Primarily a show that serves the spirits industry (or trade) in Texas, for us at Tequila Aficionado Media, it was a chance to visit with new brands, products and services trying to break into the challenging Texas spirits market.
In this clip, Michael E. Klein, a spirits entrepreneur and long-time Austin businessman who spearheaded the formation of the alliance, explains its purpose.
What follows are some of the highlighted products that you should watch out for on Tequila Aficionado Media, in Texas, and beyond.
In the current booming mezcal market, more and more brands are appearing under the traditional higher alcoholic proofs that more established mezcals are known for. Briscas is a refreshing libation that refuses to be confused with other gateway mezcal brands.
Ricardo Gonzales, Sales & Marketing Director for importer Moreno Spirits, gives us a quick rundown of the small batch espadín Briscas Mezcal.
Juan Moreno, President & CEO of Moreno Spirits, explains how bringing Briscas to market was a journey of discovery for himself and his family.
The Texas Bar & Nightclub Alliance Convention was not without surprises for us at Tequila Aficionado Media.
Jason Kosmas, co-founder of the 86 Company.
Austin resident Jason Kosmas, co-founder of the celebrated The 86 Company responsible for a brilliant line of spirits with exacting quality like our Brands Of Promise(TM) Overproof Silver Medal winning Tequila Cabeza, made an appearance in support of the event.
L-R: Mike Morales, Jason Kosmas, John Rivers
Also exhibiting in grand style was John L. Rivers IV (a.k.a.: Juan Rios), Managing Director of Julio Cesar Chavez Tequila, a new offering from the illustrious former boxing champion.
Not only did he share with us some of this fine sipping tequila and listed its current markets, but also an exclusive photo of a super piña in the champ’s agave fields.
[Spoiler Alert! At press time, we had not notified John about our verdict of Julio Cesar Chavez Tequila’s review on a future Sipping Off The Cuff(TM), but we let the cat out of the bag, here….]
Mixing and Matching
One of the more exciting and refreshing combos we discovered at the Texas Nightclub & Bar Alliance Convention was between Pablo Madrigali, Brand Manager with Mexcor International and Lucy Corona, co-founder of Slim Ritas, the 100 calorie fresh juice margarita mix.
Mexcor, a family owned business based in Houston, TX, has been the importer of crowd pleasing tequilas at reasonable prices from Destiladora del Valle de Tequila (NOM 1438) for several years, including El Reformador, Cava de los Morales and Agavales.
Lucy Corona is a dynamic and spirited mother and business owner whose dream after giving birth to her children was to enjoy a satisfying and natural margarita. So she made them herself!
Here, Rob Corona explains the birth of SlimRitas.
Here, Pablo gives a bit of Mexcor’s and Agavales’ history, and how he and Lucy joined forces.
One To Watch
Michael E. Klein has handed the reigns of planning future conventions to the team at San Antonio based SMC Events, and it looks to expand the tradeshow’s reach even further with more products and services participating.
Judging from the contagious energy coming from the booths of other exhibitors at the first annual Texas Nightclub & Bar Alliance Convention, the promise of bigger yearly events looks to be a sure thing.
Welcome to the world of Tequila through the vision of Del Bravo Imports.
We are committed to bringing you one of the finest distilled 100% blue agave tequilas on the market.
Tequila Peñasco represents quality, is named for the famed beach town located in the Mexican State of Sonora, on the sea of Cortes. Today, Tequila is one of the fastest growing liquors in the world. The direction of the growth is decidedly upscale. An entire tequila culture is being developed not just in Mexico but all over the world. Enjoyed in many countries, local pubs, neighborhood bars as well as many sophisticated restaurants around the world.
There is a large market of excellent 100% blue agave tequilas available in the range of $20 to $30. A greater quality of tequilas made of 100% blue agave in the $30 to $50 dollar range. Most all tequilas priced under $20 dollars are mass produced for local markets and export and are made from a mix of agave plants. For the enjoyment of our beloved loyal Tequila drinkers; Tequila Peñasco is enjoyed in the USA in Arizona, Texas and South Carolina, as well as 3 northern states of Mexico, Sonora, Chihuahua and Baja. Let your senses be your guide! DISCOVER THE DIFFERENCE…
Tequila Brands and Producers Have Already Sailed Into the Sucker Hole
For those new to the expression, a “sucker hole” is a colloquial term referring to a spate of good weather that “suckers” sailors into leaving port just in time for a storm to resume at full force and wreak havoc on the ship and crew.
For both Tequila Brand Owners and producers of a certain size, their ship has already sailed, and the storm is now closing in on them. Some in denial, others looking through rose-colored margarita glasses, still believe they can navigate through to that glimmer of light on the horizon. However, the perfect storm of doom looms just past the horizon of hope, and will soon envelope and destroy most, if not all, in its wake.
Oh, and that’s the good news. The bad news is that only a few of the big and the very nimble will survive.
This is because of a number of factors, primarily that too many of us bought in to the Yankelovich and similar studies that declared premium and above 100% Agave Tequila brands as the next big thing.
While the premises of these market premonitions were undoubtedly true, too many of us jumped headfirst into the juice just before the world economic decline. Six hundred brands have turned into 1200 brands in less than five years. The growth of the market has been dramatic compared with other distilled spirits, yet, it’s still relatively small, ranked only 4th in US volume. It has not grown fast enough to accommodate all of the entries into the field.
Resistance is Futile – Change is at Hand for the Tequila Market
The Gravy Train Wreck Ahead
I’m sure that for many of you, in just reading the title of this article, your blood pressure has escalated, and you may already be misdirecting your anger at the author.
For others who have experienced the many similar economic paths to consolidation in the global beverage industry, you have already accepted that change has to occur, and you will soon better understand and appreciate the math behind what I am about to lay out, and why everything I’m about to outline here will happen in due course.
For those of you who have your personal fortunes riding on the Tequila Train, both prominence and profit may still seem to be so close that you think you can see the light at the end of the tunnel, or beyond the next bend. But, I’m sorry to say that for most of us in the biz, the light at the end of the tunnel is that of an oncoming locomotive. This will be a catastrophic collision, albeit in slow motion, that will drain your resources and your resolve.
What can be learned from the Russians? (Excerpted from JustDrinks.com)
The global economic crisis has had a significant impact on the Russian spirits market, changing market dynamics and briefly halting the much-lauded premiumisation trend, according to current research.
A recently released report from the International Wine and Spirit Research (IWSR) on Russia’s spirits market claims that the downturn has also led to “…disruptions across the supply chain, with many suppliers and distributors going bankrupt or halting production. For healthier companies, however, it has presented an opening to establish their brands and take market share…”
The Silver Tequila Clouds have a very Dark Lining (Excerpted from Global market review of Tequila – forecasts to 2013 www.researchandmarkets.com )
The history of the Tequila industry has been one of boom and bust. Sales rose during the 1940’s only to collapse again in the mid-50’s. Export sales rose steadily from the 1960’s onward, although domestic sales fell sharply in the 1980’s due again to an economic slump, and the severe Mexican economic crisis of the early 1980’s resulted in plummeting sales.
The market was again disrupted by a critical shortage of Agave beginning in the late ’90’s, which served to hold back the category’s international development as brand owners were forced to divert limited supplies to the core US market, and quality perceptions were damaged as some manufacturers moved from 100% to 51% (Mixto) Agave products.
Today, that dynamic is in reverse, and the market is in oversupply. More and more 100% Agave products are coming into the market. This is helping to raise quality perceptions, and in turn, demand is surging not only in core Mexican and US markets but across a number of other countries.
The outlook for the category has rarely been better, and Casa Noble Tequila president and COO David Ravandi commented, “Tequila is entering a stage of consolidation in the world markets. It is no longer a fad. The fact that 100% Agave Tequila exports have increased tremendously over the last two years is extremely positive for the product’s outlook in the years to come.”
US Tequila Importation is a Sucker Bet
“My cousin will make the best Tequila for you Mr. Gringo”
“So, my friend, you want a great Tequila brand? We will make it for you. Just fifty percent cash up front to start the process.”
Unfortunately, far too many have fallen for this old gag. Relying heavily on the forecasting reports of the early 2000’s that suggested that luxury Tequila would be the next big spirits category after vodka.
With dollar signs in their eyes, the believers drank the Tequila Kool-Aid, most of them spending way too much to buy a brand, custom molded bottles, etc. But the worst part was that this left little if any money for marketing. Many did not even understand brand marketing inflation was happening right under their noses.
It had started soon after Patron hit 100,000 cases in volume in 2001, and the cost to market a Tequila brand in the US went from $1 to $10M per year. Today it takes at least $20M per year just to play in the same ballpark as Patron’s $50M plus, Sauza’s $35M plus, and Cuervo’s $30M plus marketing budgets.
Who could have predicted that a “realistic” business plan for the next successful ultra-premium Tequila brand calling for only 10,000 cases in the first year would end in it’s investors taking a bath?
The problem with this equation is three-fold:
1) Pricing: Unlike vodka and white rum, 100% Agave Tequila is just too expensive to produce and bottle in Mexico. Unless, like rum, vodka and mixto Tequila, it is able to be shipped in bulk and bottled near the final consumer, the cost involved with 100% Agave Tequila is always going to be too high to attain critical volume and profit levels.
2) Volume: US mass volumes are best when a spirits category is between $9.99-29.99/750ml. One hundred percent Agave Tequila is currently profitable only at the upper ranges when higher volumes are attained.
3) Distribution: The US “3-Tier” Distribution System is at best an oligopoly, and 19 states run a monopoly. Of the 1200 plus Tequila brands, want to guess how many they want to carry? Well, after the top 20, you are very lucky to be “special order only”. If you are fortunate enough to live in the states of California or Arizona, where one can be both the importer and distributor, you will find yourself driving your precious Tequila brand around to each account in your car.
Without product volumes or market clout, you will be hard pressed to get even an appointment, let alone a vender number with the chain restaurants and grocery stores. These major chain stores like Chili’s, Chevy’s, Costco, Kroger, etc., drive at least 85% of the combined volume in all but the control states. Without access to the chains, your market becomes the handful of privately owned, “Mom & Pop” accounts that usually know that small independent distributors are easy prey for bending the law on consignment, stringing out payments, or not paying at all.
While driving your own brand around certainly makes time for the personal touch and focus, these hand-selling efforts prove to be the most inefficient ways to distribute one Tequila brand. Your glass ceiling to fame and fortune becomes that next level of chain distribution that can only be had by a state-wide delivery system of the large wholesale distributor.
With Tequila segment Pricing, Volume and Distribution all against you, one will need to have a lot more money than the brands of the past in order to simply survive in the US.
Tanks-a-lot for Nothing
Call the tank maker and raise your stocks of liquid now!
Unfortunately, most of the mid-sized Tequila distilleries have bought into the notion that Agave prices will go up in the very near future. They base this notion on the boom and bust cycle of the past, and like Lehman Brothers, believe that they have successfully timed the market.
Greedily, many producers are now mortgaged to the hilt in order to produce all the Tequila that they possibly can afford to store in stainless tanks or wooden barrels. Fear of the impending Agave price increase that has yet to happen (and may not for many, many years) has seemingly forced them all into a squirrel-like stockpiling frenzy.
Are they storing Blanco, like acorns, for the hard winter ahead? These stored nuts of liquid demise are in reality winds conspiring to produce the perfect storm for all but the most financially secure and/or nimble producers.
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