Kendall Jenner’s 818 Tequila Accelerates After Revamping Pricing Strategy
February 27, 2024818 Tequila, the brand from model Kendall Jenner and led by Southern Glazer’s veteran Larry Goodrich, has seen momentum accelerate in recent months after adjusting its pricing to cater to its core 21-35-year-old demographic. With Jenner promoting the brand via social media—where it has a following of 1.2 million—and through a recent tour of college campuses, U.S. volume is expected to rise to around 160,000 cases this year, with international sales adding about 30,000 cases.
818 initially rolled out with Blanco, Reposado, and Añejo offerings retailing at $45, $55, and $65 a bottle respectively. But last year it lowered pricing after hearing from core consumers that the brand was often out of their financial reach. “What we all realized was that our consumer is really Gen Z, and they can’t afford to spend $45 or $50 for a Blanco,” Goodrich tells SND. “They can buy it for special occasions, but they can’t buy it every day. So we reduced our pricing to $29.99 on Blanco, $39 on Reposado, and $49 on Añejo. On Blanco, we’re now up 70% in the last four weeks, and we expect to be up 100% for February.”
Currently, 818’s Blanco expression makes up about 55% of the business, followed by Reposado at 35% and Añejo at 10%, as the brand’s new pricing continues to roll out more widely across the market. “The pricing and execution off-premise is unlocking the potential,” adds 818 president and COO Mike Novy. “But on-premise is also playing a role, especially for trial, awareness, and exposure. In some states like Florida and Nevada we’re as much as 40% or 50% on-premise.” Key on-trade partners for 818 include Landry’s, Lettuce Entertain You, Hwood Group, and Tao, as well as a host of independents, he notes.
The move to pull back on pricing positions 818 in the super-premium Tequila segment where growth has been most robust lately, placing it against competitors like 1800, Espolòn, Teremana, Cazadores, and Milagro. “We see a slight shift out of the apex end of the price tier, even within hot categories like Tequila,” Kevin Roberts, chief commercial officer at Breakthru Beverage Group, recently told SND. Overall, the $25 and above Tequila category in the U.S. has risen from approximately 7 million cases in 2018 to 16 million cases in 2023, according to Impact Databank.
Bolstering distribution coverage for the core portfolio nationally remains a top priority for 818, with Goodrich and Novy pointing out that there remains ample white space to exploit in that regard. “There’s so much runway left,” says Goodrich, both in terms of deepening penetration with secondary accounts and extending into new clusters of the major retailers.
818 is also targeting a growth opportunity with new 375-ml. sizes of its Blanco and Reposado, which recently hit the market. “We keep hearing from retailers that 375s have become the single-serving size or entry-level for Gen Z, and the demand for premium 375s is significant,” says Novy, adding that other innovations are in the works. “We’re constantly experimenting and we’ve got a full innovation pipeline in development for when the time is right.”—Daniel Marsteller
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