category or simply to keep up with innovation, Jose Cuervo is evolving throughout the year. First, the national roll-out of Jose Cuervo Tradicional Silver, which is produced from 100% estate-grown blue agave and uses the original recipe that was created more than 200 years ago by Don Jose Maria Guadalupe de Cuervo. Then, a facelift for Jose Cuervo Especial Gold and Jose Cuervo Especial Silver to better showcase its Mexican heritage. Ami-Lynn Bakshi, vice president Jose Cuervo marketing, Diageo, explains that the bottle shape will change slightly while the label changes to a simpler and sleeker design with the goal to strengthen its presence in consumers’€™ minds. ‘€œInnovation has been one of our pillars to success over the years,’€ Bakshi said. ‘€œWe’€™re always looking for new ways to fill our consumers’€™ needs, whether it’€™s from a new liquid, new packaging or a new format, while always maintaining the consistent quality the brand stands for.’€

Expect a new look to Proximo Spirits’€™ 1800 Tequila package with its third essential artist series, a 12-bottle collection that features designs by up-and-coming artists. ‘€œWe received an overwhelmingly positive response to the first campaign,’€ said Elwyn Gladstone, vice president of marketing for Proximo.

To celebrate its 140th anniversary, Tequila Herradura rolled out with updated brand identification in September 2010. A new bottle design’€”an angular, square cut-glass bottle’€”streamlines the global image while the metal horseshoe inset on the front face honors the brand’€™s namesake. For consumer familiarity, Herradura Blanco now goes by Silver in the U.S. and Plata in most other places.

Undergoing a design overhaul in late 2010, Don Julio upgraded to modernized designs for its blanco, reposado and añejo expressions. The three expressions maintained its authentic feel but with a contemporary look. The bottle itself offers a new lip for easier pouring while the hand-blown Mexican glass and easier-to-read batch number enhance the tequila’€™s hand-crafted characteristic.

Worth Their Weight

Besides the top three heavy hitters of the category ‘€” Jose Cuervo, Patrón and Sauza. ‘€” there are plenty of others making an impact on the category’€™s growth.

For example, Bacardi USA’€™s Tequila Cazadores portfolio notched 280,000 cases last year, a significant showing for a 100% blue agave, superpremium-priced brand. The brand features a Blanco, Reposado and Anejo, the latter two matured in small, new American oak casks. Among several promotional efforts, Bacardi is using brand ambassadors to help move U.S. consumers to the brand.

Following its success with Lunazul Reposado and Lunazul Blanco ‘€” Beverage Information Group Rising Star Growth Brand Award winners for 2009 and 2010 ‘€” Heaven Hill and Tierra de Agaves S.A. de C.V. released Lunazul 100% Agave Añejo tequila in April. Lunazul has already seen impressive results in the last year ‘€” more than 65,000 cases and 37% growth ‘€” and this addition only rounds out its portfolio while offering an attractive price. Lunazul’€™s Reposado and Blanco retail for $19.99, while the Añejo goes for $21.99 ‘€” a price point not much higher than the mixto category leader. ‘€œLunazul’€™s pricing, due to the efficient vertical integration at Tierra de Agaves, has been a game-changer in the 100% agave segment and has spawned a slew of followers,’€ said Heaven Hill brand manager Reid Hafer. The brand is also gearing up for its first national consumer advertising campaign, Sacrifice Nothing, that will bolster its strong retail focus.

Heaven Hill’€™s Two Fingers has continually seen double-digit growth within the category, a feat that’€™s tough to match. Of the top three, only Sauza accomplished that in 2010 with a 12.8% increase according to the Handbook Advance.

Another successful brand is the line of Milagro tequilas, from William Grant & Sons, with three premium-priced (Silver, Reposado and Anejo) and an additional three Select Barrel Reserve superpremium-priced expressions, which gained 25.6% last year to 113,000 cases.

When E&J Gallo Winery launched its 100% agave Familia Camarena last year, it was only available in California, Nevada and Texas. Starting in three states worked for the brand, which leapt into the seventh best-selling spot and built off that momentum to distribute nationwide before the year is half over. Working in tandem with the national launch are three Camarena taco trucks, a unique way to spread the message and share Familia Camarena tequila-infused gourmet tacos.

Although Proximo Spirits already has four tequilas under its wing, it added one more, El Zarco, to the mix within the last year. Gladstone called it a ‘€œvalue-priced tequila with incredible packaging and great tasting liquid.’€ Its hand-painted bottle matches the creativity involved in 1800’€™s artist series.

Brown-Forman is seeing success with Antiguo, which had established itself in Mexico before being launched in the U.S. in 2010, and El Jimador, which posted double-digit growth for the last fiscal year. The company also features the high-end El Tesoro Tequila portfolio, as well as the highly respected Tequila Herradura.

Celebrity Star Power

A sure-fire way to see brand success? Have a celebrity involved, especially one with an affinity for tequila. Hollywood A-lister Justin Timberlake is the man behind 901 Silver Tequila as its CEO and founder. ZZ Top’€™s Billy Gibbons is an investor with Pura Vida Tequila, endorsing the product because he believes in it. Sammy Hagar founded the superpremium Cabo Wabo brand, which recently received the Chairman’€™s Trophy for the world’€™s best reposado at the Ultimate Spirits Challenge.

Brown-Forman’€™s Tequila Herradura partnered with NFL Hall of Famer Emmitt Smith to promote the product through experiential trips to the actual Casa Herradura in Mexico. Not only did Smith enjoy drinking tequila, his sip of choice was Herradura. A Feb. 2011 contest offered the chance to ‘€œMake an Intro/Win an Intro,’€ which meant a trip to Dallas and dinner with Smith.

Beam Global’€™s Tres Generaciones recently announced a partnership with Oscar de la Hoya, who ‘€” like Smith ‘€” was already passionate about tequila. ‘€œIt’€™s the marriage of two like-minded brands who will work together now and in the future to celebrate and promote tequila and boxing,’€ said Bill Newlands, President, North America for Beam Global Spirits and Wine.

Promotional Powers

In an effort to grow their shares within the tequila market, brands are stepping into the sports arena. Baseball, basketball, NASCAR’€”you name it and there’€™s a tequila partner.

E&J Gallo Winery’€™s Familia Camarena sponsors six Major League Baseball teams beginning in 2011. After it launched last year, it partnered with the Dallas Cowboys in the NFL, and the Phoenix Suns and Orlando Magic in the NBA.

El Zarco, the latest in Proximo Spirits’€™ line-up, recently announced a partnership with the Los Angeles Dodgers Major League Baseball team for the 2011 season.

Super Bowl XLV held in Dallas this past February served as the kick-off for two months of promotion for Don Julio. The brand showcased its Luxury Drop innovation, a fusion of the shots and high-end mixology concepts in a smaller-portioned premium specialty cocktail.

When it used its local roots to be named the official tequila of the Phoenix International Raceway in October 2010, 3 Amigos tequila also nabbed the opportunity to sponsor a NASCAR race at the site.

Tequila Cazadores sponsors the Ultimate Fighting Championship, the world’€™s leading mixed martial arts organization, and presents a Spirit Award monthly to a UFC fighter.

Revolving heavily around Cinco de Mayo and Mexico’€™s popular masked live wrestling, El Jimador sponsors the theatrics and sport displayed at the touring show Lucha VaVoom. It also created a mascot, Jimi El Jimador who participates as a masked luchador.

Get Schooled

Education goes a long way with all of these brand changes and developments. ‘€œPeople are becoming more educated about tequila as a whole,’€ said David Page, PR manager for Herradura. It’€™s all about disseminating the information to the consumer and sharing details at a more intimate level. Think tastings, food pairings at special events, and social media, especially Facebook’€™s ever-growing presence among brands and retailers.

Twin Liquors in Austin, TX., Beverage Dynamics’€™ 2010 Retailer of the Year, prides itself on educating consumers, especially at its Marketplace Galleria location, which regularly holds classes, tastings and celebrity events. In February, the store hosted a bottle signing with Billy Gibbons from ZZ Top, and in March it held a tasting for Don Julio’€™s Silver, Reposado and Añejo tequilas.

Tequila Herradura has focused some of its educational efforts within the dining sector, showcasing its tequilas with unique food pairings, and using its brand ambassador, Ruben Aceves, to share his tequila knowledge with attendees.

Recognizing that people spend a lot of time online, Heaven Hill updated the Lunazul website to include more education and a Facebook tie-in.

For Patrón, Facebook is only one part of the social media picture. Patrón uses Facebook for its Cocktail Lab, a project that ‘€œencourages people to design and share unique cocktail ideas and ingredients,’€ Long said. But its members-only Patrón Social Club (www.Patrónsocialclub.com) is its primary social media tool and serves as an online community for Patrón aficionados. ‘€œWorking with highly regarded media partners, we design exclusive content that’€™s of interest and relevant to our members, and we also offer exclusive access to events and happenings in their local areas,’€ explained Long.

Through its social media efforts, Sauza is trying to reach its female audience. Its Facebook page features a special section devoted to Ladies Night, which includes entertainment tips and drink and food recipes with a focus on the margarita.

To be on the cutting edge, Jose Cuervo maintains its Facebook presence but it’€™s also reaching into the iPhone application space. Bakshi explains that Cuervo’€™s first foray into the mobile space offers a one-touch option for consumers to request a safe ride home to ‘€œCue a Cab.’€ This year also marks the return of a traveling event series, Subterraneo, that educates about Cuervo’€™s history and heritage through a Day of the Dead-like celebration and a tequila tasting.

‘€œConsumers continue to educate themselves and realize that tequila is one of, if not the most complex spirits in the world.,’€ Bakshi said. ‘€œAlso, consumers are further exploring and learning what to do with Tequila at home beyond margaritas, both with cocktails and also by pairing it with food as is done in Mexico.’€

Beyond exploration, that also means more developments and innovation among existing brands while new labels continue to work their way into the picture.

As Page put it, ‘€œThere’€™s a little bit of something in the tequila spirit category for everybody.’€

A Brief Tequila Terminology Guide

With more than 1,000 registered brands of tequila as reported by the Tequila Regulatory Council, it’€™s not exactly easy to remember those brands let alone their differences. So how do you decipher between a tequila that’€™s been labeled añejo versus one that’€™s a reposado. Follow this short guide to avoid any confusion.

100% agave. Tequila falls into one of two categories: this or mixto. With 100% agave, it’€™s made completely from the sugars of the Weber blue agave plant, bottled in Mexico and labeled with a phrase that signifies it’€™s derived from pure agave.

Añejo. Meaning old and mature, this level can only be found on bottles containing tequila that has been aged in oak barrels for at least one year ‘€” typically between one and six years ‘€” and the barrels don’€™t exceed 600 liters. The aging process creates tequila that is darker in color (amber), more complex, smoother and richer. It’€™s also known as aged or extra-aged

Blanco. This type is clear, un-aged and usually bottled immediately after it’€™s distilled ‘€” no barrel aging necessary. All tequila begins in this form. In addition to blanco, it may also be called white, silver, platinum or plata.

Extra Añejo. Take the añejo one step further and you’€™ll encounter this ultra-aged premium tequila, a classification that was added in 2006. It has been aged at least three years and has been in direct contact with oak containers that have a maximum of 600 liters. Compared to añejos, these are even darker in color (mahoghany), smoother and more complex, and so rich that they match up to other ultra-aged spirits.

Gold. Characteristically known as young or smooth, this type can also be called joven, suave or abocado. Its name is derived from the amber hue it develops when stored in the oak casks. Typically found as a mixto, this type can also be created by combining a silver tequila with either an añejo or reposado, thus keeping the 100% agave classification.

Gran Reposado. Although not an ‘€œofficial’€ label, this name refers to the 100% agave tequilas that rest in wood barrels longer than reposados but shorter than añejos.

Mixto. When a tequila doesn’€™t say that it’€™s 100% agave, it falls into this category, which means it’€™s produced from a minimum of 51% agave sugars and the remainder from other sugars. Unlike 100% agave, it can be bottled outside of the Tequila region and allowed to contain caramel color, oak extract flavoring, glycerin and sugar-based syrup.

Reposado. Also known as rested and aged, this classification means that a tequila has remained in wood barrels or storage tanks for at least two months but no more than 12 months. Characteristics include a golden color and a flavor balance between the agave and wood.

Suave. It’€™s not an ‘€œofficial’€ label, but this distinction is given to blanco tequilas that are aged up to two months before being bottled, making a smoother spirit.

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