TEQUILA: Call to the cocktail bar

As ever more Tequila brands enter the fray, the industry aims to find ways to steer consumers away from shots and towards long drinks, writes Gabriel Savage.

One Tequila, two Tequila – oh wait, not any more. Tequila is growing up, or rather, it’s asking consumers to get over their student days and take a more mature look at the category.

Let’s not be naïve here: plenty of the Tequila shifted in the UK each year is still not exactly being savoured, sipped and swirled, but as new launches pile weight on the premium end of the spectrum, brands are working hard to raise perceptions in line with price points.

“Tequila is going through a really interesting phase,” comments Justin Bater, director of strategy firm Cognosis Consulting. “The challenge is how much that gets translated to a broader consumer base.”

Without doubt, the main channel for achieving this shift is the on-trade. Patrón, which claims single-handedly to have created the ultra-premium Tequila category, has secured itself a prominent bar platform at a series of major events this summer. From cocktail sponsorship of Bistrotheque’s pop-up restaurant above the Olympic site, to a partnership with London’s Met Bar, a floating bar at July’s Henley Festival and a strong presence planned for London Fashion Week and the Mobos, Patrón is pushing hard to infiltrate consumer consciousness via some carefully calculated positioning.

Equally keen to nurture its link with the high-end bar scene is Olmeca, which in November chose London as the scene of its international launch for Olmeca Altos, the brand’s new 100% agave Tequila reposado and blanco range. “The London cocktail culture and bar scene is widely considered to be the best in the world, in terms of the quality of the cocktails and the talent and innovation of the bartenders that work there,” explains Michael Kaller, international marketing manager for Olmeca.

Drawing a further link with the bar scene, Kaller notes that: “Olmeca Altos was co-created by top bartenders and our primary target is the bartender himself, so the brand will continue to build strong and sustained relationships with them, not just in the UK but on a global scale.”

Despite this distinctly premium-focused Tequila movement taking place, there’s an acceptance that simply ramping up the price risks alienating consumers. For a category that is working so hard to bring more people on board, such a move would simply swap one barrier for another, albeit a more aspirational one.

This concern is tempering activity at the ultra-premium end, for the moment at least, with attention lavished instead on nudging consumers towards 100% agave products at a premium but nevertheless accessible price. Rafaelle Berardi, CEO of Tequila Corralejo, offers his own assessment of the prevailing wind: “I’m convinced that, in the long term, medium-priced products will take over the lower-quality, low-priced mixed market.”

However, he continues: “At the moment, premium high-priced positioning is not necessarily one we believe will help increase awareness; it helps only to create an expectation for the category.”

In keeping with this market view, the team behind Tequila Blu has been directing its own efforts very deliberately towards improving both quality and perception among mainstream consumers. “It is our mission to make Tequila Blu the Tequila that others are measured by at an entry level,” announces Julian Moss, CEO of brand owner ASM Liquor, which has already enjoyed “rapid growth” on the back of this strategy in its Australian home market.

Identifying the main hindrance for the category in the UK, Moss observes: “Too many UK consumers’ understanding of Tequila is based on bad experiences of mainstream brands.”

In order to create a bridge between the shot-fodder of student bars and the Rolls Royce offer at the top end, Moss explains how the brand is spearheading its UK strategy with a reposado, the style he believes “embodies the best of Jalisco at an affordable price with outstanding quality”.

The Tequila Blu version has been carefully positioned to add a competitively priced edge to the industry’s 100% agave benchmark. Certainly, Kaller is in little doubt that the 100% agave route is the wave to be riding at the moment.

Reporting “unprecedented growth” for Olmeca in this area, he maintains that this demonstrates “a shift in consumer trend, and one that we are likely to continue experiencing”.

However, Bill Oddy, CEO of The Drinks Company, UK distributors for Sierra Tequila, warns against the automatic canonisation of 100% agave products. ”We would avoid the temptation to say one style is better than another,” he comments, “Rather, there are very good offerings in both representations. Also beware of cheap offerings for both styles.“

A move to Margaritas

Combine this bartender focus with “masstige” positioning and it comes as little surprise that cocktails are the vehicle of choice for many Tequila brands. The flexibility and scope of this avenue is evident from its adoption by Sauza right across its triple-tiered portfolio. At entry level, the current campaign is based around promoting the Margarita, with oversized shakers distributed through the on-trade.

Moving up a notch to its 100% agave brand, recommendations such as the Hornitos Paloma offer a longer, more refreshing cocktail option; while at the super-premium Tres Generaciones level, the focus is very much on developing individual relationships with bartenders through a mentoring programme launched last year.

Jen McLaren, brand manager for Sauza at Maxxium UK, explains how the brand plans to develop the scheme for 2010 by organising masterclasses for “newbie” London bartenders, led by the Tequila expert and Café Pacifico founder Tom Estes. “It’s about extending drinking occasions and presenting Tequila as a usable, presentable spirit,” comments McLaren, adding: “The long serve is a really good way to get people back into the category, especially if they got put off it by shots when they were younger.”

The classic status of the Margarita makes this cocktail a particularly obvious and popular candidate for raising the profile of its core ingredient. Last month saw the culmination of the first annual Olmeca Margarita Contest, a week-long competition hosted by the brand in partnership with The Tahona Society, a global network of bartender Tequila aficionados.

As suggested by their brand activity this year, the team at Patrón is no less convinced that the burgeoning UK cocktail scene provides a profitable, appropriate approach for the ultra-premium face of Tequila too. Indeed, Jason Nussbaum, international brand manager for Patrón, is confident in his assessment that “because ultra-premium Tequila like Patrón is so versatile and mixable, and the UK’s cocktail culture is so vibrant, the growth potential for ultra-premium Tequila in the UK is enormous”.

From an independent perspective too, the growth potential presented by the cocktail market is the most attractive, logical route for Tequila to pursue. “I have reservations about how big the sipping trend can grow,” comments Bater. By contrast, he acknowledges the ability of cocktails to “get Tequila into more people’s hands in a way that takes it away from shot glasses”, noting the additional boost that can be provided here by the current growth in ready-to-serve drinks.

While the growing awareness and widespread brand focus on 100% agave product is good news for raising the basic quality of Tequila presented to UK consumers, Berardi feels this movement “is still not at critical mass”. Moss takes this criticism a stage further: “The current offerings at the entry level are not that great.”

For Oddy, however, the future evolution of Tequila looks set to involve a polarisation of the category into two distinct camps. “We can foresee this category developing in a similar way to Scotch whisky with a concise range of popular mainstream Tequila brands and a diverse range of 100% agave Tequilas.”

Identity theft

As the category continues to cultivate a more upmarket, socially acceptable image, it is also possible to detect a real concern that Tequila should remain true to its agave roots.

Whether this means guarding the pure expression of blanco against simply becoming a bland vodka imitation, or resisting the temptation to mask the agave character of an añejo behind a forest of oak, the last thing the world needs is another generic white or brown spirit.

Of course, the limited production areas of Tequila compared to vodka, rum and even whisky, should offer a natural advantage for the category in projecting a cohesive identity.

The challenge here is to preserve this typicity and heritage, finely balanced with the modern image needed to compete effectively on the global spirits stage. Image issues aside, Kaller for one has every faith in the quality and character of which the raw product itself is capable, arguing: “The unique flavours offered by Tequila brands which truly honour the naturally sweet and citric flavours offered by the agave plant make it incomparable to any other spirit in terms of flavour.”

As Tequila continues to push forwards and upwards across the UK market, this integrity and originality must underpin its attentive efforts to seduce the bar trade. db

Gabriel Savage, July 2010