Francisco Soltero
Strategy And Institutional Affairs Director
Patrón Spirits Mexico
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Insight

Tequila Maker Sees Ultra-Premium Opportunity

Wed, 09/06/2017 - 16:19

Tequila is Mexico’s national beverage, as well as one of the great symbols of the country. Historically, its sales were focused on the local market; however, globalization, the explosion of Mexican gastronomic culture and the evolution of production processes have made tequila one of the fastest-growing alcoholic beverages in the world.
According to Francisco Soltero, Strategy and Institutional Affairs Director of Patrón Spirits Mexico, consumers are changing their habits and directing their purchases to better-quality products. This has opened the door to new opportunities in the ultra-premium segment of tequila brands. “The trend among Mexican consumers today is to drink better, not more. They know the regions, the categories and the impact that the production processes have on the products they consume. When people drink tequila Patrón, they experience different textures and flavors, such as the crispy and fresh sensation that comes up in the mouth,” Soltero says.
The premium and ultra-premium categories are composed of tequilas made with 100-percent blue agave. Consumption growth in these segments has helped tequila to become the main alcoholic beverage in Mexico with 25 percent of sales in value and 15 percent in volume, according to market analysis firm Systematized Information on Channels and Markets (ISCAM).
Patrón Spirits was founded in 1989 in California and the tequilas produced by Patrón arrived to the Mexican market nine years ago. Shortly thereafter, the brand identified the rapid growth of the ultra-premium segment in Mexico and the US. “In Mexico, between 8 and 9 million 9L boxes of tequila are commercialized every year. Of these, the ultra-premium segment represents fewer than 500,000 boxes but it is the segment that is seeing the most growth,” says Soltero.
Patron’s success is best measured in an international context where the ultra-premium products sell around 3.5 million boxes per year, of which 2.4 million belong to Patrón, according to Soltero. “Consumers now recognize tequila as a spirit that offers the most sensitive experiences,” he continues. In the US, the world’s leading importer of tequila, Patrón sells more than in Mexico. According to September 2017 data from the Tequila Regulatory Council, Mexico produces 106.3 million liters of 100-percent agave tequila, of which 67 million liters are for export. Of these, 52.7 million are exported to the US although the UK, Western Europe, Russia, Australia and Japan are also important markets for the company. Although not all the 100 percent agave tequilas are considered ultra-premium, the growth of this category is driven mostly for the more valuable products belonging to the ultra-premium segment.
In the case of ultra-premium tequila, value comes from the production process. All Patrón bottles are produced in Atotonilco, Jalisco, where 1,600 employees participate in the process. Patrón started with one unit where the agave is cooked, the agave sugars are extracted, the liquid fermented and finally distillated twice. When the company started growing, instead of changing the process or including technology, it built another equal infrastructure and duplicated their capacity. Today, Patrón has around 12 distilleries at which more than 40 million bottles are produced by hand each year.
Patrón's goal is to continue changing tequila consumption culture with new products and experiences. “In our products we have elements that need to be enjoyed with calm and attention and this is how we started to create this new culture,” says Soltero. He adds that influencers, bartenders and hotel and restaurant owners want ultra-premium tequila because they understand the concept and experience that lie behind the product.