GTR ‘best channel’ to widen Tequila’s audience
Mexico’s national spirit is targeting international travellers in a bid to spread the word about its high-end expressions in what has become Tequila’s third-biggest market.
Global travel retail (GTR) appears to be the perfect stage for Tequila to show off its premium credentials. A sumptuous, well-lit display in a big international airport is great for raising the category’s profile, teaching consumers about 100% agave spirit, and for brand education in general. When done well, it is the polar opposite of some cheesy, Tex-Mex restaurant where the waiters all wear sombreros, the Tequila is always a ‘mixto’ and the drinks are invariably slammed.
The channel also gives the spirit a much more international feel than global sales suggest, as Jenny Shipton, marketing director for travel retail EMEA at Pernod Ricard, explains: “Even though the US and Mexico represent 80% of Tequila worldwide, GTR is an extremely important market for the category and for Olmeca, as it gives the brand a global presence in a premium market – 670 million people go through airports every year.” She says it is now “the third market for the category after Mexico and the States,” and is growing 6.1% in the premium-plus segments (CAGR 2005-15).
Some 75% of Tequila is in the premium-plus and above bracket, and that share rises to 85% in GTR, claims Shipton, who sees the spirit’s shift up-market as a key trend right now. Meanwhile the super-premium-plus segment grew by 27% (CAGR) in the decade to 2015, thanks to brands like Patrón, which pioneered high-end Tequila in travel retail. John Kilmartin, VP GTR at Patrón International, says: “You’ve got to choose a platform to super-premiumise in and to get Tequila to a wider audience beyond the US and Mexico. GTR is probably the best channel to do that in.”
Two years ago, Patrón launched its oldest Tequila to date – a seven-year-old extra añejo in GTR that, for production director, Antonio Rodriguez, was the “equivalent to a rare 50-year-old Scotch”, albeit at a fraction of the price at US$259. “We’re trying to educate consumers and maybe bring them back across to the aged Tequila niche category,” says Kilmartin, who admits such consumers probably haven’t risen through the ranks of ‘mixtos’. “No, they are predominantly in a market geared towards brown spirits such as Cognacs and malts,” he says.
Having also released a cask-collection Sherry añejo, you can see where the inspiration might be coming from. Single malts are tending to shed age-statements, particularly in GTR, and not all consumers are happy about it. Amber Beverage Group recently entered the Tequila category with the acquisition of Fabrica de Tequila Finos, which produces a number of Tequila brands including KAH, a super-premium 100% agave proposition.
“We have arrangements to launch into major travel retail operators early this year, in the Caribbean and across most of the US-Caribbean ports,” says Seymour Ferreira, Amber Beverage Group CEO. “Travel retail allows the promotion and introduction of Tequila to new consumers and that makes it very important.”
Over in Europe, top-seller Sierra Tequila is among the top three in travel retail, according to Tina Ingwersen-Matthiesen of brand-owner Borco, who says: “GTR enables us to bring our Tequila range into new markets and meet the growing interest in the 100% agave-oriented high-end cocktail culture, and the laid-back, luxury-Tequila sipping development.”
With this in mind, the premium Sierra Milenario was recently re-launched and given a pair of line extensions; the Sierra Milenario Café with Mexican coffee and vanilla, and the smoked Milenario Fumado. In Ingwersen- Matthiesen’s view, activations in GTR should be measured in terms of successful storytelling as much as sales and turnover. For her, the channel “provides an interesting space as travellers have time to experience the brands in great detail and might share their impressions on social media and across the blogging sphere”.
Eric Helms, Brown-Forman’s GTR marketing director, sees travel retail as a place to showcase the firm’s Tequila brands: “While not every traveller can visit Casa Herradura, everyone who purchases Herradura or el Jimador can experience the premium tastes and tradition of Mexico. We support this philosophy through the use of authentic Mexican-themed displays and Tequila tasting opportunities in airports.”
This month, Brown-Forman is partnering with the operator Dufry in what Helms calls “a very exciting promotion in Mexico City” focused on the super-premium Herradura Ultra and the more mainstream Antiguo Tequila. The brand’s key expressions of añejo, reposado and silver are also featuring in the country’s Tequila festival in Mexico City, Cancun and Los Cabos at the same time. Beyond Mexico, however, brand- owners often face a real challenge persuading operators that it is in their interest to give the category more prominence to allow it to flourish.
Raffaele Berardi, CEO of Fraternity Spirits, which owns the top-10 Tequila brand Corralejo, says: “Travel retail is definitely an important factor in opening up new markets and giving the category more visibility.” While Mexican airports obviously carry a good selection of brands, he feels the lack of space given to the category elsewhere simply reflects Tequila’s low market share in most countries. Nor does he believe all operators in the channel are pushing the premium button.
“GTR is not necessarily exposing the bright side of Tequila,” he says. “I think it’s mostly dominated by the big corporations, and they’re looking for rotation and price points. If you have the opportunity to be in GTR it’s a great vehicle, but it’s a very competitive price set.”
For Ferreira: “There’s always the opportunity to have a discussion with retailers and customers about improved space or better presentation, but ultimately the big question for the retailers has to come back to what margins are being generated and what consumers are looking for.
“I think our role in this, as indeed any company, is really to get the consumer traffic to build, and to balance that with the right opportunities for consumers to choose Tequila. Now whether that be with promotions in-store, or displays, or whether that be improved shelf space, that is a conversation we all want to have. If you look at the categories in growth, like Tequila, there is always a challenge when you are growing very fast to have the right shelf space because it is about a future promise to the retailer rather than the existing weekly volumes.”
Patrón has tried everything from tastings and cocktail demonstrations to virtual tours of the distillery in Mexico using Oculus VR technology. The approach is “very much focused on key locations,” says Kilmartin. “It’s either about trial and hopefully converting that to purchase or it’s about brand education and creating awareness around the drinkability and smoothness of super-premium Tequila. We’re there to educate consumers and show them that there’s a sophisticated way to drink it, that it’s very much an enjoyable sipping spirit.”
As for new markets, Kilmartin is “very buoyed up by India” and is keen to recruit Chinese travellers passing through Europe and the US, seeing them as future advocates for the category in China. Tina Ingwersen-Matthiesen says: “Every single person in GTR can be a potential bridgehead by transporting our Tequila into their home countries.” Berardi’s objectives are to first build Corralejo in Asian travel retail and second to win over the big operators in the US.