Tag Archives: luxury

Jessica’s Journey Interrupted Due to Hurricane Odile

I must interrupt my epic tequila journey with news of  Hurricane Odile

By Jessica Arent

 

villaAnyone that knows me knows Cabo San Lucas is my home away from home. I find myself worrisome and agitated as I await word of the many I call “family” and “friend” who are unaccounted for and unreachable. Since Sunday night I have found myself turning over and over with concern, as the Hurricane ravaged beautiful Los Cabos, Mexico.

Last Saturday, Cabo San Lucas, and San Jose Del Cabo were tranquil trendy hotspots for getaway weekends and sun seekers. The entire Baja Peninsula is a thriving, luxury destination for those who seek an experience beyond the expected.

VWdealerCabo San Lucas is the place where earth, sea, and sky meet, where the sunset is spectacular and the fun in the sun never ends. It is home to celebrities and expats alike.  Cabo San Lucas, the corridor of the Peninsula, and San Jose Del Cabo are, in my opinion, the most beautiful destinations in the northern hemisphere.

Luxury golf courses, resorts, and spas line the Sea Of Cortez.  Each more spectacular and luxurious than the next, creating beachfront path of luxury all the way up the peninsula from San Jose to Cabo San Lucas.  You’ll find luxury shopping malls and art galleries, $25,000 per night villas and hotel rooms costing thousands per night.  Los Cabos has a world reputation for service and extraordinary experiences.  Cruise line passengers rub elbows with the rich and famous here. Cabo San Lucas, Mexico, is the place to go to drench yourself in fun and sun. This was the place I planned to call “home” as early as next year, where I wanted to lay my head for the next twenty years.

Tourists, Mexico Military PlaneBut that was last week.

Today, Baja has been ravaged by Hurricane Odile, one of the most powerful hurricanes recorded in the history of the peninsula, a Category 4. At 10:45MST Hurricane Odile made landfall on the Baja Peninsula leaving destruction likened only to that of Hurricane Katrina.

Cabo San Lucas sits at “Land’s End”, at the tip of Mexico’s Baja, where the Sea of Cortez meets the Pacific Ocean. At the other side of the peninsula lies San Jose Del Cabo, on the edge of the Sea of Cortez and home to the locals who work in the shops, stores, hotels, restaurants, taxis, and other vendors and providers that make Cabo San Lucas the hot Mexican destination it is. It is San Jose Del Cabo that appears by all accounts to have been the hardest hit by this devastating act of nature.

temp shelterCNN is filtering images of entire barrios flattened. The hotels along the beachfront are shown with ceilings falling in and pools washing out into the sea. Tourists stacked up in stairwells in hotels and resorts were photographed riding out the storm.

playa grande hotelThere is looting and desperation in the aftermath. 600 guests are reportedly trapped within the compound of the RIU Resort, surrounded by flood waters, with no drinking water and limited food supplies. Grocery stores lie collapsed. Roads, highways, and the International Airport are flooded with debris. The FAA is stating no operations before October 10, 2014.   Military planes have been engaged to evacuate some of the 30,000 tourists trapped in Los Cabos, flying them to Mazatlán and Guadalajara to get home.

rstaurantCabo is in truth a third world community. Water is not pumped into homes and is trucked in and stored in “pilas” or wells. It is difficult for the water companies to bypass the destruction of the roads to get water to the community. Add to this a peninsula-wide power outage that has hotels running on generators and homes without electricity in sweltering heat.  As if all of this weren’t enough, there is the threat of another hurricane forming with a path that could have it making landfall on the same exact path as Odile.

Mitsubishi motorsCabo is home to many Canadian and American expats. Multi-million dollar homes are what usually come to mind when one references the destination. We think of swaying palm trees and $1000 per night luxury hotel rooms, palatial villas in gated communities, Jennifer Aniston beach sightings, and George Clooney and Mike Shanahan with homes in the prestigious beachfront golf course communities that have security gates that are better armed than the White House. While these people may have the money to cover the losses of such devastation, locals aren’t as fortunate.

Today my heart breaks while I pace, watch, and wait for a sign that those I love are safe and cared for. Today isn’t about tequila, it’s about my Mexico and her people. While the rest of Mexico celebrated Independence Day, Los Cabos and many of us who love the destination found ourselves trying to understand what to do next.

McDonaldsLos Cabos has her work cut out for her. It will take a long time for her to recover and longer still if Tropical Storm Polo becomes a hurricane and follows Odile’s path.

Today I write out of love for a country, the people, and the community I hold so dear.

marina2Today my tequila tastes of tears.

Having done some research, I was able to gather updates from my relationships at the resorts in Los Cabos, with regard to the staff, resort guests, and reservations:

 Fiesta Americana Grand Los Cabos

“9/16/14 – Due to Hurricane Odile, reservations at the Fiesta Americana Grand Los Cabos All Inclusive Golf & Spa are temporarily suspended from September 15th to 22nd. We would be happy to offer you other beach and vacations destinations during this time period.”

Villa Group – Villa del Arco, Villa la Estancia and Villa del Palmar

marina1“9/15/14 – Thank you all for your support and concern for our guests and coworkers in our Cabo Hotels. We are glad to report only minimal damages, and thankfully everyone is ok. Our three Resorts remain a safe environment for everyone, with basic electric power (supplied by our generator) and water on the facilities. One of our restaurants is fully operating and providing all the meals needed. The airport is not functioning and Cabo San Lucas is damaged. However, The worst part is over so there’s no need to worry.”

RIU Santa Fe and Riu Palace Cabo San Lucas

marina“Hurricane Odile: Update, Monday 12:00 CST 9/15/14 Riu Santa Fe Hotel and Riu Palace Cabo San Lucas Hotel have been strongly impacted by the passing of Hurricane Odile over Cabo San Lucas last night. Fortunately, all of our employees and guests are fine, and we have only suffered some damage to the properties. As a precaution, the authorities of Baja California have decided to cut electrical service, which is in addition to the suspension of the water supply due to the heavy rains. All of this is greatly hindering the efforts of our hotel staff who are working tirelessly and doing as much as possible to accommodate and care for our guests. At the moment, communication with the destination is complicated, but the authorities are already at work reestablishing all services. We appreciate your understanding and will continue to keep you informed. Update Tuesday, 9/16/14 – Communication with Los Cabos is still difficult because the telephone lines are down. We have been in touch with our colleagues, who have told us once again that everyone is fine, and they have given us the following information:

main road1 Hotel employees. We have 150 staff at the Hotel Riu Santa Fe and 120 at the Riu Palace Cabo San Lucas. Some employees left the premises yesterday to check whether their families were safe, despite the danger involved in travelling at the moment due to the floods. Many of them have returned to the hotels and others, who were not present when the hurricane hit, have joined their colleagues in looking after guests and in cleaning tasks. It is necessary to bear in mind that rooms are dispersed over large areas and that reaching each room is not an easy task.

Food and drink. At present there is both water and food for the hotel guests. With the support of the Civil Protection service, all measures are being taken to re-establish supply over the coming hours and days.

hyatt hotelAdditional teams on the way: Our Operations, Technical Services, Food and Beverage, Cleaning and general support teams are ready to leave from our hotels in Vallarta, Mazatlán and Guadalajara. They are just waiting for San José Airport to open so they can travel.

RIU is in constant contact with the local authorities and Civil Protection service. They are the experts on the ground, and are working to re-establish normality.

We appreciate your understanding during this difficult time for guests, the destination, the hotels, and all the staff working there.”

Starwood Resorts – Westin Los Cabos and Sheraton Hacienda del Mar

maan palace san Jose resort“9/15/14 – Due to Hurricane Odile, which came ashore at Los Cabos in Baja California on Sunday and Monday, September 14-15, The Westin Los Cabos Resort & Spa, and the Sheraton Hacienda del Mar Golf Resort & Spa have sustained damage, and are unable to accept any new guests at this time.  It is too soon to determine when the hotels will be fully operational, but it is not expected until at least October 31. Although the hotels are unable to welcome you during your planned stay, please know our team would be more than happy to help you make alternate arrangements. Starwood will also support any guests that would like to cancel their existing reservations by waiving all change or cancellation penalties for arrivals in the months of September and October. We look forward to welcoming you to The Westin Los Cabos and Sheraton Hacienda del Mar in the near future, and appreciate your understanding of the changes due to the recent hurricane.”

Sandos Finisterra Los Cabos

Hotel floodedMonday, 9/15/14 – In reference to the devastating news of the impact of Hurricane Odile last night, we wish, first and foremost, to confirm that the guests of Sandos Finisterra are safe and have access to basic services at the moment. We will share as much detail as possible once again as soon as possible.”

“UPDATE: Our staff is continuing to work with guests and local authorities to ensure the safety and comfort of those on the property. Guests who are currently on the Sandos Finisterra property will not be charged from this day forward. The hotel is no longer accepting reservations and all guests who are booked to arrive from today until Oct. 1, 2014 may change their reservations at no additional charge or be relocated to one of our other Mexican properties. For reservations made through an agency or wholesaler please contact them and they will provide you with the necessary information.”

“UPDATE: 9/16/14 – After the first 24 hours, there are still problems with power supplies as well as phone lines and internet connections so, unfortunately, it is not possible to talk to the hotel directly in this moment. Despite so, we can confirm that all the guests at the hotel are our priority. They all are safe and being taken care of and we are working hard together with the authorities and suppliers to recover the communications and supplies as soon as possible. At this moment, due to the communication problems, it is difficult to get official updates about the situation. As soon as we have more information about the evacuation plans we will share the news here.”

Secrets Puerto Los Cabos

debris2“9/15/14 – We would like to update you on the status of Hurricane Odile which has passed through the Los Cabos region. We are pleased to announce that all guests on property are safe and secure. Resort executive staff members are currently assessing the damage and will be providing a report later today. We will be updating you with the confirmed details as soon as we receive the information. The Los Cabos International Airport remains closed until further notice. If you have questions or concerns outside of the storm damage or airport closure, please your travel agent or tour operator We will continue to remain in close communication and will update you with further confirmed details. As always, thank you for your support.”

Additional AMResorts Update (Secrets Marquis Los Cabos, Zoëtry Casa del Mar Los Cabos, and Dreams Los Cabos in the immediate area…

“9/15/14 – We would like to update you on the condition of the Los Cabos region due to Hurricane Odile. As we have previously communicated, all guests on property are safe and sound. We are continuing to assess the status of the resorts as well as working to receive updated information from public authorities regarding infrastructure. Our communication lines are extremely limited at this time but we will be in touch once we have additional news to share.”

  Hilton Los Cabos

debris3“9/15/14 – All guests and team members are reported safe. Due to the effects of Hurricane Odile, Hilton Los Cabos Beach & Golf Resort is closed to arrivals at this time. The hotel is not accepting existing or new reservations until a definitive assessment of the damage is complete. Our immediate priority is to care for our guests and team members, and we are doing everything we can to minimize the effect on them. We’ll post more information as it becomes available. Thanks for your prayers and good wishes.”

“UPDATE 9/16/14 – All guests and team members at Hilton Los Cabos Beach & Golf Resort have been accounted for and are reported safe. At this early stage, we do not have a definitive assessment of the damage. Our immediate priority is to care for our guests and team members and we are doing everything we can to minimize the effect on them. Currently, our team is assisting guests, providing meals and water, and trying to keep them as comfortable as possible. The hotel continues working with the local authorities and our tourism partners in the area. As a reminder, the Los Cabos airport remains closed until further notice. At this time, the hotel is closed to arrivals and no longer accepting reservations. The safety and security of our guests and team members are of paramount importance and Hilton Los Cabos Beach & Golf Resort makes every effort to ensure that all practices and standards are in line with strict safety regulations. In anticipation of the storm, the hotel immediately implemented its hurricane preparedness plan and emergency procedures. These are difficult times, not just for us, but for everyone affected by the current situation.   NOTE: Guests with existing reservations should contact their travel provider.” 

Pueblo Bonito Resorts 

debris1“9/15/14 – Thank you for all your good wishes and prayers. We would like to inform you that all guests and team members at the Pueblo Bonito Resorts are reported safe. Hurricane Odile has damaged some parts of our hotels but no structural damage was caused. We are working hard to help our guests and cleaning up any damages to restore services as soon as possible. Please stay tuned and we will keep you posted as more information comes available.”
“UPDATE: 9/16/14 – Hello all! We want to let you know that we are working very hard to determine a time frame as to when our Cabo San Lucas hotels will be fully operational again. At this point, however, it is too soon to officially establish this time frame. For those of you who have reservations for this week, we recommend you that reschedule your stay for later dates. Please make changes to your reservation by contacting the channel through which the reservation was booked. If you have reservations for September 22nd or after, please stay tuned and we will continue to update you through posts on our site.

Many of you have noticed that you have not able to reach anyone in the destination today. Unfortunately, the telephone and WIFI services have been down throughout Cabo today, but we would like to assure you that all of our guests are safe and sound, and all are being provided with food.

Regarding the airports, a definite date has not been announced for the Cabo International airport (SJD) to reopen, but cleancabocurrent advice from airlines indicate that it may reopen around September 22nd for arrivals. Local news is reporting that, according to the Secretary of Tourism, the airport’s two terminals were damaged but the airport is operable. The smaller Cabo San Lucas airport (CSL or MMSL) is not operable and is reported to be closed until October 10th.

In the meantime, the Federal Government of Mexico has announced that there will be an air bridge to evacuate tourists and residents from Los Cabos. The Tourism Ministry has announced that the National Defense ministry, the Mexican Navy, and the Communication & Transport ministry will all be involved in the evacuation process. We will keep you informed as more information becomes available.

Lastly, for those of you who have shown concern about the locals, we have reports from emergency officials in Baja California that 135 people have been treated for minor injuries from flying glass or falling objects, but fortunately, there were no serious injuries or deaths. We sincerely appreciate your warm words of concern for all of our coworkers and guests, and we thank you for your understanding and your patience as we work to restore our services and operations. Please continue to check here for more updates.”

Capella Pedregal

Cell Tower down9/15/14 – Capella Pedregal is currently completing its assessment on the effects of Hurricane Odile.

One&Only Palmilla

“9/15/14 – Guests of One&Only Palmilla were evacuated ahead of the storm and no guests were at the resort when Hurricane Odile hit the area. While it is too early to give a complete assessment, our dedicated team is working diligently to assess damage in order to determine when the resort will reopen. We will provide updates as they become available. We are in the process of contacting guests with bookings immediately impacted.”

Casa Dorada Los Cabos

“Casa Dorada would like to send express heartfelt comparison for all those affected by the recent Hurricane to hit Cabo – We were very lucky and all of our guests and staff are safe, we feel very blessed.”

Solmar Resorts – Solmar Resort, Playa Grande Beach Resort & Grand Solmar

central San jose Del Cabo“Thank you all for your support, thoughts and prayers. Please know that our priority remains the safety and comfort of all our guests throughout the Solmar collection. Hotel management is currently surveying and assessing the damage to all properties. We will share more information once we have it but rest assured that Solmar will continue to provide the best service possible to the guests that remain with us during this time through our dedicated staff & management team.”

Hacienda Encantada and Marina Fiesta

cardealer“9/15/14 – We wanted to provide you with an update on the current status at the hotels due to the aftermath of Hurricane Odile. Everyone at the hotels – employees and guests – are all safe. Due to the Hurricane that hit last night, some damage has been reported at the hotel. Our first, and of course immediate priority, is to ensure that all guests and valued employees remain safe. We will be conducting a full assessment on-site and will continue to keep you all updated in the coming days. Thank you for all of your well wishes and continued thoughts.”

Las Ventanas al Paraiso

“Hurricane Odile was the strongest hurricane on record to make landfall on the Baja California peninsula, and in its aftermath, we are currently reviewing the damage it caused. This will take time, as it is still raining and the storm has not fully cleared the region. Until we can fully assess the damage and ensure the resort’s overall safety, Las Ventanas will remain closed. All guests were transferred to San Diego, a safe distance from the storm’s path, before Hurricane Odile hit Baja. We will provide updates as they become available.”

Barcelo Grand Faro

cars“We are glad to announce all guests on property are safe and secure, every safety action was taken on the right place on the right moment, and we will provide a report later on for further guests who had already reserved with us for the following days. Communications are still poor by this moment but we trust this will be fixed on the following days. Los Cabos International airport will remain closed until further notice. If you have questions or concerns outside of the storm damage or airport closure, please your travel agent or tour operator. Thanks for all your support.”

When considering the magnitude of hurricane and the experiences of so many enduring this devastating storm, we should recognize the teams at the resorts for the management of their emergency services in ensuring the safety of the resort guests and staff.  Thanks to Caboholics as well, which has been a wealth of information.

As of this writing, Cerritos Tequila, their signature resort and beach lie on El Cerritos Beach, has not reported on the safety of those on the property or whether the resort saw any damage. It is my greatest hope that those who call Cerritos Beach home are safe and sound.

If you would like to help, donations of clothing and food as well as financial assistance can be managed through the following TRUSTED organizations:

cellU.S. Consulate The U.S. Consular Agency in Los Cabos, Mexico is located at the Shoppes at Palmilla local 221-B, Transpeninsular Highway Km 27.5, San José del Cabo. If you are a U.S. citizen in need of urgent assistance, the emergency number for the U.S. Embassy/Consulate is (619) 692-2154 (dialing from the U.S. 011-52 + phone number). See the U.S. Consulate Hurricane Odile page for more information. Visit  Smart Traveler Enrollment Program to register your name with the State Dept. for future travel.

The State Department has established a crisis hotline to respond to inquiries about current conditions and loved ones visiting Los Cabos. If you require assistance personally, or wish to inquire on behalf of a friend or family member, please use the following.

From the U.S. & Canada: 1-888-407-4747

From Overseas: 1 202-501-4444

Email: OdileEmergencyUSC@state.gov

 

**ALASKA AIRLINES ADVISORY;

AirportUPDATE 1:30 p.m. Tuesday, Sept. 16:

Alaska Airlines has extended its flexible travel policy for customers with tickets in or out of Los Cabos that were purchased on or before Sept. 14 for travel Sept. 14-30. Change fees and difference in fare will be waived if new travel is booked in the same cabin, and customers may choose to travel in or out of Los Cabos, Puerto Vallarta, Mazatlan, Manzanillo or Ixtapa-Zihuatanejo. Travel must be completed on or before Nov. 5, 2014. Tickets must be exchanged or refunded by Nov. 5, 2014.   www.alaskaair.com

 

DONATIONS THAT ARE DESPERATELY NEEDED!!!!

barrioSmall first aid kits, flash lights and batteries, plastic tarps, Bottled water, clothes, shoes, blankets, can food, small coolers, duct tape, pet food, hand can opener, lighters, towels, work gloves, duffle bags, kitchen accessories like paper plates, cups, utensils, garbage bags, protein bars, paper towels, toilet paper, bar soap, shampoo – Please try the following links for the shipment and donations –

https://www.youcaring.com/Cabo

https://bisbeesconservationfund.org/Donate/CaboRelief

http://www.ligamac.org/index.php/support-us/donate-now

 

Los Cabos International Airport Update!!

Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (NYSE:PAC)(BMV:GAP) (“the Company” or “GAP”) informs that the Mexican Bureau of Civil Aviation (DGAC), the Mexican aeronautical authority, has issued a NOTAM (Notice to Airmen), in which it has instructed Los Cabos International Airport (SJD)(“the Airport”), that from the date of the issuance of the NOTAM until October 8, 2014, to operate solely for official, humanitarian aid and rescue flights, as well as general aviation operations.

While the NOTAM is in force, GAP will dedicate all of its efforts in preparing the Airport for the re-opening of commercial operations, which are essential for rebuilding the region’s economy. The first phase, thereof, will involve the basic re-opening of the terminals as per the aeronautical authority’s guidelines.

The Company carried out essential tasks to clear the flight areas and the aprons, immediately after Hurricane Odile moved through the area, in order to receive aid and facilitate the necessary evacuation; this was completed in the 12 hours following the hurricane. GAP, in conjunction with the federal and state authorities, airlines and hotels focused its resources to the evacuation of visitors and residents from Monday, September 15 to Friday, September 19, evacuating nearly 25 thousand passengers with the use of an air bridge provided by national and international airlines; approximately 480 such air operations took place.

The tasks that are scheduled to initiate as per the issuance of this NOTAM, consists of debris removal and recovery of the facilities, the terminal buildings and the equipment in order to re-commence basic services by the date indicated by DGAC. The full recovery of the facilities will take place gradually, beginning on the date of the NOTAM, and is expected to be completed prior to November 25, 2014.

The Company reaffirms its commitment to the federal government, the aeronautical authority and the government of State of Baja California Sur to re-establish airport services as required by the resident community and the development of tourism in the region.

 

 

jessica arent, jessica's journey, mexico, tequila, tequila aficionadoAbout Jessica Arent

Jessica Arent has spent her career steeped in the Hispanic culture. Passionate about the Latin culture and experiencing roles that have taken her from television to digital marketing throughout the United States and Mexico, Jessica’s passion for Mexico runs in her blood. An accomplished writer, Mexico is where her heart lives and is the focus of her work and writing.  Specializing in marketing Hispanic based products and services, Jessica will tell you there are few people in the world or places she has traveled, from Asia to Europe and in between, who compare to the Mexican culture.  Building websites such as ALL ABOUT MEXICO and fostering the marketing endeavors of a number of tequila products, to name a few, Jessica sets out to inspire the world around her, one person, one relationship at a time, to know and understand the culture she calls home.  Jessica is a partner at Intermountain Media, LLC, the Communications and Media Director of Terra Energy Resources Corp, and shares other travel and tequila adventures on her blog, Jessica’s Mexico.

Never miss an article or review again – Subscribe now!

* indicates required

Email Format

View previous newsletters.



Change is at Hand for the Tequila Market, Part I

tequila market, masa azulPart I of II

Written by Chris Zarus of TequilaRack

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.

[Tweet “Tequila Brands and Producers Have Already Sailed Into the Sucker Hole”]

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.

[Tweet “Too many of us bought in to the Yankelovich study declaring 100% Agave Tequila brands as the next big thing.”]

Resistance is Futile – Change is at Hand for the Tequila Market

train wreckThe 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.

iwsrWhat 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…”

cloud liningThe 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

tequila history, santa fe“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.

[Tweet “The US “3-Tier” Distribution System is at best an oligopoly, and 19 states run a monopoly.”]

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!

no masUnfortunately, 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.

Copyright 2010 International Tasting Group (ITG), All rights reserved. Unless otherwise noted, ITG is the legal copyright holder of the material on our blog and it may not be used, reprinted, or published without our written consent.

Links

SPIRITS TRENDS

U.S. Spirits Market 2008, Gross Revenues by Price Category

http://www.discus.org/pdf/2009IndustryBriefing.pdf (This is the most recent report by DISCUS for 2009. Tequila volume is still listed as 4th.)

http://www.thefreelibrary.com/Spirits+fast+track+brands.-a0144204154 (shows Patrón reaching 119K cases in volume in 2001.)

http://archive.cyark.org/2012-understanding-the-maya-calendars-blog

http://www.forgottenagesresearch.com/index.htm

http://www.nostradamus.org

http://www.oceanfreightusa.com/topic_impg.php?ch=19 (Bonded warehouses.)

http://dsc.discovery.com/news/2009/02/09/tequila-agriculture.html (agave farmers)

http://www.yankelovich.com/ (state of the consumer)

tequilarack

Originally posted October 1, 2010 by Chris Zarus of TequilaRack.  This is considered a standard in the industry and is even more relevant today.

Please visit TequilaRack, a member of the Tequila Aficionado Flight of Sites.

 

 

Never miss and article or review again – Subscribe now!

* indicates required

Email Format

View previous newsletters.