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Patrón Tequila Picks Up Steam, Heads Toward 2M Cases

April 12, 2012

Even with its ultra-premium positioning, Patrón Tequila has managed to grow steadily throughout tough economic times, and the brand’s progress appears poised to accelerate. “Ultra-premiumization is still the future of our industry—and that’s not just limited to Tequila,” Patrón Spirits Co. COO John McDonnell tells Shanken News Daily. “When you look at the spirits category in the U.S., ultra-premiums have grown faster than any other segment.”

Patrón’s portfolio, which essentially created the high-end Tequila category, includes Silver, Reposado and Añejo expressions priced at $42.99, $46.99 and $52.99, respectively, as well as luxury offerings Gran Patrón Platinum ($199.99) and Gran Patrón Burdeos ($499.99). After a 6.5% global volume gain last year to 1.9 million cases (1.8 million of which came from the U.S.), Patrón became the world’s largest Tequila brand by retail sales value at $1.1 billion, surpassing Jose Cuervo, according to Impact Databank. For calendar 2012 through March, the brand is up 8.5% by volume globally and is projected to pass the 2-million-case mark this year.

“Throughout the downturn, we never cut back—we actually increased our marketing spend,” McDonnell says. Patrón has proven especially adept at advertising through social media, mainly through its “Patrón Social Club,” a members-only network. The Social Club, which boasts 250,000 active members, rewards people who engage with the brand, such as through its popular “Patrón Secret Dining Society” initiative. “It’s about offering experiences that people otherwise couldn’t afford, or which wouldn’t otherwise even be possible,” says McDonnell, describing a recent secret dining event in which randomly selected Social Club members were treated to a dinner at Busch Stadium in St. Louis.

The Patrón Spirits portfolio also has been seeing strong growth from its Tequila-based liqueur range, which features Patrón Citrónge ($22.99), Patrón XO Café ($24.99) and the recently released Patrón XO Café Dark Cocoa ($24.99). The line’s standout offering has been XO Café, whose volume grew 35% globally last year. Indeed, XO Café has emerged as the leading Patrón label in several global markets, including the U.K. and Australia. Patrón’s liqueur range currently accounts for 22% of Patrón Spirits Co.’s total sales, and while the company will consider new products with a Patrón base further down the road, there are no immediate plans to launch additional expressions, McDonnell says, adding, “We’re not a flavor-a-month brand trying to fill the pipeline with new products. We have patience—XO Café was around in the mid-90s and is just now gaining traction.”

Meanwhile, Patrón Spirits Co. is hoping to replicate its core brand’s success with two other ultra-premium brands—Pyrat rum ($24.99-$289) and Ultimat vodka ($40). “Every one of our brands kept growing through the recession,” McDonnell says. “Our strategy has been to never denigrate the brand, never discount and never back down from advertising. We aren’t going to fix what isn’t broken.”

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