Category Overview  Since 2002, sales of high priced tequilas, "super-premium" tequila 100% blue agave, have increased 28%, with an average growth rate of 8.6% per year, as reported by the Distilled Spirits Council. The Tequila Regulatory Council, which tracks producers, reports there are now 1,166 tequila brands registered within the category. In 2008, the Council reported 901 registered brands, representing 30% growth in the past 3 years alone. The growth has encouraged spirits multinationals to invest in the category with Beam Global recently acquiring the Sauza brand and Brown-Forman snapping up Herradura. Thanks to a hyper competitive environment filled with upstarts, a highly fragmented marketplace and a history of little brand differentiation (thanks in part to America’s fascination with Margaritas), tequila marketers are accelerating their marketing spend in order to both differentiate their product from both other top shelf competitors and generic competitors at the low-end. Combine this with the appealing demographics sports provide and loosening alcohol marketing rules for many sports properties (NBA took on its first spirits sponsor – Bacardi – in 2010 and reversed its ban on liquor ads in 2009, NFL is exploring the spirits category at the team & league-level, NASCAR will allow spirits advertising & retail promotions for first time in 2012) and it’s easy to see why tequila marketers find sports an appealing venue to market their libations. While multi-national backed brands (i.e. Brown-Foreman’s el Jimador) are competing aggressively for league-level sponsorships, the fragmentation of the market among smaller players with tighter marketing budgets, has resulted in a bounce in competitive activity for more affordable team-level deals, primarily motivated by geographic expansion of Tequila brands into top 50 DMA’s. Spending Activity It would be difficult to account for spending at 1,166 tequila brands. The sponsorship activity displayed below is pulled from the SponsorPitch.com database and covers top category players within the U.S. For more information about deal terms and decision makers at each company, please consult the SponsorPitch Sponsor Index.

SPORTS  PROPERTIES  LOADING  UP  ON  TEQUILA  DEALS    

           

                                                                                                         

 Activations Pouring rights and consumer sampling are important activation components for many deals. Other traditional activation staples of the tequila category include logo rights for promotions, on-field signage, VIP hospitality, on-site presence, rights to develop co-branded merchandise and player appearances. As is the case with most spirits sponsorships, activation messaging reminds consumers to drink responsibly.

2011 Forecast Major markets will eventually become saturated with tequila team deals, but seeing as this is still a fairly nascent category, there is still plenty of room for geographic growth. Beyond team sports, look for tournament-based events, such as golf to loosen rules around spirits sponsorship, which will create an additional area of growth. As league executives become increasingly interested and open to spirits sponsorship, look for multi-nationals to

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likely lock in the tequila category, as part of broader deals that allow conglomerates to leverage rights fees across a selection of other distilled spirits categories including not only tequila, but also other spirits such as rum and vodka. Despite this trend at the league level, most teams will still be able to sell their own exclusive deals – and given that most of the smaller brands will not have the marketing budgets to afford league deals anyway – look for team deals to be where most of the category activity lies in 2011 and beyond.

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