Posted on | March 26, 2012
Written by | Jack Robertiello
It’s a question retailers and restaurateurs, even the most agave-centric, are facing more and more today. The flood of new brands has proven to be more than a bit overwhelming, spurring comparisons to the constant stream of new vodkas.
Think of it this way: while only around 150 or so Mexican distilleries are legally registered to produce tequila, there are somewhere in the neighborhood of 1,300 separate brands, with some distilleries producing dozens of labels. Few of them have legitimate hopes of becoming the next Patrón, but all seem to be betting on the current American fascination with agave.
Figures gathered by the Distilled Spirits Council of America (Discus) confirm the overall agave spirit surge; in 2011 tequila sales were up more than three percent to just over 11.9 million cases—making it the sixth largest category, bigger now than Scotch, blended or Irish whiskies, brandy or gin.
Most of the growth has been among those 100% agave tequilas made only with sugars extracted from the blue Weber plant and produced in one of the five Mexican states allowed to make tequila. The higher the price, the better things are—super-premium brands grew 11.3% percent, while high-end premium grew 9.1% (Discus includes such brands as Cazadores and El Jimador in their definition of high-end brands, while Patrón, Herradura and Don Julio are among the super-premium brands).
As long as the agave fields can support it, there will be more says Dori Bryant, whose Spirits of Mexico competition and events have attracted hundreds of brands and thousands of attendees. “Consumption of tequila has risen more than 40 percent in six years, and we can expect the brand explosion to continue,” she says.
The average restaurant or retailer may still mainly carry the leading brands bolstered by national marketing and advertising support. Yet numerous retailers and operators have focused on establishing themselves as tequila destinations. That task is more challenging now, both because so many more establishments with an agave focus are vying for that niche and because the plethora of brands is difficult to keep up with.
Fittingly, there’s a bit of the Wild West feel in the tequila market, something noticed by Zack Romaya, whose Old Town Liquors in San Diego has built its reputation as a tequila wonderland.
“Lately, a lot of importers are coming into the market and then they leave the business quite quickly,” he says. The new brand owners, who generally contract with a distiller for production, may be passionate, but their products may simply be unimpressive or indistinguishable from others, making them harder to sell.
Romaya knows the trend well, since he’s developed his business selling as many tequilas as anyone in the United States. He’ll take on almost any new one, “but it’s getting to be too much, too costly to carry so many and we’re running out of room.”
Many operators are now compelled to draw the line at a number that makes business sense and tweak the portfolio along the way. At La Biblioteca de Tequila, the lavish basement bar in chef Richard Sandoval’s three-story restaurant Zengo in midtown Manhattan, the menu includes around 400 different agave products (including mezcals and mixto tequilas), part of the library approach its name suggests, says beverage director Courtenay Greenleaf.
“At this point this question is whether or not to take more on,” she says. “We try to represent all the agave spirits, and as a ‘library’ we have brands that fit into different niches. There are those we consider our classic novels—the Cuervos and Don Julios and other brands everybody knows. We also have what I consider a cheesy romance section, and some things from pop culture, too.” Something for everybody is the concept, but picking among the new keeps her focused on price point mix and a tequila’s point of difference.
To elbow their way onto her list of about 80 brands (La Bibiloteca typically carries all expressions—blanco, reposado, añejo and extra añejo—if available), tequilas must represent something different, perhaps a unique flavor profile. For instance, Greenleaf wants to be able to offer guests contrasting samples in flights of tequila—say, two reposados, one lightly rested and one that has taken on more oak.
Lately, she notes, newer brands are arriving more clearly crafted for the American, especially female, palate—lighter, sweeter, easier to drink and decidedly less earthy and rustic, a more traditional style many tequila aficionados seek out. Punta Serena, a 100% blue agave tequila, is one of these. Punta Serena creator Kimie Kitahara says that her vision was to “create a brand of tequila that provides not only impeccable quality but aesthetic beauty as well.” The award-winning, super smooth liquids (the añejo is aged three times longer than most competitors) are packaged in sleek Cognac-like bottles with emerald jeweled caps projecting an obvious feminine appeal.
For those operations with limited space, a mini-mezcal boom is making decisions about shelf space even more challenging. At the recently opened Viktor & Spoils in New York City, manager Leo DeGroff needed to curate the agave selection for the modestly sized spot to include a range of tequilas and mezcals. To do so, he eschewed many of the top 20 best-selling tequilas and focused on unique bottlings. “We wanted to make sure we represented the various regions and different styles for people who want to take the next step in their discovery of tequila,” he says.
For some, though, the more brands the merrier. Take Mi Tierra, one of San Antonio’s busiest restaurants. In 2007 when current beverage manager Tony Aguirre arrived, the popular restaurant carried perhaps ten tequila brands—Herradura, 1800 and other marquee names. Now, they carry 200 or so expressions and go through more than 15,000 bottles of tequila in a year. And Aguirre would take on more if he could.
“I’m finding out that people are looking more and more to branch out and get away from the familiar brands and try these newer expressions,” he says. He cites such brands as Cielo del Diamente, Maestro Dobel and Siete Leguas as those gaining traction.
Points of Distinction
Newer brands are forced by intense competition to seek points of differentiation. Lunazul is one of the few estate-grown tequila. Newcomer Arrogante uses only traditional stone ovens to cook agave, rather than stainless steel auto-claves, and employs juice from only the first pressing. Rudo and Tecnico, two brands from Double Eagle Imports Ltd, focus on marketing surrounding Lucha Libre, the Mexican professional wrestling style, and its two main personalities—Rudo (a brawler fans love to hate) and Tecnico (the good guy). Appealing to calorie counters, the new Slim brand (technically tequila with natural flavors) is 60 proof, but remains remarkably true in its flavor profile thanks to the inclusion of agave essence.
Tequila innovation includes flavors, too. Tarantula Azul from McCormick Distillers is technically a “tequila liqueur.” It’s a brilliant blue color and infused with citrus flavors (there’s also a strawberry version) designed for margaritas and cocktails (also available in ready-to-drink pre-mixed four packs). Agave Loco (100% agave) is infused with natural pepper oils—jalapeño and serrano—and results in tequila that packs a pleasantly spicy punch, particularly in Margaritas.
Tequila Avión, a brand that hit the ground running two years ago accompanied by significant media spend (and a role on the TV show Entourage), was quick to win over critics, picking up a Double Gold at the 2011 San Francisco World Spirits Competition. Boasting ultimate smoothness as their calling card (thanks to a proprietary Ultra Slow Filtration process), Avión’s Silver, Reposado and Añejo expressions are all made from high-elevation agave plants grown at 7,000 feet.
Most spirit companies of any size, even those not traditionally known for interest in agave, are spending more on their tequilas. Heaven Hill in conjunction with joint venture partner Tierra de Agaves recently launched a broad-based consumer marketing and print advertising campaign for Lunazul Tequila. The brand, known as a high-quality blanco and reposado positioned at a price point just above the mixto category leader, is an estate-grown, small-batch tequila backed by the Beckmann family.
Even wine companies have entered the fray: Gallo launched Familia Camarena Tequila in spring of 2010. The brand has a unique selling proposition: a premium 100% blue agave tequila with a more value-oriented price point—$20 (critics and consumers seem to agree to quality overdelivers for the price).
“Customers are definitely ready for new expressions,” agrees Old Town Liquor’s Romaya. “Our customers are looking for something less mass market. Tequilas now are like wine for me—there’s a different flavor for every occasion and every palate.”
In the Know
As customer interest in agave spirits grows, staff training and customer education become even more important. Tequila salespeople need to know more than the differences between a reposado and an añejo tequila; tequilas from the highlands of Jalisco tend to be sweeter, more floral and citrusy, while lowlands brands tend to be earthier, spicy and vegetal.
Greenleaf points out that establishing a reputation as a serious tequila destination isn’t all about quiet contemplation, however—in addition to serving customized flights of tequila, La Biblioteca also offers tequila sno-cones, a trio of Mexican street-style shaved ices served in paper cups and topped with tamarind, hibiscus and strawberry syrups.
Tequila’s New Expression
As the wave of tequila continues, new expressions going beyond the legally defined blanco, reposado, añejo and extra añejo contribute to the expansion.
Take Don Julio Claro, the brand’s 70th anniversary tequila. Starting with standard Don Julio añejo, the distillers filter the tequila through a process that returns the agave flavors to the forefront, yet still retains the expected oakiness—vanilla, caramel, etc.—of an aged variety.
Filtering in this manner has been tried before, of course, as seen in Maestro Dobel, said to be the first crystal-clear aged tequila. But Dobel, an attempt to combine complexity with the crispness of a blanco, blends extra añejo, añejo and reposado tequila before the filtration.
While most tequilas are 80 proof, a few come in a higher potency, most notably (for its TV advertising presence) 1800 Select Silver 100 proof produced using two distillations, then blended and filtered.
A new brand, Revolucion, has recently entered the U.S. with five expressions, including a 100 proof version. From the plantations in the lowlands of El Arenal, Jalisco, the brand also differs in its use of barrels that have been used exclusively for tequila for at least 20 years.
And then there’s the celebrity angle, already worked by Justin Timberlake for his 901. Now welcome (at least in Texas for the time being) Kinky Friedman’s new Man In Black Tequila, including a six-year-old extra añejo Friedman calls “Tequila Noir.”
Few brands have chosen—yet—to follow the lead of Ocho Tequila, which has pioneered specific estate vintage expressions, leading to a different range entering the market annually. But by next year this time, the market will be sampling Expresiones de Corazón, four experimental tequilas using barrels exclusively provided by brand owner Sazerac, including a reposado aged in Buffalo Trace bourbon barrels; and three añejos—one aged in Sazerac rye barrels, one in George T. Stagg barrels and another in Van Winkle barrels. The small production releases (about 22,000 bottles in all) will be the first in a series that Corazón will offer under the guidance of Sazerac’s national tequila sales manager David Grapshi.
Leaders of the Pack
While new brands inevitably excite interest in a spirit category, the lion’s share of volume and consumer interest still comes from brands at the top of the heap.
At Jose Cuervo, for the largest-selling brand, plans include new flavors in their ready-to-serve line for both Jose Cuervo Authentic Margaritas and Light Margaritas. Cuervo will also drive consumer connections with more than 5,000 promotions on-premise, reintroducing of the Cuervo 3 Ways shot serving board, which will also take center stage on the brand’s Facebook page. Off-premise, the brand will supply cross-merchandising and POS materials. Additionally, select retailers will run a custom label program through June so customers can have a picture placed on their bottle of Jose Cuervo Especial Gold or Silver.
Last spring, Beam Global unveiled Sauza Blue, the first 100% agave tequila from the brand, available in both silver and reposado. Both bottlings are designed to emphasize freshness—the agave plants are put into production within 48 hours of being hand-picked, resulting in the freshest, most agave-forward expression. (Interestingly, the emphasis on real agave is happening in the value tier as well: Old Mexico Oro Tequila promotes its inclusion of 70% agave, compared with most other value brands which contain only 51%, the minimum by law).
Patrón now has a tequila-based liqueur called Dark Cocoa XO Patrón, a blend of silver tequila with coffee and cocoa. Patrón will continue with its Secret Dining Society consumer campaign, hosting private dinners and events.
Herradura is partnering with mixologists in key markets to develop innovative cocktails. The brand is also joining forces with Esquire magazine and digital lifestyle outlets like Urban Daddy to promote the tequila mixology movement and its own Herradura Barrel Select Experience.
Don Julio off-premise activity will program around holidays and summer activities. This year celebrates the 70th anniversary of the year that founder Don Julio González started making tequila, and the brand will mark this with the continued roll-out of Don Julio 70, an añejo tequila filtered to restore the crisp agave flavor.
Tequila is made from the blue agave plant, which resembles a cactus but is actually a member of the lily family. At the heart of the plant is the “piña” (similar in appearance to a pineapple), which produces the aguamiel (“honey water”) that is fermented and distilled.
Tequila may only be produced in designated areas of Mexico, most noteably the state of Jalisco; the spirit takes its name from the town of Tequila.
There are two basic classifications for tequila: 100% blue agave, which must be 100% from blue agave plants and bottled in designated regions of Mexico; and mixto, which must be at least 51% from blue agave.
Tequilas are further segmented based on aging. Blanco (aka silver) is clear and unaged. Joven (aka gold or abocado) spends several months in tanks before bottling. Reposado (meaning rested) is the first definitive level of aging; these tequilas rest in wood (usually oak) barrels for two to 12 months. Añejo (meaning “old” or “mature”) applies to tequilas aged at least one year in oak barrels; these tend to be darker, smoother and more complex. Extra añejo tequila has rested at least three years in barrel.