Why Texas Distilling is Booming
Tito Beveridge obtained the first legal permit to distill spirits in Texas, starting in a small shack in Austin more than twenty years ago and selling his first case in 1997.
The beverage alcohol market has undergone significant changes since then, perhaps most pronounced in the Lone Star State. Recent sales growth for Texas brands proves that, at least in our industry, everything really is bigger in Texas.
“The support of Austin, and Texas, is a big part of what helped get this brand to where it is today,” says Tito’s VP of Trade Marketing Frank Polley. “Texans love their state, and we’re thankful that many became loyal Tito’s fans, who in turn asked for us in bars and stores when they traveled across the country.”
Texas Pride
Southwest Spirits, founded in 2014, develops spirits brands that appeal to Texans, a unique combination of general market and multi-cultural consumers across the vast state.
“Combined with the ‘pride of Texas’ cultural phenomenon, that base provides an opportunity to develop taste profiles for passionate and loyal consumers,” says VP of Marketing Ronna Feifarek. “Being a Texas brand is about showing where we’re made and personifying southwestern heritage to appeal to Texans, and beyond. There’s a strong affinity for Texas brands, and a place attachment to Texas among consumers.”
Southern Champion, maker of BuzzBallz, sees a similar appeal. “Many out-of-towners will tell you that Texans have immense love for and loyalty to the state and, by proxy, anything Texan,” says Content Manager Kim Diggs. “Prominently stating that we’re a Texas-based brand on our packaging has inspired lots of impulse buys and, eventually, brand loyalty from our customers.”
Western Son Vodka began in 2011 in a 3,000-square-foot warehouse in Carrollton, but has since grown to a 45,000-square-foot distillery, 37,000-square-foot distribution campus and a hospitality center in Pilot Point thanks to support from Texas consumers.
“Although the landscape has changed, the Texas hospitality has always remained strong thanks to the great people of Texas who welcomed us with open arms from the beginning,” says Director of Brand Marketing & On-Premise Erin King.
In-State Relationships
The strength of Texas’ on-premise, off-premise and distributor markets have played a large role in building the state’s spirit brands, both within Texas and throughout the country.
“Our Texas neighbors and industry friends were a true driving force behind getting our name out there and we continue to cherish and uphold those relationships to this day,” Polley says. “Tito spent a lot of time connecting with folks throughout the Austin area to introduce his brand to the local community. Because of their belief in our product, Tito’s started showing up across the on-premise landscape more and more.”
Southwest Spirits cites a presence at the Texas Package Stores Association show, which it brings together the entire Texas market and showcases new brands or programs. “Another association we’re tied to is Go Texan, which appears on our NUE and Title 21 brands, and will soon be on revised Calamity packaging,” Feifarek says. “The Go Texan logo was created by the Texas Department of Agriculture to shine a spotlight on Texas businesses and make them easily identifiable to buyers.”
State of the Market
Texas brands aren’t the only spirits doing well in the state – the overall beverage alcohol market is growing at a rapid pace.
“The spirits business is continuing to grow at double-digits in Texas, driven by premium plus categories,” King says. “Texas vodka brands like Western Son are outpacing the category and continuing to grow market share. The biggest drivers we see is the desire to eat/drink locally made products – consumers want products and brands they can connect and relate to.”
“Texas is a dream market for growth and is currently one of our fastest-growing markets,” Southern Champion’s Diggs says. “In addition to independent retailer partners, we’re seeing a ton of growth in Texas-based chains with taste, value and convenience being the leading trends for purchasing decisions.”
Texas trails only California, Florida and New York in spirits consumption, and was first in both overall spirits and vodka consumption growth in 2018.
“The spirits category in Texas will continue to grow for the foreseeable future, particularly when it comes to craft spirits,” Tito’s Polley says. “As the wellness trend continues to gain momentum, consumers in Texas and beyond are seeking drinks to fit their active lifestyles. Whether that’s a cocktail with less sugar or gluten-free alternatives, consumers will look for choices that reflect a desire for high quality.”
Despite the heated competition for market share, these suppliers all express support for their fellow Texan brands.
“The great part about this community is we’re always pushing each other to be better and do better, both within the smaller communities we serve and across the nation,” Polley says.
“There definitely is a camaraderie to being from Texas,” Southwest’s Feifarek adds. “The TPSA and groups like the Texas Distilled Spirits Association help us bond over all things Texas. Suppliers come together to fight legislation or ‘break bread’ at events supporting Texas in general, like aiding those impacted by Hurricane Harvey in Houston or the recent tornadoes in Dallas.”
A Bright Future
Known for their bullish outlook, Texas suppliers predict that the market for authentic products from the Lone Star State will only get bigger.
“We believe all sectors of alcoholic beverages in Texas will grow over time,” Diggs says. “Texas beer boomed and is still growing; Texas wine is gaining traction outside the state and has a ton of room to grow. There’s no doubt that Texas spirits will continue to grow at a rapid pace. We think the biggest change is hat competition will force quick innovation to capture consumer attention.”
Western Son’s King agrees. “We think craft spirits will continue to grow throughout the U.S., similar to the growth of craft beer. Craft spirits brands will continue their innovation and push the envelope on product offerings,” she says.
Southwest Spirits cites the increase in distillery permits – from 9 in 2008 to 117 in 2017 – as evidence of continued growth, pointing to a trend of brewpubs now distilling spirits as well.
“Just around Austin and nearby Hill Country, there are 14 distilleries,” Feifarek says. “In the next decade you may see more consolidation with larger brands, but we believe the wild west and its entrepreneurial spirit will live on as new companies try to become destination experiences for spirit-loving consumers. We don’t offer that yet, but we have plans to expand and provide a more personal interaction at our facility.”
Titos’ Polley points to changing consumer tastes for increased future growth.
“We expect the vodka category to continue to grow in the Texas market as more consumers lean into personal wellness and move away from high-sugar spirits and cocktails,” he says. “Consumers are beginning to swap their usual cocktails for options that have fewer carbs, are gluten-free, light and incorporate more fresh, seasonal ingredients. Craft spirit brands are likely to become more popular than ever as a result, and we expect to see Tito’s grain more traction in this category as people discover our product and the story of how it was built.”
And just what would Tito’s be without its home state of Texas?
“At the end of the day, there is no Tito’s Handmade Vodka without Texas,” Polley says. “Texas is a place that will always be home to us and embodies the spirit of giving we work to uphold through our ‘Love, Tito’s’ program. We look forward to spending many more years in the great city of Austin helping others in need, expanding our presence within communities and sharing plenty of great cocktails together.”
Jeremy Nedelka is Beverage Group Content Director at EPG Media. Read his recent piece, Recognizing the Best in Alcohol Marketing.
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