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There Is Gold and Silver As Never Before In Mexico’s Native Spirit
As the familiar adage goes, there are three things to keep in
mind about maximizing profits these days. The on-going popularity of
super-premium vodka aside, tequila continues to boom.
From the Fontana Bar at The Bellagio in Las Vegas, Bartender Darren
West sums up the phenomenon that has captivated customers in the United
States succinctly: “Who would have thought 10 years ago that people
would be paying $60 dollars for a shot of tequila?”
Who indeed? Roots Revamped
The veracity of West’s observation is particularly poignant, given the
somewhat seedy history of this native spirit of Mexico. As recently as
the latter decades of the 19th century, many a patron and bar owner
associated it with cheap, wicked-tasting mixtos and skull-popping
hangovers acquired on lost weekend vacation trips to Tijuana. In many
respects, it was considered to be the Night Train of the entire spirits
category. No more. Tequila is hot, and getting hotter all the time. In
fact, it is now the fastest growing spirits category of them all, even
besting vodkas. According to the Distilled Spirits Council of the
United States (DISCUS), since 2002, U.S. imports of tequila have grown
28 percent –– an average rate of 8.6 percent per year. In 2005 alone, a
total of 9.2 million 9-liter cases, and 9.8 million cases in 2006, were
sold.
Silver & Gold
Premium, super-premium and luxury brand offerings –– whether
blancos, reposados or añejos –– from Patron, Gran Centenario, Cuervo,
El Tesoro, Sauza, Cazadores, Cabo Wabo, Don Julio, Casa Noble, Tequila
Corralejo, El Diamante del Cielo, Juarez, 1800 and many others now vie
for Yankee dollars in venues without regard to ethnic or brand theme.
In some establishments, tequila has usurped fine scotches in the
hierarchy of demand after vodkas, and tequilarias that ply the spirit
to the exclusion of all others have sprung up in cities and towns
across the nation.
As the only tequila still owned by a Mexican family, Cuervo
commands 50 percent of the market share for the spirit that Americans
can’t seem to get enough of –– something that Cuervo Senior Brand
Manager Anamaría Ceseña attributes both to product evolution as well as
the ongoing Latin cultural revolution.
“In the Unites States, people have embraced a lot of what the Latin
culture is,” Ceseña says. “And tequila has come a long way. It is much
more refined and smoother than it used to be. People can enjoy it, not
only in a Margarita but in sipping.”
Not a company living off its reputation, Cuervo –– owner of 1800
tequila and super-premium Grand Centenario as well –– reflects the full
range of tequila enjoyment. The portfolio extends from the best-selling
Jose Cuervo Especial to the original JC Tradicional to its recent
marketing-heavy launch of Jose Cuervo Black Medallion — an añejo aged
for a year in oak barrels that caters exclusively to the American
palate in that it mixes well with any type of cola drink. In addition
to its dominance of the popular and well segments, Cuervo’s high-end
Reserva de la Familia has proven to be a profitable and prophetic
indicator of tequila’s top-end futures.
“It retails for $100 a bottle, “Ceseña says. “And I’ve seen it go for anywhere from $10 to $25 a shot.”
Profit In A Name
As the overall No. 2 purveyor of tequila in the United States,
Sauza, another distinguished brand with an old family distilling
history, has won over the drink palates and earned the loyalty of
legions of tequila aficionados. It purportedly was Sauza founder Don
Cenobio Sauza who first called the golden spirit he distilled at his La
Perseverancia Distillery in Tequila, Mexico, “tequila,” after the city
of its origin.
And his distilled foresight is validated by a powerhouse portfolio
that represents the full line of tequila, including premium Sauza
Blanco, a premium, 51-percent agave, silver tequila; Sauza Extra Gold,
a premium 51-percent agave tequila; Sauza Hacienda, a premium, 51
percent agave Reposado tequila; Sauza Comemorativo, a super-premium,
51-percent agave, añejo tequila; Sauza Hornitos, a super-premium,
100-percent agave, reposado tequila; and Sauza Tres Generaciones, a
family of ultra-premium, 100-percent agave tequilas, that includes
plata, reposado and añejo tequila either double or triple distilled in
the case of the Tres Generaciones to retain the full agave flavor.
What is it about Sauza that has made it such a star in the on-premise?
“Some of it is (the fact that) Sauza is such an authentic Mexican
brand,” says Sauza Brand Manager Barbara Liss. “It has been around for
a long time, and it is steeped in tradition. I can’t claim we are the
only one, but we are definitely stronger than most of them.”
All of the Sauza tequilas have been flexing their revenue-enhancing
muscles on premise lately, but Liss says one in particular has been a
standout.
“The Hornitos has been extremely successful,” Liss says. “It is a
great, strong brand that is on fire in the U.S. Sales are up 10 percent
for the year to date versus last year.” And according to the Nielson
numbers, Liss says the Sauza Comemorativo is the top super-premium
añejo in the market. As good as tequila sales currently are, with the
flavor explosion that has opened up all kinds of new possibilities for
the Margarita, and with the Latin and Hispanic cultural boom in full
swing in the United States, Liss says tequila’s real popularity may
only be just beginning.
“We are just now scratching the surface. There is a lot of opportunity out there.”
By far, the boldest tequila brand to make its on-premise premiere
in recent times, however, is Patron. The third most popular tequila
brand by volume and No. 2 in bottom-line sales, this Las
Vegas-headquartered tequila brand does not enjoy the extended pedigree
of a Cuervo or Sauza. The history of its founding by Paul Mitchell Hair
Care entrepreneur John Paul DeJoria only goes back 18 years to 1989.
What it lacks in longevity, though, it more than makes up for in an
all ultra-premium tequila line that is now the fastest growing in the
world. “In 2006, we grew 95 percent,” Patron vice president of
marketing Matt Carroll says.
Indeed, with its popular Patron Silver, a label that accounts for
70 percent of Patron sales, Patron Añejo, Reposado and Patron Gran
Platinum, its top-end tequila that goes for $200 per bottle, Patron
doesn’t just represent a tequila sales success story. It is an
on-premise success story, Carroll says.
“We’re going to do about 1.1 million 9-liter cases in 2006, and 70 percent of that is on-premise.”
Educated Spenders
Darren West — a two-time U.S. champion in the annual International
Cocktail Competition and a veteran bartender, now with The Bellagio’s
Fontana Bar in Las Vegas — says the brisk demand for high-end tequilas
at his bar is being generated by such patron-driven calls such as
Chinaco, an exclusive anejo tequila that goes for $65 a shot, and
Patron Platinum.
“Patron Silver is asked for more than anything at my bar,” he says.
“People have been asking for it to be shaken and served chilled — like
you are making a Martini.”
The Fontana Bar’s lineup of tequilas reads like an ensemble of
agave all-stars. The house carries 1800, the La Familia of the Cuervo
products, Gran Centenario, Sauza Tres Generaciones, Herradura Silver
and Añejo, Corazon, Don Julio, as well as well as a number of El Tesoro
tequilas, including the acclaimed Paradiso Añejo.
“We only deal with 100-percent agave tequila,” West says.
For the most part, West’s clientele is educated about tequilas and
doesn’t mind paying for the best, but he says that a guest occasionally
will glance at the drink menu and say, “Oh, my God. Why is tequila
$12?
“People do not realize what it takes to make tequila,” he says.
“The commitment behind it is almost the same commitment as American
whiskey. There are laws, and agave can only be grown in certain
regions.
“To make these phenomenal tequilas is not something that is done
overnight. Someone’s heart and soul is behind
it.” NCB
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