Mexican Spirits and Beer are Mainstream in El Norte

TAXAHeadermodifiedMade In Mexico

It didn’t take the North American Free Trade Agreement to get U.S. consumers to buy Mexican. Tequilas, brandies, liqueurs and beers from south of the border have been popular here for years. Nafta, a steadily growing Hispanic population and increasingly worldly consumers have helped grow these products even more dramatically in recent years.

Mexican, spirits, beerBy Michael Sherer

Margaritas, for example, are the most popular cocktail in the country. Mexican brands now account for 40% of imported beer sales. Mexican brandies rank at the top of the list of the world’s best-sellers, as do coffee liqueurs from Mexico.

“Everything Latino is hip and cool across the food and entertainment categories,” said Jose Chacon, senior brand manager, tequilas, at Allied-Domecq. “The same dynamic is affecting our industry.”

“The number-one thing driving the popularity of Mexican products is the boom in Mexican restaurants in the past 10 years,” said Craig Johnson, group brand director, Allied-Domecq. “What’s driving tequila and Mexican brandies in particular is consumer interest in true, authentic Mexican products.”

Tequila’s Back

Tequila, which suffered a setback between 2000 and 2001, is back on a growth curve again. Agave shortages in Mexico, due primarily to a failure to anticipate growing demand, caused prices to rise dramatically at the end of 2000 and throughout 2001. As lower-priced “mixtos” dropped out of the market and more acreage has reached maturity, however, supplies have stabilized. Happily, in 2002, the category roared back, to the tune of an 8.1% increase, to more than 7.1 million 9-liter cases, according to the Adams Handbook Advance 2003.

“People stayed away as prices went up,” Chacon said, “but now they’re coming back. We’re seeing better prices on Sauza as agave supplies grow, and we’re getting back to fundamentals of the business to get the brand back on track and back to historical levels of growth.” Indeed, according to preliminary research, the Sauza line grew by double-digits in 2002, according to the Adams Handbook Advance 2003, to more than 1 million 9-liter cases.

Category leader Jose Cuervo, which also saw its phenomenal sales growth slow during the past two years due to higher prices, is also seeing renewed growth. The combined Jose Cuervo line increased sales 4.8% in 2002 to more than 3.4 million 9-liter cases. The brand owns its own supply of agave fields. While it doesn’t see the shortage completely ending until 2006 because of the plant’s 8- to-12-year maturation, it has definitely eased.Sauza, Mexican, spirits, beer

Sauza tequila sales rebounded last year by 18.8%.

Cuervo Gold is continuing its focus on the “CuervoNation” program this year. Consumers will have chances to win trips to exciting CuervoNation “outposts” and ultimately a trip to the brand’s 8-acre Caribbean island. Diageo’s Jose Cuervo portfolio now includes the best-selling Jose Cuervo Especial (Gold), Jose Cuervo Tradicional, made with 100% blue agave; Jose Cuervo Añejo, also made from 100% blue agave and aged for at least one year in American oak barrels; and Jose Cuervo Reserva de la Familia, made from 100% blue agave, and produced in limited quantities after being aged in new French and American oak barrels.

To continue bringing consumers back to the category, Cuervo plans to launch a product line extension later this spring. Details likely will be available when this issue comes out.

To kick off the summer selling season, Allied-Domecq’s Sauza will be partnering with regional out-of-category suppliers for Cinco de Mayo. The promotion promises to generate excitement for both the brand and the category.

Two Fingers, imported by Heaven Hill, will take advantage of flattening prices this year by repositioning the brand. A summer co-pack promotion with margarita mix will help draw attention to a new label destined to give the brand’s signature black bottle better shelf presence.Cuervo, Mexican, spirits, beer

Jose Cuervo is highlighting its CuervoNation program in Cinco de Mayo point- of-sale.

As the core business starts to grow again, the brands that expect to benefit most are super- and ultra-premiums.

“While the value-priced tequilas were off about 12.2% from 1998 to 2001, ultra-premiums were up 7.5%,” said David Dorsey, brand director at Brown-Forman. “Ultra-premiums are still doing very well. We’re seeing good growth on Don Eduardo.”

“Tequilas will see the next boom in ultra-premium brands, like vodka did a few years ago,” said Kathleen DiBenedetto, group product director at Jim Beam Brands, which imports El Tesoro and Chinaco. “They’re still considered a white spirit, and consumers are more educated now. They know about 100% agave tequilas, and what reposado and añejo tequilas are.”

Jose Cuervo, in fact, is putting a little more emphasis on its superpremium Tradicional and ultra-premium Reserva de la Familia. The producer’s web site, now in both English and Spanish versions, uses Tradicional as an example of the brand’s 200-year Mexican heritage.

Each year’s bottling of Reserva de la Familia is packaged in a special edition box designed and hand-crafted by a different Mexican artist.TwoFingers, Mexican, spirits, beer

Two Fingers Tequila, from Heaven Hill Distilleries, is running a co-pack promo with Margarita mix this summer.

Sauza also makes use of higher-end products in the brand portfolio to get consumers to trade up. Both Hornitos and Conmemorativo recently added 1.75-liter packages to their mix, the first superpremiums to offer that size. Tres Generaciones gives Sauza presence in the ultra-premium segment.

“People tend to stay in the Sauza franchise even as they try new tequilas,” Chacon said. “They feel comfortable and confident when they try new products in the family.”

Jim Beam’s El Tesoro relies heavily on brand ambassadors, including master distiller Carlos Camarena, to spread word-of-mouth praises for the brand. They’ll concentrate on accounts in nine markets this year, conducting tastings and educating staff in both off- and on-premise accounts. New packaging also will be introduced in May.

El Conquistador, from Heaven Hill, uses shelf talkers to explain differences between blanco, reposado and añejo as well as tasting notes for each. Like other ultra-premium brands, it competes in a variety of spirits tastings for awards which help generate interest in the brand.

Leading Brands of Tequila
(thousands of 9-liter cases)

BrandSupplier
2001
2002 (p)
% Chg
Jose Cuervo/1800 (*)Diageo3,3113,4704.8%
SauzaAllied Domecq Spirits USA8501,01018.8%
Montezuma TequilaBarton Brands LTD48765033.5%
Rio Grande TequilaMcCormick Distilling10816250.0%
CazadoresBacardi USA1101209.1%
Total Leading Brands4,8665,41211.2%
Others1,7181,705-0.8%
Total Tequila6,5847,1178.1%

(*) Includes 1800 Tequila through 9/02; 1800 Tequila is now handled by Skyy Spirits.
(p) Preliminary Source: Adams Handbook Advance 2003

Even Montezuma, from Barton Brands, leverages its awards to help spur sales at retail. The brand has won both gold and silver medals from the Beverage Testing Institute. As the third best-selling brand in the U.S., Montezuma had a stellar year in 2002, upping its sales by 33.5% to 650,000 cases nationally. While operating from a smaller base, the fourth-best-selling tequila, Rio Grande, from McCormick Distilling, increased sales by 50% to 162,000 cases nationally in 2002. [McCormick has also had success with Tequila Rose, a 34 proof product that is a strawberry-flavored cream liqueur mixed with tequila, as well as Tarantula Azul, a citrus-flavored tequila in an eye-catching package.] And Bacardi USA had success last year with Tequila Cazadores, which saw sales increase 9.1% to 120,000 cases nationally.

Interestingly, several changes of tequila brand ownership and distribution have occurred during the past year. Skyy Spirits is now handling 1800 Reposado and Añejo Tequilas and the superpremium Gran Centenario, brands that had previously been part of Diageo’s portfolio here in the U.S. Margaritaville, first introduced by Seagram about five years ago to tremendous initial success, has landed at David Sherman Corp., which is trying to recapture the brand’s excitement. And the smaller superpremium brand Corazon is now being handled by Sidney Frank Importing.

Beer Here

Mexican cerveza continues to grow faster than beer from any other country or any other segment, for that matter. Category leader Corona saw growth of about 9% last year, nearly double that of the import category as a whole. While that was slow compared to heady 30% growth a few years ago, it accomplished it in the face of a price hike and the slow economy.

Corona’s success is a credit to its consistent strategy over the past two decades.Mexican, spirits, beer

Brown-Forman’s Pepe Lopez Tequila is using a “Pepe Loves Rita” theme in its p-o-s this spring.

“We don’t really look at or market our products as Mexican,” said Don Mann, Modelo product director at Gambrinus Company. “The brand leverages space between imports and domestics. It has the cachet of an import, but is more approachable than other imports, so it has broad consumer acceptance as a result.”

New television and radio spots that kick off this month and a full promotional program are on tap for the brand this year. Corona Light will get a lot more focus with its own series of ads and more attention in family promotions.

“Cinco de Mayo is an opportunity to get a jump on the summer selling season,” said Bill Hackett, president of Barton Beers, Ltd., Corona’s other importer. “We have a huge opportunity with Corona Light. The growing light beer market is a 45 share of the beer industry. Light beer is still under a 10 share of the import segment. That’s a huge opportunity for retailers as well.”

The other Modelo products — Negra Modelo, Modelo Especial and Pacifico — also are well supported at retail with programs scheduled throughout the year.

Kennedy Jr and Alec , Mexican, spirits, beerThis past January, Robert F. Kennedy Jr. (left) and Alec Baldwin participated in the Gran Centenario Tequila snowshoe and tobogganing race at the Squaw Valley Sports Invitational in Squaw Valley, CA. The event was part of a weekend of festivities benefiting Kennedy’s Waterkeeper Alliance, a grassroots organization dedicated to preserving and protecting water from polluters.

Mexican brands imported by Labatt USA also are experiencing strong growth. Tecate is now the number-four import in the country even though it is targeted squarely at Mexican-Americans. Last year the brand went through a transition as it shifted to programs designed to appeal to a younger generation while not alienating traditional, first-generation Mexican-American consumers.

The brand is using CART racing, soccer and music to bridge the generations. Tecate’s CART program is even bi-lingual to give it broader appeal.

For Cinco de Mayo, the brand has come up with a “Celebracion las Cincos de Mayos,” a play-on-words in which “las Cincos” become five senoritas on point-of-sale materials flirting with a guy named Mayo. The materials also highlight Tecate’s five package sizes.

A more edgy and contemporary ad campaign kicked off in January. The brand also is sponsoring a lot of new up-and-coming Mexican bands here, using music to reach new consumers.

Dos Equis is aimed at a broader market and will continue the “Dos Equis Zone” program it began a few years ago. The program encourages consumers to experience the brand in its native environment, tying into travel destinations like Cancun.Corona, Mexican, spirits, beer

Corona Extra and Corona Light are positioning themselves as “The Drinko for Cinco” in p-o-s materials.

For Cinco de Mayo, the brand is offering an all-in-one Fiesta Pack of beer, chips and salsa at a special price. This summer, Dos Equis will promote “liquid” sports like water skiing, surfing and windsurfing.

Sol continues to focus its effort on core markets in the southwest and southern California, but will likely also get support in a few emerging markets in the northeast.

Brandies and Cordials

Kahlúa, one of the biggest brands in the world, saw its sales decline somewhat last year. The brand is in the middle of a strategic review of its global positioning and will likely develop new programs later this year to renew consumer interest in the brand.

In the meantime, it is taking advantage of the revival of classic cocktails by promoting three drinks that helped make it famous — the White Russian, Black Russian and Kahlúa and milk or cream. Allied-Domecq’s “first choice” sales teams will be working with on-premise accounts to increase demand which is expected to have a spillover effect on off-premise sales as well.

Allied Domecq also is focusing efforts on a superpremium line extension called Kahlúa Especial, which is said to be hand-crafted and carefully blended for extra smoothness.

Other coffee liqueurs from Mexico are capitalizing in off-premise accounts on Kahlua’s popularity. Kamora from Jim Beam, Sabroso from Barton Brands, and Copa De Oro from Heaven Hill all offer a price alternative to the category leader. Consumers often look for value brands like these at retail after trying a well-known brand on-premise.

Brandy is another spirit from Mexico that is sometimes overlooked. Surprisingly, brandy outsells tequila by about a six-to-one margin in Mexico.kahlua, Mexican, spirits, beer

One of the most popular spirits brands in the world, Kahlúa is promoting The White Russian (as well as Black Russian and Kahlúa and milk/cream) in a variety of p-o-s materials.

Presidente, for example, is the number-one selling brandy in the world and the top spirits brand in Mexico. Off-premise, the brand’s focus has been on Mexican-Americans. An aggressive on-premise program, however, will likely broaden Presidente’s appeal at retail. Consumers are slowly being introduced to the brand in cocktails like the Presidente Margarita at Chili’s Grill and Bar.

“As consumers start to encounter the brand on-premise, they will begin to see and ask for it off-premise,” said Johnson.

The brand also will repeat a joint promotion with Sauza in September on Mexican Independence Day.

Allied-Domecq is counting on increased awareness of Presidente also helping premium Don Pedro brandy and the ultra-premium Azteca de Oro, aged 12 years in the Spanish solera system.

While Cinco de Mayo is a good time to merchandise all these products from Mexico, their popularity with consumers means they’ll sell year round with a little attention from you. *


What’s With The Worm?

Some consumers may look for a worm in the tequila they buy or wonder why it doesn’t have one. In reality, only certain brands of mezcal are sold with worms in the bottle. The stuff of frat houses legends, mezcal isn’t tequila. But in one of those oddities in the spirits industry, all tequilas are mezcals.

Mezcal refers to any spirit made with some type of agave plant. Tequila, like champagne or cognac, must conform to certain standards to carry the name. Tequila must be made with at least 51% blue agave from a certain area around Jalisco, Mexico.

Mezcal, on the other hand, can be made with a variety of different agave types. In all cases, it is made with 100% agave, and usually the agave is roasted in a pit for several days, giving it a smoky characteristic somewhat like Scotch, also giving it its reputation for being “rough.” (Modern tequila production often uses large autoclaves to steam the agave piña instead.) The roasted agave is then stone ground to release its juice for fermentation.

Most mezcal production occurs around Oaxaca, south of Jalisco. Mezcal producers liken their product to armagnac, a product different in character from cognac, but not quality. There are different stories about how the worm got into the bottle. The most commonly accepted is that around 1942, an artist named Jacobo Lozano Paez started a small bottling plant and initially bought mezcal from a family in Oaxaca.

By 1950, Paez was a self-proclaimed connoisseur of mezcal and noticed that batches made with agave heavily infested with agave worms tasted much different. It gave him the idea to market his mezcal with a worm in the bottle. Consumers began to accept the worm as proof of alcohol content.

Like tequila, mezcals come in different types: blanco, bottled immediately after distillation; madurado, similar to reposado tequila; con gusano (“with the worm”); añejo, aged in oak for at least six months and usually from one to four years; and triple-distilled minero, often considered the best. Only a few brands, such as Barton’s Monte Alban, are still bottled with a worm.

From the March/April  2003 issue of  Beverage Dynamics

Craft Tequila–WTF Does THAT Mean? Part 2

Blurred Lines

Throughout Part 1, we employed the use of more adjectives and descriptors to define, describe and distinguish one booze from another in the same category, as well as to give the illusion that it is actually closer to another booze in the leading categories.

Words like award-winning, artisanal, small-run, limited-production, hand-crafted, and boutique are reused over and over.  So are micro-distilled, limited edition, small batch, small lot, organic (which we’ll cover in-depth in a future article), single village, homespun, authentic, small-lot, prestige, signature, high end and reserve.

They all have real core meanings, but because we see them repeatedly in ads, billboards, packaging, shelf talkers and point of sale (POS) materials, the lines between meaning and true definitions get blurred.

Has anyone actually ever been to Los Camachines, where Gran Centenario is made?
Has anyone actually ever been to Los Camachines, where Gran Centenario is made?]

For instance, the definition of the word premium as defined by the Distilled Spirits Council of the United States (DISCUS) is actually a pricing term.  To the average consumer, however, it has come to mean quality.  And when consumers’ buying habits change and trade up, it has become known as premiumization.

There’s no chance of spirits marketers discontinuing the use of the Tequila Marketing Myth of borrowing benefits any time soon.  How, then, do we really define and measure a craft tequila?

We’ll show you how in a moment, but let’s get two things straight right here–

Remember Fact #1?  Tequila belongs in Mexico.

Though some American micro-distilleries have attempted to distill small batches of agave spirits, it has proven difficult and labor intensive due to it being produced from a plant that takes years to mature as opposed to grains, hops, and grapes that yield more frequent harvests.

It would be silly to define and measure craft tequila in ways that relate to wine, beer and other spirits created in the United States and abroad.  There may be no boundaries in spirits marketing, but to impose limits on the number of barrels, bottles and cases manufactured and sold by a tequila distillery in order to measure a craft product would have no jurisdiction whatsoever in Mexico.  Secondly–

There Is No Backpedaling

The Beer Wench, Ashley Routson said it best when interviewed for this article:

“No one wants to fault the big guys for being successful–that is not what this argument is about.  My main question is–how big is too big?  And as long as a company stays independently-owned, does that mean it will always be craft?”

Indeed, both the craft beer and spirits segments are growing at such a fast rate, that the Brewer’s Association has changed its definition multiple times.   This has allowed the burgeoning brewers more room to expand.  And as spirits writer, Wayne Curtis, discusses in this article from The Atlantic, the alarming growth rate of small distilleries is having an effect on the quality of the finished craft product due to a shortage of experienced distillers.

As a consequence of this exponential growth, in both the craft beer and craft spirits categories, the process–the art form itself–is getting watered down.

*Rant Alert!*

Let’s face it–

No backpedaling!
No backpedaling!

No one gets into the tequila business to be a failure.  Everyone wants to be on top.  And once you get there, the challenge is to stay on top.  We know how arduous the tequila hero’s journey is.

No one with a business plan ever said, “I’m going to mass produce my lousy tequila and once I’ve flooded the shelves with my swill and lost market share, I’m going to distill a tequila the old fashioned way.”

Don’t pretend to continue to still make your tequila like you have over the past 250 years, either.  You are not that home based family operation still harvesting agaves by mule and macerating piñas with a tahona, any more.  That family’s history was forgotten when the brand was sold.

And just because you build a separate, smaller facility on your distillery property to produce a more labor intensive line (and even petition to do so under another NOM number!) when you have never attempted to do so in the first place, does not make your more expensive line a craft tequila.

Moreover, just because you happen to be a colossal consumer of agave, still being emulated for your unique style of 80’s spirits marketing, and prefer to see things differently, don’t expect the rest of us to swallow your slant.

The Craft Tequila Gauntlet

El Tesoro handmade tequila.
El Tesoro handmade tequila.

Following are some tips and suggestions that may help guide you in making more informed decisions when selecting, defining and measuring a craft tequila.

#1:  NOM list

By Mexican law, every tequila must display a number that corresponds to the legal representative, tequila producer or distillery in which it was produced.  Tracing that number to the CRT’s list of distilleries, you can discover what other brands are manufactured under that specific number, and presumably, in that specific factory.

Logic dictates that the fewer labels a fabrica (factory) produces means more care should be taken with its one or two flagship brands.  Logic also dictates the opposite when you see many different brands appearing under a particular NOM number.

Whether the distillery produces only a few lines, or many contract brands for others, is not necessarily a sign of the tequila’s craftiness or quality, but it’s a start.

You can view and download the most recent NOM lists from our website here.

#2:  Pedigree

Don Felipe Camarena
Don Felipe Camarena

Taking a pointer from panel expert, Chriz Zarus’ now industry classic article, “Change is at Hand for the Tequila Market, Part II,” a craft brand with a good chance of survival in the market will be one that “You, your distillery, and your brand have generations of lineage.”

Meet-the-Maker dinner pairings, industry meetings and on-premise tastings showcasing a craft tequila will more than likely feature the brand owner or the master distiller behind the brand.

In some cases, a well respected Brand Ambassador (not the gal or guy with the tight t-shirt!) will stand in for the owner if there is a scheduling conflict.

Again, this is not a guarantee of craftiness or quality, but most family owned brands will stand behind (or in front) of their tequila with pride.

#3:  Distillery ownership/partnership/co-op

Another tip from Zarus’ treatise that could be useful in determining whether a craft tequila will be successful or not is, “Your company does…own at least a portion of the distillery that produces your product.”

This was successfully accomplished by the owners of Suerte Tequila, one of the few still produced with a tahona (milling stone).  In order to ensure the quality of their tequila and to regulate the brand’s eventual growth, Lance Sokol and Laurence Spiewak purchased the distillery.

Does your craft tequila have some skin in the game?  Most good ones do and will proudly make that information public.

#4:  Agave and land ownership

Similar to #3 above, some craft brands are owned by families with ties to the land and own their own agave.  In some instances, they may or may not own all or a portion of the distillery where they produce their tequila.

In the midst of this current agave shortage, this one asset could make or break a craft brand.  This information should be readily available in POS material, but is also not a guarantee of quality or craftiness.

#5:  Use of a Diffuser

While considered a legitimate tool in tequila production efficiency and has the full blessing of the CRT, it is a dead give away that shortcuts are being taken.

As noted agave ethno-botanist, Ana Valenzuela so succinctly declared in this open letter…

“…prohibir el uso de difusores (hidrólisis de jugos de agave) que les quita “el alma” (el sabor a agave cocido) a nuestros destilados, únicos en el mundo por su complejidad aromatic y de sabores.”

[“…to prohibit the use of diffusers (in hydrolysis of agave juices) that takes the “soul” (the flavor of baked agave) out of our native distillates, singular in the world for its complexities of aromas and flavors.”]

El Tesoro's tahona, still in use.
El Tesoro’s tahona, still in use.

This is also in keeping with Zarus’ definition of preserving the process as the art form or craft outlined in Part 1.

Using a diffuser is a closely guarded secret by most mid-sized to large distilleries and hard to spot.  You can read more about them here.

#6:  Organic

If there are any products that deserve to be described with the aforementioned adjectives that spirits marketers are freely throwing around these days to denote a handcrafted tequila, mezcal, or other agave distillate, they are in the organic segment.

Stringent regulations are required in both farm to distillery, and then from factory to bottle, to be given the designation organic and the permission to use the USDA seal that appears prominently on the labels.

By virtue of being organic, the process is considered much more natural and is inherently small batched.

But, not every brand has the budget to become a certified organic tequila.  In addition, some brands may simply not see the value of being certified as organic, especially since some organic certifying agencies have been looked upon distrustfully in recent years.

Still, it could arguably be the most reliable indicator of a craft agave distillate.

#7:  Transparency

This might be the toughest test of all.

As we mentioned above, many brands prefer to play their cards close to the vest.  By the same token, many family owned brands are fiercely proud of their origins and will gladly tell you the truth, the whole truth, and nothing but the truth.

Is your craft tequila brand willing to tell you their story, or just tell you a story?

Many of the more popular craft tequila brands are helmed by creators who are delightfully flamboyant and outspoken, as well.

 Craft by Any Other Name

As our reader in Part 1 stated, the meaning of craft is “all over the place” and then some.

Spirits marketers using their powers for evil.
Spirits marketers using their powers for evil.

With mixology being the leading trend driving the spirits industry and demand for better ingredients on the rise, this means quality tequila is essential for those creating crafted cocktails (there’s that word again!).

But, with  the invention of the wildly popular michelada cocktail, a margarita (which is the favorite way Americans consume tequila) served with a beer bottle upside down in a margarita glass, and chilled tequila on tap, there will surely be more cross pollination between adult beverage categories.

We’ve already seen this with tequila brands selling their used aging barrels to small brewers to create signature craft beers, as well as tequila aged in barrels bought from other brand named spirits.

This will only lead to even more crossovers between categories caused by inspired spirits marketers, PR firms, uninformed spirits journalists, and multinational corporations.  Borrowing benefits has been the norm for some time.

There will always be those who deliberately hide the truth or feed false information to the media and practice opacity.  We can’t control what they will say and do.

The key is to become educated and informed about a tequila’s recipe and process.  Using the Craft Tequila Gauntlet above can certainly help in making the right choices.

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Craft Tequila: WTF Does THAT Mean? Part 1

What does that mean for tequilas?
What does that mean for tequilas?

An interesting question crossed my desk concerning the term craft as it relates to tequila.

This person asked…

“The one thing I am finding is the definition of ‘craft’ is all over the place. What does craft mean to you?  Do you think it is based on the method, quantity, who makes it or maybe all of these factors?”

This reader went on to ask if I considered a particular big name brand as a craft tequila, and if not, would I consider a certain higher priced line from this same transnational corporation that owns the brand as a craft tequila.

Further, he confessed that two other well-known brands could be considered “craft” tequilas even though one of them had reported sales of over 50,000 cases in 2013.

 Craft by Definition

According to Merriam-Webster’s online dictionary, my favorite definition is–

“…an activity that involves making something in a skillful way by using your hands.”

The word handcraft is defined as…

“…to make (something) by using your hands.”

There are even deeper meanings to craft as it relates to the beer, wine and spirits industries, but before I get to them, let me remind you of some tequila facts and a huge marketing myth.

Fact #1:  Tequila has its own geographic indication (GI).  The blue weber agave from which it is made can only be grown, and tequila can only be produced, in specific states and regions in Mexico.

Fact #2:  According to the Distilled Spirits Council of the United States (DISCUS), despite 13 million 9 liter cases of tequila sold in 2013, it is still–and always will remain–virtually last in sales volume behind whisk(e)y, gin, vodka and rum due to Fact #1.

This brings me to the…

Tequila Marketing Myth–Borrowing Benefits

So, how does a PR or marketing firm with no real knowledge of what good or bad tequila is, convey the message that its client, usually a high powered, non-Mexican owned tequila brand (and all that that implies), is just as cool as the other kids who may or may not be as well funded?

Tequila disguised as...?
Tequila disguised as…?

Simple–

You “borrow” benefits from the guy ahead of you.  You compare your tequila brand’s features and benefits to the leader in the field, thus making your client “worthy by association.”

From the moment that Herradura rested tequila in used Jack Daniels barrels to attract the American whiskey drinker decades ago, marketers have tried to disguise tequila (and mezcal, now, to some extent) as something else.

And because of Facts #1 and #2 above, tequila marketers have for years misled the public by borrowing benefits from wines, beers and all other spirits in a seeming effort to gain tequila’s acceptance into the mainstream drinking public, and to increase sales.

Craft by Design

Here’s what it means to produce a craft product in each of the following arenas.

The Brewers’ Association defines craft as small (“6 million barrels of beer or less per year”), independent (“less than 25 percent of the craft brewery is owned or controlled by a beverage alcohol industry member that is not itself a craft brewer”), and traditional (“a brewer that has a majority of its total beverage alcohol volume in beers whose flavor derives from traditional or innovative brewing ingredients and their fermentation”).

The American Craft Distillers Association’s (ACDA) definition of craft gets trickier–

“…those whose annual production of distilled spirits from all sources does not exceed 750,000 proof gallons removed from bond (the amount on which excise taxes are paid.)”

According to the Alcohol and Tobacco Tax and Trade Bureau (TTB), a proof gallon needs an entire conversion table to figure out.  We’ll let you do the math, here.

The American Distilling Institute’s (ADI) guidelines are similar but allows certified craft spirits a “maximum annual sales of 52,000 cases where the product is PHYSICALLY distilled and bottled on-site” and “maximum annual sales are less than 100,000 proof gallons.”

Where wine is concerned, the Department of Revenue defines a “small winery” as any winery that produces less than 25,000 gallons of wine in a calendar year.  A “farm winery,” however, can produce up to 50,000 gallons of wine annually.

Some have even arbitrarily issued their own definition of small winery as one producing as little as 10,000 gallons per year, and a nano winery as generating only 500 gallons per year.

A simple Google search shows that each state has its own slightly different definition of what a craft wine or spirit is, and several states with popular wine growing regions like California, are constantly updating their definition to accommodate growing wineries.

The same growing concerns in the craft beer industry have prompted the Brewer’s Association to update their ground rules to allow for larger craft producers.

The Revenge of Brewzilla

According to Impact Databank, a large chunk of the beer industry has surrendered significant market share (some 6.7 million barrels, or 93 million 2.25-gallon cases since 2009!) to the spirits industry.  The only bright spot for the entire category is the resurgence of locally brewed craft or specialty beers increasing in volume by 14% to 20.2 million barrels.

These stats have not been lost on spirits marketers who follow trends in similar markets to practice borrowing benefits.  The big brands like Miller-Coors, Anheuser Busch-Inbev (Budweiser) and others also have jumped onto the craft bandwagon by either investing in small breweries or by inferring in their marketing that they still make their beer by hand.

It's not a craft beer.  Just well-crafted.
It’s not a craft beer. Just well-crafted.

As Ashley Routson, a craft beer advocate famously known as The Beer Wench, and whose upcoming book “The Beer Wench’s Guide to Beer” will be an unpretentious, comprehensive approach to beer, puts it…

“In my opinion, the fight over the word craft should be one of semantics, but instead, its become a battle of the egos.”

Routson goes on to say, “The word ‘craft’ is not a synonym for the word ‘good,’ ‘great’ or ‘better.’  Many non-craft breweries and large tequila producers make world class beer and tequila–there is no argument there.  You don’t need to use the word craft to define your beverage as being good.”

Author, Ashley Routson, The Beer Wench.
Author, Ashley Routson, The Beer Wench.

Beer journalist, Mike Cortez, whose pending book will be a part of the Beer Lovers series of books (Beer Lover’s Texas), is also the co-founder of The Texas Margarita Festival, and feels that craft tequila should be held to the same strict standards as craft beer.

 “We need to separate the garbage from the good stuff.  [Like craft] beer that is only made with the basics, grain, water, hops and yeast, the brewers do not use additives or adjuncts to flavor the beer.”

Cortez concludes, “[Tequila] is a product that takes time, care and only the purest agave extraction.  The distillers depend on the time to harvest the agave, baking the pinas and perfectly extracting the juices.  Once it is distilled it is a product that is pure and only flavored by the barrel with no extra additives.”

Tequila Industry consultant, Chris Zarus, innovator of TequilaRack, the world’s first take home tequila tasting kit that deliberately includes samples of some of the finest small batch, micro-distilled reposado tequilas sourced from family run distilleries, takes the craft argument to a higher level.

“The word craft has unfortunately been abducted by the marketing department and now misleads the masses.  We go to classes that advise us on how to make our brands ‘craftier’ with specialty releases with funny names [and] all owned by multinational conglomerates that work relentlessly to reduce costs via cheaper ingredients and mechanization.”

Zarus believes that there are two industry definitions of craft which differ from what the consumer understands.  They involve a specific recipe and a specific process.

Specific Recipe

Chicken breast after having been used in clay still to make mezcal de pechuga.
Chicken breast after having been used in clay still to make mezcal de pechuga.

In this craft version, the product is consistent and costs are contained.

“The Jim Koch’s [founder of Samuel Adams beer] view that his recipe makes his beer craft regardless of the fact that MillerCoors brews it for the masses,” explains Zarus.  “In [Koch’s] opinion, its like a chef going to your house to cook his special recipe.”

“If you think about it in broad terms,” reasons Zarus, “all consumer products have a specific recipe.  The difference here may be that the recipe is full flavored and is preferred by fewer due to its heartier taste.”

Specific Process

In this definition, the process is the craft.

Tequila Fortaleza, produced by famed fifth generation distiller, Guillermo Sauza, Zarus illustrates, “[Is] very

Las perlas del mezcal.
Las perlas del mezcal.

specific, old world, but not very mechanized.  In this way the outcome varies by batch and the state of the local ingredients.  The craft is the process.”

The downside, insists Zarus is that, “…the product varies by batch, like some wines.  There is a lack of product consistency.  Some batches have more acclaim than others and the maker is not getting to charge the full price of the best batches.”

This last seeming liability has been turned into a profitable tequila marketing plan by some boutique brands like Ocho and Charbay who source their agave from single estates thus promoting the brand’s terroir and creating buzz for individual vintages.

The Meaning and the Art Form

Marketers rethink the word "craft."
Marketers rethink the word “craft.”

The two essential elements that Routson, Cortez and Zarus all agree upon are, first, that the craft process is the art form, whether in beer, wine or spirits.

The other factor that our panel of professionals agrees on is the battle of maintaining the true definition of the word craft.

We’ll explore these issues and how you can define, select and measure a craft tequila in Part 2 tomorrow.

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