MADE IN MEXICO

It didn’t take the North American Free Trade Agreement to get U.S. consumers to buy Mexican. Tequilas, brandies, liqueurs and beers from south of the border have been popular here for years. Nafta, a steadily growing Hispanic population and increasingly worldly consumers, however, have helped grow these products even more dramatically in recent years.


Margaritas, for example, are the most popular cocktail in the country. Mexican brands now account for 40% of imported beer sales. Mexican brandies rank at the top of the list of the world’s best-sellers, as do coffee liqueurs from Mexico.

“Everything Latino is hip and cool across the food and entertainment categories,” said Jose Chacon, senior brand manager, tequilas at Allied-Domecq. “The same dynamic is affecting our industry.”

“The number-one thing driving the popularity of Mexican products is the boom in Mexican restaurants in the past 10 years,” said Craig Johnson, group brand director, Allied-Domecq. “What’s driving tequila and Mexican brandies in particular is consumer interest in true, authentic Mexican products.”
Tequila’s Back

Tequila, which suffered a setback between 2000 and 2001, is back on a growth curve again. Agave shortages in Mexico, due primarily to a failure to anticipate growing demand, caused prices to rise dramatically at the end of 2000 and throughout 2001. As lower-priced “mixtos” dropped out of the market and more acreage has reached maturity, however, supplies have stabilized. But in 2002, the category roared back, to the tune of an 8.1% increase, to more than 7.1 million 9-liter cases nationally, according to the Adams Handbook Advance 2003. In the control states, the tequila category grew 6.5% to more than 1.2 million mixed cases, for the 12 months ending November 2002, according to Adams Beverage Group research.

Sauza tequila sales rebounded last year by 16.5% in the control states.

“People stayed away as prices went up,” Chacon said, “but now they’re coming back. We’re seeing better prices on Sauza as agave supplies grow, and we’re getting back to fundamentals of the business to get the brand back on track and back to historical levels of growth.” Indeed, according to preliminary research, the Sauza line grew by double-digits in 2002 nationally, according to the Adams Handbook Advance 2003, to more than 1 million 9-liter cases. The brand gained 16.5% in the control states to more than 95,000 mixed cases.

Category leader Jose Cuervo, which also saw its phenomenal sales growth slow during the past two years due to higher prices, is also seeing renewed growth. The combined Jose Cuervo line increased sales 4.8% in 2002 to more than 3.4 million 9-liter cases nationally. In the control states, Cuervo increased 6.3% to more than 560,000 mixed cases. The brand owns its own supply of agave fields. While it doesn’t see the shortage completely ending until 2006 because of the plant’s 8- to-12-year maturation, it has definitely eased.

Cuervo Gold also continues its focus on the “CuervoNation” program this year. Consumers will have chances to win trips to exciting CuervoNation “outposts” and ultimately a trip to the brand’s 8-acre Caribbean island. Diageo’s Jose Cuervo portfolio now includes the best-selling Jose Cuervo Especial (Gold), Jose Cuervo Tradicional, made with 100% blue agave; Jose Cuervo A

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