just the Answer - Jose Cuervo international MD Peter Gutierrez
Last week, just-drinks sat down with the MD of Jose Cuervo's international division
Last week, Jose Cuervo dropped in to London's trend-setting East End to launch a branding campaign for its higher-priced 100%-agave Tradicional line. Jose Cuervo international MD Peter Gutierrez talked to just-drinks about targeting growth in Brazil and the challenge of changing Tequila's image, and not about the upcoming end to Cuervo's distribution contract with Diageo.
just-drinks: First, I need to ask if there has been any discussion with Diageo about what will happen when Cuervo's distribution deal with Diageo expires (in June)?
Peter Gutierrez: I have absolutely no comment at all. There's no comment to make.
j-d: You have upped your marketing spend around Tradicional. Why?
PG: It's really a step in building advocacy around the Tequila category by starting to market our other marques in the Jose Cuervo portfolio beyond Especial - which is our standard premium offer.
Peter Gutierrez, managing director at Jose Cuervo International
The nice thing about doing it now is there's a growing sense of appreciation for all things Mexican. The view of Mexico is changing from cactus, donkeys and sombreros to more interesting, exciting manifestations of modern Mexico.
Tequila is starting to take on a role as a discovery spirit in a similar way to how vodka did ten years ago. If you look at the vodka category 15 years ago, it was very commoditised - people thought there wasn't much difference between one brand and another. It has now become a very exciting and interesting category. I think people are starting to discover that Tequila has those aspects to it without losing its whole reason to exist, which is about bonding and the high-energy ritual of drinking with your friends.
j-d: Where are people discovering this? In the US and Mexico?
PG: In Mexico and the US, the range around Tequila - i.e. that there are many different types like in whisk(e)y - is very much accepted. About 40% of total volume of spirits in Mexico is Tequila. In the US it's a far lower number, about 7% or 8% of a very big number.
However, it's a very nascent thing in international markets. The idea that Tequila is Tequila is Tequila is a consumer thought that is as true in Japan as it is in Greece or Spain or the UK. And that's what I see starting to change. In the UK, I see it changing more rapidly than I do in other international markets.
j-d: So, you believe Tequila can learn from vodka?
PG: No, because we have our own particular story to tell. What a lot of people don't understand about the Tequila category in general is that it has very authentic roots. The Cuervo company is still owned and run by the Cuervo family. I report to ninth and tenth generation direct male descendents of Cuervo. People don't even know that there's a town called Tequila.
j-d: How are you positioned in China?
PG: In China, we have really small volumes so we're only getting started there. To say it has any positioning at all is a stretch.
But I've got 80 countries, so I can't go full gas in every single market. The biggest market right now where a lot of focus is going in is Brazil. It's a big market, it's growing very well right now. Consumption of spirits is high there, they are highly experimental and have a broad palate. They are willing to experiment, so it's a very fertile consumer mindset for us to go into.
j-d: What progress have you made?
PG: We've doubled the size of the business in the last three or four years. Brazil was already a top five market for us, so from a pretty healthy position, we've focused on that market and got a lot in return.
j-d: What target do you have in Brazil?
PG: I think we can double the size of the market again in the next two or three years.
The reason I'm very bullish on Brazil is that the success we've built has focused on the key metros of São Paulo and Rio de Janeiro. So, there's another layer of geography to go after that we've barely touched.
j-d: Which other markets have you seen positive growth in?
PG: The UK and Japan. Germany is the other market where we've seen good levels of growth. Spain and Greece, which have been big markets for us, are going through a lot of pain, but everyone is going through the same amount of pain there.
But we are more than compensating for that in other markets.
j-d: What lines are doing well?
PG: The growth has really been driven by Cuervo Especial, or Cuervo Gold. That's our alpha across international and that's what we've been focused on, which is why the Tradicional campaign is exciting: It's an incremental initiative that appeals to a slightly older demographic, a more discerning demographic that's maybe getting bored with whisk(e)y drinking and mindless vodka drinking and wants to experiment.
j-d: You want to change the image of Tequila. How do you do that?
PG: Everyone carries the same apocryphal tale of woe about Tequila in their head, so to broadcast the fact that you are different and not the big bad wolf of the spirits category is a bit of a futile exercise. I think you are condemned to go the long way round. We want people to think about what they are consuming, to be surprised by an experience with Tequila and come away and say: "Hey, you know what? I went somewhere the other night and was given some damn good Tequila in a great environment and it's bloody good stuff.”
j-d: In the same way people do with whisk(e)y?
PG: Look, we're not whisk(e)y, because we are a standing-up rather than a sitting-down category, and we are a with-friends-rather-than-on-your-own-gazing-down-at-your-navel category. I'm being dramatic to make a point, but if we can attract people who are tired of sitting down and gazing at their navel, then maybe in terms of share of occasion we can play a bigger role than we have done.
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