WHITE SPIRIT – TEQUILA: Mexican wave

Despite its reputation for slammers and monstrous hangovers, Tequila is the fastest-growing spirit bar none. Fionnuala Synnott investigates

For many people, the word Tequila conjures images of moustachioed gentlemen or nights lost to cheap shots and filthy hangovers. But whatever the situation, you’re always guaranteed a reaction the moment you mention the T-word – whether it’s quasi-religious fervour from the initiated or strong revulsion from Miss vodka and cranberry.

In the past, Tequila may have been memorable for all the wrong reasons, but increasingly, the category is becoming associated with premium-quality spirits, thanks to the recent influx of 100% agave Tequilas to the UK market and the recent trend for sipping Tequila neat. Both of these factors have made Tequila one of the most dynamic spirits categories.

This growth has been driven by the enthusiasm of several on-trade champions. Among tequileros, Tomas Estes needs no introduction. The first person to open a Tequila bar in Europe (Amsterdam 1976), Estes has devoted the past 30 years to promoting the spirit, earning him the title of Tequila ambassador to the EU. Those in the know have been drinking at his Mexican bars, La Perla and Cafe Pacifico, for years. Estes is excited about the growth of the category: “Tequila is up 4%. Admittedly, this is from a tiny base, but something is happening here and in the US, where it is also the fastest-growing spirits category”.

More recently, The Green & Red bar and cantina, founded by Huw Gott, Will Beckett and Henry Besant (also MD of the Worldwide Cocktail Club), has raised the profile of the spirit by serving it with food and refusing to stock anything less than 100% agave behind the bar. Gott says, “There is definitely more customer awareness and interest in Tequila than there was when we first opened two years ago.” Besant has also noted a change: “Until a few years ago, there was a very small amount of quality Tequila available in the UK. With the exception of Tomas Estes and his bars, there was very little knowledge and no Tequila-focused venues. In the past 24 months, there has been a huge influx of 100% agave Tequila. This trend has come from the ground up, as bartenders are big fans.” According to Besant, the current consumer fascination with food traceability has worked in Tequila’s favour, as it has provenance. Estes agrees: “People are more aware of provenance and are drinking less but drinking better. Standards are going up and people are finally paying attention to what makes the product good.” As Alex Fitzimons, the UK importer and global brand manager for Arette Tequila, adds, “The public aren’t happy drinking mainstream pub brands anymore and are opting for quality instead”.

Mixing it

The growth of Tequila is not just an on-trade phenomenon: off-trade sales are up 7% by volume and 6% by value (Nielsen MAT to 31.07.07). Tequila’s passage from cult drink to commercial spirit has been fuelled by investment from producers keen to replicate the category’s success in the US in the UK market.

In a bid to attract new consumers to the category, producers are focusing on Tequila’s diversity and its long-drink potential and are moving away from its association with shots. Patrick O’Neill, marketing manager for Patrón at Cellar Trends, comments, “Patrón wouldn’t be successful if people just drank shots. We are focusing on the versatility of Patrón silver, which accounts for 75-80% of our sales. The ultimate serve is on the rocks with lime, but the category is so misunderstood here that we are introducing the brand by getting consumers to enjoy cocktails.”

Jose Cuervo is encouraging both the on-trade and consumers to try Tequila with well-known mixers. Marco DeStefanis, senior commercial director for Europe and Asia, says, “Our main focus is Jose Cuervo Especial and cola.  Other options include Jose Cuervo Especial and ginger ale, Jose Cuervo Clásico and tonic or cranberry juice.” The brand is also encouraging consumers to try Tequila cocktails with meals and has been promoting its ready-to-serve Margaritas in Tesco, ASDA and at festivals this year.

Cocktails are also a focus for Don Julio. Brand manager Will Peacock, of Reserve Brands Group, explains: “It is vitally important that producers in the UK look at the variety of ways that Tequila can be used, whether in long drinks, cocktails or even with food. Tequila really does make an excellent cocktail, as there are so many flavour profiles that a bartender can play with, from a platino, to the reposado and añejo that are aged in oak.” Sauza, meanwhile, has entered into a partnership deal with the Pitcher & Piano chain, where it is listed on the cocktail menus.

According to Guy Lawrence, global brand director for Cazadores, producers need to work on people’s preconceptions in order to encourage widespread consumption of the spirit. The brand is therefore: “promoting authentic Mexican usage such as sangrita and Margaritas.”

At a premium
Brands are keen to attract new consumers but are also looking to convert existing consumers to better Tequila. In fact, it seems that nearly every Tequila to hit the UK market in the past two years has been billed as a premium offering. Green & Red’s Gott says: “Lots of brands have seen the success of Patrón in the US and are trying to replicate it here. It’s not the end that excites me the most, but premium Tequila helps generate interest in the category and shows that it is a good-quality spirit.

The luxury end rubs off on the category in a positive way and attracts Cognac and whisky drinkers.” Besant agrees, even if there is a risk that some of the new products may price out mainstream consumers because they are restrictively expensive. “Just to have them in the market shows that Tequila is a quality product.”

Don Julio’s Peacock thinks there is enough room in the market for brands that offer quality and authenticity: “The premium sector is the fastest growing, especially at the luxury end. In the US, the ultra-premium category is growing by 40% and this is driving growth in the Tequila category.” But Arette’s Fitzimons doesn’t think the situation is sustainable: “Tequila is already a very crowded market at the top end. Some people are having to bring down their prices in order to sell more units.”

Estes adds, “There aren’t too many premium Tequilas – there are too many pseudo-premium Tequilas. Just because the price is high and the bottle is beautiful  doesn’t mean it’s a great Tequila.”

James Rackham, chairman of Emporia Brands, which distributes Casco Viejo, 100% agave Don Agustin (the new Green & Red house pour) and premium Maracame – all produced from the same single estate – thinks it is vital to have a brand hierarchy to encourage consumers to trade up. “Our success is partly explained by these three tiers, which serve as stepping stones for consumers.” Casco Viejo is a mixto – a Tequila made from a minimum of 51% agave combined with other sugars – made with 70% agave.

Education is vital to the future development of Tequila, particularly among bartenders, who can then spread the word among consumers. Green & Red’s Gott says, “Brands have cottoned on to the bartender route to market. One of the key ways to promote a brand is by training barmen and organising cocktail competitions.” Don Julio, for instance, runs a “World Class” programme for leading bartenders in 350 UK bars. Peacock says, “This not only drives knowledge of the category but also the brand, so that the barmen can recommend Don Julio to consumers in their bars.”

Spreading the word

Tequila brands are also working together in order to inform the on-trade. Last month, major Tequila producers and leading barmen gathered on Bendor (the island owned by Paul Ricard) to attend a three-day “Tequila All Stars” masterclass, organised by the International Bar Business School and hosted by Estes.

Other initiatives include the Agave Academy, set up by Arette’s Fitzimons in April this year. His mission is to “spread the word of Tequila to as many people as possible”. He adds, “People need to know about the category beyond its brands – I want the whole world to drink Tequila.” In Gott’s opinion: “It’s all about selling the category as well as selling brands. Arette and the Agave Academy have been great at educating consumers about Tequila”.

The main priority for the Tequila trade is to build a quality image. “Tequila has a wonderful but damaging reputation as a party spirit. It shouldn’t lose its bad-boy image but it should also wear pinstripes and spats from time to time, in order to be able  to rival Cognacs and single-malt whiskies,” says Fitzimons.

Tequila-based long drinks are an important element of this strategy and will help the category to grow, while allowing it to remain competitive with other popular spirits such as rum and vodka.

As consumer awareness of Tequila as a long drink grows and recruits consumers to the category, the potential for sales will also increase. Fitzimons comments, “The long drink is the answer to building Tequila’s longevity and mass appeal. We are trying to champion the Paloma (a blend of Tequila, grapefruit juice, lime juice, and soda) – an easy, refreshing drink that complements the agave flavour.”

Potential for expansion
As Tequila becomes more popular in less traditional on-trade venues, the potential in the off-trade will grow. “We are seeing premium Tequila growth in the specialist off-trade, duty-free and the likes of Harrods and Selfridges. This will continue to grow as consumers become interested in what Tequila has to offer,” says Peacock.

With only 100,000 9l cases currently sold in the UK off-trade, there is still lots of potential for expansion. Lee Millet, Sauza brand manager, says, “Supermarkets are not very focused on Tequila at present but as bartenders get more consumers into it, this will change.”

Tequila has versatility, provenance and strong on-trade support. The industry is also attracting new investment, with new brands such as Ocho  launching in the UK market. (The Tequila, which is a collaboration between Estes and the Camarena family, is the first Tequila brand to bear a vintage). Although it seems unlikely that Tequila will ever be mainstream, the spirit continues to make new converts, thanks to increased knowledge and quality products. Besant concludes,

“We are now some way to winning the battle against inferior-quality Tequila.” 

© db November 2007