The best thing about the everyday luxury business is that an awful lot of Americans can afford a $15 cocktail, whereas real luxuries, like a $3,500 Rolex, have a much smaller market. And the margins for superpremium spirits are fantastic. Remember, these high-status luxury products are more than half water.
It’s possible the trading-up trend could reverse, and we’ll all drink Joe Schmo’s vodka as some sort of trucker-hat statement. But liquor experts think the superpremium category is pretty safe. The reason is that Grey Goose and its ilk do not rely on mere “coolness,” which is fleeting and hard to pin down. They’re chasing after “bestness”—a consistent target even if it’s hard to hit. There will always be a large subset of drinkers who want to be drinking “the best,” because bars and nightclubs are places to be seen. Places to prove you’re a player. “Spirits is an image-driven category,” says Branca. “We’re acutely aware of what we’re drinking in the presence of others. That’s why it’s so important to have strong on-premise promotions with influential consumers.”
Thus we’re out on this freezing winter night, hawking Corazón at a club on the Bowery. The scene is clearly rife with Influencers. On my way in, I brush past Ethan Hawke.
Over in a corner, the SFIC team has set up a bar serving free Corazón tequila. There’s a Corazón ice sculpture and several babe-alicious Corazón girls flitting about with margaritas. The whole thing’s a $2,000 outlay from the marketing budget.
Though tequila has a strong frat-boy affiliation, as a salt/lime/bodyshot-off-drunken-coed’s-clavicle kind of item, it too has been caught in the trading-up trend. Sales have nearly doubled in volume since 1990, and the margarita is frequently identified by bar and restaurant owners as the most popular cocktail in America.
Corazón began outside the Sidney Frank empire, in the mind of one Frank Arcella, sole proprietor of Arcella Premium Brands. Arcella knew his one-man outfit couldn’t compete in the high-stakes vodka category. But in superpremium tequila, he had a fighting chance.
Arcella toured tequila plants in Mexico and settled on one in the highlands of Jalisco. It owned its own agave fields (a major consideration, as agave supply can fluctuate wildly) and aged its tequila in dedicated, tequila-only barrels—not reused sherry and bourbon barrels, as is often done. The product was good, and the management was reliable. So Arcella struck a deal.
He then brainstormed names and decided on Corazón de Agave (Heart of Agave) because it suggested high-quality ingredients, and because the word heart might offer good marketing angles. At the plant, Arcella was shown hundreds of existing bottle prototypes and chose one with a distinctive skinny neck. “You save half a million dollars you would have given to a bottle designer,” he says.
It’s the sort of gut decision Sidney Frank made his fortune with. To me, it’s astonishingly cavalier. (I’ve seen Coca-Cola execs give PowerPoint presentations about how they hire naming agencies and focus-group every single design decision.) But Arcella is no fool or hayseed. He spent 29 years at Seagram’s, reaching executive vice-president. He says brand creation is simple: product, package, name, marketing plan. “This is not rocket science,” he claims. Perhaps in the fickle world of luxury liquor, it’s better that one man make all the decisions. It results in a more distinctive, memorable product—one that feels less like a product for the masses.
Arcella actually went to Frank early on in the Corazón time line, to see if Frank had any interest. But it wasn’t until a few years later, in 2002, that Frank decided to buy Corazón. It’s not hard to see why. The Corazón brand blueprint looks exactly like the one for Grey Goose. Corazón can claim, with a modicum of credibility, that it’s the best product out there (it also got superlative marks from the Beverage Testing Institute, which will soon be touted in an ad campaign). It’s got distinctive packaging. It’s priced above most competitors.
And so here we are tonight, out on the town, influencing the Influencers. At one bar, we get “bottle service,” buying an entire bottle of Corazón for a mere $310—plus mixers for free!—and displaying it prominently on our table.
Even with all this, it’s hard to foresee the sequence of events that might turn Corazón into a real competitor to Patrón. But the industry knows better than to bet against Sidney Frank. “Patrón has good imagery, it’s a strong brand, and it’s set up nicely,” says Michel Roux, the liquor exec who crafted Absolut’s long reign. “Of course, you could have said the same thing about Ketel One, back before Grey Goose took off.”
If Corazón fails to overtake Patrón, Frank has fallbacks, like a new line of cognacs, which will come in flavors like pear and apple, aimed at what analysts term the “urban” or “hip-hop” market. Frank has some experience with this market—he backs a side project with rapper Lil’ John, marketing an energy drink called “Crunk!!!” It’s also a market where conspicuous luxury consumption is on the rise, and the prices are high. The best cognacs are often three to six times more expensive than anything else behind the bar.
A new line of rums is also in the offing. Rums are widely believed to be the next vodka, as they’re also adept at soaking up flavors and acting as the base for a wide range of cocktails. SFIC plans to import its rums from Australia, to break from the herd of Caribbean rums. Tentative name for the line of rums: White Pelican. “It’s an endangered species,” says Frank, “and my wife likes the sound of it.”
When I asked a Bacardi executive, he said that rum doesn’t really have a superpremium category. That’s probably what Absolut would have said about superpremium vodka back in 1996.