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Tequila Sunrise

How a New Upscale Day Dawned for Mexico's Ancient Firewater
Jonathan Kandell
From the Print Edition:
Chuck Norris, Jul/Aug 98

(continued from page 1)

When it came to marketing Porfidio, he was all business. He carted samples--at $150 a bottle--to liquor trade shows, first in Europe and Asia. Then he turned his sights on the United States, where he chose as his importer Todhunter Imports Ltd. in West Palm Beach, Florida. He left the Mexican market for last. "When I first came here, Mexicans looked down on Tequila so much that I don't remember it ever being served at weddings," says Grassl. "Now, it's everywhere."

What changed their minds? According to Grassl, the prestige that Porfidio and the other superpremium brands gained abroad convinced Mexicans that Tequila could be synonymous with sophistication. This, by the way, is not the sort of explanation that Mexicans are likely to embrace. "It's supposed to be good for your heart, and it's made in Mexico," says Felipe Ahumada, a Mexico City-based real estate developer, giving his own spin to the recent rise in popularity of Tequila in his social circle. "We have our national pride," adds his wife, Sheila.

Whatever the reasons, Mexicans account for 60 percent of Porfidio sales. According to Martin, politicians, business impresarios and drug barons seem to feel that there's no better way to demonstrate their appreciation of important colleagues than to send them whole cases of Porfidio Silver ($25 per bottle), Porfidio Añejo Blue Agave ($40), Porfidio Reposado ($80) and, most popular of all, the Porfidio Single Barrel Añejo ($80), nicknamed Cactus, for the cute glass sculpture on its bottom. Late last year, Grassl introduced in Mexico and Asia--and to a limited degree in the United States--the priciest Tequila in the world, Porfidio Barrique de Ponciano, at $500 a bottle.

In the United States, superpremium Tequilas have become popular for many of the same reasons that cigars and small-batch Bourbons are experiencing a renaissance. "Consumers are dedicating more time for themselves to indulge in life's finer things," says Ken Ruff, vice president of national accounts at JBB Worldwide, the U.S. distributor of two pricey, high-quality Tequilas, El Tesoro de Don Felipe and Chinaco.

To convince Americans that Tequila can be numbered among preferred spirits, superpremium distributors are trying to sweep aside its hairy-chested image. "We're talking after-dinner drinks here," says Harrison B. Jones Jr., senior brand manager for Sazerac Co., which distributes Herradura in the United States. "I don't think anybody is going to be gulping shots of these Tequilas while chowing down on burritos."

While Mexico takes the lion's share of Porfidio, the United States, with 30 percent of sales, is the largest export destination. Close to 10 percent is evenly split between Asia and Europe. South America accounts for less than 1 percent of sales.

Just a couple of years ago, Porfidio might have been dismissed as a "boutique" brand. But in 1996, Grassl sold 300,000 liters, and last year, sales exploded to an estimated 2.4 million liters--at an average retail price of about $50 a bottle. "My biggest problem is how to handle a cash flow that's increasing 800 percent a year," says Grassl. One solution was to build a Tequila distillery of his own, something he finally did last year near Puerto Vallarta. Incredible as it seems, Grassl still rents five independent distilleries for several weeks to a few months a year to produce his Tequila. He doesn't even own his own bottling plant, although he does have state-of-the-art mobile equipment.

As impressive as Porfidio's sales figures are, they lag far behind market leader Cuervo's 50 million liters in 1996. But a more moderate-sized traditional producer like Herradura (5 million liters sold in 1996) has to be glancing over its shoulder. Grassl insists hisgrowth hasn't hurt any fellow Tequila producers. The real losers, he asserts, are whiskeys of all varieties in Mexico. "In the U.S., I think we're taking market share from the single-malt whiskeys," he says.

Until recently, his expanding business kept Grassl on a 100-hour-a-week work schedule, which leads one to wonder how he found the time to meet his Guadalajara-born wife, Cecilia. In a sense, the local bureaucracy played go-between. Despite Mexico's efforts over the last few years to cut red tape and encourage freer trade, many government officials at the local level continue to be notorious for passing new regulations that require exporters to devote countless hours negotiating for permits and dispensations. The lawyer Grassl used--and still uses--for these negotiations was the woman he eventually married. "I was spending more time with her than with anybody else in the business," he says. They now have a young son, and live a five-minute walk from his headquarters, a former two-story house in an upper middle-class Guadalajara neighborhood. It has an armored door, electronically operated and surveyed by closed-circuit television--a reminder that nowadays successful business people in Mexico must take kidnapping threats seriously.

t's a Monday morning and Grassl drives his huge Ford Lobo recreational vehicle to the town of Tequila, some 30 miles northwest of Guadalajara--the capital of the state of Jalisco--to inspect a distillery. On the way, he expounds on the liquor's history and production methods.


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