In a speakeasy south of Houston Street in NYC—one of those places that require a secret password to get behind the unmarked doors—there is a bar stocked with esoteric whiskies and Tito’s Handmade Vodka.
Not the likeliest choice the bar-goer might expect, but Tito’s has grown from a hometown vodka distilled in Austin, Texas to a vodka that is now being poured in trendy watering holes sipped on by the “groovy and cool folks,” says Pete Angus, SVP of sales for Tito’s. Angus joined Fifth Generation Inc., the Austin, Texas-based company that produces Tito’s about six years ago and strategically helped grow the brand across the United States. Now sold in all 50 states, Canada and the U.S. Virgin Islands, Tito’s is making its way through key markets and targeting mainstream consumers.
“Our vision had always been to get the brand to sell north of Houston Street,” says Angus. In other words, getting the brand into the hands of mainstream consumers. And as of last month, Tito’s secured its first account in Midtown Manhattan.
Tito’s is a prime example of a brand that has grown via word of mouth—influencers sharing the story about this American, craft vodka brand made by Bert Butler “Tito” Beveridge II, founder and master distiller. With a vision and a can-do attitude, Beveridge, a geologist and geophysicist, is a self-taught distiller who simply made vodka he liked to drink. After about 16 years on the shelf, Tito’s is now in the midst of a craft distilling movement and becoming an overnight success story selling tens of thousands a cases a month making it Beverage World’s inaugural Distiller of the Year.
“Tito’s is a great example of a success story for craft vodka,” says Euromonitor International’s U.S. Departmental Analyst, Claire Moulin. “The brand has been present for a while, but its sales only recently took off and in 2012 reached over 1 percent in share of total vodka sales with growth 50 percent and above for the past two years.”
Working with a very small budget, the company uses grass roots marketing, sampling—Beveridge is a big believer in sampling—and the help of its loyal fans to keep the momentum going. Nicole Portwood, brand manager for the company, says that one of the biggest challenges she faces is brand awareness.
“Our awareness numbers are still very low nationwide and that’s a good thing as far as I’m concerned because we are growing at such a tremendous rate on such a relatively small base I see nothing but opportunity in the white space above where our awareness is right now,” she says.
The company has doubled its participation in music festivals for this coming year and is also looking to make investment in the digital video space to help share the brand’s story. The company also focuses on giving back to the communities it is sold in.
For example at the South by Southwest Conferences & Festivals held in March, the company wrapped a vintage trolley that used to be part of the bus transportation system at the University of Texas with Tito’s branding and offered free shuttle service to attendees around downtown Austin. Serving drinks, donations were collected for the Health Alliance for Austin Musicians.
In New York and New Jersey the company is donating $1 for every bottle of Tito’s sold to benefit the communities hardest hit by Hurricane Sandy.
Competing for shelf space in the vodka category isn’t an easy feat. According to Euromonitor International, vodka represented more than 35 percent of total spirits sales in the U.S. in 2012 and only three brands—Smirnoff, Absolut and Svedka—hold more than a 5 percent share.
“The good news for new players is that it is very fast moving and consumers are always willing to try new brands,” says Moulin. “U.S. consumers are becoming more adventurous in terms of new flavors and are willing to try out new brands if the brand can show some differentiation, an added-value.” That added value can be packaging, taste, price point, quality, or a good story—craft vodka with an authentic cachet.
“When you think craft, you think of beer, now cider, and traditional domestic spirits like bourbon, but there is also strong potential for craft distilling in the vodka category,” Moulin says.
Met with opposition from retailers time and time again, Angus relays that Tito’s beat out the competition on taste with an authentic story to back it up—not fancy packaging, not premium positioning. The vodka is distilled in a pot still, more analogous to how you’d cook a cognac or a single malt scotch. Beveridge describes Tito’s as a filet mignon at a pot roast price. He started making the vodka for his friends, so keeping it affordable was important. Tito’s retails for about $17.99-$19.99 for 750 ml and $27.99-$34.99 for a half gallon.
To back its story, Tito’s has received some critical acclaim: unanimous winner double gold at the SF World Spirit Championship, named a Fast Track Growth Brand by Adams Media Group every year consecutively since 2006, earning a 95 rating in Wine Enthusiast Magazine (beating out Ketel One, Grey Goose and Belvedere), and in 2010 receiving the Chairman’s Trophy for world’s best Vodka Tonic in the Ultimate Cocktail Challenge.
“As we say, the juice is in the bottle,” Angus says. “And what I’ve learned over the 34 years I’ve been in the business is the consumer wants more than just a good quality tasting product, they want to make that emotional connection to the brand and when they hear Tito’s story by word of mouth or through the activity we do, they make that personal connection with the individual too.”
BEVERAGE WORLD: When you first decided that you were going to make vodka, what were your expectations?
TITO BEVERIDGE: I was hoping to do 60 cases a month and I didn’t really know what I was doing, but I thought that would make me about $1,200 a month and I figured that was enough to live on. I didn’t have huge expectations, but it ended up that the liquor business was a lot more complicated than I thought that it was.
BW: So how did you learn the ropes?
BEVERIDGE: I’m kind of a self-taught distiller. When I started it was before the internet. I went to the library, but there wasn’t anything in the library. It was almost as if there had been a book burning during Prohibition or something. All I really knew were boiling temperatures and I knew how to make beer and I’d also made wine. I had that part of it down, but I had never built a still before. So I just started off from scratch. I built a little 16-gallon still and added on a little propane rig and then built a condenser and a boiler and later on I built filters. I just kept modifying my stills and trying different mashes to see what I liked. Since I knew I didn’t know anything, I just went ahead and tried anything I could think of to see what I could do.
BW: So, just to be clear, you built your own still from scratch?
BEVERIDGE: Yeah, we still build our own stills.
BW: Any thoughts on investing in a manufactured one?
BEVERIDGE: I always wanted to get one of those fancy French or Scottish stills but…I’ve just always made my own and so I just kept on making them. I guess I just don’t know any better.
BW: Is it more like, if it’s not broke don’t fix it?
BEVERIDGE: It’s kind of like if it’s not broke don’t fix it. What’s kind of nice with the way I have it now is if I want to change something I just go ahead and change it, an experiment. I can take a still and just have it rebuilt over the weekend. If I don’t like it, next weekend I can go ahead and switch it back. It gives me a lot more flexibility and I’m kind of a tinkerer so I like to try different things and see what it’ll do.
BW: It seems like there was a lot of trial and error in the early days of Tito’s. How long before you found the flavor you were looking for?
BEVERIDGE: I think after about two years, I started nestling in on a pretty good thing. The low-hanging fruit I’ve already gotten and most of the experiments I do now, they just don’t pan out at all (laughs).
BW: How would you describe Tito’s?
BEVERIDGE: I would say it’s smooth going down and it gives you a nice, easy feeling when you drink it. It’s not one of those vodkas that make you fall down and do stupid things. It’s got a nice, easy and relaxing buzz to it and it leaves you clean in the morning. I really like that a lot. It has light caramel vanilla notes to it, roundness and then a chop at the end. It’s a good all around sipping vodka.
BW: Is that how you drink it?
BEVERIDGE: I usually drink it with a splash of seltzer water and wedge of lime and a wedge of orange. But I’ll drink it with just water and ice, water and lemonade, cucumber martini, straight up martini, seltzer and an Italian soda—every which way.
BW: How would you describe the brand’s climb?
BEVERIDGE: Just steady. It’s almost weird. I started out as a one-man show. I started out using credit cards and I had a loan. The brand grew every year, but it seemed like we just never had the money to go out and push it really hard. And so we just started off as a word-of-mouth type brand and I still kind of think that we are a cult brand or something. The first eight years were just completely painful. I just couldn’t break even. I had to build more production capabilities, more distilling, more bottling. Then, around 2005 it started to get a lot easier and the last eight years have been pretty exciting.
BW: In a crowded vodka market, how do you think you have achieved this cult following?
BEVERIDGE: When I started this thing, I tried to raise money to hire professional distillers and when I couldn’t get any money I had to just do it on my own. I came to a point where I decided I just had to make vodka that I like to drink. And I think I’m just lucky that what I like to drink is right in there in the bell curve of what a lot of people like.
BW: Tito’s seems like a no-nonsense type of vodka. Tell me about the packaging.
BEVERIDGE: I was dating a vegetarian girl at the time and she made me use recycled paper. The pot still on the label, I drew that on CorelDRAW, and I picked out the font, Lucida Calligraphy bold italic, from Word Perfect. I thought, if I ever made any money I’d get a professional to do it, but then it kind of ended up that by the time I had the money to do it, I’d been in business for too long to switch and so I had to stick with it. Everybody hated the package. Everybody felt like it looked like a brown paper towel wrapped around the bottle. People gave me grief about it for a long time.
BW: As a craft distiller, what are your thoughts on the craft distilling market today?
BEVERIDGE: When I started I was like the only craft distiller in the U.S. I think it’s funny, people are telling me what a micro distillery is and I’m thinking to myself, ‘S%#t !, I came up with that word.’ When I started in ’95 there just weren’t any little distilleries. Unbeknownst to me, I think I started the whole American craft distilling movement.
BW: So, do you have any advice for other craft distillers
BEVERIDGE: Make something you like to drink because you’ll be drinking a lot of it.