Interview: Lee Applbaum On What’s Next For PatrónMay 13, 2019
Early last year Bacardi took full control of Patrón Spirits in a deal valuing the brand at $5 billion.
Patrón’s core Tequila brand remains the dominant player in upscale Tequila in the U.S., outselling its nearest competitor, Don Julio, by nearly 1.7 million cases. According to Impact Databank, the brand’s U.S. volume rose 3% to 2.4 million cases in 2018. SND associate editor Shane English recently spoke with Patrón CMO Lee Applbaum to discuss the agenda for the brand moving forward.
SND: A year after Bacardi’s acquisition, how does the future look for Patrón?
Applbaum: We’ll exceed our plan for the year, which is always an aggressive one. Our upstream measure of success is our brand tracker. On all key brand metrics, we’re as healthy or healthier than we’ve been since we started the tracker more than a decade ago. As you know, we have a 70% market share of super-premium Tequila in the U.S. We’ll deliver more incremental cases this year than some of the top 10 brands in super-premium and luxury will sell in total, for perspective. You’re going to see us intensify our focus on aged marks, because we have a very loyal consumer. But they often don’t think about us when it comes to aged Tequilas—which is really funny, since Silver is the distillate that gets aged to become our Reposado and Añejo.
SND: What role does innovation play in Patrón’s strategy?
Applbaum: I think we have two paths on innovation. One is the longer-term, more permanent sort of innovation. In 2017, we introduced Patrón Extra Añejo. That will be an ongoing part of the portfolio as consumers and the trade evolve. The second path for innovation is shorter-term limited editions. With those, we can continue to challenge our master distiller to do new and interesting things to stimulate the conversation around innovative ways to age Tequila.
SND: How is Patrón’s agave supply being managed?
Applbaum: We have a collective of 10 or so families who grow for us. Our contracts aren’t only about establishing quantity and quality. They’re also about establishing a floor and ceiling for pricing. This ensures that our growers will always be able to sell to us at a fair price—even if the market is down—and it protects us when prices are up. So for us, currently, it’s more about being able to confidently have access to the highest quality agave.
SND: How is the supply situation from an industry-wide standpoint, given all the growth in 100%-agave Tequila?
Applbaum: If there’s something that I’ve been seeing in the marketplace, it’s other brands harvesting Tequila early, which produces an inferior product. This will lead to a separation between those brands that are just in this for the short-term and those in it for the long-term.Subscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning.