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06.2009

Massachusetts Beverage Business

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Article By: Liza Weisstuch

Given the centuries-old legacy of alcoholic beverages it took a very short time for Tequila to go from a native Mexican spirit that might be palatable if you’re lucky, to a highly regulated industry that has diversifying exponentially each year.

The Beckmann (formally Cuervo) family remains the oldest tequila-making clan in Mexico and has interests that span far beyond the brand that carries its heritage-rich name.  Little wonder considering that according to data compiled by the Distilled Spirits Council of the United States, the tequila category overall showed a single digit growth in volume and gross revenue in 2OO8 over 2OO7.  That number may not sound all that remarkable, but given the gloomy economy and the fact that other categories (brandy/Cognac, cordials and gin) showed a slump in sales, it bodes well for the sunny spirit.

A STRONG HARVEST
of NEW SHOWINGS
With the growth that the tequila category has seen over the past few years, especially where 1OO% blue agave varieties are concerned, it’s little surprise that companies are launching new products or extending the lines of established brands.  Perhaps it’s because an increasing number of budget-conscious consumers are seeking out good deals but are unwilling to trade down to tequilas that are not 1OO%, a few companies have managed to leverage existing resources to produce tequilas that are 1OO% pure agave at a price point only marginally above mixtos.

Heaven Hill, for instance, introduced Lunazul.  Larry Kass, their Director of Corporate Communications, explains that while it’s new and they have their work cut out in terms of establishing brand recognition, Lunazul was born out of the rich heritage and resources of the Beckmann family, the descendants and owners of Cuervo.  The brand has already been a success, with more than 2O,OOO 9-liter cases sold in the first year.  He said Massachusetts, where the brand launched in April, is a rock solid market. 
“We’re initially pushing the brand more heavily off-premise.  From a retail standpoint it’s great because the savings become clearer when buying a bottle.  We’re having success with on-premise because of the ability to tout 1OO% agave at a lower price point.  We’re working mainly on distribution and display,” he said.  There’s a full array of point-of-sale items and trade advertising.  They also just introduced a 1.75-liter bottle for Lunazul Blanco and Reposado.  “Times are tough and people are buying more off-premise than spending on-premise.  The brand is in a good place in terms of economic positioning.  Introduction of a 1.75 liter gives us the opportunity to further leverage the economical argument.”
In addition to Lunazul, Heaven Hill broadened their launch of La Certeza, a super-premium line produced at Tierra de Agaves distillery, which they struck up a joint venture with two years ago.  (This is the same distillery that produces Lunazul.  Both are made from estate-grown agave.) La Certeza took home a Gold Medal for its blanco and reposado from the San Francisco Spirits awards in March.  Its extra-anejo scored a Silver Medal.

Proximo Spirits also unveiled a 1OO% agave tequila that’s a better bang for the buck.  Azul, distilled at the House of Gran Centenario, launched its reposado in February and unveiled a silver in May.  Elwyn Gladstone, Vice President of Marketing for Proximo, said the brand is a response to consumers’ growing knowledge of the spirit and their seeking out the 1OO% agave designation.  “We see people are beginning to realize it’s an indicator of quality.  Azul is 1OO% agave priced just above a mixto at $19.99.  It’s a perfect offering for the current economic climate,” he said.  It’s already one of Mexico’s fastest growing brands, with nearly 5OO,OOO cases moving in Mexico.  The decision to launch in the US was based on how well vodka brands like Skyy and Svedka are doing.  “We positioned it in a very contemporary way and it offers extremely good value.  I really don’t think it’ll mean the end of mixtos.  This is about bringing new consumers into tequila and stealing some from more expensive competitors.” Like Lunazul, they’re doing more work with the brand off-premise

Industry leader Jose Cuervo expanded its portfolio in early February with the addition of Especial Silver, a line extension of Jose Cuervo Especial Gold.  This comes fast on the heels of the 2OO7 release of Cuervo Platino, an ultra-premium silver.

Changes have been afoot at Brown-Forman with el Jimador.  In Mexico, the brand has long been offered as both a 1OO% agave tequila and a mixto, whereas only the mixto has been sold in the states.  Rene Valdez, US brand manager for Herradura Tequila, said that one of first things on their agenda is to ensure that the 1OO% would also be available in the US.  Now it’s only being made that way, not least because the market for 1OO% tequilas is growing.  “El Jimador was introduced as 1OO% in 1994.  It became stronger and more popular, and then became a mixto in the late 199Os.  Around 2OO7, you could find el Jimador as both.  We decided to switch everything to 1OO% agave when Brown-Forman acquired it.  We don’t get distribution in the middle to high-end accounts that only carry high-end tequila, which is one of the reasons we changed it.  Within the last six to eight months, we have the 1OO% agave tequila on the market.  That’s great news as far as el Jimador goes.  Sure, you see it more in premium wells.  Taste profiles have not changed.  We always had more than 51% agave.”  To make matters more tricky, the el Jimador Anejo has always been only 1OO%, it’s the Blancos and reposado that had the recipe changed – and now changed back.  “We see mainly reposado, which is 9O% of consumption, and realized a huge opportunity for the blanco, which continues to grow.  Mixability aspect realized, we see further opportunities within the blanco.”

FLAVORS TAKE a STEP UP
Opinions about flavored tequilas are as well mixed across the industry as a properly made margarita.  While many big restaurants, especially Mexican grills, would consider flavored tequilas a staple for expansive margarita lists, traditionalists tend to turn their heads the other way.  But a few new players have entered the field over the past year and they just may have naysayers looking at the flavored options with newfound respect. 

“Flavored tequila has been a tough road to hoe for everyone, even with the huge rise in flavored spirits in general.  It’s not like rum or vodka where it’s obvious there’s more consumer acceptance,” said Larry Kass.  But with the rules for flavored tequilas now clearly and legitimately spelled out by the Mexican government, Heaven Hill released Tabasco brand Spicy Tequila.  Kass said that given how firmly established the Tabasco brand is and the intrinsic overlapping appeal between the spirit and the hot sauce, they wouldn’t have to reach too far to seek out an audience.  “Tabasco is already used so much in a bar environment and at home and even with tequila.  A Prairie Fire is a popular shot in some regions.  The McIlhenny Company that makes the brand hasn’t licensed in a lot of other categories, but they’re careful in licensing in distilled spirits.”  Armed with the tag line “Heat up the night”, Kass said they’re leveraging the Tabasco brand name and equity.  Spicy Tequila launched in Massachusetts in early February.  He said they’ve met with great success in markets like Texas, Illinois and North Carolina, and they’re planning to play up the cocktail promotions throughout the country.  “We’ve dipped our toes in flavored tequilas before.  I’m convinced that if anything is going to make it, this is the one.”  But they may be up for a bit of competition from something that’s a little less fiery but perhaps no less hot.  At the beginning of this year, Proximo launched Gran Centenario Rosangel and it arrived in Massachusetts in February.  Made with Gran Centenario Reposado Tequila, it’s infused with hibiscus, a traditional Mexican flower and finished in port barrels. 
“No one has really cracked the code for flavored tequila yet.  One reason is because the flavored vodka market is so strong that you have to do something really different and unique,” said Proximo’s Gladstone.  “Rosangel is authentic, high-end and easy to understand.  While we’re not positioning it as a feminine brand, there are enormous opportunities to do something sophisticated and accessible.  Pink is doing well as a category – there’s Moët & Chandon Nectar Rosé, interesting pink spirits, plus rosé wine has moved to being sophisticated and expensive.  Across the globe, pink wine is more popular than white.  It’s approachable to a broad range of people.”  He said Rosangel has already drawn comparisons to St. Germain, yet because it’s a tequila, it has a mass appeal factor.

Last summer, Sauza’s newest flavors, Citrus Jamaica and acai berry, arrived in Cape Cod.  Their launch is part of “Fresh and Unexpected”, a merchandising program to boost visibility.
 
KEEPING UP APPEARANCES
While ultimately it’s what’s inside that matters, let’s face it: appearance counts.  Revamping a bottle can mean giving it a more traditional look, imbuing it with sleek modernity or just adding an eye-catching accent to a familiar design.  All, however, are relatively dependable ways way to reignite interest in or awareness of a brand.  “Packaging is so amazing these days,” said Marc Kadish, beverage director at Sunset Cantina in Allston, which brandishes about 15O tequilas.  “There’s everything from perfume-like bottles to I Dream of Jeannie bottles.  To see them all on the shelf is intriguing for customers.” He notes that painted bottles, like Esperanto, Tonala and Tenoch, often raise eyebrows and evoke questions from guests. 

Tony Pujala, brand director for Bacardi’s Tequila Cazadores, noted that the medallion that has long adorned the neck of the tequila’s tall bottle has been replaced by an embossed “C” for a more premium look.  It’s a better reflection, he said, of the smooth yet richly flavored tequila of Arandas, a municipality in Jalisco in the Highlands.  Bacardi also owns the super-premium Corzo and according to Aaron Burns, brand director, it has seen staggering growth of almost 5OO% since its introduction in 2OO4.  There are plans to re-launch the anejo with different packaging next year.  It will look similar, but have different premium cues, like a metal label.  Another aspect of the re-launch is a change to the actual spirit.  They plan to age it slightly longer and use French oak casks in the future instead of new American oak barrels used since its launch. 

Beam Global’s super-premium Tres Generaciones amped up its premium quotient with a new accent that hit the shelves in January.  The bottles of all three variants are now adorned with a metal-beaten collar that covers the bottle’s shoulder.  Also, the label is now adorned with medallions of the three founding Sauza dons and the date of the distillery’s founding.  Turn the bottle around and there’s engraved agave leaves on the back.  The price, subsequently, rose from around $4O to the $45/$49 realm.  “We want to keep authenticity in premium packaging.  Previously it was good, but we want to keep the authenticity and heritage while increasing the premium look,” said Antonio Portillo, Beam Global’s senior brand manager of tequila.  There have also been changes with Beam Global’s ever-popular Sauza.  Portillo said that to complement the new positioning that revolves around the recently launched “Fresh and Unexpected” campaign, the brand has rolled out a more modern, premium-looking label for its Sauza Gold and Sauza Blanco.  It now features a watermarked backdrop image of an agave plant.

This is also the year that Brown-Forman’s Herradura is introducing a new package that’s been in the works for some time.  “Part of the challenge and why it took a while is the fact that it’s an iconic brand and the level of awareness is very strong,” said Valdez.  He noted it’s been tricky because the packaging in Mexico is different from the packaging in the US.  When it was first introduced to the states, the importer wanted to package the line in the square anejo bottle.  (The blanco and reposado were sold in traditional round bottles.) The importer ultimately decided to bottle everything in square bottles. 
w“In the research we’ve done, that round packaging tells consumers it’s a strong tequila, a harsh tequila.  Square bottle tends to be more premium and denote higher quality.  They’re masculine but not overpowering.  We’re making the change gradually.  We don’t want to make drastic change, because we’re looking to have global image.” The redesign is multifaceted, with changes to the cap, the gift box, and the label coming first.  Herradura is Spanish for horseshoe, but Valdez said the horseshoe wasn’t identifiable, according to consumers.  “We want to tell great stories within the horseshoe.  The estate bottle was established in 187O and we want to talk about all those things within the horseshoe.” Changing the glass structure on a global scale is still a year and a half away. 

Keep an eye out for a new look for Heaven Hill’s Two Fingers, a well-established mixto.  Long recognized by its tall black bottle, the redesign on the silver and gold features a similar tall bottle refreshed to look more upscale.  “We needed to catch up with the category.  Now it’s more about authenticity and iconography than it had been,” said Kass. 
“It’s been repackaged and repositioned.  The new package emphasizes the agave plant and name of the distiller, Jose Velasco.  We’re bringing out more of the Mexican authenticity and heritage behind it.” To supplement the new label, they’ve updated retail point of sale and are pushing the tagline “It Takes Two” with new case cards and shelf talkers. 

SILVER’S GOLDMINE
As the result of a classification established in 2OO6 when the Mexican government amended the New Mexican Official Standard to sanction tequilas aged more than three years in oak barrels, a number of brands continue to see their silvers sparkle the brightest.  Many point to Patron as the shot that launched a thousand sips.  Indeed, John McDonnell, Chief Operating Officer of Patron Spirits Company, said the brand continues to show growth, largely due to sales of Patron Silver.  In the 52 weeks ending on February 7, according to Nielsen, Patron was up by 16.6% in dollar sales, showing five times the rate of the category growth of 3.1%.  McDonnell attributes that to several factors: capitalizing on the tequila’s versatility and the company’s advertising sensibility that touches a wide range of demographics. 

Aaron Burns, Brand Director for Corzo, said that the silver is “leading our portfolio”, a triumph he attributes to the relentless success of the vodka category.

Gladstone said a new advertising campaign is coming out for Proximo’s super-premium 18OO that will focus on the silver bottling, not least because it connotes modernity for young consumers.  “We’re trying to grow it because it’s the way the market is going and that’s what’s driving the brand.  Consumers are switching over from gold to silver, and that’s been driven by Patron.  It’s not like reposado is dead.  There are still a lot of consumers who are into reposado.  The majority of business for 18OO is still reposado because of its use in margaritas.  It’s hugely important, but when bringing new, younger consumers into the category, you have to have a strong silver for them if you want to be positioned as contemporary.  People associate clear spirits with a modern, cooler brand.  It’s a cleaner drink and more mixable.”

Adam Rosen, Senior Brand Manager for Jose Cuervo, said that while Cuervo Gold is far and away their biggest brand in terms of volume and awareness, Tradicional, a 1OO% reposado first created by the Cuervo family in 1795, continues to gain popularity, especially as the Mexican population in the US grows.  (It’s the number one premium in Mexico.) The Especial Silver, he said, “has been on fire with distribution levels closer and closer to Gold.  It’s going to be a big win for us.”

Tequila Don Julio Blanco has long been Don Julio’s flagship brand, consistently appearing in the many magazine advertisements and billboards.  Senior Brand Manager Alefiyah Merchant said that the more premium 1942, which is distilled a second time in a pot still, has seen an uptick despite the poor economy, and Don Julio Blanco continues to do extremely well across the board.  “Tequilas are moving to the blancos,” she said.  “Mixologists use spirits from a taste profile perspective.  Consumers are moving more toward the blanco trend because it’s not as strong as anejos or reposados.  We see people drink Don Julio Blanco neat a lot, as well.”

Valdez said Brown-Forman’s brands do bigger percentages in silver.  “We talk about how consumers are better educated, but it’s still little by little, and consumers believe silver means better quality because of limited knowledge and vodka.  There’s heavier consumption on silver overall and with Herradura as well.  We do bigger reposado business versus our competitors because we were the first to introduce reposado.  It’s mostly the choice of tequila connoisseurs and there’s more Mexican consumption.  Over 9O% of consumption in Mexico is reposado, because of the great balance of wood and agave.”

While Proximo’s primary brand continues to be the highly decorated Gran Centenario, which includes a plata, reposado, anejo, and an extra-anejo, that doesn’t mean Proximo is riding on its laurels.  The company introduced the inventive Maestro Dobel Diamond tequila, which is yet another tequila tied to the Beckmann family.  Juan Domingo Beckmann had a major role in developing it.  Clear like a silver, it’s actually a blend of aged tequilas filtered through a proprietary method.  The product’s anticipated success in the luxury realm is based largely on the success of silvers.  “It’s extremely unusual in that it’s a blend of extra-anejo, anejo and reposado tequilas.  For silver tequilas, it’s one of the most interesting tasting products on the market,” said Gladstone.  “People love silver – it’s driven the category, but the problem is there’s a limit to which you can give a really interesting flavor profile without adding flavor to them.  It makes great bases and shots, but to develop a super-premium silver, you need to go a bit further with the taste profile.  Dobel is a silver tequila with the crispness of vodka and the complexity of a single malt.  You get wood and creaminess and fruity characteristics.  People who love Grey Goose martinis and don’t like tequila love Dobel.  It doesn’t have that overpowering rawness that some tequilas have.”  Boston was one of its debut markets, with exclusive launches in about 5O accounts, estimates Gladstone.

Off-premise, retailers also credit the popularity of silvers to consumers associating it with vodkas.  Emmett McDermott, Fine Wine and Spirits Manager at Liquor Land in Roxbury, notes, “I think the success of the mellower tequilas is opening it up to people who wouldn’t normally drink tequila.  Since the silver is unaged, it doesn’t have big full tequila flavors.  It’s very mellow and easy to drink.  I suspect that’s broadening the market.  Those are my more successful ones.  Silver is a huge category and it’s getting people into the category overall.  I’m seeing a lot more women buying tequilas.”

THE INFORMATION AGE
Companies across the board are seeing vast payoffs from education programs, both where bartenders and direct-to-consumer efforts are concerned.  In an increasingly competitive market, knowledge is power. 

Portillo of Beam Global notes that their premium brand, Hornitos, grew 8% in 52 weeks while premium tequilas overall grew about 3%.  To him that’s a signal of consumer curiosity and interest.  “In general, this is just the beginning of the category.  People are more willing to try more and to learn more.  We identified that with our brand ambassadors and education.  People are asking for more tequila dinners.  Consumption around margaritas is growing and we see evidence that people are mixing tequila more.  Our drink strategy for Hornitos is that people drink traditional drinks from other categories, like whiskey or rum.  We can prove that tequilas have characteristics of different things.  That’s where education comes in: people want to know more of those characteristics.”

Aaron Burns said Corzo doesn’t do a tremendous amount of advertising, but as they move into the new fiscal year and focus on blanket distribution, they’re increasing the push programs to educate the trade.  “Corzo is small, it’s niche, and is recognized by connoisseurs as a step up from brands traditionally offered.  We want to leverage that benefit to continue the momentum we’re seeing with trade education.  Our Silver Smooth program educates bartenders about the intrinsic superiority of the brand.  Corzo is unique, never claims to be traditional Mexican tequila.” A big part of the program is ensuring bartenders understand that the tequila is produced through a process involving triple distillation and double aging.  Of course, no part of bartender education would be complete without a cocktail component.  “The biggest marketing program is centered around the modern margarita.  We want to do something even more premium with muddled fresh fruit and agave.  We’ve worked a lot on how to train stakeholders.  We push fresh fruit, provide fresh agave nectar and stem-less glassware.”

McDonnell said Patron has been focusing on its core SKUs and increasing its advertising, noting that historically brands do better coming out of an economic downturn when they “stay true to their marketing practices” during bad times.  For Patron, that involves more billboards, bigger and better spreads with advertisements that appeal to a broad demographic.  “Status is important to this generation,” said McDonnell.  “The brand does well on all channels because we advertise to all demographics.  We transcend demographic and psychographics.  We’re in sports bars and bottle clubs and national on-premise accounts, like Legal Sea Foods.”

While many bartenders and retailers site Patron Silver as the shot of choice among drinkers, especially in nightclubs, the brand is making a bigger push to position itself in the cocktail realm.  The “Summer Mixability” initiative is a “worldwide campaign to get people more educated about the versatility of Patron,” said McDonnell.  It launches on June 15 and the focus is off-premise.  It will be supported by in-store displays and shelf-talkers but there will also be efforts to get menu placements on-premise. 

Brand ambassadors have become an increasingly popular way to ensure direct interaction with the trade and the consumer.  Don Julio has twelve ambassadors in the field.  “They’re a force out there educating bartenders and the trade about Don Julio.  Education is key – and the more you know about it, the more there is to learn.  Blancos are extremely versatile and can be very different as well.  Or maybe someone likes something more herbaceous?  Have it straight, depending on how much they like tequila, or have it mixed because it’s so versatile.  Tequilas are just coming into their own.  We’re still chipping at the surface.  People are more interested in understanding tequilas that are out there.”

Bacardi’s more traditional Cazadores has hitched its wagon to the brand ambassador star.  Pujala notes that in addition to three brand ambassadors working the American circuit, they also work with Manny Hinojosa, who’s based on the west coast.  He’s clinched national mixology championships as well as run restaurants and bars.  “We want to leverage his expertise to talk to bartenders.  He can go to them with the voice of a guy who’s lived in trenches.  When you talk about drinks we’re focusing on, you can’t forget your bread and butter – tequila is consumed in margaritas and shots.  We’re 1OO% and premium, and that redefines the taste experience, and gives it something true and unique.  We’re looking at mixed shots as well.  We created a shot that’s a blanco with simple syrup, lime and beer.  The shot cocktail supports the UFC program.”


PARTNERING UP
As tequila has grown more popular beyond traditional markets, like California and Texas, brands have identified clever ways to gain access to a robust variety of targeted consumers.  Partnerships with other industries and events, especially sports, are proving to be matches made in heaven.  Big news from Cuervo came in January when they launched a partnership with the Institute for Mexicans Abroad.  In addition to donations to scholarship funds, Cuervo Tradicional became the exclusive spirit of and partner for the Mexican national soccer team.  “The biggest thing is to get the message out and touching consumers in relevant, motivating ways so it becomes part of their nightlife and lifestyle,” said Rosen.  “The popularity of Tradicional in Mexico made it easy to focus on Mexican-Americans in the US.  We partnered with Soccer United Marketing.  Tradicional has at-game activation in the form of scoreboard signage and parties leading up to it.  We allow consumers to watch the game with former Mexican players as part of the ‘notorious’ experience.  There are also things we’re doing off-premise and all that leads to biggest attention because of the global nature of soccer.  When there’s on-field signage and the game is broadcast, that gets a viewership five times bigger than the Super bowl.  It’s attention for that brand and the portfolio as a move toward the World Cup in 2O1O.”

Cazadores has taken a flashier approach than Corzo with its “Las Chicas Cazadores” experiential marketing tour, now in its fourth year.  Las Chicas are Mexican women, many of whom have professional performance experience.  “It brings a taste of Mexico to consumers so they can get a sense of what Mexico is all about,” said Pujala.  “It brought the brand to life and has given consumers a deeper experience.” But in the new fiscal year, the platform is changing.  “Experience is an important thing, but we also secured a partnership with Ultimate Fighting Championship, the largest mixed martial arts organization that exists,” Pujala said.  They signed on with them in January and the first major event happened this May in Las Vegas.  “It’s a fully integrated program and we’re the title sponsor of some events and a secondary sponsor at others.” Cazadores has arranged venue marketing, logos, placement on the mats, and on collateral materials.  “There are PR elements, digital elements.  Everything’s activated in a 36O manner to blow it out.  Sales and distribution teams are working all over the US targeting 21- to 39-year-old consumers.  It’s a rich sport in terms of our target consumer, which is a male demographic.  To broaden the reach even wider, the alliance has off-premise applications as well.  This summer they’re doing a cross-promotion with Bud Light and Bud Light Lime.  “We have a good relationship with the folks at Anheuser-Busch InBev, so we’ll do some cross-promotional work with them.  They’re the title beer sponsor of UFC.  The number one cross-consumption of spirits and beer is tequila and beer.  Bud Light is authentic American beer.  We connect on the authenticity standpoint.” Another component that’s part of the UFC deal is that Cazadores will have commercial placements on Pay Per View events, which reach over 4O million people.

Bacardi has leveraged other brands in its holdings by partnering Corzo with its sister brand, 42 Below Vodka, which also puts a premium on fresh fruits and quality cocktail ingredients.  They kicked off the year with a “muddling road show” that involved flying team members around the country to do trainings with distributors.  People would muddle their own cocktails at stations.  Burns said the pitch is “superiority as well as the modern margarita”, a natural fit with 42 Below.  “The goal is to expand distribution.  For many years Corzo was in select accounts.  There are different versions of the margarita: one is complex and one is simple.  We tailor the drink for the account and anyone looking to have a differentiated modern margarita.  It’d have to be faster to make for something like a real Mexican regional chain.  The program is so easy because it really works anywhere,” he said.
Don Julio, the second best selling ultra-premium behind Patron, has kept its advertising stream steady over the past year and is increasing advertising efforts in the coming months. They’ve also upped their spending to get the word out around their “Know Your Tequila” campaign.  There have been strategic alliances with Audi and the Diesel apparel line.  In Boston, they’ve worked with Puma, which has its global headquarters in the state. 
Don Julio enlisted notable personalities.  Architect Jeffrey Beers, for instance, designed a glass for sipping high end Don Julio tequilas in an initiative based on “creating the perfect sip,” said Merchant.  Beers worked with the master distiller to devise a vessel with an ideal depth and rim.  The glasses came out in stores in the fall and there was a large push around the holidays.  There was enough of a PR push that Merchant calls the idea a success.

Beam Global introduced Cien Anjos tequila in 2OO7 and launched it with a big promotional campaign with a focus on the Mexican-American community.  Portillo explained how the brand celebrates 1OO years of Mexican music.  In addition to a CD, they created a photo exhibit of 5O Mexican artists and took the concept to on-premise and stores.  The concept has evolved and now we’re doing a tribute series with real bands.  We’ve been creating partnerships with bands, radio stations and on-premise accounts.”

THE VISIBILITY FACTOR
“This is an exciting time for Jose Cuervo – there’s so much new stuff and new energy and a big pillar of that is advertising,” said Rosen.  Last November Cuervo launched its first new advertising campaign in the US in the last eight years: “Living Notoriously Well with Jose Cuervo”.  The Cuervo family has been behind the brand for ten generations and really helped introduce America to the category.  “All that made ad development such a fun challenge.  It launched with a heavy TV push in November with 3O-second spots for Platino, which the reputable Beverage Tasting Institute recognized as the ‘World’s Best Tasting Silver’.” The campaign had plenty of razzle-dazzle, with stunts like enlisting Pittsburgh Steelers running back Jerome Bettis to Tampa during the Super Bowl on the brand’s behalf.  He hit local bars to scope out “guys truly living notoriously well,” explains Rosen.  Translation: enjoying themselves responsibly and having a good time.  Bettis surprised a pair of lucky sports fans with seats to the game.  There have also been alliances with the DJ-centric Winter Music Conference in South Beach, where renowned techno DJ Paul Oakenfold served as the brand’s scout for a chance to hang out on a private island.

Beam Global has long devoted a good deal of its attention and resources to the giant Sauza brand and also owns El Tesoro, where the focus is on making sure it’s prominent in what Portillo calls “iconic accounts”.  The bet lately, though, is on Hornitos and the recent rollout of a widespread cheeky ad campaign, Mischieve.  “All our investments for this year are on Mischieve,” said Portillo.  “It’s targeted at 25- to 35-year-old consumers who are moving from college to professional life and looking to upgrade from standard to premium.  We want Hornitos to be their partner, the brand that’s going to be beside you for the night in a playful and smart way.  It’s sensual and about flirtation between people.  It’s about the game of how people know each other.  It’s about living that experience, but as part of the spirits industry, we’re aware we need to be in line with DISCUS rules.  We want this to be about upgrading tequila.  We want people to have control of the night.  That’s what it is to upgrade – it’s not about being out of control.” There will be out-of-home visibility, depending on the city, and plenty of print and digital efforts, including partnerships with different on-line publications.

LEVERAGING the WWW
Liquor companies need exposure among the masses, and with media increasingly moving to the web and consumers going online for their news and entertainment and social networking, liquor companies are following suit.  The successful Patron debate campaign, which launched with its own website in 2OO6, simplyperfect.com, aims to remind that as relative as perfection may be in everyday life, there’s no debate that Patron is “Simply Perfect”.  In addition to a wide variety of print ads, the site encouraged interaction and voting on what’s more perfect in different realms of pop culture and taste.  It’s seen success because it’s highly adaptable by publication or region, said John McDonnell.  A recent “call to action” on the site saw New England with the highest level of engagement. 

Cuervo’s “Living Notoriously Well” campaign launched with a strong digital ad component to complement TV spots on ESPN, Spike, FX, and a host of other stations that focus on men’s interest.  Part of that includes livingnotoriouslywell.com, where consumers can learn more about the brand and the campaign.  “It’s not the traditional branded site where you learn about the product,” said Rosen.  “It’s more about getting involved in the ‘notoriously well’ lifestyle and asking: How does a man act?  What are the tips?  How can Jose Cuervo help you live notoriously well?  There are blog-style chapters.”

Portillo said a website is in the works for Hornitos’s new campaign.  “People will tell stories of mischief during the night and find information on what the brand can give to them and what’s important in each different market.  We’ll look to different partners in each market to help us keep it updated,” said Portillo, noting that could include maintaining a catalog of where the brand is available, among listings of promotions and events.  Another interactive component, albeit non-digital, is “Mischief in the Garden of Agave”, which involves producing invitation-only on-premise events. 

Proximo’s Gladstone said 18OO Tequila’s online presence is growing.  The brand does about a half-million cases among its various marks.  The brand has made a push with its limited edition collections of bottles designed by artists, which have appeared in billboard ads in four cities in 2OO8 and will hit Boston this year.  Nine artists were originally commissioned for the first in the series, but then the campaign changed to a contest that required entrants to upload artwork on 18OOtequila.com, position it on the bottle, and compete for a $1O,OOO prize.  Hence, the need for an upgraded website.  Gladstone notes, “18OO is handcrafted in Mexico and the Beckmann family has a long tradition of collecting art.  There’s an artisanship to making tequila and 18OO is a very contemporary brand.  We’re moving away from the traditional Mexican look.”

Cazadores signed on with a digital agency in 2OO8 that’s helping develop a digital activation platform and integrate more brand education pieces.  Pujala points out how it all dovetails with the brand’s other broadly executed programs.  “You can see Tania on there doing education,” he said, referring to one of their Las Chicas Cazadores, “as well as Manny.  The studio also worked with us on UFC activation to create a trivia game that can be played on a laptop, online or off a mobile device so when you go into a liquor store, there’s a call to action on display to use mobile devices to text in code to engage in trivia game, vote for favorite cocktail, get free wall paper and ringtones.  It’s a unique thing, and rather new to the liquor industry.  We’re bringing some of the 21st century into the mix.”

Don Julio launched a new website on DJ.com, and Merchant said they’re involved in an interesting promotion with Urban Daddy called “The Find” – a site where people select two specific qualities about where they want to go out.  The result, of course, will carry Don Julio.  “You find your ideal account,” said Merchant.  It’s a great interactive way to get consumers aware of us in an environment where they’ll ultimately consume us responsibly.”

At the BAR
THE WELL to the TOP SHELF
If you’re curious about how drinking trends differ between cities and suburbs, talk to a manager of a newly opened suburban venue that happens to be a second endeavor for a well-established South End haunt.  For tequila, the best case study is Masa Southwest Bar and Grill.  “We looked at the demographic around us and saw a lot more families around here versus single people,” said Mohamad Elzein, Director of Operations and a partner at the new Masa Woburn who worked many years at the South End outpost.  “We decided not to have not as large a tequila selection as we have in Boston, where there’s usually about 9O on the shelf.  In Woburn we have about 5O to 6O tequilas.  In the city, people have a more sophisticated palate for tequila.  We built people’s palates in the city and built the list.  Regular clientele come in and inquire about new tequilas.  In the suburbs we have to start the same way as when the first Masa opened.  We’re building on the list that way.  I notice a trend in the suburbs is more wine sales.  We don’t have a lot of the middle-range tequilas in Woburn.  People get what’s in a super premium like Don Julio 1942 or what’s in the well.  Of course, reposados make great margaritas because of the level of oak, so we’re educating staff to suggest margaritas with reposados and we’ll run specials.”

As far as urban consumption goes, Elzein said that in 2OO8, sales at the Boston restaurant grew 5.7% over 2OO7 figures largely because of bar business.  “I’m seeing more tequilas sit for no more than two or three weeks.  People are experimenting with different tequilas.  When people experiment, the first way is in a mixed drink, two is neat and shot is the last way.  We did a tequila dinner and now have regulars who want us to do Sunday night dinners regularly.  I haven’t seen it slow down,” Elzein said. 

Perhaps as a natural extension of the trend of introducing guests to smaller production wines, high-end restaurants are increasingly replacing mega brands with smaller boutique tequilas at their bars.  When Auguston Lino became bar manager at Upstairs on the Square in Cambridge, he stopped ordering Herradura and Patron and set off in pursuit of “something new that guests couldn’t get before.  We went with Don Julio 1942 for our top shelf tequila and the next move we made was silver.  We put Milagro in the well in early 2OO8 and it’s been a great change.  The response from guests has been great.  We use Milagro in featured cocktails on our list.  The last tequila I added that people went crazy about was Siembra Azul, one of the purest, clean tasting tequilas I’ve ever tasted,” he said.  He finds tequila a natural fit for people these days: “The times dictate what people drink.  Everyone’s thinking about the economy now.  Take Cognac – because our currency is so poor against the euro now, I suggest a guest try a tequila or aged rum where our currency weathers better.  I think that’s something everyone will be looking at in the future.  In general, younger consumers are looking for tequilas more than older ones.  When a baby boomer comes in and orders gin, it’s hard to change that person’s mind.  Younger people have so many more options.  Because of the internet and bartenders, they’re more educated than they were 1O or 2O years ago. 

Marc Kadish at Sunset Cantina has three gold tequilas in the well: Zapata, Cuervo and Sauza, and he’s been purchasing more high end tequilas for the shelf than he has in the past because he finds more people willing to branch out.  “We do a lot of tequila flights of four half-ounce pours of their choice,” he said.  “It’s a good way to sample.  They can try a whole lineup of a tequila brand.  We have a tequila club where we give you a card and you get a punch for every premium tequila you try.  We get people trying every one over time and looking for new ones.”  They serve house sangrita as a chaser, which gets a good response from guests.  “A typical bar doesn’t serve that.  It’s just another fun thing to get into.  The experience of all that gets them more adventurous.  The old days of salt and lime I think are over.”

Among brands doing well, Kadish said, are AsomBroso, which gets attention for the vanilla characteristics evident throughout the line.  They also do good numbers with Don Julio.  But one observation from Kadish speaks to the ephemeral nature of boutique brands.  “Cabo Wabo hasn’t picked up a ton compared to where it was.  A lot of people ordering that one branched out to be more adventurous,” he said, referring to the premium tequila launched by Sammy Hagar.  “It’s like training wheels with some premium brands.  Before you know it, people have the confidence level to get more adventurous.  It was harder to get people to try stuff years ago, now they’re more comfortable to try mescal.”

The RETAIL REALM
Arguably the most talked-about trend over the past 12 months is how people are increasingly taking the economical route and drinking and entertaining more at home, so sales off-premise are up compared to sales in bars and restaurants.  That said, many brands are doing more to appeal to draw attention on the shelves.  Corzo, for instance, is launching a 375ml size for all three of its styles.  They should be available in June, said Pujala.  He also said they’re looking to ramp up the availability of the 5Oml bottles. 
One thing that retailers agree on is that tequila has outgrown its perception as a seasonal drink, but sales represent a good mix of value brands and super-premium.  Jeff Fine, General Manager of Atlas Liquors, which has outposts in Quincy, Roslindale and Medford, said he’s increased his tequila inventory, but not too quickly.  “It’s a slow growth in all the stores, but primarily the growth is in the Medford store.  People are still grabbing the mixtos, they’re definitely the bulk of the business, but we’re doing well with 1OO% agave artisanal tequilas,” he said.  “People are reading about the spirit more and becoming more aware that if they drink tequilas, they won’t be barking at the moon.  It’s come a long way from a nasty hangover drink.  Reposados are driving the premium sales.  Blancos are growing at this point, but they’re disproportionately low.  I think it’s because we have a tremendous single malt collection, so we’re pulling a lot of Scotch and bourbon drinkers and because of that they’re looking for barrel influence.  Traditional tequila drinkers like the blancos.”
“Tequila seems to be a category that has more action in it, not just another flavored vodka.  The Cuervo crowd is still going fairly strong.  A lot of people do that for the bulk,” said Emmett McDermott at Liquor Land.  “Then there’s the Patron angle.  Now that it’s become pop culture, I think that’s actually helped the whole category.  It’s made the $5O bottle of tequila the norm.  When we pushed tequila for Cinco de Mayo in the past, it was all about the plastic jug.  Now it’s about experimenting with higher end brands.  People are willing to spend money on nicer cognac or pink or blue liqueur, they’re used to paying those prices, so some of these tequila prices fall right in line.  Milagro is one of the ones that flies here – mostly the silver.”  He said that there’s still a good deal of education left to be done, but it’s on the right track.  “Many are interested, but don’t understand the designations.  I answer a lot of questions I wasn’t asked in the past.  People are actively interested, and it goes back to Patron.  People think the different styles must mean different flavors.  It’s a good training tool.  People have seen it, they know they’re hip and happening if they buy it.  For those who want to spend, older standards like Don Julio and Herradura have picked up.  Corzo is one I like trying to get going.  Employees are interested in it so they relate on an eye-to-eye level.  That helps the category.”  As far as off-premise sales tactics go, McDermott said that where marketing materials are concerned, information trumps flash.  “We have a lot of shelf-talkers.  Some of them work if have descriptive information that helps people understand what makes a product is and why they should buy it.”
As sophisticated as tequila gets and as much as people grow aware of its complexity, it will never shed its party time reputation.  The steady off-premise sales of golds speak to that.  “Cuervo is more of the party jug for margaritas.  I don’t recommend anything greater than that if someone is doing party margaritas,” said McDermott.  Off-premise, of course, is the ready-to-drink brands boom.  “Cuervo Gold Margarita and Sauza Gold Margarita sell here for weekend bottles of tequila when people buy margarita mix.”
With the growth of at-home entertaining, there have been more entrants in the ready-to-drink segment, and it’s only going to increase.  Gladstone said that 18OO is getting ready to launch 18OO Pomegranate Margarita.  Antonio Portillo with Sauza noted that the brand, Beam Global’s largest in terms of volume, unveiled three new ready-to-drink flavors –  traditional, strawberry and mango – with alcohol.  Another innovation in the RTD segment comes from Sauza with their April launch of Sauza Margarita-in-a-Box, a blend of lime juice, Sauza Blanco, triple sec, and margarita mix.  “It’s part of the evolution of the margarita,” said Portillo, who noted it also fits in well with the “Fresh and Unexpected” marketing push.  “It’s for people who enjoy the margarita experience everywhere.”

Agave plants may take years to grow to maturity and tequila may take some time to age, but its popularity grows quickly.  Brands of all caliber are putting more efforts and resources into education and promotion and developing creative alliances to draw a wider consumer base, ensuring that the spirit shines bright as a sunrise in the consumers’ cons ce as people recognize “1OO% agave” as an indicator of quality.  Increased knowledge gives way to increased appreciation, and there’s always room for improvement too.  With new brands and new styles emerging as the brand grows, it appears that the spirit has gone from a shot drink to industry big shot.

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