Of course, this lifestyle legacy does mean tequila has always had a natural affinity with the on-trade, but its popularity is gradually spilling over into retail channels. In the past 12 months in the off-trade tequila has grown in value by 12% (Nielsen, May 2016), but now the lemon wedges are less prominent and its popularity is being driven by the more sophisticated image of sipping. According to this year’s IWSR report, premium tequila is seeing some of the highest growth of all spirits categories with a 193% increase in the past five years, up 32% in the last year alone.
It does pose a bit of a problem for retailers though, who must be wondering how to showcase tequila’s premium credentials without pushing it off the shots and shooters shelves. Added to that is the age-old headache of how to inject some on-trade theatre to the overall category in stores.
Merchandising aside, suppliers are making plenty of noise about tequila’s premium positioning.
Giancarlo Martins, brand manager for tequilas at Pernod Ricard, highlights the fact only 29% of tequila is sold on promotion versus 47% for total spirits, which he says is a sure sign consumers are willing to pay more for quality products.
Natalie Garcia, Casamigos brand manager at Cellar Trends, says: “Producers are trying to teach consumers that tequila is more than just a shot, but can be sipped just like a single malt or a rum.
“We are seeing premium tequilas listed in specialist retailers, particularly across London and, while I think it will take a bit of time to spread nationally, it will be a trend that will reach all the off-trade.”
Dan Dove, head of Diageo Reserve World Class GB, says retailers should tap into this by creating a premium display. “The Don Julio range is presented in beautiful glass bottles, each with a unique presence and cues to the brand’s heritage
and authenticity,” he says. “As well as quality, consumers are on the lookout for brands they can connect with. Don Julio offers six unique tequilas, ranging from a light crisp ‘silver’ tequila, with hints of citrus and agave, to more full-bodied oak barrel aged tequila.”
He adds that the brand can be served on the rocks or in cocktails.
A MATTER OF IMAGE
“It is important retailers capitalise on this opportunity to upsell premium spirits such as tequila.”
Pernod Ricard is focusing its efforts on its super-premium Olmeca Altos. The brand will get a neck- collar promotion in the off-trade for Day of the Dead (Halloween), which Martins highlights as a key tequila consumption occasion.
He also points out that a number of on-trade consumer trends are trickling down into the off-trade, highlighting a better-educated trade. He adds that the cocktail renaissance is also driving interest.
Dan Bolton, managing director at Hi-Spirits, agrees brands and serves familiar from the on-trade are “definitely at an advantage” with consumers within both the tequila and the shots and shooters market.
“Having said that, tequila is definitely a category in transition,” he says. “At the top end there is a real appreciation of the diversity of tequilas and mezcals. Many customers still approach tequila as a novelty/shot drink, and the more retailers highlight the provenance and origins of the drink the greater the opportunity to drive growth.
“Range planning is key – we offer Montezuma Silver and Gold as mainstream choice, Monte Alban Mezcal with the agave worm in
the bottle as a speciality; and the premium Expresiones del Corazon range of tequilas aged in different bourbon barrels to give each a different character.
“Displaying that type of choice creates a talking point that helps retailers engage with consumers.”
SHOTS & SHOOTERS
While tequila is embracing its premium aspirations it is still a valued part of the shots and shooters family, where it sits alongside a raft of popular drinks.
Spirits in the off-trade are in growth at 3% and a portion of this can be attributed to the cocktail revival.
This is where shots and shooters have an advantage, according to Hi- Spirits’ Bolton. “Shots and shooters represent far more of an opportunity than more complex cocktail serves because they are generally easier to replicate at home,” he says.
Others also say it’s been a good year for their brands in this sector. “The past year has been extremely successful for Jägermeister, in terms of both sales and consumer engagement,” says UK marketing director Nicole Goodwin.
This year the brand’s JägerHaus is returning to key summer festivals to showcase its Ice Cold Shot, Root 56 and Black Spice serves. A £300,000 marketing campaign will support the Root 56 “perfect summer serve” – Jägermeister with ginger beer and a wedge of lime. It follows the success of this serve last year, which led to its launch into the off-trade.
It is also resurrecting its popular £1 million Jägermeister Unearthed experience. The brand unveiled a makeover this month with a new bottle shape and label.
For tequila, Cellar Trends’ Garcia says: “We always say the best advertising is trying the product, or
‘liquid to lips’. Once consumers try Casamigos tequila, whether it be blanco or reposado, they understand a tequila can be sipped and they will continue drinking it.”
Martins at Pernod reminds the trade that consumers are increasingly looking to replicate their experiences in the on-trade at home, therefore “bespoke/exciting serving vessels are always a winner with consumers”.
He adds: “Every year we create a bespoke serving vessel for Day of the Dead, designed by a local artist, which goes down very well with our customers.”
For shots and shooters, merchandising is particularly important to get right because, as Bolton at Hi-Spirits says, a bottle on shelf is dull compared to the on-trade, where customers can see a brand being poured.
He suggests prominent and imaginative displays of “party” brands, such as the company’s Fireball shot and Antica Sambuca.
“Keep space in the chiller for big- night-in shots and shooter brands and use signage to communicate signature serves and USPs, such as ‘serve ice cold from the freezer’,” he says.
And another way to keep this sector lively in stores is to ensure the shelves have a bold array of colours and flavours, as Craig Chapman, marketing manager for Luxardo at Cellar Trends, says.
“Flavours with a bright and vibrant colour are an attractive option and they stand out well on- shelf. Alongside the new Mint flavour there is a whole different taste in the crisp, green Spiced Apple Sambuca, which has a melting apple crumble sensation.”