Tito’s Handmade Vodka Surging, With 59% Growth To Nearly 600,000 Cases In 2011February 23, 2012
Even in a crowded and hyper-competitive premium vodka category, Tito’s Handmade vodka ($25 a 750-ml.) has stood out in recent years. Tito’s, which has been an Impact “Hot Brand” for the past three years, saw rapid acceleration in 2011, with depletions rising 59% to 580,000 cases. With that performance, Tito’s is now more than twice its size of just two years ago.
Tito’s founder and owner Tito Beveridge, who heads up Austin, Texas-based distiller Fifth Generation Inc., expects the growth surge to continue this year. “We have years of groundwork that are now coming to the surface, lots of personal contact, and that’s giving us momentum,” he tells Shanken News Daily. “My salespeople—who always sandbag their projections so they can outperform and get a bigger bonus at the end of the year—have agreed to 30% to 40% growth (for 2012). I usually double their sandbagging. So production-wise, I’m preparing for a lot more.”
One of the more remarkable things about the rise of Tito’s—apart from its success at a super-premium price point all through the economic downturn—is that it has managed to gain wide visibility without participating in the flavor craze. Beveridge says there are no plans to extend Tito’s into flavors. He prefers to teach consumers how to make their own flavor infusions with the core brand via the Tito’s website.
“I understand it from a billboard and shelf-space viewpoint for suppliers, but I don’t see why a retailer would clog up all that real estate with flavors since a lot of them don’t turn much volume,” he says. “(The current situation) reminds me of 1992, when Stoli came out with 12 flavors and everyone took them in. A lot of them just gathered dust.”
Echoing the sentiments of others throughout the industry, Beveridge says that price competition remains rampant in the vodka category. (Tito’s price actually rose by $6 during the downturn, when Fifth Generation’s bank financing for a round of production expansion fell through.) “Some brands went down three or four price points the last few years,” Beveridge says. “I’ve recently heard chatter from retailers that price increases are coming, but out in the marketplace I see brands cutting their own throats to make a box quota. We try not to get involved with that vicious cycle. We just stick to our knitting.”