Stateways

StateWays - May/June 2017

StateWays is the only magazine exclusively covering the control state system within the beverage alcohol industry, with annual updates from liquor control commissions and alcohol control boards and yearly fiscal reporting from control jurisdictions

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StateWays | www.stateways.com | May/June 2017 30 TEQUILA | CATEGORY UPDATE LUXCO ANNOUNCES NEW TEQUILA DISTILLERY St. Louis-based Luxco announced the completion of a new tequila distillery in Mexico. The distillery, DGL Destiladores (Destiladora González Luxco), is located just outside the city of Arandas, in the highlands of Jalisco. DGL continues the decades-old partnership in making tequila between the Lux and González families. Construction on the eight-acre facility is expected to be completed soon with distillation planned for mid-summer. The new distillery will use the same methodology to produce 100%-agave tequila as the family's Destiladora González González (DGG) has been using for more than 150 years. Alfonso Dominguez Zamudio, who has previously worked at DGG, will be the distillery manager, working under master dis- tiller Rodolfo González. "Luxco has seen incredible growth in our tequila portfolio, es- pecially in the Exotico and El Mayor brands, and this new distill- ery will allow us to further expand our production and enhance the brands," says Donn Lux, Luxco Chairman and CEO. LEADING TEQUILA BRANDS IN THE U.S. (000 9-Liter Cases) BRAND SUPPLIER 2015 2016p % CHG Jose Cuervo Proximo Spirits 3,180 3,290 3.5% Patron The Patron Spirits Company 2,186 2,275 4.1% Sauza Beam Suntory 2,095 2,247 7.3% 1800 Proximo Spirits 1,075 1,090 1.4% Juarez Luxco 688 695 1.0% Familia Camarena E&J Gallo 758 785 3.6% Montezuma Tequila Sazerac 610 630 3.3% el Jimador Brown-Forman Beverages 436 516 18.3% Don Julio Diageo 356 399 12.1% Margaritaville Sazerac 298 305 2.3% Leading Brands 11,682 12,232 4.7% Others 3,268 3,471 6.2% Total Tequila Category 14,950 15,703 5.0% p = preliminary data Source: BIIG's 2017 Handbook Advance. For more data and analysis, visit www.BevInfoStore.com. It's a common response from brands at a certain level of sales, although modeling the future is risky business, especially given agave's susceptibility to diseases and the shifting market for raw material. Following a surge in demand in the early 2000s, agave prices skyrocketed and many producers were forced to limit 100% agave expressions and push their mixto (51% agave) brands. With consumption growing, farmers started planting more agave and by 2005, overproduction knocked the bottom out of the market. By 2008, many farmers abandoned agave for corn and piñas were left to rot. Because of the boom and bust cycles, large tequila brands have begun to take more care in monitoring their agave nurseries. "At Casa Sauza, we own and manage our agave supply - 10,000 acres of our own agave fi elds and 13 acres of land used for the agave nursery," Patel says. "This is really important, as it means we likely won't see the challenges other manufacturers will face once Mexico's agave oversupply levels out." It's a similar case at Herradura, says brand manager Jennifer Simmonds. "We stay close to what is happening in the agave market and plan and project our longer-term agave needs multiple times per year to ensure we are meet- ing demand. At Casa Herradura, we take great pride in harvesting our own agave." Says Megan Hurtuk, tequila marketing manager at Sazerac in charge of Corazon, Siete Leguas and Pueblo Viejo, "The price of blue agave has doubled since mid- 2016. However, we have seen fl uctuations due to supply

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