Tequila enjoys the best of both spirit worlds: it is the key ingredient in one of the most popular cocktails of all time and, at its finest and priciest expressions, it can be savored like fine Cognac by avid aficionados. Over the past go-go decade, tequila has maintained its party persona while gaining cachet with discerning customers via a rising wave of super-premium products. And the venerable Margarita has found new life through classic cocktail status. That dual personality has helped to keep tequila volume and sales afloat during tough economic times.
Overall, last year was a difficult one for the on-premise business; traffic was down and sales were sluggish. Nonetheless, tequila volume was up 1.3 percent overall in 2009, according to statistics from the Beverage Information Group, Cheers’ parent company, with projected growth of more than 2 percent on a volume basis, which is solid compared to Scotch, which is expected to lose 0.1 percent this year, but somewhat weak compared to vodka, which is slated to gain upwards of 6 percent.
That positive figure is borne out by anecdotal evidence from the field, where many operators report that tequila sales are strong. Customers still are drinking good tequila, say bar owners, although they may be cutting down on other purchases or going out less.
“Our tequila business is pretty good,” reports Jonathan Sablon, manager at the Agave Grill in Hartford, Conn., a modern Mexican grill and tequila bar concept. Sablon says he’s seen no evidence of customers trading down when it comes to beverage alcohol, although they may order less food—an entrée but no appetizer, for example. Agave Grill’s House Shot is El Jimador, priced at $5 for a 1-ounce pour. The restaurant’s new menu features one of the latest trendy entrants into the market: Hotel California Silver, priced at $10, and Hotel California Reposado for $12.
“Maybe people aren’t going out as often,” adds Jon Paul Paxton, owner of Juan Pablo’s Margarita Bar & Restaurant in Wildwood, N.J., “but when they do go out, they want to drink something great.” He, too, hasn’t experienced any trading down in terms of quality for the beverage alcohol he serves.
“Any trading down in tequilas on-premise I think will be short lived,” notes David Commer, president of Carrollton, Texas-based consultancy, Commer Beverage, who consults for clients such as Red Robin and T.G.I. Friday’s. Before the current recession, the tequila category had experienced an overall upsurge in quality as customers began to appreciate better tequilas. Commer expects that interest to pick up again when the economy recovers.
A Growing Category
The spirit’s growth is partly fueled by the proliferation of new brands and expressions entering the market. It’s not uncommon for a tequila-oriented bar to offer a few dozen tequilas. Most are constantly updating and expanding their lists.
“Over the last year and a half, the number of tequilas on the market has doubled,” points out Junior Williams, general manager of Barrio Tequila Bar in Minneapolis, which also has a sister unit in St. Paul. When Barrio opened, it was difficult to reach a target list of 100 tequilas, he recalls. Now that list is up to 130 selections, price $4 to $65, with plans to add at least eight more shortly. “That’s how much availability has grown,” says Williams. Top calls at Barrio include Cazadores, Maestro Dobel, Don Julio and Don Eduardo.
“Tequila is hip; it’s where vodka was a few years ago,” proclaims Patrick Rhine, bar manager at Verdad, a restaurant featuring tapas and small plates in Bryn Mawr, Penn. Although not a tequila bar, the restaurant has nearly 40 offerings on its beverage list. That menu is expanding with the addition of the top-shelf Corzo and Herradura brands.
Agave Grill, which has more than 70 tequilas on its list, changes its selection fairly frequently. “Sometimes I can’t get a certain brand any more or a bottle doesn’t sell, so I phase it out,” explains Sablon. “But I’m always discovering new tequilas.”
Value is the Spot
Value-priced tequila is by far the biggest category of the segment. Despite the recession, gross revenues grew more than 20 percent in 2009, according to the Washington, D.C.-based Distilled Spirits Council of the United States (DISCUS). In comparison, revenues for the total tequila category grew only 3 percent.
“Customers are more value-conscious these days,” notes Kim Bosse, director of operations at Salud Tequila Lounge in Chicago. “We steer them towards quality tequilas that aren’t as pricy.” As an example, Bosse cites Dos Lunas. “It’s a smaller house that not that many people are familiar with, but it’s a great tequila.” Salud worked with the supplier in a limited-time promotion that offered the brand in $6 Margaritas. Salud also boasts a list of 75 tequilas, mostly priced from $6 to $30; however, a 2-ounce pour of the 1800 Collection goes for $300, says Bosse. The number one call at the tequila lounge is Patrón, and other top customer choices include Don Julio, Milagro, Sauza and Cuervo.
At Verdad, customers will be able to choose from three tiers of Margaritas, prices were yet to be set at the time Cheers went to press. The basic version will be mixed with blanco tequila, Cointreau and fresh lime, and the high-end featuring a top-shelf añejo, Grand Marnier, Cointreau and fresh juices.
“We try to teach customers that the more expensive brands are not necessarily the better brands,” proclaims Philip Ward, co-owner of Mayahuel, a New York City bar specializing in tequila and mescal. “I recommend spirits for what’s in the bottle rather than what the image is.” Three family-owned tequila houses that offer quality at reasonable price points, for Ward, are El Tesoro, Siete Leguas and Pueblo Viejo.
For many years in this country, tequila was consumed mostly as a shooter or as a Margarita ingredient. That has been changing over the past decade as consumers have come to appreciate better quality quaffs and producers have debuted a number of top-shelf expressions. Despite the recession, the super-premium category showed positive revenue growth of 1.3 percent in 2009, according to DISCUS figures.
“The big increase in the value segment prepares the way for trading up when the good times return,” said David Ozgo, DISCUS’s chief economist, at the association’s annual Industry Review held in February in New York City. Ozgo predicts a return to popularity of the higher-end brands later this year.
“We’re seeing more people sipping tequilas slowly to enjoy them rather than shooting shots,” Ward observes. Among some of the sippable añejos stocked at Mayahuel are Ocho Single Estate, priced at $20, Gran Centenario, $15, and Jose Cuervo Reserva de la Familia, menued at $22.
Salud showcases its selection of 100 percent agave tequilas by serving full 2-ounce pours in a tasting glass specially designed to enhance the aromas, color and taste. “At Agave Grill, we’re trying to change the way people drink tequila,” declares Sablon, offering revolving tequila flights in both half-ounce and full-ounce pours. Prices vary according to the brand. “Each flight samples all three tequila expressions, so that customers can taste the evolution of the time the spirit spends in barrels,” he notes.
Sangrita, a tomato-citrus juice, is a traditional tequila accompaniment in Mexico. Barrio carries on that tradition with its Compadres, which means friends in Spanish, priced at $1.50 additional, served alongside the tequilas. Some of the dozen Compadres listed on the menu include Blood Orange, Cinnamon and Apple-Ginger Sodas, as well as lemonade, draft beer or Red Bull.
“It’s a good upsell to sipping tequilas,” says Williams, who counts a number of the sippers among his top 10 best-sellers. “Milagro is popular, and we sell a lot of El Jimador, Corralejo and Reserva del Senor for sipping.”
Not everyone is sold on sipping tequilas, however. “We don’t sell a lot of sipping tequilas,” says Paxton at Juan Pablo’s Margarita Bar. He estimates only two to three percent of his customers opt for high-end tequilas, which are served in snifters.
“Interest may be leveling out,” comments Commer on the super-premium category. “Not so much that it slowed down, but that they overfilled their pipeline and now it’s catching up.”
And, he adds, “I’m not sure how big that market is outside of the spirits aficionados and sophisticated metropolitan areas where people are really sipping tequila.”
A Renewed Focus on Cocktails
While the Margarita may continue its popularity streak, Bosse at Salud has another theory about how much tequila is being consumed. She thinks the rise of cocktail culture has stirred new interest in high-quality Margaritas and beyond. “We’ve grown along with that trend and created some unique tequila cocktails that do really well,” says the director of operations. Recently promoted was the Horchata Colada, $9, made with the Mexican rice-almond beverage horchata, Sauza Hornitos Añejo and agave nectar.
“We’re seeing more mixing with tequila, because people are enjoying better cocktails,” chimes in Mayahuel’s Ward. The mixologist points out that there aren’t that many classic cocktails featuring tequila, so the field is wide open for experimentation. Some of his popular creations include the Pilot Punch, $13, made with blanco and jalapeño-infused tequilas, Yellow Chartreuse, lime, cucumber and mint; and the Slight Detour, $14, composed of jalapeño-infused tequila, reposado and joven mezcal, agave nectar and Xocolatl Mole bitters.
The reputation of the Margarita, one of the top quaffs, depends upon top-quality ingredients and attention to proportions. Commer estimates that more than 90 percent of the tequila sold in the United States is in the ever-popular Margarita, which remains a top drink.
Like New York, San Francisco is on the crest of the cocktail culture wave, so it’s not surprising to find many excellent and innovative Margaritas there. “My inspiration is from the classics,” says Manuel H. Castillo, bar manager and cocktail director at Tropisueño, a taqueria and restaurant in San Francisco.
The most popular of the cocktails, which are priced $8 to $12, is the Margarita de la Casa, made with El Jimador tequila, fresh lime juice and agave nectar; it’s served on the rocks with salt-and-aji chile rimmed glass. “It’s all about balance,” says Castillo. “You have the sweet and sour, the robustness of tequila and subtle heat of the chile and the salt.”
Riffing off that classic is the Violeta Margarita, which uses Creme de Violette liqueur as an accent, complemented by a vanilla-salt rimmed glass. The eponymous Tropisueño adds Domaine de Canton ginger liqueur and Meyer lemon, served with rose-infused sugar and lemon salt.
The taqueria stocks 50 tequila brands, three expressions of each; prices range from $7 all the way up to $75 for extra añejos such as Partida Elegante and Herradura Seleccion Suprema. “Tequila is refined, like Cognac, and meant to be enjoyed slowly, rather than shooting it down,” comments Castillo.
There’s a bottle of Herradura Seleccion Suprema on the top shelf at Bardenay, a three-unit chain of distillery restaurants, based in Boise, Idaho. “We do sell quite a bit of it, but demand runs in streaks,” says owner Kevin Settles. Bardenay offers 10 tequilas, priced from $5.50 for Sauza Hornitos Reposado to $35 for the Seleccion Suprema.
Bardenay’s house Margarita, $6, is made with Sauza Gold Tequila—and for an extra dollar guests can get a float of Grand Marnier, Chambord, Midori or more Sauza on top. One of the more interesting variations is the Prickly Pear Margarita, priced at $6.50, made with Sauza Gold, triple sec, house-made Margarita mix and prickly pear cactus syrup.
“Mixing a good Margarita is like baking a cake; if it’s not balanced, one ingredient will overpower the rest,” posits Paxton at Juan Pablo. Their house Margarita is made with Sauza Extra Gold, Patrón Citronge and fresh lime juice. Only fresh juices are used in the dozen specialty Margaritas, which range from $10 to $12 and weigh in at 16 ounces with ice, served in hand-blown Mexican glassware. The three most popular Margaritas are the Jimmy Buffet, made with Margaritaville Blanco, Margaritaville Oro, triple sec, Grand Marnier and fresh lime juice; the Drunken Smurf, composed of Tarantula Azul, curacao, fresh lime juice and a splash of Sprite; and the Tango Mango, a mix of Margaritaville Last Mango, Grand Marnier, mango, and fresh lime juice.
The frosting on Juan Pablo’s cake is the Crystal Margarita, which is made with Don Julio Real, Grand Marnier 100 Centenaire and fresh lime juice, priced at $75 a glass. “People said we were crazy, but we have sold quite a few, going through a couple of bottles of Don Julio Real during the busy season.” Paxton concedes demand for the pricy cocktail has slowed, but he insists he’s still selling quite a few of the drinks even in this economy.
The new spring lineup of cocktails at Verdad will feature Herradura Silver as a base with various liqueurs and fresh juices. Prices will range from $9 to $12, and a Tequila Cosmo will star Corzo Blanco. Rhine keeps a jar stocked with in-house infusions, currently cinnamon-thyme. Soon, it will be raspberry-vanilla. The Raspberry Crush will mix this latter infusion like a Mojito with muddled raspberries and mint, topped with grapefruit soda.
Serrano chile-infused blanco is a specialty at Agave Grill, where Sablon spices up a Chile Passionfruit Margarita with the infusion. Otherwise, Agave variously employs Herradura, El Jimador and Hotel California Tequilas in cocktails. An unusual offering is the Naparita, named for the cabernet sauvignon wine mixed with tequila, Cointreau, lime and orange juices.
Whether consumed straight up or in the cocktail mix, tequila remains a popular quaff consumed in myriad ways.