Heineken in a PR spat over its Desperados brand
The silly season must be upon us or why would the Mexican Tequila Regulatory Council (CRT) threaten to sue Heineken over its Desperados lager now? The tequila flavoured Desperados beer has been around for 20 years, having been developed by the Heineken-owned Fischer brewery in France in the 1990s.
Obviously, the CRT is picking a fight over the meaning of “tequila flavoured”. As they see it, Heineken is using the protected name of the spirit on a product that contains none. The CRT argues, either Heineken takes the word tequila off its Desperados branding or puts some tequila into the bottles. If Heineken refuses, the CRT feel they will have no choice but to fight this in court. Incidentally, the CRT is not demanding any financial compensation from Heineken, media say.
The Desperados issue must have galled the CRT for some time but it was the high cost of international legal action that has previously held it back.
Desperados is sold in 85 countries – though it was discontinued in the US in 2015. Heineken says it is thriving, especially in Spain, Germany, France and Poland. The brand enjoyed a 17 percent rise in both the value and volume of sales in 2016 compared with 2015, reaching 349 million litres, worth USD 1.2 billion, according to the IWSR, the London-based industry group.
Heineken does not disclose what proportion of the product is flavouring, how much tequila ends up in a bottle of Desperados, or its recipe for the tequila flavouring. In its defence, Heineken told media that there is tequila in the flavouring used, which is sourced from Mexico – from one of the members of the CRT.
There are two recent business transactions underlining the value of tequila that the CRT is looking to defend.
In June 2017, the US actor George Clooney sold the Casamigos tequila label, which he co-owned with two friends, to drinks company Diageo in a deal worth up to USD one billion.
Diageo did not disclose revenue or profit figures, but Morgan Stanley estimates that the deal's enterprise value was about 20 times annual turnover (!), which would make it much pricier than other spirits deals.
Mr Clooney, Cindy Crawford’s husband Rande Gerber and real estate developer Michael Meldman launched the brand in 2013 as a passion project. In 2016, the company sold 120,000 cases of the super-premium tequila. In the US, a 750 ml bottle retails for USD 45 to USD 55.
In February this year, José Cuervo, the world’s biggest tequila producer, raised more than USD 900 million in an IPO, which valued the company at over USD six billion.
Global consumption of tequila increased six percent year on year in 2016, according to market research company Euromonitor. In the US, the largest market for tequila, growth was higher at slightly over eight percent.
