Buy Tequila Online

According to a report in Fool.com, Nielsen Scantrack & LiquorTrack data reported a12.5% increase in tequila sales 2006, which was the largest growth in any alcoholic beverage. Could tequila be worth investing in?

The most popular tequilas by sales are Jose Cuervo, which is distributed by Diageo (NYSE: DEO), Sauza from Fortune Brands (NYSE: FO), and Brown-Forman’s (NYSE: BF.A) recently acquired Casa Herradura. Other distributors have tequilas, though they may not be as well known. Constellation Brands (NYSE: STZ) sells three different types under the labels of Montezuma, El Toro, and Capitan. Apparently, a reference to something Mexican is important in marketing your tequila.

So many brands, so little time
For my money, the one to watch here will be Motley Fool Income Investor recommendation Diageo. Jose Cuervo had a market share of 43% in 2005, according to Impact Databank, and it’s also been one of the first to market with brand extensions like flavored tequilas, which allows for greater sampling of the liquor. Cuervo has also brought out new and innovative marketing campaigns. For example, it has partnered with Spanish TV giant Telemundo to film a telenovela — a Spanish-language soap opera — on the grounds of its distillery. While Sauza will also be featured, it exposes both brands to large numbers of Hispanics who watch these shows not only in Mexico and Latin America, but also throughout much of the U.S. Cuervo also runs a number of tequila bars called Taberna del Tequila that are set up in airports around the country and run in conjunction with HMSHost. Jose Cuervo, through Diageo, is a market leader in many ways besides sales.

While Diageo sells at a slight premium to both Fortune Brands and Constellation, it is discounted against Brown-Forman. It has a tough-to-beat distribution network similar to the exclusivity enjoyed by Anheuser-Busch (NYSE: BUD), owns a portfolio of “global priority brands” including Smirnoff vodka, Captain Morgan’s rum, and Bailey’s Irish cream, and continues to enjoy growth both here and abroad.

Filed under: Tequila News, Tequila Brands