TEQUILA

 

Remarks:

  • Tequila market is a $3 billion market worldwide
  • US sales of tequila make up 80% (2.4 billion) of the worldwide market
  • Tequila has two basic types, a mixtos and a 100%-agave. Mixtos uses no less than 51% agave, with added sugars (glucose, fructose)

Supporting Information:

Tequila is a distilled beverage made from the blue agave plant; currently 300 million of these plants are being harvested each year. Usually blue agave is grown in the highlands region and are typically larger in size and sweeter in aroma and taste than a lowlands agave, which have a more herbaceous fragrance and flavor. The tequila market has been established since the 15th century near the location of the city of Tequila, Mexico.

Since 2002, U.S. imports of tequila have grown 67% – an average rate of 5.8% per year. In 2011 alone, almost 12 million 9-liter cases were sold. Grossing $3 billion worldwide, with U.S. sales making up 80% or 2.4 billion.

Much of the attention within tequila producers in recent years has been on Patrón and its competitors at the high end. While efforts continue to be the premium brand, a new market is developing with an influx of accessibly priced 100%-agave labels vying for competitive bar and shelf space.

Two brands among the top five tequilas in the U.S. (1800 and Juarez) saw volumes rise by double-digit rates in 2011. A third, Sauza, wasn’t far behind with 9% growth. Meanwhile, the category’s second-ranked brand, Patrón, increased its consumer base adding more than 750,000 cases last year. Of the top five, only market-leader Jose Cuervo declined. The dynamic performance of upscale brands like Patrón and 1800 and lower-priced offerings like Juarez and Impact, “Hot Brand” Camarena demonstrates tequila’s current strength across multiple price points.

Currently Cuervo is the market leader with a 33% share or $792 million. Patron boasts a 15% market share or $360 million per year, while Sauza has a 14% share or $336 million, in the U.S. In addition to the market leaders, Camarena, whom recently launched in 2010, already sells over 300,000 cases per year. Sauza introduced its new Sauza Blue edition, which rolled out last June at $19/bottle, boasting a moderate bite and a sweet fruity finish, played a key role in the brand’s U.S. growth.

Project Description:

The development of a custom configured device used to treat the taste of tequila will be attached to the outside of the bottle. As a direct result of this treatment, the tequila possesses an increased noticeable taste of flavor and reduced typical nose (ethanol). Tequila treatment will be, with specifically designed devices, to achieve desired taste/effect the manufacturer(s) have requested.

This treatment process allows the manufacturer to decrease the turnaround time required to distill and age tequila. This allows the manufacturer to deliver more inexpensive and better tasting product to the market, while staying true to an aged taste.

Use of lowland agave to produce a smooth, appealing tequila – refer to supplemental reading below for lowland agave description. 

The von Hoffmann & Partner technology will introduce a “smoother” taste using a manufacturer’s already distilled tequila and will add no additional manufacturing or tooling costs. By changing the taste of previously produced tequila, the producer gains the ability to re-release their existing tequila(s) and marketing it as having a smoother taste or they have the ability to release a “new” brand – resulting in increased profitability from less expensive agave.

Validation

The von Hoffmann and Partner tequila treatment device has been third party validated by today’s market leaders, and aficionados.

Supplemental Reading

Figure 1: Agave Plant

Lowland agave The valley or lowlands agave, grown at lower elevations with less water tend to produce a spicier, less floral taste compared to the preferred highland agave.Highland agaveHighland agave is grown in red clay soil at higher elevation than lowland. Producing tequila with highland agave will warrant a noticeable difference in taste. Taste characteristics include a more floral note. 

Distillation

Distillation is a process used to extract all the impurities from the tequila. All tequila is distilled twice, in some cases three times, normally distillation last 14 days.

Aging Process 

During the manufacturing of tequila, it is required to age in a barrel, normally white oak or steel, for a predetermined amount of time. Once the tequila is removed from the barrel and bottled, the aging process stops.

The aging and barreling process constrains producers’ ability to bring a product to market as rapidly as desired. The von Hoffmann & Partner device reduces barreling time increasing turnover rate.

Figure A: Concept device installed on existing bottle 

 

Key Business Goals

  • Increase noticeable taste of flavors.
  • Reduce typical nose of tequila (ethanol).
  • Produce premium tequila(s) with lowland agave.
  • Deliver a new line of publicly appealing tequila(s).

Fundamental Characteristics

  • Device will evolve taste of tequila.
  • Device will anchor onto existing bottle structure. 

 

 

Market Benefits

Since the establishment of tequila production many brands of tequila such as Cuervo, Patron and Sauza, to name a few, have been producing various grades (blanco, joven, reposado and anejos) of tequila. Since the emergence of said brands, the market for tequila has seen an increase in competition and availability for new product development. With the introduction of smoother tasting tequila, the market value would soar driving value and allowing the end consumer to enjoy a richer and smoother tasting tequila(s).

Implementing the von Hoffmann & Partner technology into the bottling process of produced tequila will add value and drinkability while minimally increasing costs and further drive market value and sales.

The tequila market will benefit from the addition of smoother drinking tequilas using lowland agave plants treated with the von Hoffmann & Partner devices. Treated lowlands agave will develop similar characteristics as the highland agave plants, allowing an increased use of lowland agave, reducing cost of production, and maintaining a 100% agave product.