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Amid Rising Competition, Patrón Continues To Dominate Luxury Tequila

June 8, 2017

Upscale Tequila pioneer Patrón has been encountering a host of new competitors in recent years, but the brand continues to soar, crossing 2.3 million cases on 10% growth in 2016, according to Impact Databank. Since 2012, the above-$40 Tequila category in the U.S. has expanded by a total of 800,000 cases, with Patrón accounting for more than half of that growth. Overall, Patrón represents more than 70% of the over-$40 Tequila segment, outselling its nearest competitior—Diageo’s Don Julio—by nearly 2 million cases.

In recent years, Patrón has upped the ante on its upscale approach, launching its artisanal Roca Patrón line in 2014 as a higher-end offshoot of the core brand. Featuring Silver, Reposado, and Añejo entries retailing between $69.99-$89.99 a 750-ml., 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. The Roca range, which was at about 38,000 cases in 2015, rose to 44,000 cases in the U.S. last year.

Chief marketing officer Lee Applbaum tells SND that Patrón has lately put an emphasis on underscoring its artisanal attributes. “Our brand has a lot of swagger,” Applbaum says. “The marketing challenge has been on authenticity. So our efforts have been focused around telling the story: We’re a large-scale but artisanal Tequila, made the same way for 28 years.”

While driving U.S. demand for luxury, 100%-agave Tequilas, Patrón’s success has also paved the way for fast-growing competitors like Don Julio, up 23% to 375,000 cases last year, and Brown-Forman’s Herradura, which grew 13% to 158,000 cases.

According to Applbaum, the competition is welcome as long as new players are committed to helping build the high-end Tequila category over the long haul. “Competition is good—if the new players are artisanal, 100%-agave Tequilas,” he notes. “But it’s not good if they do it merely to jump into a hot category and make a quick profit.”

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