W20266

TEQUILA AMBHAR: DESIGNING A GROWTH STRATEGY FOR THE US

MARKET

Mary Conway Dato-on and Silvia Cacho-Elizondo wrote this case solely to provide material for class discussion. The authors do not
intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names
and other identifying information to protect confidentiality.

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In June of 2017, Jaime Celorio, chief executive officer (CEO) of Ambhar Global Spirits LLC (AGS), was
reviewing results for the company’s first two quarters. AGS’s new leadership had improved the company’s
performance, but there was still a lot to accomplish. AGS needed a strategic branding and marketing plan to spur
growth and to position the firm’s star brand, Ambhar, among the leading premium tequilas in the US market.

In July of 2013, Celorio and a group of investors purchased AGS; shortly thereafter, Celorio assumed the role
of CEO. His first task was to reposition the Ambhar tequila brand, which was suffering from image problems.
Given his lack of experience in the tequila market, he invited experienced industry consultant Oscar García
Orozco to collaborate. Over the next few years, a new strategy helped rejuvenate the company and its brands.
However, by the fourth year, it was clear that their efforts were falling short of sales objectives.

Celorio and Orozco needed to present a growth plan and strategy for the US market to the board of directors
by September of 2017, with the objective of increasing sales by 30 per cent over the previous year. Although
Celorio and Orozco had cultivated a very good working relationship, their opinions differed on the best
way to grow the Ambhar brand. The board had given them only two months to prepare and present their
plan for the US market in 2018 and beyond.

TEQUILA: A LEGENDARY MEXICAN DRINK

Tequila, like vodka, gin, whisky, brandy, and cognac, fell into the category of distilled alcoholic beverages.
Tequila as the fastest growing sub-category over the past decade was gaining on whisky, which was still
the most prominent beverage in this category.1 Traditionally, the tequila sector was dominated by large iconic
brands such as Jose Cuervo and Sauza, which set the standard for the market.

1
Kristina Monllos, “After the Surge in Premium Tequila, We're Now Entering a Golden Age for Incredible Mezcal,” Adweek,
May 9, 2016, accessed January 21, 2019, www.adweek.com/brand-marketing/after-surge-premium-tequila-were-now-
entering-golden-age-incredible-mezcal-171294/.

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The signing of the North American Free Trade Agreement in 1994 had bolstered the tequila industry in two
fundamental ways. It provided recognition for denominación de origen, or designation of origin, and it
introduced large-scale direct foreign investment into the tequila manufacturing process.2

Tequila Regulatory Council

In December of 1993, the Consejo Regulador del Tequila, or Tequila Regulatory Council, was created to
ensure quality control in the production and promotion of the culture and prestige of tequila as the national
drink of Mexico. The council had three main objectives: (1) assure compliance with official tequila norms
through verification; (2) guarantee genuineness of the product; and (3) safeguard the designation of origin
in Mexico and abroad.3 The last objective related most directly to marketing and promotional activities.

Designation of Origin

The designation of origin was specified to a geographical region in a given country. It served to designate
the quality of a product that originated from a region that had distinctive natural and cultural characteristics.
Beginning in 1974, Mexican tequila obtained its designation of origin. The protected growth zone
encompassed the entire state of Jalisco, 30 municipalities in Michoacán, 11 in Tamaulipas, eight in Nayarit,
and seven in Guanajuato. The designation of origin quickly became a competitive advantage for Mexico
by making that specific region the only place in the world that could produce authentic tequila.4

GLOBAL TEQUILA MARKET

The worldwide tequila market experienced strong growth between 2009 and 2013, with a compound annual
growth rate (CAGR) of 4.2 per cent. An all-time-high volume of 26.7 million cases of tequila were sold in
2013, with each case containing nine litres of tequila.5 According to an International Wine & Spirit report,
projected sales from 2014 to 2019 looked equally promising, with a forecasted CAGR of 2.68 per cent and
expected sales to reach 31.5 million cases6.

By 2017, Mexico was no longer the main sales market for tequila producers, with 70 per cent of all volume
destined for export. The United States had become the main destination for tequila, receiving around 81 per cent
of all exports.7 Selling tequila in international markets clearly provided new growth opportunities for producers.
The Mexican market had become significantly more competitive and complex, while the country’s excessively
high tax rates (e.g., 53 per cent IEPS and 16 per cent of IVA) cut deeply into tequila company profits.8

2
“International Protection of the Tequila Designation of Origin,” Consejo Regulador del Tequila, accessed April 9, 2020,
www.crt.org.mx/index.php/en/pages-2/proteccion-del-tequila-a-nivel-internacional.
3
“About Us,” Consejo Regulador del Tequila, accessed January 21, 2019, www.crt.org.mx/index.php/en/features-
2/fundamentos/crti.
4
“Designation of Origin,” Consejo Regulador del Tequila, accessed January 21, 2019, www.crt.org.mx/index.php/en/pages-
2/semblanza.
5
“Global Tequila Market Reaches Record High According to a New Market Research Report from The IWSR and Just-Drinks,”
PR Newswire, April 21, 2015, accessed January 16, 2016, www.prnewswire.com/news-releases/global-tequila-market-
reaches-record-high-according-to-a-new-market-research-report-from-the-iwsr-and-just-drinks-500753351.html.
6
Ibid.
7
Axel Sanchez, “7 de cada 10 litros se van para el extranjero,” El Financiero, March 3, 2017, accessed January 8, 2019,
www.elfinanciero.com.mx/empresas/de-cada-10-litros-de-tequila-se-van-para-el-extranjero.
8
Impuesto Especial de Productos y Servicios (IEPS) was a special tax on products and services; Impuesto al Valor Agregado
(IVA) was a value-added tax; see Mark Earley, “Permanent IVA and IEPS Obligations of IMMEX Certified Companies in
Mexico,” Tecma University, www.tecma.com/immex-certified-companies-in-mexico.

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Major Competitors in the Tequila Market

Although the tequila market encompassed a seemingly vast number of companies, with more than 1,000
brands recognized by the Tequila Regulatory Council, in 2016 three brands controlled most of the market.
Jose Cuervo was a family-owned brand distributed by the British multinational alcoholic beverages
company Diageo plc, Sauza Tequila was distributed by Beam Suntory Inc., and Patrón was distributed by
the popular rum distiller Bacardi Limited. Together, these three brands dominated the tequila market with
a 50.4 per cent global share (see Exhibit 1).9

In 2015, Diageo plc purchased the Don Julio brand of tequila. In June of 2017, it closed a US$1 billion10
deal for the purchase of Casamigos, a tequila brand previously owned by Hollywood actor George Clooney
and Rande Gerber, husband of actress Cindy Crawford.11 With the acquisition of these two brands, Diageo
plc sought to cement its leadership in the premium categories.

Parallel to the segment’s consolidation through corporate brand acquisitions, tequila consumers started
demanding exclusive, high quality products, spawning the release of new premium types of tequila such as
tequilas cristalinos, which included the brands Don Julio 70, Maestro Tequilero, 1800, and Herradura.12
These subcategories, aimed at more discerning tequila drinkers, offered luxury and quality, and helped
position tequila as a higher-value, aspirational hedonic product.

US Tequila Market

From 2003 to 2017, tequila sales in the United States grew by 184 per cent in revenue across all tequila
market segments (see Exhibit 2). One reason for this was the wide selection available, which suited every
budget and all occasions. The proliferation of high-end premium brands, which grew by 368 per cent, and
super premium brands, which grew by 730 per cent during the same period, as well as the continued
presence of lower cost brands provided many different customer segments with access to tequila and made
sales of tequila comparable to other spirits in the overall adult beverages market (see Exhibit 3).

The American tequila market was comprised mainly of giant importers such as Pernod Ricard, Bacardi
Limited, and Diageo plc13. Celorio noted that various mid-size and local importers and distributors also
provided lesser-known brands to consumers. In the wine and liquor segment, 10 wholesalers controlled 70
per cent of all commercialized volume. According to AGS’s research, in some markets, as few as two
wholesalers maintained between 4,000 and 7,000 individual items, or stock-keeping units.

Celorio felt that the power of well-positioned brands limited market entry by new brands into distribution
channels. Most bar and restaurant chains preferred to carry major brands, which they could not do without
the help of distributors. However, most distributors of lesser-known brands (such as Southern Glazer’s
Wine & Spirits of America in Texas and the central west United States), Celorio explained, were generally
unconcerned with developing new brands and simply filled orders. Eventually, small to mid-size
distributors were forced to merge to create a larger scale and more robust competition.

9
Sanchez, op. cit.
10
All dollar amounts in US$ unless otherwise specified.
11
Clay Risen, “Sipping Pretty: Tequila’s Global Ambitions,” Fortune, May 21, 2015, accessed January 16, 2016,
https://fortune.com/longform/tequilas-global-ambitions.
12
Sheila Sánchez Fermín, “Los mexicanos consumen más tequila premium,” Expansión-CNN, March 8, 2015, accessed
September 20, 2019, www.expansion.mx/empresas/2017/03/07/los-mexicanos-consumen-mas-tequila-premium.
13
Clay Risen, op. cit.

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Based on his experience, Celorio estimated that large US distributors could request a 20–30 per cent margin
from brands that had less than 10 years of experience in the market. For brands with greater recognition
and more time in the market, distributor margins were typically lower (approximately 5–6 per cent) because
volumes for such brands were significantly higher. The more a brand increased the quantity of cases sold,
the lower the margin.

TEQUILA AMBHAR

Celorio: The Tequila Expert Meets the Serial Entrepreneur

Celorio was a successful Mexican businessman with years of experience in the financial sector, culminating
in the position of chief financial officer at the investment bank arm of Merrill Lynch, Pierce, Fenner & Smith
in 2002. In 2009, he decided to start a consulting firm under the name Dynamic Business Opportunities. In
2013, Celorio and a group of investors purchased AGS, and Celorio assumed the position of CEO.

Orozco: Consultant and Lover of Tequila

In 2014, Celorio became aware of Orozco’s reputation and broad experience in the Mexican tequila industry
and contacted him to help grow the Ambhar brand. After Celorio became CEO of AGS, Orozco joined his
team. Orozco owned a tequila boutique located in the Expo Guadalajara called Tequilas Pasión de Mis
Amores that marketed more than 90 tequila brands. He also consulted with numerous companies to create
new tequila brands or reposition existing ones. He held various certifications from Mexican and
international institutions, including Master Tequilier from the Mexican Academy of Tequila and Catador
de Tequila from the Tequila Route and National Tequila Industry Council. Orozco also routinely promoted
cultural events and tequila expositions. Since 2010, he served as the general director of the Expo Tequila
Tlaquepaque, which Orozco described as one of the largest and thought to be among the most important
industry-focused events in Mexico.

Brand Origins and Evolution

In 2009, the Ambhar brand launched on the Las Vegas Strip,14 using a large-scale public relations campaign.
In 2010, Ambhar became a key part of the Tropicana Hotel redesign with the opening of the Ambhar
Lounge. According to Celorio, poor brand management by Santo Spirits, who owned the Ambhar brand at
the time, had led to major debt problems and forced the company to seek external financing. In the same
year, the brand suffered from an image crisis as a result of harsh criticisms lodged by tequila bloggers
against the firm’s advertising.

In 2013, with the desire to purchase an existing tequila brand, Celorio and a group of investors contacted
Santo Spirits to formalize the purchase of two brands: Ambhar and Cuatro Amores.15 After purchasing the
brands, the new owners incorporated them into the firm Ambhar Global Spirits LLC.

14
The Las Vegas Strip, also known simply as “The Strip,” is a six-kilometre section of Las Vegas Boulevard South in Las
Vegas, Nevada.
15
Cuatro Amores was a tequila brand that emphasized volume over quality and was promoted for use in margaritas.

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The Rebranding Strategy

Celorio’s priority was to re-establish the Ambhar brand’s image and reputation. Early market studies found
that Ambhar consumers in Las Vegas came principally from California and Texas, which led Celorio to
focus distribution efforts in those two states.

As a new member of Celorio’s team, Orozco tackled brand design, focusing on penetration and positioning
strategies for the US market. Celorio also wanted Orozco to lower production costs and product inputs,
which at that time were all imported from other countries. Orozco began by analyzing product ingredients
and image, which lead to the identification of two main objectives: improving product quality and making
Ambhar an entirely Mexican product.

Before Orozco’s arrival, bottles, labels, and other product inputs were purchased from the United States,
Canada, India, and China, leading to large inventories and elevated costs. To achieve the objective of
becoming an entirely Mexican product, Orozco reassigned all product inputs to national suppliers. This
local supply strategy lowered costs by 40 per cent while also reducing production times.

Ambhar was repositioned as a sophisticated product. Within months, the brand was a competitive high-end
premium tequila brand. Celorio was aware of the importance of the Mexican market, which was second in the
world in terms of consumption. However, based on the volume and value of tequila exports in conjunction
with the desire to position Ambhar as a sophisticated product, it was essential to begin focusing on markets
with greater purchasing power. Consequently, Ambhar distribution in Mexico was delayed until 2014.

Celorio explained that “in part because of novelty but mainly because of positioning Ambhar as a 100 per
cent Mexican product, sales increased and everyone took more pride in the brand.” For example,
simultaneous to brand repositioning was the development of new company values including quality,
tradition, and the conservation of natural resources through efficient action. Celorio noted that the “new
organizational culture included a fierce commitment to following the highest standards of quality to create
an artisanal and environmentally responsible tequila.”

Celorio and Orozco sought synergies to capitalize on the brand’s presence in both the United States and
Mexico. They concentrated efforts on sales at beach resorts on the Riviera Maya, and premium hotels in
Cancún, Tulum, and Playa del Carmen, where many Americans and wealthy Mexicans vacationed. In 2017,
Ambhar became available in Mexican duty-free stores, which offered a promising growth opportunity,
although contracts with US duty-free outlets were still pending (see Exhibit 4).

Coinciding with these developments, the product was given an updated bottle shape, an accompanying
brand story, and the new slogan, “The same old friend, but with a new character.”

AMBHAR’S MARKETING STRATEGY

Target

Ambhar’s main target market was a sophisticated consumer with a taste for the highest-quality liquors.
According to Celorio, the brand’s target consumer was a successful youthful, adventure-seeking male who
enjoyed international travel. The marketing department created a portfolio of a man they saw as a friendly,
social guru, with a classic style and a love for Mexican culture.

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Positioning

Three main pillars supported the brand’s differentiation strategy: high quality product, distinct bottle design,
and communication through large events. Because Ambhar was positioned as a high-end, premium,
handcrafted tequila with an exquisite taste, these three pillars were supported by its artisanal focus.

Branding and Packaging

The brand design featured an elegant horseshoe as a symbol of good luck. The brand logo, the dragonfly,
was a central image in the product’s packaging. It represented happiness, life, luck, and tradition in Mexican
culture. Dragonflies were also the traditional guardians of blue agave fields in Tequila, Jalisco.

The bottle was made of virgin glass and moulded into the shape of a canteen, reminiscent of the Old West.
According to Celorio, the brand’s bottle design received a graphic design award in 2012. After being filled
by hand, each bottle was adorned with a leather band bearing the Ambhar dragonfly.

Product Strategy

The distilling process relied on the traditional methods defined by producers of high-end premium tequila,
which guaranteed a smoothly-flavoured and textured product. Orozco’s expertise in tequila was critical to
achieving improvements in quality. In the final step of the artisanal distilling process, each unit was bottled
and numbered by hand. The processes and aging periods differentiated the various types of tequila.
Ambhar’s range of products consisted of three main varieties: plata, reposado, and añejo. All three varieties
were produced at a small distillery in Jalisco.

Tequila Plata was made from the purest form of blue agave. Ambhar Plata was mellowed in stainless steel
vats for up to two months to create a pure, transparent liquor with smooth scents of lime and pineapple.
Tequila Reposado was aged in oak whisky barrels for 364 days, just long enough to impart the signature
pale golden hue and balanced flavour of fresh vanilla and salted caramel notes.

Finally, Tequila Añejo was aged for more than two years in the finest white oak whisky barrels, which resulted
in pungent aromas of clove and cinnamon, a dark amber colour, and an incomparable smoky flavour. Añejo
was aged longer than required by industry norms, making this tequila the jewel in the Ambhar crown.

Pricing Strategy

Given that Ambhar competed in the high-end premium market segment, it was priced above $35 per bottle at
a competitive premium pricing level. The pricing strategy was deemed appropriate and consistent with the
up-market image of the brand’s original recipe, artisanal production, and premium packaging design. Across
the board, Ambhar’s prices were approximately 15 per cent lower than the equivalent brand produced by
Tequila Patrón, the first super premium tequila and one of the world’s best-selling spirits in the US market.16

16
Joseph V. Micallef, “Patron Tequila: In Command of its Destiny,” Forbes, May 16, 2019,
www.forbes.com/sites/joemicallef/2019/05/16/patron-tequila-in-command-of-its-destiny/#1935e1394f30.

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Distribution Strategy

Ambhar distributed its product mainly through two channels: on-premises and off-premises. The on-
premises channel was expected to generate 70 per cent of US sales, while the off-premises channel was
responsible for 29 per cent of sales. The remaining one per cent was designated to the online sales channel.
As Celorio noted, “developing an authentic, high-end premium brand requires greater positioning in the on-
premises channel, though this requires more time and greater investment.”

On-Premises Channel

The on-premises strategy encouraged consumption of Ambhar in high-end bars and restaurants, which
provided greater brand control and higher margins while helping to create a brand experience. This channel
was structured around a higher level of interaction with the consumer. According to Celorio, “bartenders in
the US are more socio-economically affluent than bartenders in other parts of the world, and consumers
valued their recommendations on premium products.” This perception led Ambhar to invest heavily in
training these influencers.

The main point of sale in Ambhar’s on-premises channel was The Walt Disney Company (Disney).
According to company records, sales through Disney represented 20 per cent of total sales for Tequila
Ambhar, and 90 per cent of sales of the tequila Cuatro Amores (which was 51 per cent agave). The
agreement with Disney provided high volume sales but relatively low margins while imposing demanding
logistics and quality control requirements. The advantage of partnering with Disney was brand prestige
along with the opportunity to showcase the brand to consumers from all over the world. Ambhar was sold
in the Epcot Mexican Pavilion at Walt Disney World Resort near Orlando, Florida. It was also sold in the
main restaurants and bars at Disney amusement parks and hotels.

In 2013, Ambhar also began a sales relationship with the Dallas Cowboys, a professional American football
team. This partnership provided the brand with access to the 52 bars in the team’s stadium, and it made
Ambhar the number one brand consumed at recreational events in Texas. Orozco worried that the brand’s
presence at the Dallas Cowboys football stadium would generate confusion in terms of the brand’s
consumer target. The average football stadium attendee and Dallas Cowboy fan was not an exact match to
Ambhar´s sophisticated brand image. However, fans who normally watched games from the stadium’s
luxury suites, commonly known as skyboxes, did represent the brand’s target customer profile.

Off-Premises Channel

The off-premises channel was developed as a result of clients getting to know the product through on-
premises sales. The strategy was to gain greater coverage in markets in the United States, Mexico, and
eventually other countries. With respect to the various regions of the United States, according to Celorio,
“In some markets we have the largest and most corporate distributors, in others some smaller ones that
focus on creating brands, and we then transition to a larger distributor with greater sales coverage in their
brand portfolios.” For the most part, Ambhar was sold through large corporate distributors. In other regions,
the brand worked with smaller distributors that were focused on building brands.

In the United States, Ambhar’s retail and wholesale partners varied by state. Ambhar was generally sold in
large, high-end liquor store chains such as Total Wine & More, Spec’s, Sigel’s, and Costco Wholesale
Corporation (Costco). Spec’s and Sigel’s were local distributors in the Dallas, Texas area, whereas Total
Wine & More and Costco were national distributors. Costco sold spirits at 266 locations across 31 states
but carried Ambhar mainly in its Texas locations, and in limited quantities.

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Communication Strategy

Brand messaging was specific to the US market and the Mexican market, but in both places, the messaging
used a combination of traditional and digital media. Orozco’s previous experience had shown that investing
in both types of advertising was effective. Digital media was becoming increasingly important to reach
consumers, accounting for approximately 70 per cent of total brand messaging; however, the company
dedicated approximately 50 per cent of its margins to marketing campaigns that used both traditional and
digital platforms. According to Orozco, in new markets, the cost for advertising was estimated at
approximately $200 for every case sold, whereas the cost in established markets was much lower at
approximately $75 per case.

Traditional Media

Early Ambhar advertisements appeared on billboards, delivery vehicles, magazines, and other print media.
Ambhar advertising could also be seen in the stadium where the Dallas Cowboys played. It appeared on the
3,000 television screens in the stadium and inside its 52 bars during each game of the season; there were also
advertisements during some out-of-season events. Printed ads were also placed in the Dallas Cowboys game day
magazine and in the menus of various establishments around the stadium. Ambhar advertising also targeted local
consumers by using postal codes of stadium attendees and wholesalers working with the Dallas Cowboys team.

Digital Media

In 2014, Ambhar launched a social media campaign on Twitter, Facebook, and Instagram to reach regional
consumers and increase brand recognition. In 2015 and 2016, Celorio decided to scale down investment in
digital media, opting for a more thorough assessment of target markets to develop a more robust digital
advertising strategy.

In early 2017, Ambhar hired a Miami advertising agency to develop a new digital strategy based on the idea of
creating something disruptive, including contracting with an Ambhar brand ambassador. The agency launched
a national campaign to unify the brand message under the slogan, “Magical Moment: Impress Me with a
Drink.”17 Videos and online promotions were created to go viral, and references were made to the Ambhar
Tequila Academy that were intended to influence bartenders to promote and incorporate Ambhar into cocktails.18

EVALUATING GROWTH ALTERNATIVES IN THE US MARKET

Hundreds of brands die trying to break into the US market,

usually two or three years after launching and after spending a lot—a lot—of money.

Oscar García Orozco

17
“Ambhar Tequila Magical Moment: Impress Me with a Drink,” YouTube video, 1;10, posted by “Ambhar Tequila,” June 26,
2017, accessed January 19, 2020. https://youtu.be/8FO1wquZPcM; “Ambhar Tequila Magical Moment 2” YouTube video,
1;09, posted by “Ambhar Tequila,” June 26, 2017, accessed January 19, 2020, https://youtu.be/N6H4KuDuT5A.
18
“AMBHAR Tequila: Academy,” YouTube video, 3:05, posted by "Ambhar Tequila," June 3, 2014, accessed January 7, 2020,
https://youtu.be/o1Tci4W9Zk8.

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Celorio identified two main avenues to achieve the company’s desired sales growth: increasing strategic
distribution alliances by focusing on distribution partners, and improving brand identity by focusing on the
brand story and positioning.

Orozco believed that Ambhar already had a strong brand identity, so he favoured developing strategic
alliances to strengthen the distribution network. He suggested that more attention be paid to implementing
a push strategy in priority sales channels. The company’s relationships with the Dallas Cowboys and Disney
amusement parks represented a large percentage of the brand’s sales. Therefore, Orozco wondered, “Why
not replicate this strategy with other important brand partners?” He felt that positioning Ambhar in new
geographical areas of the US market through strategic distribution alliances with other recognized brands
would require comparatively little effort, time, and resources. According to AGS’s research, the main
markets for tequila in the United States were California, Texas, Florida, and New York. Ambhar could
position itself in these markets to accelerate growth.

Celorio, on the other hand, favoured a branding strategy that made the brand’s genetics appear more
Mexican and more authentic. This implied investing in a pull strategy so that final consumers would ask
for the product in both on-premises and off-premises channels. With this strategy, Celorio asserted that the
brand should develop a solid storyline to anchor communication strategies and enable the attraction and
retention of clients. Celorio saw brand recognition as a vital factor in gaining a leadership position in the
US market, but he also respected Orozco’s experience in the industry, which had given him a “sixth sense”
for identifying market opportunities. As Celorio explained, “What’s the use of having the product available
in lots of points of sale if the client doesn’t know about it and didn’t ask for it? Advertising campaigns are
typically expensive but are indispensable in the process of building a strong brand.”

THE DILEMMA: BUILD THE BRAND OR DEVELOP DISTRIBUTION ALLIANCES?

Celorio and Orozco were both aware of the company’s limited resources, so they needed a cost-effective
implementation of a strong growth strategy. The goal was to increase sales by 30 per cent over the previous year.
However, according to Orozco’s calculations, growth projections were closer to 15 per cent (see Exhibit 5).

If the strategy’s focus was brand building, new initiatives would be needed, including educating influencers
such as bartenders and chefs, increasing the YouTube video campaign, and expanding the Ambhar Tequila
Academy. As Celorio noted, “Other tequila brands implemented such a grassroots marketing strategy with
great success.” Other ideas included an aggressive campaign in both traditional and digital media as well
as a potential celebrity brand ambassador.

Celorio thought back to a memorable article he had read for his Master’s in Business Administration (MBA)
marketing class titled “Building Strong Brands in a Modern Marketing Communications Environment.”19
He decided to reread the article to see if the author’s advice was relevant to Ambhar’s current dilemma.

Orozco’s plan to negotiate new strategic alliances to boost other distribution channels also made sense. The
brand could not grow without strong distribution channels. Celorio had great expectations for Ambhar. He
believed that success in the US market would lead to conquest in Europe and eventually in China.

Only two short months remained to develop and present a strategic growth plan to the board of directors.
As CEO, Celorio had to analyze the risks and opportunities inherent in each option and determine, given
the current situation, whether to pursue a brand development or distribution strategy.

19
Kevin Lane Keller, “Building Strong Brands in a Modern Marketing Communications Environment,” Journal of Marketing
Communications 15, no. 2–3 (July 2009): 139–155.

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EXHIBIT 1: TOP 12 BRANDS OF TEQUILA, 2014–2016 (IN THOUSANDS OF NINE-LITRE CASES)

Increase from 2015 to

Brand 2014 2015 2016
2016
Jose Cuervo 3,082 3,360 3,515 4.6%
Patrón 2,150 2,186 2,475 13.2%
Sauza 2,089 2,095 2,247 7.3%
1800 1,085 1,075 1,090 1.4%
Familia Camarena 635 758 785 3.6%
Juarez 684 688 695 1.0%
Montezuma Tequila 585 610 630 3.3%
el Jimador 379 441 516 17.0%
Don Julio 260 300 357 19.0%
Margaritaville 285 298 305 2.3%
House of Cazadores 260 290 299 3.1%
Zarco 230 235 236 0.4%
Milagro 164 187 218 16.6%
Total Leading Brands 11,888 12,523 13,368 (Average Increase) 7.2%
Total Tequila 14,325 14,950 15,977 6.9%

Source: Jack Robertiell, “What’s Next for Tequila in 2018,” Beverage Dynamics, March 20, 2018, accessed January 7, 2020,
www.beveragedynamics.com/2018/03/20/tequila-trends-2018-retail.

EXHIBIT 2: US TEQUILA REVENUES BY MARKET SEGMENT, 2003–2017 (IN US$ MILLION)

Gross Revenues Including Federal Excise Tax

High-End Super
Year Value Premium Grand Total
Premium Premium
2003 $143 $606 $73 $140 $962
2004 $145 $674 $110 $139 $1,068
2005 $147 $691 $128 $223 $1,189
2006 $149 $713 $142 $400 $1,404
2007 $157 $754 $160 $479 $1,550
2008 $167 $751 $146 $533 $1,597
2009 $201 $760 $144 $540 $1,645
2010 $204 $760 $167 $580 $1,711
2011 $217 $749 $193 $641 $1,800
2012 $221 $749 $205 $707 $1,882
2013 $221 $818 $213 $779 $2,031
2014 $225 $806 $220 $860 $2,111
2015 $231 $853 $258 $968 $2,310
2016 $241 $909 $297 $1,038 $2,485
2017 $260 $968 $340 $1,163 $2,731
2003–2017 Growth 81.2% 59.7% 368.2% 730.0% 183.8%

Source: “¡Tequila Olé!” Distilled Spirits Council of the United States, accessed February 28, 2020, www.distilledspirits.org/wp-
content/uploads/2020/02/Tequila-2019.pdf.

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EXHIBIT 3: TEQUILA SALES COMPARED TO OTHER SPIRITS, 2004–2014 (IN US$ BILLION)

$5.8
VODKA

$2.7
BOURBON

$2.5
CORDIALS

$2.4
RUM

$2.1
TEQUILA

$2.0
SCOTCH

$0.9
GIN

Source: Adapted from Clay Risen, “Sipping Pretty: Tequila’s Global Ambition,” Fortune, May 21, 2015, accessed September
22, 2019, www.fortune.com/longform/tequilas-global-ambitions.

EXHIBIT 4: TIMELINE OF MARKET OPENINGS FOR TEQUILA AMBHAR

Year Location
2009 Launch on the Las Vegas Strip (Las Vegas, Nevada)
2011 Opening of corporate offices (Austin, Texas)
2013 Dallas Cowboys stadium (Arlington, Texas)
2014 Mexico and Florida
2015 Oklahoma and Mississippi
2016 California
2017 Duty-Free Mexico (New York, New Jersey, Louisiana, Arkansas, and Georgia)

Source: Company Information.

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EXHIBIT 5: TEQUILA AMBHAR HISTORICAL SALES

Number of Cases Sold, 2013-2018

20,000
20,000
17,400
14,300
15,000
11,200
10,000

5,000 4,100
1,600
-
2013 2014 2015 2016 2017 2018 e

Annual Growth—Cases Sold

2014 2015 2016 2017 2018 (estimated)

156% 173% 28% 22% 15%

Source: Company information.

This document is authorized for use only in Jesús Antonio Aristizabal Castaño's Fundamentos de mercadeo / 2024-1a at Universidad EAFIT from Apr 2024 to Oct 2024.