• by Karl Greenberg , February 7, 2011

Tequila has its own version of the generic-versus-branded problem: while tequila is the fastest-growing spirit beverage in the U.S., its growth is driven by its use as an ingredient in margaritas. So in spite of the growing popularity of higher-end tequila brands, the market here is still largely driven by whatever bottle happens to be near at hand when the blender gets powered up and salt gets shaken.

Herradura, the leading premium tequila brand in Mexico -- where natives do not drink margaritas by and large -- is hoping to build on the recognition of premium tequila in the U.S. The 140-year-old brand, marketed here by Brown-Forman, wants to accelerate the acceptance of premium tequila and the recognition of the Herradura brand as its exemplar.

Among the messages the company is delivering with new marketing in the U.S. is that Casa Herradura -- which is centered on the original hacienda near Guadalajara -- still makes tequila the old way, without chemicals, added yeasts or additives like caramel coloring typically used in so-called "gold" tequilas. The hacienda doesn't add yeast because in addition to harvesting miles of blue agave, the hacienda still grows a variety of fruit crops in the valley in which it -- and the distillery -- are located. Those crops perfuse the air with some 300 varieties of airborne yeast, according to Ruben Aceves Vidrio, director of international brand development, obviating the need to pour it into the vat in powdered form.

Aceves Vidrio says that while the brand has been around a long time, it was only first sold in the U.S. in the 1960s in a shop in Chicago called La Preferida. The company has been focused on the sister brand, El Jimador. But Aceves Vidrio says the time is good to talk about Herradura because "there is more consumer acceptance of ultra-premium tequila and lots more competition."

He likens the tequila market in the U.S. to where the wine industry was 15 or 20 years ago. "Back then, few people were really that discerning when it came to quality; now, wine drinkers are very sophisticated consumers. Our hope is over time, people will become just as discerning with tequila as they are with wine today." He says tequila constitutes only about 6% of distilled spirits sales in the U.S., although it is the fastest-growing category and also the most profitable on a comparison basis, since it is twice the price in the U.S. that it is in Mexico.

The company is launching a new campaign timed to the introduction of new packaging. The older square bottle has been replaced with a new design with sharper angles, bevels and Mexican motifs. Orfilio Quintero, brand business manager for Casa Herradura, says the new bottle was also an effort to unite the packaging globally. "We had a square bottle in Mexico and a round bottle in the rest of the world," he says. "That created a lot of confusion among consumers."

The company is focusing on major markets like Miami, Dallas and other Texas cities, and California with the new campaign, "Never Compromise," including print, outdoor and cable efforts on the Plum Network, which services affluent communities like the Hamptons on Long Island. "We will do programs in New York next year and are attacking many smaller markets," says Quintero, who adds that the company distributes its products in 50 states and 130 global markets.

It is also running a "Make an Intro/Win an Intro" contest offering an introduction to Football Hall of Famer Emmitt Smith. The prize includes round-trip airfare and accommodations for the winner and a guest to Dallas, where they will get to dine with the athlete. Contestants must "like" Herradura's Facebook page to submit their entry.

Quintero says California is the leading state for tequila, comprising 20% of national sales -- "but it is a more discerning consumer. In San Francisco, our tequilas are used in a lot of high-end restaurants. Half of my sales on the East Coast are in New York. It's the third-largest after California and Texas," he says.