As new luxury tequilas aim to compete with those started by celebrity partners, one brand is hoping to carve out a niche in the segment by emphasizing what it doesn’t have.
Elevated Spirits’ Cierto Tequila, a high-end tequila launched by accomplished technology venture capitalist Todd Chaffee (Twitter, Netflix) in 2019, is banking on its additive-free liquid to help it stand out to conscious consumers in a growing segment. Additives— such as glycerin or caramel color— are used by producers to create uniform color or softer flavors, and are present in an estimated 70% of tequilas, according to Tequila Matchmaker. Legally, four types of additives are allowed in tequila, and if they are below 1% by weight, they aren’t required to be printed on the label.
“Customers are not just buying luxury goods because they are luxury goods, they are looking under the hood,” said the company’s new CEO, Ami-Lynn Baskshi. “The liquid has got to match the outside and I think that’s creating a lot of runway for us.”
Baskshi, who joined as CEO last month, is a 21-year Diageo alumna, whose stints at the global spirit company include vice president of marketing for tequila, and vice president of innovation for North America. Other recent appointments include Jim Ruane, a former Diageo VP, as chief growth officer, and Laurence Wolfe, who led end-to-end supply chain operations for Heineken USA and for Pernod Ricard Americas, as COO. Tony Spinelli, head of sales, comes with 16 years of experience with Diageo, most recently as vice president of strategic accounts; and Ken Ruff, head of strategic accounts on-premise, joined with 35 years at Beam Suntory, most recently as vice president of on-premise national accounts.
Cierto’s expressions, which range from $89 to $279, fit in the growing ultra-premium tequila (+$50) segment, which has grown to 11% of the category’s share in dollars over the past four years according to NIQ. Sales growth for the segment in off-premise channels in the last 52 weeks ending August 12 was up 5.3%, although against the backdrop of luxury spirits in an overall decline. Other recent high-end launches from beverage veterans are also aiming to distinguish themselves through boasts about their transparency or organic status. The market is less crowded with organic tequilas, although many independent agave spirit brands promote other sustainable production attributes and also work with family producers.
While a claim like “no additives” — especially given the small percentage of additives allowed in tequila—might seem minor, those sugary syrups and artificial colors can shift consumers’ expectations of tequila away from the more complex flavors of a traditionally-made spirit. Additive-free certification status has only been attained by 99 brands out of the nearly 3,000 tequila brands on the market through Tequila Matchmaker’s additive-free tequila program launched in 2020. The industry standard helps to combat claims that are otherwise difficult to prove by the average consumer in an industry that does not require ingredient, nutritional or allergen labeling (yet).
Bakshi said that the additive-free label is one of the brand’s biggest opportunities to stand out, adding that customers like Total Wine and high-end tequila retailers have been asking for products in the space. It should be noted that although tequila temples like San Diego’s Old Town Tequila allow customers to sort their selections by the presence or absence of additives, most major retailers do not, indicating that additive-free may not be in the mass-market conversation yet.
To that end, Cierto is focusing its channels on “high IQ” tequila markets like California, New York, Illinois, Texas and Florida, particularly high-end Mexican restaurants, bars and independent retailers where consumers are over-indexing in tequila. In the future, the company also plans to expand into the U.K., Canada, Australia, and luxury travel markets. To drive sales in its recent 40-plus market rollout, trial is a top priority for Bakshi, followed by digital advertising and e-commerce, an “underpenetrated route” for luxury spirits, especially tequila, she said.
“What got super and ultra premium tequila to where it is today is not what it’s going to take to get it to tomorrow to the next level,” Bakshi. “And so this additive free space is going to become huge.”
But other brands like Fortaleza, and even some produced by Cierto’s same distillers, such as ArteNom, are examples of industry darlings that have long been additive-free. So Cierto launched “privately” first, aiming to build a reputation as a regular award winner on the spirits competition circuit. The company has exceeded 750 international accolades, with 762 medals and awards to date.
“Over the years while the brand was private, and while continuing to kind of build it out, he [Chaffee] was really using that to validate the liquid and to earn advocacy and credibility,” Bakshi said.
The new CEO likens the competition spree to an Olympic medalist returning for the gold. While certain spirit competitions are used by brands to enhance their recognition with stakeholders when entering the market or generate new buzz, few enter in as many as Cierto— perhaps most illustrating the deep pockets required to do so. Chaffe is known for his big hit investments in technology companies like Netflix, Kayak and Pandora— although his biggest claim to fame is the $44 million early bet on Twitter, which returned close to $5 billion for his company, according to Forbes.
Elevated Spirits recently closed a successful Series B funding, with investors including NBA All-Stars Kevin Durant and Devin Booker, NFL and former NFL All-Pros DeMarcus Lawrence and Xavier Rhodes. Those big names will be helping from a behind the scenes perspective, said Bakshi.