Brand Building and Communications, India, Marketing and Sales

Agave India: What’s in a name?

November 18, 2014 29 Comments

A Tequila product from India?

Yes, that’s right. But, even though Agave India produces an outstanding 100% Agave product, the term ‘Tequila’ or even ‘Mezcal’ is protected by designation of origin registration and reserved for use by Mexico.

(You’ll find previous blog posts on how the agave plant found its way to India from Mexico here and issues related to Appellations of Origin (AO) here.)

DesmondJi Products

As a result, Agave India Industries Pvt Ltd, the craft distiller behind Agave India, can only use the generic Agave designation and be content with the following on their promotional material:

100% Agave product, a gift of the blue-green Agave plant.

A plant grown in the red and black volcanic soils of India’s Deccan plateau and nourished in a semi-arid micro-climate similar to that of Central America.

In other words, it walks like a duck, squawks like a duck, tastes like a duck but… it is not a duck. Or, better, you can’t call it a duck.

Undeterred by this and secure in the knowledge that he makes world-class spirits products, Desmond Nazareth (under the brand name DesmondJi®) has been producing his products since 2011.

Meet DesmondJi®

The term Ji is a suffix used in India as a sign of respect, also known as an honorific and comparable to the Japanese –san or the Mexican Don, as in Don Julio. Kind of ironic actually, since I couldn’t tell the difference between DesmondJi 100% Agave and Don Julio Blanco in a blind taste test. Yes, it is that good.

Desmond is a graduate of the Indian MIT known as Indian Institute of Technology Madras (IIT-M) and moved to the US as a software entrepreneur. In 2000, he moved back to India. But, while in the States, his home bar became known among his friends as the place to go for the best margaritas. Alas, back in India, tequila products were not widely available (still aren’t due to tariffs) much less orange liqueurs or margarita blends. Too bad, he thought.

But, if you’re an entrepreneur, a problem can easily become an opportunity.

Desmond spent several years researching agave plants and the making of agave spirits including visits to Mexico to understand cultivation and

Cocktail glass water tower at the distillery.

distillation. Back in India, he recalled seeing the distinctive agave plant in the Deccan plateau. The next thing you know, he builds a micro-distillery and produces a range of products. Agave India is the country’s first fully integrated “field to bottle” alcohol beverage company focusing on global spirits made to international standards with Indian raw materials and know-how.

When he and I spoke I asked him what the enormous agave plants were used for before he came along. His answer, “They were used as fences.”

Desmond Nazareth and Indian Agave Plants.

A portfolio of 8 products

Under the DesmondJi® label, the company produces a 100%, a 51% Agave spirit and a 51% Agave Gold spirit with an oak finish. In addition, they have an Orange and Blue Curacao liqueur made with the Nagpur orange. After all, you can’t make a decent margarita without an orange liqueur and if you’re using Indian agave, you also should use a liqueur made from Indian oranges. In addition, they produce alcoholic margarita blends or, as we call it, a premixed margarita.

Finally, the portfolio also contains a Pure Cane spirit (think cachaça) made from locally grown sugar cane.

Challenges

While India is primarily a (scotch) whisky drinking country, white spirits like vodka and tequila have shown growth and future promise. But, for now at least, non-whisky alcohol products are a drop in the barrel, ur, bucket.

Desmond would like to set his sights on the US, the largest tequila consuming market in the world. But, I don’t need to tell you that while not yet saturated, the US tequila market is very cluttered. Can a craft agave spirit from India gain a foothold? Even if its terroir and geographic location is comparable to that of Mexico?

Still, the Indian population in the US (according to The Times of India) is the third largest from Asia, after those from China and the Philippines. They are mainly centered in the Boston to DC megalopolis and in Northern California. Further, I’ve been told that more than 60% of retailers in New Jersey are from the Indian sub-continent and in New York City, roughly 45%.

So the challenge is – will consumers from India or of Indian ancestry, have an interest in agave spirits from India? Will retailers?

Maybe the answer is that it’s not about national pride or appellation alone. Maybe it’s about a high quality product that uses these two elements to kick start a venture in the US.

To me it’s like brandy vs. cognac or champagne vs. prosecco – it’s not about nomenclature, it’s about quality.

What do you think?

The Agave India distillery

Altaneve Prosecco

October 22, 2014 No Comments

A distinctive product deals with marketing challenges

Sparkling Wine in the US has grown twice as fast as the overall wine category over the past five years. Within sparkling wine, the non-champagne segment accounts for over 90% of sales (See earlier post on Booze Business) with prosecco leading the charge.

In fact, in a recent article in Shanken News Daily:

“The Prosecco DOC Consortium recorded a 34% increase in exports to the U.S. market in the first half of 2014, with volume reaching 1.27 million cases.”

In effect, prosecco has challenged champagne for the top of the sparkling wine domain. In so doing, prosecco has changed the occasions for drinking sparkling wine. While champagne is for celebrations and special occasions, prosecco is for everyday and any time. Further, at $12 to $15 per bottle, prosecco has an advantage for everyday use.

But, just as there are $12 bottles of wine as wells as $20, $30 even $40 still wines, can an upmarket prosecco capture a significant share of that market?

Enter David Noto with Altaneve Prosecco

It’s quite an interesting story. David’s family has been making wine for 10 generations in Italy and he grew up with a passion for prosecco, particularly the high quality end. So he changed his career from engineering and finance technology and brought this product to market a few years ago.

According to David, “The US market is not deeply familiar with the broad range of prosecco, so we felt it was time to introduce the best.”

In addition, the brand has an interesting story to tell. Altaneve means high snow in Italian and is a reference to the snow capped peaks of the Dolomite Mountains that can be seen from the vineyards in Valdobbiadene where the prosecco is produced. The production facility is the second oldest in the town where the production of prosecco dates back to 200 BC.

In short, Altaneve has it all, provenance, terroir, heritage and high quality. Taste? I’m a huge prosecco fan and, while I’m far from a connoisseur, I think it’s the best tasting prosecco I’ve ever had. It’s versatile (any occasion with or without food), and unlike other

prosecco I’ve had, it’s consistent from bottle to bottle.

Altaneve sells for roughly $29.99 a bottle and therein is the problem.

The marketing challenge

I suppose it’s because the prosecco category in the US market is still in its infancy. Or, maybe the current image for the category is that it is generally low in price. As a result, David faces an uphill battle getting the message across that high end prosecco is worth the price. After all, all wine categories segment by price, why not this one?

I can understand the consumer reluctance to trade up. The category is still evolving and they came to it originally for an inexpensive alternative to champagne, so why pay for top shelf. That perception will change gradually over time but for producers like David Noto, accelerating a change in perception will take marketing muscle and lots of money. Altaneve is a startup brand.

The hesitation by the trade (especially bars and restaurants) is baffling to me. The mark up and profitability from Altaneve would make the brand more than worthwhile. Yet, the reluctance to change, to accept a segmentation of the prosecco category, not to mention lack of knowledge, all make it an uphill battle. To me, it defies logic.

I guess the bright side is twofold. First, slowly but surely, better retailers like Sherry Lehmann and important chains like Capital Grille are stocking Altaneve. Then there is David Noto himself. If you’re a follower of this blog, you know I often write about startups and the entrepreneurs behind them. Add David Noto to the list of passionate, smart and committed.

As to the Altaneve product itself, try it and let me know what you think. Unfortunately, it currently is only available in NY, NJ and CT, but also online. I’m betting you’re going to love it.

While you’re at it, check out what Wine Spectator had to say about Altaneve, as well as other info from their Facebook page.

Vodka’s Journey: The Bumpy Road Ahead

September 3, 2014 2 Comments

Is the largest spirit category in the US heading for tough times?

Despite the massive size of the vodka market at 70 million 9-liter cases, there are signs that the rate of growth will steadily decline in the years ahead. If nothing else, all products have life cycles (think bell-shaped curve) and tastes and preferences are subject to change over time. After all, what got vodka to its height in the first place were the changing preferences away from whiskies. Now, it’s Whiskey’s turn to move back into favor. But, that’s only part of the story.

Vodka History

Who invented vodka is the subject of some debate – the Russians, Swedes or Poles – it really doesn’t matter for this analysis, so let’s fast forward to the US and the post WWII period.

Prior to the 1960s, whiskies (imported or domestic) were dominant with a smattering of gin preferences. Many distillers at the time looked down their noses at vodka, partly because “odorless, colorless and tasteless” was not in the distiller’s blending art and, partly because it was seen as the alcohol preference of excessive drinkers. Maybe I’m wrong, but I think the Smirnoff (or was it Popov) ad slogan “leaves you breathless” was a signal to have a drink anytime/anyplace and no one will know.

By the 1970s preferences among drinkers began to change in favor of vodka thanks to: James Bond, changing tastes of women (preferring mixable, sweet drinks), drinkers who wanted the effect of alcohol without the “silent shudder” and the emergence of interesting and fun concoctions (cocktails, such as the Moscow Mule).

The 1980s and 1990s brought further accelerated growth with vodka cocktails (think Sex and The City) and the advent and growth of imported brands led by Absolut and it’s advertising. At the beginning of this period there were only a handful of imports, most notably Stoli, Finlandia and Absolut. But, a number of important factors changed the picture.

In the 1980s, based on Russian misadventures (Korean Airline, Olympic boycotts, etc), Absolut benefitted from the Stoli boycott and the door was open to other imports. In the mid 90s, brands like Ketel One and Grey Goose taught the consumer that super and ultra premium vodka brands were worth paying for. At the same time, flavored vodkas began to make their presence known and further changed the category.

The Flavor explosion

At first, the flavors had some meaning and a strategic role to play. Want to enhance the flavor of a drink, choose citrus vodka; make that Bloody Mary zing, choose spicy vodka; and so on. Gradually the ‘simplistic’ flavors gave way to the exotic – mango, strawberry, apple, peach, vanilla and so on.

By the 2000s, the flavors took hold and gradually moved from exotic to the ridiculous – marshmallow, whipped cream, sorbet, cake, candy, bacon, salmon and other flavors that, as the saying goes, I wouldn’t drink with your mouth.

While this senselessness was going on, another factor entered the market – the low priced imported segment. Brands like Svedka, Sobieski, Wodka and others basically said to the consumer, “Hey, you’ve been overpaying; here’s imported quality at a low price.”

The net result of the “tutti frutti” flavors and inexpensive brands has been to churn the market and create confusion. Both among the trade, stuck with dozens of fad flavors and brands, and consumers, who face a dizzying array of choices.

Where is it all heading?

The storm clouds on the horizon are coming from two main directions – craft products and whiskey and even a combination of the two.

Ironically, whiskey (particularly American) originally defeated by vodka, has come back and with a vengeance. From 2012 to 2013, the rate of whiskey’s growth was two and a half times faster than all vodka including flavored. Leading the whiskey charge were flavored whiskeys (the sweetness factor again); interest in unique cocktails (traditional and new) and mixologist skills; and the craft, small batch explosion.

Whiskies of all types have begun to capture the drinking imagination of consumers regardless of age or gender. They’re fun to talk about, to drink and to identify with – whether bourbon corn, rye, or malt – they represent serious products and an understanding that, unlike vodka, they require skill that is more than turning on a tap.

Enter the craft or small batch phenomenon. Not only is it fueling the whiskey growth, it’s also impacting the vodka category. Take a brand like Tito’s for example; it’s grown by over 40% compounded in the last five years, based largely on its “Hand Crafted” claim. Although, I wish someone could explain to me how you are hand crafted at nearly 1.5 million 9-liter cases.

Nevertheless, the craft concept, claim or whatever, is also becoming a factor in vodka with micro distilleries and the anti-filtration movement that’s just beginning. (By the way, the “unfiltered” vodka approach makes me chuckle… we’ve gone from filtered over charcoal, lava rocks, precious minerals and vestal virgins during a full moon to what, straight from the still?)

I think the Big Boys are starting to take notice of the vodka evolution. What choice do they have other than watch their sales go down and miss their bonuses. Take Absolut’s Elyx for example. It’s billed as “the single estate handcrafted vodka.” Other than marketing hype, I have no idea what they are trying to say about the brand. I think it has something to do with copper stills and an offbeat “global creative director.”

Also, Pernod Ricard’s Absolut is going into the micro distillery business and opening local distilleries around the world including Seattle, Detroit, London, Melbourne and others. It’s called Our/Vodka and supposedly the uniqueness of the concept will return the brand to its glory days. Good luck with that.

Finally, Bacardi’s Grey Goose is introducing Grey Goose VX, which “contains Cognac created from grapes from the Grande Champagne cru.” It’s currently only available at Travel Retail outlets, probably as a market test of the viability. According to The Spirits Business, “Bacardi has claimed Grey Goose VX (which stands for vodka exceptionelle) is a “significant step change for the vodka/white spirits category”.

So look for more churn in the vodka market in the years ahead. The growth will decelerate as the crazy flavors are put out to pasture (or wherever errant products go) and the competition from outside the category heats up.

The response from the vodka companies will be interesting to track. I can’t help but think of the expression, “Desperate times call for desperate measures.”