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Embajador Tequila: Framework for The Future

January 3, 2019August 15, 2016 by Lisa Pietsch

[Transportation, room and board were provided to M.A. “Mike” Morales by Embajador Tequila in order to research this article. No monetary compensation was received and no guarantee of a favorable article was given by M.A. ‘Mike” Morales or Tequila Aficionado Media. This article was written by, and is the opinion of, M.A. “Mike” Morales.]

Open Doors

Everyone in Atotonilco had heard of the Fabrica Santa Rosa’s suspension due to COFEPRIS’ (Comisión Federál para la Protección contra Reisgos Sanitarios) and SAT’s (Servicio de Admistración Tributaria) prolonged “Juntos Contra la Ilegalidad” (“Together Against Illegality”) crusade to reduce illegally produced alcoholic beverages on the Mexican market.

Many were shocked since Embajador’s outstanding reputation for producing top notch tequilas had been stalwartly guarded–and envied–for years.

Collectively, the crew at Fabrica Santa Rosa was still reeling from the aftereffects of the shutdown. A few described these agencies’ G-Men as acting arrogantly and condescendingly.

Certainly, this was no way to treat a group of professionals who had many years of extensive experience in distilling frontline tequilas to the strict adherence of the normas.

Individually, each recounted how he or she felt ambushed by the government officials and bum-rushed by the deliberate escalation of what were considered by many high ranking officials in the industry as minor—even laughable– infractions.

Despite that, neighboring tequila distilleries were shaking in their boots wondering if their stored tequila would be targeted by those government agencies’ assault that existed only to add more liters of seized juice to their latest numbers.

[Tweet “@EmbajadorTquila: invites you to peek inside its Open Doors.”]

In fact, the concerned brand owner’s tequila who inspired my Bullying In Tequila editorial during the early stages of Embajador’s closure, is distilled just up the road from Fabrica Santa Rosa.

In this clip, we entered through the iron gates of the perimeter of Tequila Embajador. The rows of estate grown agave and the rich, red soil of Atotonilco el Alto took center stage.

(Taken from inside our SUV, it may be too fast to watch continuously, and the sound is a bit muffled by the wind as we drove onto the grounds.)

Once we parked on the property, the charm of the Fabrica Santa Rosa took over.

How the Magic Happens

Here’s where it all starts: three autoclaves, from 40,000 KGS to 25,000 KGS in capacity, plus 2 ovens of mamposteria (brick/stone masonry). The cook time in autoclaves is approx 10 hours; in ovens it’s 24 hours. Embajador is a combination of both of these methods.

Behind the Iron Door

Opening the iron door of one of the masonry ovens and taking a peek inside. As you can tell, it’s quite a chore.

Adjusting to Variables

Our tour guide, Francisco Segura Garcia, the company’s accountant and bookkeeper who, since the age of 16 has worked in the tequila industry in some form, explains–

What influences the flavor profile of a tequila? A common question, he admits, that has a simple answer, yet, complex at the same time. For instance…

Older agave vs. younger agave; and healthy agave vs. diseased agave. If you put either of these through the same process, you won’t get the same results.

Cooking time varies with the time of year, as well. That’s why there are master distillers with years of experience in the variations that can affect the final outcome. Also, the seasons of the year makes a difference (summer vs. winter).

The agave is an extraordinary organism, continues Francisco. One of the most adaptable plants ever created. It can exist in the desert or near the coast. Wherever water is abundant, or in extremely arid climates.

[Tweet “@EmbajadorTquila: Adjusting to variables. See for yourself.”]

Francisco outlines that when they harvest during the colder months, the agave defends itself with a special coating that they must adjust for.

Variables like pressure, cook time, water temperatures at shredding, and above all, fermentation and distillation. Otherwise, the tequila produced appears cloudy and bitter even though you’ve followed the same recipe as before.

Two Important Elements

Francisco discusses the importance of fermentation and distillation, and how they are equally influential elements within the tequila making process.

The type of yeast used during fermentation is also important since some can produce more higher alcohols than others, which is in violation of the normas.

Embajador uses proprietary yeast made from their own estate grown agave.

Fermentation time also varies depending upon the time of year (warm vs. cold weather).

The Vision

We witnessed the ongoing construction on the grounds leading to its phased in expansion that would eventually include a boutique distillery within the larger Embajador distillery. It will include a tahona, barrel room, gift shop, and an historically accurate re-creation of a vintage working tequila taberna, among other things.

[Tweet “@EmbajadorTquila: An Eco-Friendly #tequila distillery.”]

The mini distillery is estimated to be completed by the end of 2016, with the remaining improvements to be finished within a year.

Eco-Friendly

Aiming to cut down on the distillery’s carbon footprint, the eco-conscious family recently modernized the fabrica by installing a boiler to heat water used in the plant. It runs on a combination of leftover bagasse (bagazo) from shredding the agave and wood chips.

The Future Framework

The framework of Embajador’s future. More of the buildings and what they will house on the grounds. (Hint: Even the bricks of the vintage distillery are made by hand.)

Positioned For Success

Licenciado Cristobal Morales Hernández, legal representative for Tequila Embajador and the Fabrica Santa Rosa, describes what he sees for the immediate future of Embajador in two to three years, including the improvements and growth projected for the distillery.

He also takes into consideration the ramping up of the volume of the plant’s production without suffering a dip in quality of its consistently exceptional juice that they have proudly maintained for 12 years.

[Tweet “@EmbajadorTquila: Positioned for success.”]

He concludes that the buying public should continue to expect the same lofty standards of prizewinning tequila and he acknowledges that the situation concerning the mandated stoppage in production was simply a lesson learned.

See And Taste For Yourself

Lic. Morales relays what he wants consumers to know about Embajador.

He graciously extends a heartfelt invitation to the public to see their more than adequate facilities for themselves.

Shhh...Embajador is resting. — Shhh…Embajador is resting.

He ensures that Embajador is strictly adhering to Mexican and global regulations, and that when the public samples any of the tequilas produced at the fabrica that they can be assured of its propensity for high standards of excellence.

[Tweet “@EmbajadorTquila: same lofty standards of prizewinning tequila. Taste for yourself.”]

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Learn all about tequila from field to glass and then get paid to share your love of agave spirits with others! Buy Them Both Now!

Embajador Tequila: Business As Usual

January 3, 2019August 13, 2016 by Lisa Pietsch

Let’s Review…

In Part 1, Embajador Tequila: Rectifying The Situation, we listed all the minor infractions that the distillery, Fabrica Santa Rosa, was charged with by COFEPRIS (Comisión Federál para la Protección contra Reisgos Sanitarios) and SAT (Servicio de Admistración Tributaria).

We also brought to light the fact that every breach was addressed within hours, and that the real delay of lifting the ban on the Embajador distillery’s operations was the bureaucratic read tape surrounding the method of documenting and tracking of raw materials and supplies.

Before we tackle this topic, however, a word about the yellow journalism popular with Mexican news agencies.

Scraping A Dead Horse

The phrase “beating a dead horse” is often used when the same story is repeated over and over again, until the subject matter becomes tiresome.

Scraping is a term used by copywriters when expounding on a press release that is distributed to several news agencies at once. It’s extracting pertinent information from the news release or website, sometimes copied word-for-word, without proper credit given to the original source material.

In essence, it’s stealing (plagiarism), but, it helps to keep the topic fresh and different from the rest of the reports seen on other news channels.

Making matters worse, name any reputable producer allegedly busted during COFEPRIS’ and SAT’s “Juntos Contra la Ilegalidad” (“Together Against Illegality”) blitzkrieg, and they are instantly guilty by association.

While there are many honorable news writers in Mexico (many having lost their lives, especially those reporting on narco trafficking activities), most Mexican newspapers are tabloids using this archaic, unethical and unprofessional style of reporting.

The more controversial the titles and the more alarming the descriptions, the more the reader feels like an actual eyewitness to the alleged crime, and, the more newspapers are sold.

It resulted in sensational headlines for the copywriters who, chances are, had never even set foot onto a tequila distillery, and high fives all around for COFEPRIS and SAT.

No one at the Fabrica Santa Rosa denies that they were guilty of the minor infractions they had been charged with, but, in reviewing the aforementioned articles in Part 1, you’d think the Untouchables had just captured Al Capone for tax evasion.

In true Elliot Ness fashion, there was a loophole.

But, it’s wasn’t what you thought.

The Loophole

Imagine driving across the state line and being immediately pulled over by a state trooper. When he asks you for your home state’s current registration, the smokey takes one look at your paperwork and tells you that your registration is not legally recognized by his state’s laws. He then impounds your car until you can prove that your registration is legal.

[Tweet “@EmbajadorTquila Goes On the Record.”]

That’s exactly what happened to Tequila Embajador.

After a mound of paperwork providing and proving their procedural accurateness, converting to the more approved methods of record keeping–ninety days later–the ban on Fabrica Santa Rosa was lifted and it’s back to business as usual.

Embajador Tequila Goes On The Record

In this snippet, Licenciado Cristobal Morales Hernández introduces himself as the legal representative for Tequila Embajador and the Fabrica Santa Rosa.

Lic. Morales explains that while Embajador has never suffered infractions due to the wholesomeness and quality of their tequila (in other words, it has never produced illegal tequila), the main problem was in providing proper documentation as per the normas.

[Tweet “The @EmbajadorTquila distillery was sealed but product was never destroyed”]

Morales goes on to describe that what the authorities actually did was to seal the distillery and the remaining tanks and barrels of tequila, but the product was never destroyed as is customary for the aforementioned government agencies to do during their “Juntos Contra la Ilegalidad” offensive.

The distillery was allowed to finish elaborating the tequila in all its various stages of production until the matter of the paperwork documentation was in compliance with the normas.

Embajador Tequila: Business As Usual http://wp.me/p3u1xi-4lf — Lic. Cristobal Morales with flagship tequilas, El General, Embajador and Jalisciense.

They were not allowed to truck out finished product, however, or to receive more harvested agave until that matter was resolved. These same conditions were enforced on all of their contracted brands, as well.

In fact, even though the method of paperwork was not in keeping with the two agencies’ guidelines, paperwork DID exist making every step of Embajador’s tequila making process traceable to the very last agave plant and liter of tequila.

Lesson Learned

Cristobal asserts that in the 90 days of the plant’s closure, the company not only met the requirements of the agencies, but exceeded their expectations throughout the distillery, particularly concentrating in the fermentation, distillation and warehouse sections of the fabrica.

Lic. Morales admits that while the agencies’ reaction to the minor infractions were considered harsh, the situation served as a wake up call to step up their game on all levels of each department to stay on par with their indisputable high quality.

*******

In the next segment, Embajador Tequila showcases its Framework for The Future.

[Tweet “The @EmbajadorTquila distillery is not only back in business, they’ve got BIG future plans.”]

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Learn all about tequila from field to glass and then get paid to share your love of agave spirits with others! Buy Them Both Now!

Embajador Tequila: Rectifying the Situation

January 3, 2019August 12, 2016 by Lisa Pietsch

[Tweet “Remember our Bullying in Tequila article? http://wp.me/p3u1xi-486 It’s BACK!”]

The Situation

Since that morning in early April when a news report in the Chinese press first announced that the Embajador distillery (NOM 1509) had been cited by COFEPRIS (Comisión Federál para la Protección contra Reisgos Sanitarios) and SAT (Servicio de Admistración Tributaria), and shut down for various minor infractions, I’d been anxious to investigate their situation, in-depth.

Without a single citation in over 12 years, multiple improvements in the works to compete effectively in Asia and Russia, and kosher certification, it made no sense to endanger their forward movement and future plans by being seemingly underhanded and distilling tainted juice.

[Tweet “Family-Owned Distillery makes Alma de Agave, Crótalo, Cabresto, & Embajador #Tequila.”]

This family-owned distillery has a stellar reputation for producing such exquisite fan favorites like Alma de Agave, Crótalo, Cabresto, along with its highly decorated flagship brand, Embajador.

Things Don’t Add Up

As I expressed in my editorial, Bullying In Tequila, I believed this was clearly a case of government agencies bullying an up-and-coming player poised to enter the burgeoning Chinese and Russian spirits markets, and known to Tequila Industry insiders as a formidable force firmly positioned in the private label sector.

When Andres Garcia, Regional Sales Manager for Embajador Tequila, called to invite me to inspect the day-to-day operations of the Fabrica Santa Rosa, I found their willingness to be transparent refreshing, especially in the wake of such damaging charges.

[Tweet “Honesty is the best policy in life and in #Tequila”]

The “Violations”

Let’s get right down to brass tacks.

According to the initial Chinese report–

Embajador Tequila: Rectifying the Situation http://wp.me/p3u1xi-4iZ — New log book and safety signs.

“Mexican health authorities seized over one million liters of tequila on Friday, which belongs to a production company in flagrant breach of health norms.

“All production of tequila was immediately suspended after the investigation found “sanitary conditions far below standards for production, as well as an inability to trace supplies and a lack of legal documentation.”

“The security included seizing 980,399 liters of tequila in tanks or unmarked bottles, 34,677 liters of finished products in labelled boxes mainly from the El Embajador and El General brands, and around 55,000 liters at various stages of the production process.”

In this news release from Mexico—

“The second largest seizure of alcohol in three years is carried out.”

“It concerns the second largest securing of illegal inebriating beverages…. In this operation, 1.70MM liters of irregular alcoholic beverages were seized….”

(“Realizan el segundo decomiso más grande de alcohol en tres años

“Se trata del segundo aseguaramiento de bebidas embriagantes ilegales mas grande….En esta acción…se aseguararon 1.70MM litros de bebidas alcoholicas irregulares…”)

[Tweet “The second largest seizure of alcohol in three years is carried out.”]

In this incendiary report from El Financiero—

“Federal authorities confiscated one million 70 thousand liters of tequila outside the normas in the locality of Atotonilco el Alto, and it concerns the largest securing of irregular alcoholic beverages.

(“Autoridades federales incautaron un millón 70 mil litros de tequila fuera de norma, en la localidad de Atotonilco el Alto, y se trata del aseguramiento más grande de bebidas alcohólicas irregulares.)

[Aforementioned federal authorities] imposed seals of closure and immobilized the product and installations of Tequila Embajador, where work and services were suspended due to deficient sanitary conditions in the production process, lack of traceability of supplies and scarcity of legal documentation.”

(“…impusieron sellos de clausura e inmovilizaron el producto e instalaciones de la empresa Tequila Embajador, donde se suspendieron sus trabajos y servicios por deficientes condiciones sanitarias en procesos de producción, falta de trazabilidad de insumos y carencia de documentación legal.”)

“Security measures applied included the seizure of 980,399 liters of product in bulk inside storage tanks and bottled without labels; 34,676.7 liters of finished product in cases and labeled primarily of the brands El Embajador and El General; as well as 55,000 estimated liters of product in various stages of production, chopped, shredded, fermented and distilled.”

(“Las medidas de seguridad aplicadas, incluyeron el aseguramiento de: 980 mil 399 litros de producto a granel dispuesto en tanques y en botellas sin etiqueta, 34 mil 676.7 litros de producto terminado en cajas y etiquetado principalmente de las marcas El Embajador y El General, así como 55 mil litros estimados de producto en proceso, troceado, molienda, fermentación y destilación.”)

“Sanitary irregularities were also detected such as tanks without protection,

[and] accumulated dirt and grime. Additionally, there were no physical separations between the fermentation and distillation areas from the rest of the spaces of the distillery.”

(“También se detectaron irregularidades sanitarias, como tanques sin protección, y acumulación de suciedad; además que no había una separación física entre las áreas de fermentación y destilación del resto de los espacios de la empresa.”)

“In addition, there were flies present in the fermentation and distillation zones due to a lack of pest control, evident lack of order and cleanliness and there were no log books registering the carrying out of cleaning and maintenance of equipment.”

(“Además, se detectó la presencia de moscos en zonas de fermentación y destilado, debido al deficiente control de plagas, evidente falta de orden y limpieza en las instalaciones y no se contaba con bitácoras de limpieza actualizadas ni registro de mantenimiento de equipos.”)

And, from this blatant smear campaign–

“Any person who would want to consume any of the brands of tequilas involved should know that these products were elaborated under dubious sanitary conditions. For instance, the inspectors found a platform over the reception tanks and one over the fermentation tanks that did not have any protection.

Moreover, there were gutters without protection with an accumulation of grime, evidence of consumed foods in the processing areas and lack of cleanliness in the fermentation area with the presence of non-useful materials including a motorcycle.”

(“Cualquier persona que guste consumir alguna de las marcas de los tequilas involucrados, debe saber que estos productos fueron elaborados en condiciones sanitarias muy dudosas; por ejemplo, los inspectores encontraron una plataforma sobre las tinas de recepción de jugo y uno de los tanques de fermentación, las cuales no tienen protección; además, se encontraron canaletas sin protección y con acumulación de suciedad, evidencia de consumo de alimentos en las áreas de proceso y falta de limpieza en el área de fermentación, con presencia de materiales en desuso, incluyendo una motocicleta.”)

“Also, an open bag was identified with detergent and a bottle containing liquid with the smell of disinfectant over the barrels. There was lack of maintenance of the walls and a presence of clearings, windows without protection [screens] in different areas. The distillery had no physical separation between the

fermentation and distillation areas from the rest of the spaces. It also had no identification and delineation of the areas such that packing material, products, chemicals and bottles were found in the same place.”

(“También identificaron la presencia de una bolsa abierta con detergente y un envase conteniendo un líquido con olor a desinfectante sobre las barricas; hay falta de mantenimiento en paredes y presencia de claros, ventanas sin protección en diferentes áreas; la empresa no cuenta con una separación física entre las áreas de fermentación y destilación del resto de los espacios del lugar, ni tiene identificación y delimitación de áreas, de tal forma que el material de empaque, productos químicos y envases se encontraban en un mismo sitio.”)

And finally, a simple English translation from the original press release by COFEPRIS and SAT by trade magazine, The Spirits Business.

The Rest of The Story

What all these news services failed to mention was that each of the above infractions, except one, was addressed within a couple of hours.

So, why was the lifting of the closure of Fabrica Santa Rosa distillery not met with equal timeliness by these government agencies?

Why allow the escalation of a situation that normally requires only a warning, and malign a distillery’s spotless reputation?

Why did it take almost 90 days to rectify the situation and to restore the Embajador family’s impeccable integrity within the industry?

Two reasons–

COFEPRIS’ and SAT’s ongoing three year campaign (some call it a smoke screen or a witch hunt) called “Juntos Contra la Ilegalidad” (“Together Against Illegality”), to reduce illegally produced alcoholic beverages on the Mexican market, and…

Paperwork.

*******

Click for Part 2, Embajador Tequila: Business As Usual.

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Learn all about tequila from field to glass and then get paid to share your love of agave spirits with others! Buy Them Both Now!

Tequila Aficionado Media Presents Last Tequila Standing

January 3, 2019July 20, 2015 by Lisa Pietsch

national tequila day, last tequila standing, tequila aficionado, TV show, reality show

First ever Tequila Reality Show kicks off on National Tequila Day!

For Immediate Release!

In 2011, eighteen tequila start ups had vied to be crowned the top Brand Of Promise(TM) in the world’s first broadcasted Tequila Reality Show.

Tequila Aficionado Media Presents Last Tequila Standing

July, 2015, San Antonio, TX: Starting July 24, 2015, National Tequila Day, 45 exclusive episodes of Last Tequila Standing will be streamed daily over Tequila Aficionado Media’s website and on-demand over its own YouTube playlist, as well as featured throughout all of its powerful social networks.

“Through the expansion of opportunities on the Web, and Tequila Aficionado

Media’s own explosive growth, we are proud to present for your enjoyment, Last Tequila Standing,” declared Tequila Aficionado’s CEO, M.A. “Mike” Morales.

Never-before-seen raw footage of some of the tequila industry’s most promising labels will be aired. Each will relate their start up stories and demonstrate their tasty signature cocktails, too.

Colorful brand owners, master distillers, and top flight brand ambassadors took the stage with their enduring tequilas, many of which are still thriving even in 2015’s more competitive tequila market.

[Tweet “Tequila Aficionado Media Presents Last Tequila Standing!”]

The Dare

In the late summer of 2011, 18 brave tequila brands took up this challenge–

To appear on the first ever televised tequila reality show to share with the world their personal stories and to participate in a judged tasting competition to be named the Last Tequila Standing.

Rocky Road

As with most TV pilots and shows that are ahead of their time, Last Tequila Standing struggled to find a permanent network home.

“After a series of fits-and-starts, several failed business deals and cable company mergers that never happened, Last Tequila Standing was all but lost,” recounts Morales, a producer and one of the hosts of the show.

From the moment Season 1’s taping had wrapped, Morales worked tirelessly for months with the Executive Producers to try to fulfill the show’s original mission–

To educate and inform tequila aficionados worldwide in an entertaining fashion on the finer points of Mexico’s national spirit, as well as to help promote organic, artisanal, small batch, and boutique tequila Brands Of Promise(TM).

“But just a few years later, with the advent of streaming video made popular by services like Hulu, Amazon, and Netflix, the playing field has changed dramatically,” adds Lisa Pietsch, Tequila Aficionado Media’s COO in charge of social media marketing. “Last Tequila Standing lends itself perfectly to our binge watching audience.”

The Line-Up

Participating tequila brands include…

Alquimia Organic Tequila, Alma de Agave, Crótalo, Cuestión, Don Pilar, Tributo, SilverCoin, and many others.

In addition, Sal del Mar gourmet sea salt, Casa ZG sangrita mix, and Nature’s Agave syrup are also highlighted.

Guest Starring

Alquimia and Quinta de Gomez, organic tequilas.

Along with Tequila Aficionado Media’s CEO and Tequila Journalist, M.A. “Mike” Morales, Clayton J. Czczech guest judges on Last Tequila Standing.

Also on hand to impart his vast tasting expertise is industry expert Christopher Zarus, inventor of the only take home tequila tasting kit, TequilaRack, which will also be featured extensively.

A Global Event

“Since the taping of Season 1 of Last Tequila Standing, the Tequila Industry has aggressively pursued global expansion into countries like China, Russia, India, and Brazil,” explains Morales.

[Tweet “The streaming of Last Tequila Standing is a global event of epic proportions!”]

“Given that our audience is not only viewing Tequila Aficionado from these locations,” asserts Pietsch, “but all across Canada, the United States, Germany and Mexico, we can truly say that the airing of Last Tequila Standing will be a global event of epic proportions!”

*******

Watch for new episodes of Last Tequila Standing premiering every day–for 45 days–beginning on National Tequila Day, July 24, 2015 at 11AM CDT.

[*Editor’s note: As a courtesy and at the request of Clayton J. Czczech, Tequila Aficionado has attempted to remove all videos and photographs in which he was featured without degrading the balance of the Last Tequila Standing content provided to us.]

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Learn all about tequila from field to glass and then get paid to share your love of agave spirits with others! Buy Them Both Now!

Change is at Hand for the Tequila Market, Part I

July 27, 2014December 20, 2013 by Lisa Pietsch

Part 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

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.

[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!

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.

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 4^th.)

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)

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.

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Tequila: The Year in Review

July 27, 2014December 6, 2009 by Lisa Pietsch

According to figures released by Herradura, the number of cases of tequila exported annually are…

US 11.5 million
México 7.5 million
Germany 450,000
Russia 300,000
Canada 250,000
France 200,000
Greece 190,000
Japan 150,000.

Of worldwide tequila production, Mexico bottles 33% while the United States bottles 51% as bulk mixto.

However, figures released by the CRT (Consejo Regulador del Tequila) state that from January to October of 2009, there was a 19% drop in tequila production from 2008.

A reporter for Excelsior Online recently commented in his column that despite Mexico’s economic drop of 7% during the recession, as of October 2009, sales of tequila have increased 10% over last year. While this columnist attributes the rise in tequila consumption to consumers trying to make the recession more bearable, others in the tequila industry are more optimistic about the future.

Juan Beckmann Vidal, president of Casa Cuervo, sees enormous worldwide potential in the exportation of the Spirit of Mexico, particularly into Asia. He foresees the annual sales of 137 million liters of tequila to double in the next five years.

With the current instability of each country’s economy, it will be interesting to see what the final production figures are at the end of 2009.

Open Doors

How the Magic Happens

Behind the Iron Door

Adjusting to Variables

Two Important Elements

The Vision

Eco-Friendly

The Future Framework

Positioned For Success

See And Taste For Yourself

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Let’s Review…

Scraping A Dead Horse

The Loophole

Embajador Tequila Goes On The Record

Lesson Learned

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The Situation

Things Don’t Add Up

The “Violations”

The Rest of The Story

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First ever Tequila Reality Show kicks off on National Tequila Day!

For Immediate Release!

Tequila Aficionado Media Presents Last Tequila Standing

The Dare

Rocky Road

The Line-Up

Guest Starring

A Global Event

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Tequila Brands and Producers Have Already Sailed Into the Sucker Hole

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