Next Round: Inside the Tequila Boom With Rashidi Hodari of Beam Suntory

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On this episode of “Next Round,” host Adam Teeter chats with Rashidi Hodari, managing director of tequila at Beam Suntory. Hodari begins by giving a brief overview of the tequila products offered at Beam Suntory, including Hornitos, El Tesoro, Tres Generaciones, and Sauza. Hodari and Teeter then discuss tequila’s recent dominance of the beverage alcohol market and why Beam Suntory is dipping its toe into the hard seltzer category.

Further, Hodari details Hornitos’ “A Fair Shot” and “A Shot Worth Taking” campaigns aimed at supporting immigration and providing financial support to entrepreneurs, respectively. Finally, Teeter and Hodari discuss the rise of celebrity tequila and its influence on the industry at large.

Tune in and visit https://www.beamsuntory.com/en to learn more.

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Adam Teeter: From Brooklyn, N.Y., I’m Adam Teeter, and this is a “VinePair Podcast” conversation. Today, we are talking with Rashidi Hodari, the managing director of tequila at Beam Suntory. Rashidi, what’s going on, man? Thanks for joining me.

Rashidi Hodari: Thanks for having me. I couldn’t be more excited to be with you. I’m a big fan of VinePair and happy to be speaking with you. Tequila is as hot as it’s ever been.

A: Oh dude, totally.

R: Hard seltzers are as hot as they’ve ever been. Ready-to-drink cocktails as well. We’ve got all of our irons in the fires, trying to win big in all of those categories.

A: I can’t wait to talk to you, from a director’s perspective, about how you look at the market. These specific podcasts get listened to a lot by people in the industry, so insights from you are going to be awesome to unearth here. Before we jump into that, what does the role of managing director of tequila mean?

R: It’s everything from setting the long-term vision for what we’re going to do with our products in the category, how our brands are going to be developed, what we’re going to make, and how we’re going to win across the globe in tequila.

A: And what are your brands?

R: We have a wide range. I like to say it’s a democratized set of opportunities for tequila. Everything from the ultra-premium El Tesoro, super-premium Tres Generaciones. In the premium category, we have Hornitos, and we also have Sauza tequila.

A: OK, cool. Has Beam Suntory always been in the tequila game? How long has tequila been part of the portfolio?

R: Beam Suntory is a relatively young company. It’s been around five years.

A: Five years, right.

R: That happened when Suntory effectively acquired Beam, but it became a stand-up company. As part of that, Beam had always had Sauza. It had it for a significant number of years before that. If you know the history of tequila, Sauza is one of the founding families. We actually produce our tequila at the original site where the first tequilas were ever produced in Mexico, to this day. Our brands have been around and have been part of creating the tequila industry from the very beginning.

A: Interesting. Hornitos and El Tesoro, those all came after the acquisition?

R: No. If we go into the history of the brands, Hornitos was effectively launched as a brand that was premium tequila for the everyman. It was originally part of the Sauza family, but it was spun off as its own brand from Sauza. Then, Tres Generaciones is essentially a super-premium tequila that effectively takes tequila to places where it hadn’t gone at the time. Those are all part of one family, we call it our brand house. We’ve had that as part of our portfolio, and as the market has shifted and consumers have come to learn more about tequila, we’ve placed our bets on the premium part of our portfolio. El Tesoro is from a different family, the Camarena family. They have a long history of making very high-quality tequila as well. As we have developed and the category has grown, we’ve put more support and emphasis around making sure people understand all that tequila has to offer, so we’re trying to win across all of those different segments.

A: Interesting. El Tesoro always performs really well in our tastings. It’s a really good tequila. That’s also been inside the Beam Suntory family for at least a few years, right?

R: Yeah, I think it’s been close to 10 years. We’ve had a long-term relationship with them.

A: Cool. Obviously, you opened by saying that tequila is on fire. We obviously know that. All of our data through VinePair Insights has shown for the last few years that tequila is just trending up, up, up, up, up. The only thing it ever seems to lose to is bourbon. It’s good for you guys because that’s the other spirit you guys have. But I’m curious, what do you think is the reason for tequila’s dominant explosion in the last few years?

R: I think it’s been a slow burn, so to speak. It’s not a category that came out of nowhere; it’s been around. To a certain extent, it initially wasn’t something that people looked at with fondness. You have a fondness in terms of expectations of what the quality was. You effectively had Patrón set the table more than 15 years ago of tequila being more than just cheap alcohol. They set the table of a reappraisal. That reappraisal has happened year after year with new people coming into the category. The recognition is that the products are very, very good, and they meet a lot of different demands. If you look at how consumers consume the product in Mexico, it’s very telling to show that it is very much democratized. There is not an occasion, there’s not a time for alcohol consumption that doesn’t offer a way in for tequila. From high-end to everyday sessionability, tequila can find a way in. That versatility, I think, is what creates a lot of opportunities, especially in the United States, where there’s a lot of competition, there’s a lot of demand, but as that reappraisal happens people can find a tequila that meets their needs.

A: Do you think that there is an association with tequila among consumers as being a purer spirit or a better-for-you spirit than other alternatives?

R: I think that, along the path over the last few years, as health and wellness trends have increased and people get much more knowledgeable about what they’re putting in their bodies, tequila offers a very credible set of product attributes that lends itself with high credibility to that. But at the end of the day, it is alcohol. It’s the balance of what you want from a spirit, but also having the benefits that come from all the associations with agave. I think it gets the benefits of both of those. Then, people have to make a judgment call of what’s going to tip them over the edge in one direction or another.

A: Obviously, we’re moving beyond the decades ago the idea that it was a lime-salt-shot type of liquid and into a really fine, high-end sipping liquid. Everyone is super aware that the Margarita is the No. 1 cocktail in America, but what else are you seeing on your end? Dealing with consumers and positioning El Tesoro, Hornitos, etc., in terms of cocktails for tequila? Are there certain cocktails you’re seeing trending more than others? And if so, which ones are those? Again, besides the Margarita.

R: Yeah, I could probably get into the top cocktails. The first thing that comes to mind is the Paloma. However, I don’t want to overlook the Margarita and the Margarita’s versatility, flexibility, nuance, and ability to be made with a plata, reposado, or anejo. It is very different in which liqueur you add to it, whether it’s flavored or whether it’s something that’s very refined and high-quality. You’ve seen increases of Cognacs being added to Margaritas. There’s no limit to the fascination of having your custom and ideal Margarita. It’s part of the reason why we’re launching a new lineup of Margaritas with Hornitos. Additionally, you can talk about cocktails all you want, and even though we’ve moved away from salt, lime, and a shot, shots are still the No. 1 consumption of tequila. At the end of the day, it’s still a big part of the category’s DNA. People associate taking shots, having fun, and letting loose with it. I think in the past, it was a bit of an albatross that made people a little bit hesitant. I think it also in these times with the pandemic and with the pressures that are going on, people want that freedom, they want a release. That’s why we have our “A Shot Worth Taking” campaign. That’s why we have the Shot Fund to help inspire people to live their best lives, effectively. It’s also why we have a thing called a “A Fair Shot” of Hornitos, where we support folks taking the steps to become American citizens, because we know that living your best life and getting after it day-to-day is a meaningful thing that tequila has brought to the experience that people have when they go out to bars and restaurants, but it should be something that is available to everybody.

A: Ah, that makes a lot of sense. That is super cool. Has “A Fair Shot” campaign been always stuff that Hornitos has done and pushed forward?

R: We’ve been doing this for a few years, and I think it comes out of the idea when I gave a little bit of overview of the history of the brand and how it was set up to be effectively a premium tequila for the everyman. It was actually based on the idea that we make really good tequila. If everybody has not had it, we should find a way to get it for them. It’s one of the reasons why we were one of the first brands to export our tequila to the United States. It’s one of the reasons why we believe the power of the brand is unlocking people’s ability, their human potential, their ability to go for it, go for what’s next in life, to take a chance on things. We make sure that when we do programs, whether it’s “A Fair Shot” with supporting immigration or the “A Shot Worth Taking” where we’re supporting entrepreneurs, we’re being a catalyst for them making contributions to the world. I think that’s one of the things that is also interesting about tequila. There’s an energy there that people gravitate towards, and we want to make sure that we were contributing in a meaningful way to that experience and not just making it something that they regret in the morning.

A: That makes complete sense. Let’s talk a little about other innovations happening with tequila. Obviously, the other big trend besides tequila that’s been booming in the United States is hard seltzer. I’ve always been surprised that we haven’t seen more hard seltzers that are spirits-based. Obviously, there is High Noon, which is killing it, but there haven’t been a lot more yet, but that is changing. I think one of the most interesting aspects is combining a spirit that’s on fire, tequila, with the seltzer world. You guys have just released that with the Hornitos hard seltzer. Can you talk about how that decision came to be and what you were looking at in order to determine that you wanted to create a hard seltzer? Then, how does that fit into the brand family?

R: Yeah, I’d love to. It’s funny because as a bit of an aside, we’re on a podcast, but we’ve been living life in a virtual world for the last year. I can think back to some meetings that we had about a year ago, discussing what our brand’s aspirations were and what we needed to do. It really came down to trying to not just ride the wave of the success in the tequila category or seeing the wave that was also moving in hard seltzers, but then how do we need to act? How do we need to behave and what shots do we need to take as a company and as a brand to live our values in a way that helps us make our decisions and make choices about what we did? We said most spirit brands and most premium brands will shy away from going outside of their lane. They want to be really good at what they do. I think that’s totally respectable, but as a brand, Hornitos stands for taking shots. This is the one where people love tequila. People love seltzers. People love putting tequila in their seltzers. If you want to get after it and you want to enable and inspire people, take a shot on yourself. I think that ethos of taking a shot on ourselves and believing that we can stand next to the biggest players in hard seltzer — whether it’s spirit-based or not — with tequila and soda, tequila and seltzer, combined with that adjacent category, is a winning proposition. We just have to do it in the boldest and ambitious ways possible. That required getting buy-in from the organization and getting everybody lined up. Also, make sure that it is very clear that we’re not dipping our toe into this. If you look at the package, you see Hornitos is the biggest thing there because we want people to be proud. We want to be proud that this is a Hornitos seltzer. At the end of the day, we want to drive that passion in everything that we do. We want it to come across, and we want people to be proud to pick it up, to hold it, to drink it, and to pass it on to the next person.

A: When you were developing the culture, how much were you thinking about calorie count? How much were you thinking about calorie counts especially with respect to flavor? I know that’s something that I’ve talked to other people about as well who have developed seltzer brands. No one is really sure if seltzer exploded because of calories or because of flavor. You have seen new brands that are pushing more flavor, which often comes with higher calories, and they’re wondering if they’re going to be successful. What conversations did you have around that?

R: We said it’s got to taste good. It’s got to be awesome, and people have to want to talk about it. If you just go to the table stakes of what’s going on in the category, hitting a certain level of ABV, hitting a certain calorie count, and being quiet about your flavor, you’re going to get lost in the masses. We said, “What is the boldest way we can go out and make sure people love the way that it tastes?” Ultimately, we found that that difference was potentially 10 to 15 calories. We’re not expecting people to drink 15 of these, probably just a couple of them. That’s fine. We want people to be proud to drink these for that couple of cocktails we’re going to have in the evening. We thought about it, but we made deliberate choices about going with something that’s going to taste good.

A: I’m pretty sure I know the answer to this question, but I’m asking anyway. You have a bunch of brands that obviously want to be able to be sold everywhere, grocery, etc. So they took the brand name, but they went with a malt base. Was that ever a consideration for you? Are you guys OK that it might be a little bit harder for the consumer to get Hornitos as easily as maybe a White Claw or things like that?

R: I think it’s a consideration. I think it’s just being mindful in knowing the depth of your listener and serving the audience and the appreciation for the three-tier system. That is something that you can’t really operate in without fully appreciating the complexities of the three-tier system. We’re mindful that there is a ceiling on where we can get. Now, there’s an element of the price structure that also comes through, so I think we took that into account. But we also recognized that we want people to appreciate it, and I think it also gives us a little bit of license. As I said, we have a partnership with On the Rocks, a brand that we acquired last year where we have a Hornitos Margarita. We’re launching a Hornitos Margarita that is spirits-based. We want to basically make sure that when you have tequila and a desire for a premium tequila experience, you know that when you’re picking up something that has Hornitos on it, that’s a premium tequila experience.

A: There’s actually tequila in it, OK.

R: Yes. We want to make sure that was consistent, because our vision was bigger than just seltzers. When you want a premium tequila experience, you want to have a good time and enjoy yourself. We want to make sure that the brand connects to that, and that allows us to live the virtues of why the brand exists in the first place.

A: I have one more hot-button question for you. In the past six months to a year — though it’s been happening for much longer than this — there’s been a lot more attention paid to the amount of celebrity tequila that’s entering the category. While some people will say that’s because of George Clooney and his billion-dollar buyout, we actually published an article this month that also looks at that. Actually, that could have been well before that if you look at Sammy Hagar and Cabo Wabo with this idea of celebrities really supporting tequila. At the end of the day, there are definitely brands that think it’s good for the category and brands that are bad for the category or are muddying the category. There’s definitely a lot of backlash from trade. Do you guys have an opinion there? What do you think about this massive expansion of celebrity tequila?

R: I go back a little further. I think his name is John Paul Dejoria, who was the founder of Paul Mitchell who was integral in the development of Patrón and bringing super-premium tequila to West Coast culture, making it part of celebrity culture. There’s no way you can look down upon that spotlight that was created because people took something that people put their blood, sweat, and tears into and put a bigger spotlight on it. Now, I think I read a portion of the article, but there’s a lot of ways in which appropriation can happen and not appreciating what went into creating tequila as having a denomination of origin. On my side at least, I respect that people see the value in it. I think it actually pays back to our founders. Don Cenobio, Don Eladio, and Don Francisco were essentially the family — along with some others in the industry — that fought for the creation of the denomination of origin, the fact that only you can make 100 percent tequila in Mexico. If you go to the trade one step further, and you look at mezcal, there are critics of what they did. They weren’t perfect individuals by any stretch, but they effectively set up what we’re benefiting from today. We maybe haven’t done our job as the non-celebrity tequilas to actually tell the true story of how this industry got created and what work went into it. It’s why we spent a lot of time thinking about what it takes to get people actually down to Jalisco. To get them to Tequila, and to experience what it actually looks like to be there. We’re working on a partnership to develop a museum down there to tell the true history of what it went through, and it’s exciting to me. I welcome more people coming in, because I think we have a strong story to tell that is rooted deeply in what happened to create this phenomenon that we’re living in now. At the same time, I recognize that living in the past and only thinking about what things happened in the past is a fantasy world. I’m very happy to see people getting excited about tequila in whatever way that they want to. I’m just ecstatic to be in a place where I can contribute to such a phenomenal industry and work in a category that has so much going for it.

A: That makes sense to me. Rashidi, thank you so much for taking the time to chat with me today. It’s really cool to hear about your role at Beam Suntory, all the cool innovations you guys are doing around tequila, and to just talk about tequila more generally. Thanks so much.

R: I appreciate it. I can’t wait to get out there. Next time I’m around, I’ll look you up and we’ll find time to grab a couple of shots of tequila, maybe a Margarita.

A: Yeah man, that’ll be great.

Thanks so much for listening to the “VinePair Podcast.” If you love this show as much as we love making it, then please give us a rating or review on iTunes, Spotify, Stitcher, or wherever it is you get your podcasts. It really helps everyone else discover the show.

Now for the credits, VinePair is produced and recorded in New York City and in Seattle, Wash., by myself and Zach Geballe, who does all the editing and loves to get the credit. Also, I would love to give a special shout-out to my VinePair co-founder, Josh Malin, for helping make all this possible and also to Keith Beavers, VinePair’s tastings director who is additionally a producer on the show. I also want to, of course, thank every other member of the VinePair team who are instrumental in all of the ideas that go into making the show every week. Thanks so much for listening, and we’ll see you again.

Ed. note: This episode has been edited for length and clarity.

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