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T-Minus

How one tequila company cornered the market by banishing the word "tequila" (and enlisting Clint Eastwood)

Author Kris Frieswick

ILLUSTRATION BY TIM TOMKINSON

“WE TRY NOT TO SAY the word ‘tequila.'”

While this might be a rule in many households in America, it’s a curious thing to hear from John McDonnell. He is, after all, president of international operations and chief operating officer of Patrón Spirits International, maker of Patrón. Tequila. You’d expect Job One would be telling customers what he’s selling.

Instead, McDonnell and his team have chosen to focus their marketing efforts on positioning Patrón as a superpremium liquor, not a tequila, for reasons that become painfully obvious once he explains them. “When I say ‘tequila’ to you, what do you think of?” he says. “A bad night you had when you were 17?” (Um, yes.)

“So instead we said to people, ‘I’d like you to try Patrón,’ and people said, ‘What is it?’ And we said, ‘Just try it.'”

Judging by the numbers, eschewing the T-word has worked. In 2011, Patrón became the largest-selling tequila by retail value, edging out its nemesis, Jose Cuervo. Patrón topped out at $1.08 billion compared with Cuervo’s $1.03 billion, according to Impact Databank, which tracks the spirits industry.

And here’s another thing: It all started with hair. Back in 1989, John Paul DeJoria, co-founder, CEO, board chairman and luxuriantly ponytailed pitchman for hair-care company John Paul Mitchell Systems, was sipping a tequila that his friend Martin Crowley had brought home from a trip to Mexico. “It was smoother than anything we’d ever tasted,” DeJoria has said. Crowley suggested the two find a way to make it even smoother, package it in bottles made of recycled glass and go into business together.

The men hired Francisco Alcaraz, a “tequila chef ” who made the product in a distillery in the mountains east of Guadalajara, Mexico (where Patrón is still made). The two partners decided to produce 1,000 cases, figuring that if it didn’t sell, they could give it to friends. It sold—and sold well, its popularity helped by word of mouth. Clint Eastwood, a DeJoria pal, prominently drank Patrón in a scene in 1993’s In the Line of Fire as a favor; since then, it’s been mentioned or featured in more than 200 songs, movies and TV shows. “We haven’t paid for any of that,” McDonnell says. “The artists have adopted the brand.”

Despite all the love and strong domestic growth, however, the company’s executives—including McDonnell, president and CEO Ed Brown and CMO Matt Carroll—realized they would have to go global if they wanted to really move the needle. At the time, 2005, Patrón was sold only in the U.S. and on two Caribbean islands.

The marketing team was summoned, and about six months later they had a plan. In addition to the T-word ban and a strategy to target key influencers (i.e., beloved bartenders) worldwide, the company would go after an unconventional market that had been identified as ripe for Patrón domination: duty-free outlets. “These shops were focused on scotch and cognac, but no one was paying attention to tequila. So that left the door wide open for us,” McDonnell says. “We had to hit it hard and fast before the competitors took notice.”

The first target was one of the fanciest and busiest luxury duty-free shops they could find, World Duty Free in London’s Heathrow Airport. Patrón was a hit, and it subsequently started landing in duty-free shops around the world. After that, the uptake spread to hotels and other places where Patrón-loving Americans took their duty-free bottles, like so many apple seeds. As a result, Patrón is now sold in 135 countries.

What’s next? Patrón Spirits International, which is based in Zurich, is slowly building its portfolio. It owns Pyrat Rum, an ultrapremium rum that Crowley and DeJoria bought seven years after launching Patrón. In 2007, it acquired Ultimat Vodka. Carroll says the company is seeking a bourbon and a gin to add to the mix. But these spirit categories are already very crowded, presenting a stiffer challenge than Patrón faced.

Could, say, a familiar face be enough to cut through the clutter? Sadly, no. Despite his obvious ease in front of the camera, DeJoria has chosen not to become a pitchman here, saying he’s happy to stand back, let his management team do their thing and be “the super-proud owner of the company.” But Carroll admits that DeJoria’s conspicuous absence from ads is mostly to avoid confusing Patrón’s customer base. In other words, there’s concern that the world isn’t ready to buy tequila from a shampoo guy, even if it isn’t called tequila, and even though they already are, in droves.

KRIS FRIESWICK, a writer whose work has appeared in publications including WSJ, Men’s Health and Inc., remains a slavish devotee of the very dry gin martini.

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