Stateways

StateWays-July/August 2016

StateWays is the only magazine exclusively covering the control state system within the beverage alcohol industry, with annual updates from liquor control commissions and alcohol control boards and yearly fiscal reporting from control jurisdictions

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StateWays | www.stateways.com | July/August 2016 4 TABLE CONTENTS of DEPARTMENTS 37 9 StateWays ® (ISSN 0279-2133) is published six times per year (January/February, March/April, May/June, July/August, September/October, November/December) by The Beverage Information Group, a division of EPG Media & Specialty Information, Editorial offi ces: 17 High St., 2nd Fl., Norwalk, CT 06851. USP Number 944-740, periodical rate postage paid at Norwalk, CT and additional mailing offi ces. Postmaster: Send address changes to StateWays®, PO Box 2123, Skokie, IL 60076-7823. Subscriptions: Single copies $8.00. U.S. one year $20. $50 Canada and overseas by surface mail; $130 Air mail to all other countries. All subscriptions payable in U.S. dollars. Payment must accompany order. To subscribe write: StateWays®, PO Box 2123, Skokie, IL 60076-7823; or call StateWays customer service number 8 a.m. To 4:30 p.m. CST at 845-856-2229. Customer Service fax (847) 763-9569. Customer Service website customerservice@epgmediallc.com. Copyright 2015 by The Beverage Information Group, a division of EPG Media & Specialty Information, 17 High St., 2nd Fl., Norwalk, CT 06851. Reproduction without the express written consent of the publisher is prohibited. Not responsible for return of unsolicited materials. The Beverage Information Group publishes StateWays ® , Beverage Dynamics, Cheers ® , Wine & Spirits Industry Marketing, Liquor Handbook, Wine Handbook, Beer Handbook, Handbook Advance and Licensed Beverage Fact Book. 40 6 | Editor's Note 7 | Wine Business: Growth Through Acquisition / / By Jonathan Newman 8 | Brand Spotlight Q&A: Marie Brizard 9 | Brand Spotlight Q&A: Patron 37 | Wine Reviews: Muscat 40 | On the Shelf StateWays | www.stateways.com | July/August 2016 9 S P O T L I G HT S P O T L I G HT q&a CRAFT ON A LARGE SCALE P atrón Tequila has used artisanal production techniques well before that trend swept through spirits and marketing. The brand has long positioned itself as ultra-premium and has become a giant of the top-shelf. Still, the com- pany remains loyal to its craft roots. I recently spoke with Patrón's Chief Market- ing Officer, Lee Applebaum, about the com- pany sticking with small-production methods, its target customer and what's coming next in the pipeline. BY KYLE SWARTZ StateWays: How can you be considered craft tequila at your size? Lee Applebaum: We're small-batch, but large-scale. It's really expensive to make tequila the way we do, but it's also very important. Cost is not in the discus- sion. It's about quality and craftsmanship. As a general rule, as brands achieve scale, they lose a lot of handcrafting. They begin to look for efficiencies. That's particularly true if it's a publicly traded company (which we are not). And this helps explain the understandable misper- ception that large brands cannot also be small craft. There's no legal definition of 'handcrafted.' We pro- duce millions of cases and have a 70% market share of U.S. ultra-premium tequila. But we still produce everything in small batches. Our copper stills are just as small as brands that only do a couple thousand cases. We don't have larger production mech- anisms. We just replicate our small-batch production many times over. We have rows and rows of small stills. There are 1,300 men and women working at our distillery, and only 130 people in the balance of the company. SW: How do you communicate this to the consumer? LA: We're being ultra transparent about it. We add it to all of our advertising. We're actually using Oculus virtual reality to take people inside our distillery. And this isn't some video we put together. This is an unedited tour. We're increasingly inviting media and the press to our facility. We want people to have a very open view of what's going on. This lets other people tell our story for us. There have been legal battles over companies using certain terms to describe their production. We don't take this lightly. We believe that we use these terms appropriately. And we believe we have the right to do so and have the production processes to back them up. SW: Who is the target consumer for Patrón? LA: We tend to look at the world more in terms of behav- ioral qualities and lifestyles. So we have these two categories: Bros and Knows. The Bros are not just guys. They're any consumer interested in the swagger and aspirational aspect of the brand. It's a badge of value walking up to the bar and ordering Patrón. Same thing with gifting a bottle of Patrón. And these people run the economic gamut. After all, our bottles range from $45 to $7,000. The Knows are the customers who are first and foremost interested in our authenticity and story. These are people who want to know how we make it and what we do for sustainability. Our marketing is geared towards those two types. The good news is that they're not mutually ex- types. The good news is that they're not mutually ex- types. The good news is that they're not mutually ex clusive. Many Bros want to be perceived as Knows. It adds substance to their style, which is where our brand really delivers. SW: What's next for Patrón? LA: We have a limited-edition, wood-finished expres- sion that's coming out next year. I can't tell you the finish yet. Partly because we're still holding our breath and making sure it finishes right. Until the last minute when it comes out of the barrels it can still change and mature - tequila is a finicky spirit. In general, we're interested in a lot of wood finishes moving forward, including Scotch barrel-finishing. But we'll never be a brand that releases a new expression or flavor every month or year. You don't get to be a world-class spirit that way. Our innovation will never be led by marketing. We're led by our distillery. They innovate and then we find a way to market these new products. • ? ? ? ? 40

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