Tres Agaves Takes Control of its Destiny with New $6 Million Distillery

FILED FEBRUARY 22, 2018

Eight years after its US debut, Tres Agaves tequila is entering a new phase in its lifecycle. With a 30% CAGR during the last three years, it has outgrown the distillery where it is produced on contract, and has begun construction on its own distillery and visitors center in Amatitan, Jalisco.

Tres Agaves founder and chief Barry Augus tells WSD that it's always been his dream for the brand to have its own home base and agave source, but it only recently became a possibility when a plot of land went up for sale that borders a plot owned by Tres Agaves' agave farmer and agave nectar producer, Fernando Perez.

"It had always been my intent when we were ready to build our own distillery, to be in Amatitan, the birthplace of tequila… it seemed like it was kismet. So when this [land] became available it seemed like this was the time to go," he says.

The new Tres Agaves tequileria--which is set to open this summer--will total about 40,000 square feet, and cost approximately $6 million. It has a production capacity of 75,000 cases - more than double the brand's current production rate of 35,000 cases. Recall, Tres Agaves remains one of the spirit partner brands with Trinchero Family Estates, joining the portfolio in 2012.

"We feel we're not anywhere close to the ultimate demand, and potential for this product," says Barry, adding that when they get to full capacity, which could be as soon as three or four years, they can "easily" add a second oven and more distillation tanks.

Beyond providing a physical sense of identity for the brand, owning a distillery gives Tres Agaves the flexibility to bring processes in house. For instance, Tres Agaves has a successful single barrel program, but because the regulations for tequila are so strict, each barrel is technically its own batch and requires a separate filing with the Consejo Regulador del Tequila (CRT).

"It was hard to get our [distilling] partners involved with that because they have their own needs and priorities. So oftentimes someone on my team comes up with a creative idea, and it almost feels like we're imposing on them," he says.

It also allows them to experiment with production styles and limited edition products. Tres Agaves is currently produced using an autoclave oven and shredder mill, but the new distillery will have some more traditional methods for use as well, including horno brick oven, a tahona wheel and pine fermentation tanks.

"There's things that I've wanted to do over the years," says Barry. "Not that we're going to rush out and launch 100 products."

The 39 acres surrounding the new distillery are already planted with agaves that were being farmed by David Partida, and the Partida family. As the new distillery comes online, Tres Agaves will source all its agave from its single source agave farming partner, working with them to identify specific fields dedicated to the brand.

It has been well-documented that agave supplies are running short in Mexico, when asked how Tres Agaves is offsetting the increase in costs, Barry tells us emphatically that the brand has never taken a price increase yet, and are doing everything they can to maintain it. They're working with their grower for long term pricing stability.

"It seems like every time we have to sit down and look at rising costs, something has come along to help us. In fact, I will tell you that as a small craft distiller, the recent [craft modernization act] really helped us in a way that we can remain competitive. For a small producer like us, the marginal benefit of the reduction in excise tax rates has been palpable, so we're very thankful for that."

Tourism has been increasing "exponentially" in Tequila, due to the popularity of the category, and because the government has invested a lot of money into infrastructure to support the growing industry. "Tequila is a denomination of origin spirit, and there's a true sense of place around tequila," he says. "Not all categories have that, and so I think it's important to encourage people to come to the DOO and see things."

"We embrace having visitors here. 'Come see how we produce, come see how we age.' We're proud of that."

WHAT CONSUMERS DRINK IN THE BIG CITIES

As we've previously reported, wine is the most popular category on Drizly's alcohol delivery platform, but there are a few markets that buck the trend. In a recent look at trends in 12 major cities, Drizly found that buyers in Austin, Seattle and Tampa Bay over index on spirits orders, while Boston and Denver are "particularly strong" markets for beer.

Red wine was the most popular wine category, followed by white and then sparkling wine in all of the metropolitan cities in this roundup, but a few anomalies worth noting are that Dallas and Northern New Jersey over index on white wine, while New York City and Los Angeles over index on rose wines.

The consistent trend across these 12 cities is that vodka and whiskey are easily the two most popular orders. However, we see that Los Angeles and New York have strong tequila sales; Tampa Bay sells significantly more rum than the other cities; and interestingly, D.C. way over indexes on gin.

Seattle is the leader in basket size, with an average order of $83. Though Drizly notes that Seattle does have a disproportionate share of corporate orders, which typically have higher order totals. Dallas, Los Angeles, Northern New Jersey and DC have average orders of around $70. Consumers in the other cities typically spend around $60 per order.

WSD BRIEFS:

CONSTELLATION TO LAUNCH BLACK BOX SPIRITS. Black Box Wines is Constellation Brands' "single biggest share gainer," up 32% in sales growth over last year, said president and coo Bill Newlands yesterday at the Consumer Analyst Group of New York Conference. To capitalize on the popularity of the brand, he revealed the company is planning to introduce a Black Box Spirits line this year. Constellation declined to comment further on the offering, but we know there will be a tequila, whiskey and vodka offering. We'll have more information as it rolls in.

3 BADGE BEVERAGE'S LEESE-FITCH WINES UP 16% IN 2017 to 271,372 cases, an "all-time high," per a release. The company attributed the brand's growth to favorable consumer consumption trends in the price category ($11+), strong sales execution in Q4 and the brand's positioning and story. The Leese-Fitch portfolio includes chardonnay, cabernet sauvignon, sauvignon blanc, zinfandel and a red blend. Retail sales were up 23% for the year, with several varietals also showing double-digit growth. Programming is in place to keep the momentum going in 2018.

PRESTIGE BEVERAGE GROUP'S RISATA WINES TO LAUNCH Brachetto d'Acqui to its portfolio alongside Moscato d'Asti, Prosecco, IL Rosso, Pink and Red Moscatos. It is made with 100% brachetto grapes and will be available nationwide starting April 1 for approximately $17 a 750 ml.

CLOS DU BOIS TO RELEASE LIGHTLY BUBBLED WINES. Lightly Bubbled Rose and Lightly Bubbled Chardonnay are the latest additions to the Clos du Bois portfolio. Marketing vp Jon Guggino says the wines "are the ultimate crossover wines, delivering all the sophistication of still wine with broader appeal." The Lightly Bubbled wines will hit store shelves nationwide starting next month at a suggested retail price of $13 a 750 ml.

Until tomorrow,
Your Editors

Emily Pennington - emily@winespiritsdaily.com
Sarah Barrett - sarah@winespiritsdaily.com

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