Patrón Tequila founder and former Southern Glazer’s Wine and Spirits (SGWS) leadership have teamed up to launch a Texas-based spirits company, slated to introduce its debut product in April.
Announced today, Round 2 Spirits comes from billionaire John Paul DeJoria, co-founder of Patrón Tequila and Paul Mitchell hair products. In 1989 DeJoria and partner Martin Crowley founded Patrón, scaling the brand into a pioneer for premium-plus tequila in the 1990s.They sold it to Bacardi for $5.1 billion in 2018 shortly after Pernod Ricard bought out Avion Tequila and Diageo acquired George Clooney’s Casamigos.
DeJoria is joined by chairman and CEO Ed Brown, a former Patrón Spirits CEO of 20 years, and president and COO Lee Applbaum, former chief marketing officer of Patrón Tequila and Grey Goose Vodka, whose resume also includes stints at Target Australia and Coca-Cola. Brad Vassar, who spent 15 years as the COO of distributor SGWS will serve as chief commercial officer. The team also includes Patrón’s former production director from Mexico, Antonio Rodriguez.
But with the distillery based in the U.S., don’t expect a new tequila brand. Round 2 Spirits opted to acquire an existing operation – Muenster, Texas-based Whiskey Hollow Distillery, located roughly an hour north of Dallas – over contract distilling in order to have full vertical control, said Applbaum. Whiskey Hollow, which sold for $6 million last year after filing for bankruptcy, fit the bill because of its large footprint providing Round 2 Spirits room to expand production.
“The focus is really to identify that whitespace for disruption and build the brands at scale,” Applbaum said.
Patrón was one of the first brands to marry a luxury positioning with sales volume in a category that has since become a spirits’ growth driver.
The partner-funded company has invested in upgrading the distillery and is configuring production to be “totally flexible” with the aim of being consumer-led rather than category-led, added Applbaum. The COO held back specifying where that philosophy may take them.
“Obviously Tequila is not a category we can pursue with that distillery,” he said. “But we have a ton of interest in what’s going on more broadly with agave spirits. And then whether it’s white spirits or brown spirits, I think that’s completely open.”
In an industry that’s much more saturated industry compared to Patrón’s early days, disruption to Applbaum means perfecting the balance of a product’s “intrinsic” (liquid) and “extrinsic” (brand story or packaging) qualities, while finding incremental whitespace in the spirits category instead of stealing share. Flavor is also not a tenet of the company’s innovation.
“I’m not knocking flavors of any product, but flavors of a product are not innovation, any different than colors of a car are,” he said. “They’re important, they offer consumer choice, but that’s not innovation.”
Brands will be primarily digital first, with SGWS leading what will be a national launch of the first products except in a few outlier markets.