If you are reading this article: “10 Essential Steps to Start a Tequila Business”, two things come into my mind: you are walking through your agave fields and feeling inspired (after all, it’s been a great year and the blue agaves are ready to go into business) or you are simply passionate about the exciting culture of tequila! For whatever the reasons are, if you feel it’s about time to start your tequila business, you are in then in the right place 😉
After reading this article you will know the 10 core steps to start a Tequila Business. You will know how to create a successful brand, and overall you will offer the world a great tequila product.
A little about me
My name is Gonzalo Spíndola García. Just like you, I am also passionate about Tequila: not only about its unique taste, but for its dominant appearance. Although Tequila has maintained its secrets and tradition, it has also learned to evolve and become competitive in the spirits & alcoholic beverages industry. And here it is where I get involved: As a Tequila passionate, I feel compromised to get the word Tequila to its glory: as a cultural tradition, as a national symbol and as a competitive brand. Following my father’s steps, I have been in the tequila industry for more than 13 years, specializing in Tequila branding and marketing. Throughout these years we have actively participated in developing and launching several tequila brands, each time, improving the process, getting more confident and better results. With each Tequila Brand development, we have also been able to identify the 10 essential steps to start a Tequila Business. Following these steps in this order you will be able to create a Successful Tequila Brand!
But what do I mean with successful tequila?
Let me put it this way: There are hundreds of Tequila brands, some of them with more than one century in the market and others just kicking off. Despite the time difference several tequila brands have been victorious either for their sales/profit or admiral reputation in the market. Have a look at Tequila Cuervo, more than 100 years of tradition would have been forgotten if it wasn’t for the clever marketing surrounding “El Mundo Cuervo”, which at this point it is the most known tequila brand in the whole world. On the other hand we have Tequila Patrón, which in the new tequila boom, it has emerged as a high quality tequila in the international market. My third example is Tequila Don Ramón, which in its first 5 years in the market, it became the highest selling tequila in Mexico. These are 3 examples of tequila that represent the success we aim to achieve and perhaps go beyond. So if you still wonder if you can compete with a tequila with more than 100 years in the market, or a prestigious premium tequila or a popular boom tequila, HERE IS HOW:
1. Know your market. There are 3 simple questions which can help you know your niche market: Who? Where? and What?
The question “who?” will help you define your target market. It’s a common mistake to think that a Tequila Brand can be aimed to everyone: men and women, people in there 20’s all the way to their 60’s, a Senior Marketing Director and an architect student. Since it is almost impossible to target everyone as one market it is necessary to narrow it down. By narrowing down your market you will use common interests and demographic characteristics that will define a desired niche market. The tequila brand should be congruent to the niche market created.
Imagine that you are in a sports bar in New York and a group of guys and girls in the early 30’s come in for a drink. The guys decide to get bottle beers, but one of the girls decides to get a raspberry margarita with a house tequila reposado. When the raspberry tequila cocktail arrives in a rimmed frozen margarita glass with a round lime wedge, another girl in the group looks at it, she ask her friend for a sip and suddenly she also wants one! In fact not only her but all the girls have decided to also order a raspberry margarita. The next thing you notice some of the guys change their beer bottles for raspberry margaritas- even a couple in there 50’s seating in the next table, ask the waiter what the girls are drinking and the woman orders one as well!
You think: “I will make a Raspberry-flavor Tequila… Wow, what I great idea!”
If we analyze this situation to answer the “who?”, we could state that raspberry-flavor tequila is suitable for everyone: for guys and for girls, in their 30’s and for couples in their 50’s; it’s great in sports bar, perhaps any type of cocktail bar! But if we do a thoughtful analysis we realize all this is wrong: Based on this example, the correct way to define the niche market would be targeting women from 25-35 y/o, single, who like to socialize with fun fruity cocktails. Note: This doesn’t mean that other niche markets can demand your product (in this case the guys and the couple in their 50’s).
The question “where?” will tell you how to define your market based on its location. To affirm that every woman between 25-35 and single in any place in the world, will drink raspberry tequila based on this example is not right, since every country have different social and cultural behaviors. Therefore, the location factor has to be taken in consideration. If we look at the previous example, we can only determine that, in fact, American Girls, who live in New York, enjoy drinking cocktails in bar. This example doesn’t necessary apply to Argentinean or French woman who probably prefer wines or digestive liquors.
The question “what?” will help you create a product with demand: A needed product will be demanded while a not needed product will not be demanded. So how do you create a needed Tequila brand? This is very simple: you actually don’t need to make a raspberry-flavor tequila or modify its composition to create a new demand. Tequila as many other liqueurs & spirits mainly sell status and unique experiences. Applying the previous example, the girls not only ordered raspberry margaritas because of the flavor but because they associated with fun and it even created a sense of inclusion between them. To summarize, the status and experience are two important elements that generate demand.
Review of step 1
By answering those 3 questions: who? where? what? You will be able to know and define your market and create a product with demand.
2. Choose a name. For me, this is the most important part of the process: It’s from the name that your identity and tequila branding are shaped. Tradition, respect, unique, classy- anything you wish can be expressed by the name. There is no magic rule to select one, just remember that the name chosen is not only for you to like but for your niche market to identify with it. Now you might be wondering: “how would I know if the market will identify with the chosen tequila name?” To explain this, I will use other tequila brands as examples: Jimador, Hornitos Reposado, Cazadores, Patrón, Orendain, El Agave Artesanal, Don Julio, Espolón… from tequila activities to tequila qualities to names of people there are infinite ways to name a Tequila. There are no right or wrong ways to name a tequila, the key to have a successful name is to make it congruent to the philosophy of the brand.
If you wish to call your Tequila after your Grandpa Alfredo, who worked in the agave field from the age of 7, raised a family and had 8 daughters and 7 sons, and worked hard to create his own agave empire and even still at the age of 92 he still harvests (jima) the agaves with his own coa… and you wish to honor him by naming a tequila after him: Tequila Don Alfredo. Again, the name will only have significance for the niche market if you manage to express the meaning behind the name. You don’t necessarily need to tell everyone about Don Alfredo’s admirable story but to communicate the essence of it: tradition, respect, triumph, etc. “Can a tequila be name La Silla (The Chair)? Of course! make sure to communicate what kind of chair is it: ancient? Rustic? Contemporary? Elegant? Memorable? This qualities will also reflect the personality of your tequila. Again, the name won’t mean anything to the niche market if you don’t relate them to the name.
Having said that, there are a few tips I would like you to give:
Be creative, the niche is always looking for something new.
Keep the name in Spanish. Although this is not an absolute rule, Tequila is an 100% Mexican product and the niche market expects to feel that relation.
Make it pronounceable, especially if it is for the international market.
3. Once you have chosen a name, the next step is to register it. This way you will protect the name and make sure that you are the only tequila brand using it. If you are planning to commercialize your tequila brand in México, you will have to register your brand at El Instituto Mexicano de la Propiedad Industrial (The Mexican Institute of Industrial Property or IMPI) which is the organization in charge of protecting the industrial rights in Mexico. To find out more details on how to register and protect a tequila brand in México go to http://www.impi.gob.mx/wb/impi_en/Home. If you intend to export your tequila in the U.S.A. or any other country, it is not necessary to register your tequila brand at IMPI, only in the countries you wish to sell it. Nevertheless I recommend you to register the name in México, this way, your product will be exclusive in its country of origin and country of exportation. The approximate time to register a brand from when you submit your documents to receive your brand property title is 30-90 days.
Registering your Tequila Brand in the U.S.
To register your tequila brand in the U.S. you would have to do it through “United States Patent and Trademark Office (USPTO). To learn more about the registration requirements, go to http://www.uspto.gov/.
4. Once you have copy righted your brand, the next step is to choose the Tequila House you wish to work with. That’s right: You don’t need to own agave fields or a tequila factory to produce tequila. You can make a formal agreement with a Tequila House so they can prepare an exclusive tequila for your brand. The main Tequila Houses are located in the region of Tequila, assembled by the following towns: El Arenal, Amatitán and Tequila. Another important region is known as Los Altos de Jalisco; this is arranged by Tepatitlán, Arandas, San José de Gracia, Atotonilco, Capilla de Guadalupe among others. Some criteria that will help you chose the ideal Tequila House are:
The house availability to prepare tequila under your needs and expectations.
Length of agreement.
National and International awards and recognitions.
Participation and awards in Testing Competitions.
The number of Brands they bottle (which ones of these have awards and recognitions).
5. Once you have selected a Tequila House you wish to work with, the next step is to fill in a document presented by El Consejo Regulador del Tequila (Tequila Regulation Council or CRT) called Convenio de Vinculación y Responsablidad (Union and Responsibility Agreement) . Click at the link to download the document: crtnew.crt.org.mx/images/Documentos/Convenio%20Envasado.doc. This document must be completed in Spanish. Once filled in, it must be submitted to any IMPI offices to notify them that your tequila brand will be manufactured in the selected Tequila House. IMPI will send you a confirmation letter during the next 3 months. In the mean time you can go ahead and start working on the next step: label design.
6. The next step is designing your Tequila label: When designing, there are two main things to keep in mind: the technical a creative side of it.
Technical: Regardless if the tequila brand is for national or international market, the label must follow the Mexican Mandatory Commercial Information Chapter 11, Section 11.1 and 11.2.1 from the NOM-006-SCFI-2005 for Tequila Exportation (Información Comercial Obligatoria conforme al Capítulo 11, Apartado 11.1 y 11.2.1 de la NOM-006-SCFI-2005 para Tequila de Exportación).
If you intend to export your Tequila Brand to the U.S. you will also need to follow The Alcohol and Tobacco Tax and Trade Bureau (TTB) specifications. To learn more about the TTB visit their website www.ttb.gov
Creative: Just like step two, be creative and congruent with your branding. If you are assertive in these two elements nothing can go wrong. There are three main ways to design and print a label:
a)Printed on paper. This has been the traditional method of labeling tequila, therefore it is recommended if you wish to transmit a classic traditional appearance.
b)Screen Printing on glass or ceramic surface. With the boom of new tequilas, these printing techniques have been applied into the tequila industry: UV Screen Printing and Glass Screen Printing are two techniques were the glass or ceramic surface of the bottle are decorated with screen printing inks, leaving a permanent coloring on the bottle’s surface. Screen printing ink can be found in standard colors to fine metallic inks like platinum, silver and gold.
More about screen printing
In my 13 years experience, we have branded several premium tequilas using Glass Screen Printing and UV Screen Printing achieving awarded Tequila brands like El Agave Artesanal and Suavemente. If you wish to find out more about our Glass Screen Printing and UV Screen Printing services visit our site: www.InnovaTeqsa.com english/services/screenprinting or contact me via email: gonzalo@InnovacionEnTequila.com
c) Sandblasting: With this technique, the tequila bottle is decorated by etching the glass surface. InnovaTeqsa has a group of expertise who are passionate about sandblasting combining Mexican artisan techniques. If you wish to learn more about sandblasting visit our site: www.InnovaTeqsa.com/english/services/screenprinting or contact me via email: gonzalo@InnovacionEnTequila.com
7. The next step is bottle and packaging selection.
Bottle: You can either use a generic bottle or manufacture an exclusive one. For some cases, InnovaTeqsa has decorated exclusive bottles and for other cases, a generic bottle was the option. Nevertheless, in both cases, a good decoration has made an outstanding presentation. My advice is to go for an existent bottle, why invest thousands of dollars designing and manufacturing a bottle, when there are hundreds of ready-made bottles which can be use. It is simple to make it look different and unique by decorating it with different techniques.
Packaging: Although several packaging formats have emerged, like wood-board, rustic metal and plastic, the most popular packaging is carton paper. And again, if you are using a ready-made bottle, most likely you will find a ready made carton package for single and multiple units. My advice as well is to invest in decorating the carton to make it look different. If you have any specific concerns about bottle samples and packaging, drop me a quick line at gonzalo@InnovacionEnTequila.com, and I’ll be more than happy to advice you.
8. The next step is only if you are planning to Export your Tequila Brand: Obtain an Importing and Distribution License. There are many companies specialized in Importing and Distributing Spirits & Alcoholic Beverages. My advice here is to investigate different companies and compare them. Applying for big importing and distribution companies won’t guarantee you that they will promote your tequila brand. As a personal experience, many of our clients have decided to obtain there own importing and distribution license, this way they can concentrate on promoting their own tequila brand.
9. Once the IMPI approves the Convenio de Vinculación y Responsabilidad (Note: this step is consecutive to step 5), you can finally approach the Tequila Regulation Council (CRT). Here you would have to submit the Convenio de Vinculación (Union and Responsibility Agreement), copies of labels front and back, and the registration title offered by the IMPI and/or USPTO. The person in charge of revising the labels is Mr. Juan Carlos Ruiz. It is possible to send him the labels for approval to his email: firstname.lastname@example.org. The cost for revising each set of labels (front and back) is $500.00 MXN + 16% TAX (This information was correct in June 2010). The estimated waiting time is one week.
10. Once the CRT has approved your Tequila brand, the last and final step is to bottle the tequila. The Tequila House will only allow you to bottle if you have all the documentation approved by the IMPI, CRT and the USPTO. The Tequila House will arrange with you a set date to manufacture your tequila. The Tequila should be ready to go into the shops once it leaves the factory! J
A BONUS STEP: After following the 10 essential steps to start a Tequila business, we have a bonus step: write to us and tell us your experience! We would love to hear from you and if you found helpful this 10 Essential Steps to start a Tequila Business. If you have any questions or concerns or you simply want to say hi, do not hesitate to contact me at gonzalo@InnovacionEnTequila.com. Also keep coming back to our blog InnovacionEnTequila.com, we will be posting insights of the tequila industry and other interesting articles. If you would like me to write about a certain topic related to Tequila please let me know. Don’t forget to follow us in Twitter: “InnovaTequila” or become fan in Facebook: Innovación en Tequila.
Gonzalo Spíndola García
InnovaTeqsa S.A. de C.V.