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El Rayo closes $1 million fundraiser

London-based Tequila brand El Rayo has raised US$1 million in funding, with a view to double its sales in 2023.

El Rayo
El Rayo’s Plata and Reposado expressions are made using highland and lowland agaves

The raise was led by Rianta Capital, the family office of New Look founder Tom Singh, alongside angel investments from Logan Plant, founder of Beavertown Brewery, and About a Boy actor Nicholas Hoult.

Speaking to The Spirits Business, co-founder Jack Vereker said: “We closed the round on Christmas Eve, so it was quite a nice Christmas present, but there was a lot of hard work that went into it. It is quite a difficult time to raise money at the moment, given what’s going on, but ultimately the result has been amazing.

“The raise was led by Rianta Capital, who are a really great family office that has invested in other drinks brands like Moth, Lucky Saint and Pentire – that’s its kind of drinks staple.”

Vereker noted that actor Nicholas Hoult had also invested in the brand as an angel investor, after he direct messaged (DM) the brand on social media.

“He actually DM’d us on Instagram about three years ago,” he explained. “Our brand manager Phoebe said, ‘I don’t know if this is a catfish but you’ve got a DM from Nick Hoult’.

“He said he was a massive fan of the brand, and had been drinking it with someone from BBC Radio 1. He loves Tequila and loved what we were doing, so we’ve been chatting to him for a while about getting involved, and he kind of put his money where his mouth is.”

Vereker noted that Hoult “can economically be quite influential in certain circles”, but confirmed that he will not become a brand ambassador.

“We’re not going down that route – he’s very much just a silent ambassador at the moment.”

Vereker also noted that the additional investment from Beavertown founder Plant, who recently sold the beer brand to Heineken for an undisclosed sum, would provide El Rayo with the opportunity to tap into Plant’s “combination of brand and business sense”.

He added: “Strategically, he’s kind of awesome. [Beavertown] has been one of the most successful and probably standout brands of the last five years in drinks.”

This latest fundraise is the third that the brand has undertaken since its launch.

“This is not our first rodeo when it comes to fundraising,” Vereker said.

“We wanted to do this fundraise to help us take advantage of [the Tequila category’s] growth, and ultimately this investment is going to be used to double our sales to 7,000 nine-litre cases this year.”

New markets

Vereker co-founded El Rayo with childhood friend Tom Bishop in 2019.

The pair launched the brand with a direct-to-consumer sales strategy. “I used to work in a e-commerce and digital marketing company, so I kind of had an understanding of that space,” he said.

El Rayo co-founders
L-r: founders Tom Bishop and Jack Vereker

“Obviously, given what was going on with the world at the time, that kind of helped, but even before Covid, we launched very much as an e-commerce-focused and Amazon-focused business.”

Vereker continued: “Tom and I didn’t come from the drinks industry, so we didn’t even know what the on-trade really was before we started the business.

“At the end of 2021, we became all about actually establishing proper on-trade distribution. Obviously its hard work, but it was really good because now we have really good wholesale network, and we have amazing on-trade listings from independents up into the bigger bar groups.

“We work with Ciaran and James from Nightcap, who have been instrumental in opening up our wholesale network and winning our amazing listings in the on-trade.”

“For 2023, the focus is going to be on the off-trade, and continuing the success of some of the bigger on-trade listings we’ve got.”

El Rayo became the first Tequila brand to be listed at retailers such as John Lewis, Liberty and Daylesford, and is now available at more than 500 on-trade venues including London’s Sushi Samba, and Drake and Morgan.

Following The Wine and Spirit Trade Association’s (WSTA) market report last year, which revealed that Tequila’s volume sales rose by 83% compared to pre-Covid levels, with the category up by 94% in value in UK-based shops and supermarkets, El Rayo will be available in a nationwide UK supermarket for the first time from April.

“It is going to be a big, big moment for the business,” Vereker commented. “It’s half exciting, half terrifying, because I just don’t know the impact that’s going have on the business and our supply chain – and our supply chain is kind of tricky to manage, given that we produce everything in Mexico. So I think it’s 51% exciting, 49% terrifying.”

Vereker went on to say that the supermarket deal is validation of the growth of the premium Tequila category. “A lot of people have been talking about Tequila for a while, but this is the first time this supermarket is going to be listing a £30-plus (US$36.45) bottle of Tequila, so I think its validation that they’ve seen the opportunity for it.”

Furthermore, El Rayo will launch in Germany this year, marking the brands first move into international exports.

“This is something that we’ve been testing over the last few months on Amazon,” Vereker explained. “We kind of used Amazon as a bit of a test-to-learn platform, to see if the brand, messaging and the serve suggestion worked in a different country. Amazon kind of gave us a quite low barrier-to-entry, low-cost way to do that, and we became the best-selling Tequila brand in four months on Amazon Germany, so that probably suggests that it does work.”

El Rayo is made using highland and lowland agaves, and was created in partnership with maestro Tequilero Oscar Garcia.

Clocking in at 40% ABV, El Rayo Plata and Reposado cost RRP £34.95 (US$42.41) and £37.95 (US$46.16) respectively per 700ml bottle.

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