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Patrón’s Growth Continues Despite New Challengers At Tequila’s Luxury End

May 16, 2016

Patrón, which pioneered the U.S. market’s thriving luxury Tequila segment, is now facing competition from a bevy of high-end entrants including Don Julio, Avión, Casamigos and others. Patrón, which rose by 4% to 2.1 million cases in 2015 (excluding Roca Patrón), still dominates the above-$40 Tequila category with a share of more than 70%. But key players like Diageo and Pernod Ricard have made inroads with their own high-end offerings, and they’re pouring resources into the category. Overall, Tequila’s luxury segment rose 8% to 2.9 million nine-liter cases last year, according to Impact Databank.

Patrón COO and president, international Dave Wilson says the brand is fending off competition from inside and outside the category. “We see ourselves as competing in the broader luxury white spirits arena,” Wilson tells SND. “People who would typically drink a luxury vodka or Tequila are switching to Patrón.”

In 2014, Patrón expanded in the luxury segment by launching Roca Patrón ($69.99-$89 a 750-ml.), which features Silver, Reposado and Añejo expressions. Roca Patron is made using the traditional “tahona” process, with the Reposado and Añejo rested in single-use Bourbon barrels for five months and 14 months, respectively. After selling 36,000 cases in its debut year, Roca grew by 5.6% last year 38,000 cases. But Patrón says Roca is on pace to advance by more than 20% this year, and Wilson says the company is “very bullish” on the range, which tends to skew much more toward the on-premise than Patrón’s core offerings.

Among the players aiming to carve out their piece of the luxury Tequila pie, Pernod Ricard’s Avión grew 27% to more than 130,000 cases last year. Avión includes a core lineup of Silver, Reposado and Añejo expressions retailing between $40-$60 a 750-ml., as well as an Espresso liqueur ($24.99) and ultra-luxury Reserva 44 label ($150).

Also rising at double-digit rates is Diageo-owned Don Julio, which advanced by 13% to over 300,000 cases last year. To further stoke momentum, Diageo is currently investing $400 million to upgrade and expand Don Julio’s production capabilities, as well as increase its advertising and promotional spend. Brown-Forman’s Herradura is also steadily gaining ground, up 10% to 140,000 cases in 2015.

One of the most recent luxury entrants, Casamigos, has generated some major buzz of late. The brainchild of actor George Clooney, nightlife entrepreneur Rande Gerber and real estate mogul Mike Meldman, Casamigos features Blanco, Reposado and Añejo entries ($45.99-$54.99 a 750-ml.), and has advanced rapidly since its 2013 launch, more than doubling U.S. volume to 80,000 cases last year.

U.S. – Leading Luxury-Priced Tequila Brands*
(thousands of nine-liter case depletions)
Percent Change
Brand Importer 2013 2014 2015 2013-2014 2014-2015
Patron The Patron Spirits Co 1,950 2,000 2,075 2.6% 3.8%
Don Julio Diageo North America 230 270 305 17.4% 13.0%
Herradura Brown-Forman Beverages Worldwide 113 127 140 12.4% 10.2%
Avion Pernod Ricard USA 78 104 132 33.5% 26.5%
Casamigos Casamigos Spirits Co 17 38 80 123.5% 110.5%
Roca Patron The Patron Spirits Co 36 38 + 5.6%
Total Leading Luxury-Priced Tequila 2,388 2,575 2,770 7.8% 7.6%
* at least $40 per 750ml, on averageSource: IMPACT DATABANK

 

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