Every week we receive at least 2 emails from people who want to start their own tequila brand, looking for guidance on how to get started. This isn\u2019t really part of what we do\u2014we\u2019re focused on tasting, education and providing information on existing products. So, we thought we\u2019d put together the advice we usually give to aspiring brand owners, all in one place.<\/h3>\n10 Reasons Why You Should Just Say No<\/h2>\n1. You are likely to lose millions of dollars.<\/h3>\n
1. You are likely to lose millions of dollars.<\/h3>\n
So, you want to start your own tequila brand? We love tequila, so we get it. But we can\u2019t consciously advise you to do this, given that it is a risky, risky investment. Don\u2019t believe us? Let\u2019s take a look at some real world stats.<\/p>\n
The Tequila Matchmaker<\/a> database currently contains 2,345 different tequila brands. How many of these can you name off the top of your head?<\/p>\n In 2019 alone, we saw 181 new brands enter the market, and fight for shelf space with hundreds more. How many do you think are making money? Honestly, it\u2019s hard to tell since so few are publicly-traded (and therefore have to release financials).<\/p>\n But you can ask yourself how many brands you see on your local retail store\/bar shelves. Chances are, it\u2019s the same 20 to 30 everywhere you go, and many of them are from big players that count on a large portfolio of products, and revenue sources.<\/p>\n So, fierce competition is one issue, now let\u2019s talk about cost. If you want to start your brand in the near future, current agave prices alone should give you pause. At the rate of 28 pesos\/kilo, a truck load of agave needed to fill a 25 ton oven would cost you around $36,000 USD.<\/p>\n That\u2019s just for the main ingredient on one oven load.<\/p>\n \u201cThere has arguably never been a more difficult time to start a new tequila brand, given agave prices,\u201d says Clayton Sczcech<\/strong><\/a>, a Mexico-based agave spirits specialist and consultant.<\/p>\n And even if you wait for agave prices to come down, be prepared for some more sticker shocks.<\/p>\n \u201cThis is a capital intensive industry,\u201d says Tequila Fortaleza<\/a> owner Guillermo Erickson Sauza<\/strong>. \u201cWhen you get to 1,000 cases you realize you need more money to expand (for) production, inventory, barrels, facilities, marketing, and on and on!\u201d<\/p>\n Let\u2019s do the math. The largest expense right now by far is the cost of agave, with $11.33 USD for a 1 liter bottle of traditionally-made blanco tequila. If you want to cut costs, you could use a diffuser<\/a> and save about $5.71 per liter. But for argument\u2019s sake, let\u2019s say you want to make a high quality, small batch, traditionally-made blanco tequila.<\/p>\n When you add in the cost of the packaging\u2013even if you are going with cheap, standard bottles, labels, and caps\u2013and add in excise taxes, distillery fees, and harvest and transportation, you are looking at approximately $15.86 USD in costs just to make your product.<\/p>\n Then you have to factor in the markups that occur at the distributor and retail levels. That brings the price tag to about $25.40. This does not include the cost of marketing, PR, your time, travel expenses, sample product to give away, or salaries. Let\u2019s assume that you\u2019ll need to add $10\/bottle to cover those expenses because you\u2019re not going to be selling at large volume immediately. Now you\u2019re looking at approximately $35 USD before you can start turning a profit.<\/p>\n Now take a look at the tequilas you\u2019re competing against in the $35-$45 USD range. Can you afford to play this game?<\/p>\n Ok, so maybe you have deep pockets and are willing to finance your brand for the medium to long term. Then, proceed\u2026<\/p>\n Ask Yourself \u201cWhy?\u201d Why does your brand need to exist?<\/p>\n There are so many tequilas on the market these days you really have to ask yourself what niche your new tequila would fill. What would make it different than what\u2019s already available?<\/p>\n \u201cGreat tasting juice and an attractive package, those are table stakes,\u201d says Greg Cohen<\/strong>, a Dallas-based marketing advisor who specializes in spirits brands. \u201cThe challenge is to demonstrate how and why your brand satisfies an unmet need in the market,\u201d he adds.<\/p>\n What about a quality, affordable tequila? There are a handful of tequilas that are already doing a pretty good job of that. A luxury tequila for people who like a lot of wood (perhaps whiskey lovers)? That category is overflowing with contenders. <\/p>\n There\u2019s always room for a high-quality, traditionally made tequila with unique aromas and flavors in our opinion, but that\u2019s not necessarily the quickest path to mass market success, so if you go that route you have to have passion and patience. <\/p>\n So, you\u2019ve figured out why your tequila should exist, do you know how it should be made? There are a variety of both traditional and industrialized processes in use that can radically affect your final product.<\/p>\n Whether you are going to build your own distillery, or contract out an existing one, you need to know about the different kinds of tequila making processes. Don\u2019t try to do all your research online. You have to come to Mexico, visit distilleries, meet tequila producers and really see how things work \u2014 and taste! \u2014 on the ground.<\/p>\n And a big part of this is \u201cunderstanding the dynamics of the agave price cycle and its relationship to various types of tequila production\u201d, Szczech says.<\/p>\n This is because when you make your tequila, and how you make it, not only affect your costs and quality, but also the industry at large. Producers who choose an industrialized diffuser process tend to use younger agaves, taking them out of the market before traditional producers\u2014who rely on mature agaves for their higher sugar content and flavor complexity\u2014can use them.<\/p>\n Which kind of producer will you be? Start by identifying which brands you like, and learning about what it takes to make a quality tequila.<\/p>\n But that\u2019s not all. You\u2019ll also need to learn about the complicated tequila regulations in Mexico, how to register your brand name, and how to get your labels approved by both the USA and Mexico.<\/p>\n If you want to create a quality product, you will have to learn how tequila is made<\/a>, how to taste and evaluate it, and understand the profile you want and what is required to achieve it. This takes time and at least one patient tequilero willing to take you under their wing. Otherwise, you could end up being taken advantage of.<\/p>\n A jaded note here: \u201cSweet\u201d and \u201csmooth\u201d are overplayed. Added vanilla is, too. Beware of additives (and know the difference between a tequila with natural aromas and flavors, and those that rely on added sweetener, caramel color, glycerin, and agave \u2018flavors.\u201d) Taste everything, from popular mass-market brands to small producers. Ask questions, such as \u201cWhy does this tequila have more agave in it than others?\u201d; \u201cWhat\u2019s the difference in the process and the agaves used?\u201d<\/p>\n Every brand will start with some sample runs, and knowing what you are tasting and what you (and your potential customers) like will be essential.<\/p>\n If you don\u2019t have your own distillery, you need a partner. This can be complicated, especially if you don\u2019t speak Spanish. According to the Tequila Matchmaker distillery database<\/a>, there are currently 135 active tequila distilleries in Mexico. Finding the right one is not easy because each distillery is unique.<\/p>\n You\u2019ll need to start by doing your homework. Which distilleries are capable of producing the flavor profile you are interested in? You can start your research by scanning through our tequila distillery rankings<\/a> to get an idea of the overall quality of the tequila they are producing, based on ratings from Tequila Matchmaker app users.<\/p>\n Once you find one you like, will they even give you the time of day? Not all distilleries are willing to \u201cwhite label\u201d their product. <\/p>\n And the distillery owners we know who make great, traditionally-produced small batch tequilas are few, and cautious when taking on new brands. This is for a good reason: they have to be worth the time and effort because their reputation is also at stake.<\/p>\n \u201cI want to know that (a new brand partner) has the right motivation and a partnership with them will be sustainable,\u201d says Salvador Rosales, Jr.<\/strong> of Tequila Cascahu\u00edn<\/a>. His family distillery gets a lot of interest from would-be brand owners, but their small-batch, artisanal approach means they have to be very selective.<\/p>\n For example, one brand that made the cut is Siembra Spirits, the owner of the highly respected Siembra Valles<\/a> tequilas. Brand owner David Suro<\/strong> is a well-known advocate for small batch artisanal products, and his support for agave farmers and integrity was a match for the values held by the family owners at Cascahu\u00edn.<\/p>\n Are you ready to be a good partner? <\/p>\n It\u2019s not a good idea to rely solely upon your tequila preferences, or even that of your friends. If you\u2019re going to sink millions of dollars into this, you need to be certain that the tequila in your bottle is what it needs to be. Objectivity is critical.<\/p>\n Assuming you are going to contract out an existing distillery, before you sign any contracts, you should get a good idea of what you\u2019re likely to expect once your product is done. You can start by checking a distillery\u2019s reputation by looking up the ratings of all the products they produce. The easy way to find this out is to do a tequila NOM search<\/a> on Tequila Matchmaker, and drill down into each of the brands and products from that distillery.<\/p>\n You\u2019ll also want to try the distillery\u2019s products yourself. Each distillery has its own particular style and you should see some similarities, even between different brands. You can do this without stepping foot in Mexico. Instead of asking them to send you samples, buy some of their products retail to get an idea of what they\u2019re already releasing in the market.<\/p>\n Distilleries that white label will often sell you pre-made, bulk tequila they\u2019ve got in storage. If you aren\u2019t interested in creating your own batch, that\u2019s an easy solution.<\/p>\n But if you want to create your own small batch, one that matches the flavor profile you have in mind, there\u2019s another layer of work ahead of you. This is why it\u2019s so important to know how to taste, and what kind of profile you want.<\/p>\n This is usually difficult for people new to the tequila world. In the past we have helped would-be brand owners identify their ideal tequila profile (and pinpoint a suitable distillery in the process) through private blind taste test consulting using our matching technology. If this is something you\u2019re interested in, contact us.<\/p>\n As any good marketer will tell you, you have to have a great story. \u201cI love tequila so I decided to make one\u201c might be true, but it\u2019s not a compelling story.<\/p>\n However, if you happen to be born into a tequila dynasty and you missed your chance to inherit the company from your famous grandfather who sold it to a big corporation before you were of age, but you went out, earned money, and took back your grandfather\u2019s nearly 100-year-old distillery, fired it up again, and found it made great tequila, then you\u2019d be onto something. (Wink to Guillermo Erickson Sauza because that is an unbeatable story.)<\/em><\/p>\n Ok, so you weren\u2019t fortunate enough to be born into a tequila dynasty (neither were we!) Now what do you do? Go back to your \u201cWhy.\u201d What makes you passionate about doing this project?<\/p>\n Just as an aid, here are the \u201cstories\u201d we\u2019ve heard a lot recently. (Hint: Look for something different.)<\/p>\n \u201cThe master distiller at our brand used to work for ______. He\/she; was the secret of their success.\u201d<\/p>\n \u201cI created a true sipping tequila to change people\u2019s minds about tequila from their college experiences.\u201d<\/p>\n \u201cI am creating a tequila for women.\u201d<\/p>\n \u201cI\u2019m creating the Tito\u2019s Vodka of tequila.\u201d<\/p>\n <\/em><\/ul>\n (The last 3 are not actually stories, but product descriptions. You should know the difference!)<\/p>\n Bloggers, aficionados, early adopters, and some members of the media will want unique production details. Have them.<\/p>\n Mezcal producers have done a great job of listing production details on their labels, and now there is an expectation that tequila producers will offer the same level of transparency. This is also a great way to highlight how your product is different and unique.<\/p>\n Here\u2019s a word of advice from us (bloggers): Know how your product was made and be able to explain how yours is different. If you can\u2019t get us excited about it, it\u2019s probably because there\u2019s nothing new about it. If it tastes like everything else made at that distillery, we won\u2019t need to try it. We already know.<\/p>\n With so many competitors fighting for attention, marketing is crucial. If your particular area of expertise doesn\u2019t include marketing, this is the time to contract out. Get in touch with experts who know how to reach tequila consumers. Even if you make the best tequila in the world you\u2019re not gonna go far if people aren\u2019t driven to try it. It\u2019s also not going far if people can\u2019t find it.<\/p>\n \u201cIn addition to creating a compelling brand story, it\u2019s just as important to clearly identify and articulate how your tequila fills a void in a distributors\u2019 portfolio, and how it fits a need behind the bar,\u201d says Cohen.<\/p>\n All tequila drinkers are not created equal, so it is critical that you know which segment of the market you are going after. If you are looking to produce a cheap tequila to be served in bars as a well product in a nightclub, for example, you won\u2019t be able to target aficionados and bartenders with that same product.<\/p>\n If your product uses the diffuser\/yeast accelerants\/column still\/additives production process, you\u2019ll find it difficult to get bartenders and aficionados to take it seriously.<\/p>\n So, that brings your next challenge\u2026<\/p>\n Remember, you\u2019re competing for their attention with 180+ new brands every year. <\/p>\n If you can\u2019t provide a stack of purchase orders and a fan following, distributors will see your brand as risky. Small brand owner, Frank Mendez<\/strong>, agrees that it\u2019s hard to compete with the big brands.<\/p>\n \u201cThey can offer incentives to move product,\u201d he says.<\/p>\n That\u2019s why he and his wife Leticia tried to self distribute their family-owned brand, Gran Dovejo<\/a>, for several years.<\/p>\n \u201cIt was nearly impossible,\u201c he said. Although the couple live near Sacramento and the Bay Area, which are good markets for tequila, trying to get a tasting time in restaurants was tough, and they had to take time off from their day jobs.<\/p>\n \u201cIn order to do it, you have to hire people, and we just couldn\u2019t afford that,\u201d he says.<\/p>\n Bars weren\u2019t any easier. \u201cEven if a bar was interested, and wanting to support a local brand, they were reluctant to open new accounts,\u201d Mendez adds. Eventually, the family made a deal with another company to take over the distribution.<\/p>\n What about selling directly to consumers online? This sounds like the easiest idea, but there are laws in the United States that make it difficult to impossible, and vary state to state. This is because of the Prohibition Era three-tier system<\/a> in the US where importers and producers can only sell to distributors, who sell to retailers, who then sell to consumers. It is illegal to do business in more than two of those tiers.<\/p>\n This means it would be illegal to make or import, then distribute, and sell your own tequila directly to consumers. For example, a bar owner couldn\u2019t legally make their own liquor, and then sell it directly to customers.<\/p>\n By now you can probably see why we would not recommend starting a tequila brand\u2014the expense, time, legal issues, and competition make this market as risky as buying a $5 million lottery ticket.<\/p>\n \u201cEven with millions to invest, access to distribution, effective marketing, and quality juice, (would be brand owners) will also need a lot of luck, \u201c Sczcech says. <\/p>\n \u201cIf they aren\u2019t coming from inside the industry, the odds will be stacked against them as they compete with global firms who can operate on razor-thin (or negative) margins and legacy brands with rabid followings.\u201d<\/p>\n Guillermo Erickson Sauza agrees. \u201cMost brands fail,\u201d he says. <\/p>\n You still in? The answer most likely is yes, since almost all of the people who receive our advice think it doesn\u2019t apply to them, and that they cannot fail because they have a \u201cgreat bottle design\u201d or \u201cconnections\u201d or \u201can amazing name\u201d, or \u201ca secret recipe\u201d, or they are \u201cwilling to put in the hard work.\u201d<\/p>\n \u00af\\_(\u30c4)_\/\u00af<\/p>\n If you insist, you will need help, and in areas you haven\u2019t realized yet. So if you\u2019re just getting started, don\u2019t waste your precious time contacting us because all we will be able to do is reply with \u201cgood luck\u201d and provide a link to this story.<\/p>\n But, some help can be found with these trusted contacts:<\/p>\n \u2013 Clayton Sczcech<\/strong><\/a>, is a Mexico-based agave spirits specialist and consultant. If you\u2019re looking for a super knowledgeable tequila tour guide to give you well-informed and researched information about the tequila industry, its people and culture, we highly recommend connecting with him. It will be the best money you\u2019ll spend in your venture.<\/p>\n \u2013 Gonzalo Spindola<\/strong><\/a> is a consultant who specializes in all aspects of tequila production for small brands. He has helped several new brands navigate the complex processes (label approvals, bottle sourcing, distillery introductions), and can act as your local contact in Mexico.<\/p>\n \u2013 Pancho Castillon<\/strong><\/a> is a well-connected personality in the tequila world. If you need a driver who is also a guide to take you around to all of the distilleries during your research phase, you \u201cBetter Call Pancho.\u201d One day with him and you\u2019ll feel like you have been best friends forever.<\/p>\n \u2013 Greg Cohen<\/a><\/strong> is an expert in tequila PR and marketing. Based in Dallas, TX, he helps brands fine tune their stories and marketing pitches and has a list of influential media and industry connections a mile long. For those who want to get serious, he\u2019s your guy. A total pro.<\/p>\n \u2013 Ana Mar\u00eda Romero Mena<\/strong><\/a> specializes in creating tequila aroma and flavor profiles. She is a master distiller who has created profiles for a long list of tequila brands. She is known as an expert in sensorial detection, and has trained many people in the industry on how to identify the wide array of aromas and flavors found in tequila.<\/p>\n![\"tequila](\"https:\/\/tastetequila.com\/wp-content\/uploads\/2020\/02\/tequila-production-costs-1024x640.png\")
<\/p>\n2. It\u2019s almost impossible to differentiate yourself in the market.<\/h3>\n
![\"\"](\"https:\/\/tastetequila.com\/wp-content\/uploads\/2020\/02\/tequila-learning-process.jpg\")
<\/p>\n3. There is a long and steep learning curve ahead.<\/h3>\n
![\"\"](\"https:\/\/tastetequila.com\/wp-content\/uploads\/2020\/02\/cooked-agave-1024x619.jpg\")
<\/p>\n4. You need to get into the weeds on tequila production processes.<\/h3>\n
5. The search for a tequila distillery is not easy.<\/h3>\n
![\"tequila](\"https:\/\/tastetequila.com\/wp-content\/uploads\/2020\/02\/tequila-product-testing.jpg\")
<\/p>\n6. It\u2019s not all about you. You will need to do some objective product testing.<\/h3>\n
![\"\"](\"https:\/\/tastetequila.com\/wp-content\/uploads\/2020\/02\/guillermo-sauza-tequila-story.jpg\")
<\/p>\n7. You need to have a unique and compelling story if you expect anyone to care.<\/h3>\n
\u201cI bought the recipe from an old family in Mexico that was the original ________ brand.\u201d<\/p>\n8. You will need to be detail-oriented and media savvy.<\/h3>\n
![\"\"](\"https:\/\/tastetequila.com\/wp-content\/uploads\/2020\/02\/IMG_7004-1024x1024.jpg\")
<\/p>\n9. You will need to know your target market, and how you\u2019re going to reach them.<\/h3>\n
10. Finding an importer and a distributor depends on all of the above.<\/h3>\n