The art of tequila

With ‘artisan’ the watchword across all spirits categories, tequila is coming into its own with discerning consumers, finds Richard Woodard

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THE RISE OF CRAFT DISTILLING IS THREATENING TO TRANSFORM THE LEXICOGRAPHY OF SPIRITS BRAND COMMUNICATIONthese days, you can’t get through the first sentence of a press release without tripping over the words ‘hand-crafted’ and ‘artisanal’.

As the language descends rapidly into cliché, the overall trend ought to be positive for tequila, with its back-story of carefully nurtured agave plants, the impact of terroir, tahona stones and hard-handed jimadors.

Declaring craft distillers “a force to be reckoned with”, Anja Weise-O’Connor, senior marketing manager at Jose Cuervo International, says: “Small distillers have had a significant effect on the overall spirits business in at least one way – forcing the large players to be on top of their game. Consumers are demanding experiences, not just products; they are looking for brands with substance, exciting stories and a deeper meaning.”

“The growing interest in craft spirits overall has helped to shape consumers’ evolving taste for tequila,” adds Gary Ross, senior brand director of tequila at Beam Suntory. “Following along with the characteristics of ‘craft’, today’s tequila drinker has demonstrated a strong interest in distillery heritage and authenticity.”

Sophisticated palate

And here’s a third voice in broad agreement. “The consumer’s palate is becoming more sophisticated,” ventures John Tichenor, global brand director at Brown-Forman’s Casa Herradura. “There is a sense of exploration of character. People are becoming more attracted to the story of authenticity and craft, so we continue to see greater appreciation for premium and super-premium tequilas.”

But hang on a moment. The combined annual sales of Cuervo, Beam Suntory’s Sauza and Herradura are – what? – close to 8.5m cases? Throw in Patrón and we’re comfortably over 10m cases. Can that really be called craft?

“Arguably we’d fit the definition of a craft spirit – though our volume has grown significantly over the years, Patrón is still hand-crafted [there’s that word again] in small batches, using small capacity ovens, fermentation vats and copper pot stills,” says Greg Cohen, VP corporate communications at Patrón.

“As we’ve grown, instead of building bigger, we simply replicated that original small batch process so that today we essentially have 12 small distilleries under one roof. A ‘craft’ spirit shouldn’t necessarily relate to volume, but rather how the spirit is produced.”

OK, but if we accept tequila’s craft credentials, here’s another question: how many people know about them? Here we inevitably run up against tequila’s huge geographical imbalance, with more than eight out of every 10 bottles sold within the borders of the US and Mexico. Two mature markets, everywhere else – on a charitable interpretation – ‘emerging’.

Tichenor, however, insists that’s changing. “Although the US is the largest tequila market, this is not solely a US phenomenon,” he says. “We are seeing consumers globally trading up and premium-plus tequila is growing at record high rates.”

Ross goes further. June sees the largest-ever revamp of the Sauza range, including the rebranding of 100% agave Sauza Blue as Sauza Signature Blue to coincide with its launch into China, coming just after the brand’s Japanese debut. “As consumers continue to trade up worldwide, we anticipate 100% agave tequilas will become the category standard, and Sauza Signature Blue will become the heart of the Sauza brand,” he says. 

The inexorable growth of 100% agave began in the US, but is beginning to gain traction worldwide. “100% agave is a more or less global trend that is on the agenda in almost every conversation we have with existing or potential partners,” says Dr Tina Ingwersen-Matthiesen, board member at Sierra owner Borco, adding that 100% agave is a “must-have” in the US, more and more relevant in Asia, and under discussion in central and eastern European markets too.

This, she adds, increasingly brings the company’s Sierra Antiguo and Milenario bottlings into play – “the very products that, only a few years ago, we were still having to proactively carry on to the markets, and that the markets are now increasingly asking for themselves”.

Amid all this talk of 100% agave, what of mixto? While consumers may increasingly look down on it, Weise-O’Connor and Dale Sklar, MD of Wine & Spirit International (owner of Bambarria and joint owner of Villa Lobos), profoundly disagree. Both make the same analogy, that of blended and single malt scotch whisky, and Sklar says: “I can think of many malt whiskies I would refuse in favour of a blended Chivas Regal. At the end of the day, it’s all about your personal taste and palate.”

In any case, tequileros might have reason to be grateful for mixto’s existence soon enough. The latest agave shortage has seen prices soar to several pesos per kilo, says Erica Magaña, international business development executive at Casa Centinela, thanks to a combination of low plantings, plus increased demand for agave syrup and agave-derived inulin, a prebiotic dietary fibre said to have numerous health benefits.

Armed guards

“Only a few years ago, I recall the agaveros telling me it was cheaper to leave any unrequired agave to rot in the fields than collect it, getting perhaps three to four centavos a kilo, whereas now it’s fetching about MXP7 a kilo,” adds Sklar. “Some agaveros are employing armed guards to protect their agave plantations. In one night, a lorry can turn up and remove $100,000-worth of agave.”

Other consequences can be equally murky, he says – allegations of price rigging among some larger players with huge stocks of spirit; widespread rumours of agave travelling north from non-tequila areas such as Oaxaca and Yucatan. 

“You can see just how volatile the market structure is,” Sklar says. “I was recently asked by a client in Scandinavia to comment on something he had heard about agave juice coming in from Nicaragua. I hadn’t heard that one, but it makes you wonder…”

Regulating production

The response from the Mexican government, reports Magaña, has been to try to regulate production and, in particular, draw up a programme to replant agave. Sklar, meanwhile, would like to see the introduction of a bottling-at-origin rule similar to that used by champagne and cognac – but which was rejected after pressure from the US.

For Raffaele Berardi of Tequila Corralejo, the agave supply struggle is an inevitable cycle that repeats itself every 10-15 years. “Agave will always be a product with cycles and the volume may never grow to the extent to compete with vodka or whisky,” he says.

Most producers would probably agree with that statement, but many would equally argue that it doesn’t matter. In an industry where value is increasingly championed over volume, and the artisanal (yes, that word) wins favour over the mass-produced, tequila could find that status is far more important than scale.