Like a barrel-matured añejo, the tequila market in the U.S. is coming of age. A confluence of factors is driving this maturation: greater availability of high-quality blue agave product, more knowledgeable consumers, inventive and upscale takes on the now-ubiquitous Margarita, an emphasis upon eminently sippable tequilas and a new category that’s attracting whiskey and brandy drinkers.
“Tequila is certainly trendy,” says Lowell Petrie, senior vice president and chief marketing officer for Cypress, Calif.-based Real Mex Restaurants, which operates nearly 200 casual-dining restaurants. “Tequila is going through the same growth spurt that vodka did.”
Real Mex operates a number of Mexican concepts, including El Torito, El Torito Grill, Chevys Fresh Mex and Acapulco. “I’ve put a much higher emphasis on tequila in our concepts, heavily embellished the tequila program and added many more selections,” declares Petrie. El Torito has the largest collection with about 70 bottles, ranging $5.99 to $29.99 for a one and a half ounce pour. The most expensive glass is Patrón Gran Platinum. Although his casual-dining competitors may be serving a slew of Margaritas, they can’t match the range of tequilas that Real Mex concepts carry. “It’s a competitive advantage for us,” points out Petrie.
Certainly, the spirit’s star continues to rise, despite the economic recession. Last year the category showed strong growth of four percent in supplier gross revenues, totaling $1.7 billion in 2010, according to recently released figures by the Washington D.C.-based Distilled Spirits Council of the United States (DISCUS). That’s nearly on a par with the whiskey category, at 4.4 percent, and vodka at five percent. It’s also substantially higher than tequila’s three percent growth in 2009, and perhaps another indication that the economic picture is brightening. Leading brands Jose Cuervo, Patrón, Sauza, Juarez and 1800 are the top five.
“Tequila had a very strong year,” said chief economist David Ozgo at DISCUS’ annual industry briefing recently, who notes indications that consumers are starting to trade up again. Most of 2010’s growth in tequila came from the high-end premium price category, which was up 15.5 percent, while the value category grew only 1.3 percent. That is a significant shift from 2009 when the value category boomed at 20 percent revenue growth.
Most of that value-priced tequila is mixed into Margaritas, still one of the most popular cocktails in America. Indeed, most of the tequila poured on-premise is a component of that venerable drink. However, many operators are upping the quality of the tequila they use in Margaritas, employing not just silver, but also reposado and even añejo expressions. Top-shelf liqueurs like Cointreau, Grand Marnier and Patrón Citronge are standing in for standard triple sec. And they are charging a premium for that quality.
Among the 13 Margaritas featured at the Blue Agave Restaurante and Tequileria in Baltimore is the top-shelf Millionaire, made with Partida Añejo, Grand Marnier Cuvée du Centenaire and fresh lime juice. Even though it’s priced at the top end of the $6 to $18.50 range for Margaritas, the Millionaire sells well, says bar manager Charles Atwood. Rather than the standard silver, a number of Tequileria’s other cocktails are made with aged reposado and añejo tequilas, notes Atwood. And among the more inventive takes on the Margarita are the Prickly Pear, made with El Jimador Blanco, prickly pear puree, triple sec and fresh lime juice; and the Rosarita, with El Jimador Reposado, Patrón Citronge, cranberry and lime juices. Currently Blue Agave stocks 139 Tequilas, says Atwood, ranging from $5 to $66 for a one and a half once shot.
“We do a lot of high-end Margaritas, even though we’re not a fancy restaurant,” reports Lehn Goetz, owner of Coyote Café, a 22-year-old establishment in San Diego serving traditional Mexican food. “Our customers are interested in different Margaritas, not just the traditional version.” Margaritas range from $6.95 up to $14.95 for the Millionaire, made with Don Julio Reposado, Cointreau, Grand Marnier and fresh orange and lime juices. Coyote’s most popular Margarita right now is the De Fortitude ($8.95), consisting of Tequila Fortaleza Silver with Cointreau, sweet and sour and fresh lime juice. “Interest in tequila has really grown in the two decades we’ve been open,” says Goetz, noting that her café carries over 120 tequilas, priced from $5 for a one and a quarter ounce shot all the way up to $125.
One of the more innovative Margaritas at Pozole Nuevo Latino y Tequila Bar in Atlanta is the Jalapeño Margarita, which adds spicy brine from pickled jalapeños to the standard formula. “With the spiciness and smoky undertones, it’s a best seller,” says general manager Susannah Aaron. Pozole’s house Margarita is $5.50; the most expensive is $10, with a bit of a caffeine kick from Red Bull. “We get quite a few calls for that one,” says Aaron.
“Tequila quality has improved over the past five years, with more 100 percent blue agave products,” adds Aaron. Pozole offers over 50 tequila selections, ranging in price from $6 up to $40 for a glass of Don Julio Real Extra Añejo.
“I’m a big fan of our Cadillac Margarita,” says Petrie, who adds that El Torito has been serving it for over 25 years. The $7.75 drink features 1800 Reposado and a side shot of Grand Marnier that is poured at the table with theatrical flair.
Chevys also features a Margarita prepared tableside—the Cabo Wabo Rockin Rita ($7.75)—made with Sammy Hagar’s Cabo Wabo Blanco. At the table, wedges of orange, lemon and lime are squeezed into a shaker, then the silver Tequila is added; it’s shaken then poured. The Cabo Wabo Reposado version is $8.25. In either case, the drink’s presentation is further dressed up with a guitar-shaped stir stick.
Petrie also plans to roll out a new Margarita every quarter this year in most brands, usually with a complete set of accompaniments like logoed glass, stir sticks or coasters. “That enhances presentation so customers enjoy the Margarita before they even start to drink it.”
Significantly, a new tequila or family of expressions will also be rolled out in most Real Mex concepts each quarter. “I don’t believe we’ve reached critical mass yet,” declares Petrie. “Margaritas still account for the majority of tequila sales, but a growing portion of our business is in flights and individual portions. Sipping tequila is becoming heavily prevalent.”
“Our volume is still in Margaritas but sipping is definitely coming along,” echoes Goetz at Coyote Café. She has observed a lot more high-end tequilas on the market. “Fancy bottles and the new extra añejos. We’re stocking more sipping Tequilas.”
“Customers are more savvy about tequila and producers have moved more to the high end,” is how Aaron at Pozole explains why she thinks customers are sipping more.
Attention to Detail
The way in which tequila is served is also changing. Updated approaches include using better stemware, offering flights and even appointing in-house tequila specialists.
Blue Agave treats its sipping tequilas like brandy, serving them in small snifters instead of shot glasses, the better for customers to savor the nuances.
Coyote Café even boasts a certified Tequila Ambassador, Mario Marquez. “Mario acts like a sommelier, advising customers about the Margarita variations and the sipping tequilas. He talks about where and how the tequilas are made. It’s an educational piece for customers,” notes Goetz. Marquez also tailors tequila flights to suit guests’ interests.
One of the drivers of this trend is the prevalence of flights so that customers can experience for themselves the differences between the expressions or between brands. Every Tequileria worth its salt offers flights.
Flights are prominently featured in the middle of bar menu at Real Mex restaurants. Additionally, Petrie created a flight holder for the three half-ounce glasses with a card of tasting notes. Flights range from $6.99 to about $12. Each quarter new variations are introduced. Currently it’s the Battle of the Dons—silvers from Julio, Roberto and Ramon; next up is Battle of the Reposados, the brands have yet to be chosen. “Flights are getting more people sipping,” notes Petrie. He likens it to the grazing trend in food. “Customers want to broaden their palates and are going for higher-end flights.” And almost all those flights are add-on sales, says the vice president, ordered by customers who are already drinking Margaritas or Mexican beer.
In Baltimore, Blue Agave has 15 suggested flights, priced $7.50 to $14. To encourage experimentation, they are set up both vertically and horizontally—tasting between a label’s expressions or the same expression of several different brands.
“At Pozole, we’ll pick a family like Sauza, Corzo or Don Julio and offer half ounce each of silver, ‘repo’ and añejo,” explains Aaron. The least-expensive flight is Cazadores at $10.50 and the most is Milagro Select Barrel at about $18.50. “Flights are great for people who haven’t tried anything besides silver,” she says, to experience the difference aging makes. For more information, customers can peruse Pozole’s Tequila Book of Knowledge as they taste.
Established a few years ago by the Tequila Regulatory Council, extra añejos are a superpremium category, aged a minimum of three years in oak barrels (many see much more maturation than that) compared to one to three years of aging for regular añejos, two months to a year for reposados and little or no barrel time for blancos. Extra añejos are rich and deeply amber, with a taste profile similar to Cognac and aged whiskies; which attract many of those drinkers. All that barrel aging meant a lag time before many extra añejos appeared on the market. However, a few producers already marketed superpremiums that met or exceeded those specs, but just weren’t labeled that way; such as Jose Cuervo Reserva de la Familia, Sauza Commemorativo and Herradura Seleccion Suprema.
“If a customer says, I usually drink Scotch, our bartender can find them a tequila that they will like,” says Aaron at Pozole, noting that many of the añejos and extras share similarities with whisky and would appeal to those fans.
“I think tequila is winning away whiskey drinkers,” chimes in Goetz at Coyote Café.
“We have some of the extra añejos and will definitely add several more in the coming year,” declares Petrie. People are willing to pay the price for that superpremium expression, he adds, putting the spirit in the same category as aged Cognacs. “They attract ‘flavor seekers’ looking for new experiences, the people who would usually drink Cognac, Bourbon and Scotch.”