Welcome back to the BevNET spirits newsletter. This week I’m musing about the big news of the year for spirits and what it means for Tito’s and LALO, as well as for the tequila category.

What insiders are reading: Pizza vodka gets a boost and Charlie Sheen goes wild in adult non-alc. 

Thanks for reading.

-BevNET spirits editor, Ferron Salniker

This week top-selling spirit Tito’s Handmade Vodka acquired a majority stake in LALO Tequila, a fast-growing tequila brand from Don Julio’s grandson that is often compared to Tito’s for sticking to one product. For those who question how far a blanco-only tequila brand can go, we’re about to find out. 

Apart from the obvious similarities, there are a few reasons why LALO was likely compelling as Tito’s first strategic acquisition:

• Tequila is the rare bright spot in a slow bottled spirits market, and on-premise drinkers continue to shift towards tequila-based cocktails at the expense of vodka.
• Even so, things aren’t going so well for Big Tequila. Diageo’s Casamigos and Don Julio are facing class-action lawsuits accusing both brands of including non-agave alcohols, while Casamigos sales are already tanking. 

Meanwhile, LALO from the beginning has positioned itself as the additive-free brand (“like they invented it,” one aficionado told me once in annoyance). Even Patrón’s latest campaign pitted against its competitors feels desperately loud compared to the organic push LALO has done to make itself nearly synonymous with “additive-free” for the entry level tequila drinker. This is a good time for a three-ingredient little brother (well, technically grandson) to swoop in with some might behind him. 

The opportunities are clear for both brands:

• Tito’s salesforce already knows how to sell a brand like this, and with spirit companies cutting down on menu placements, LALO will now have the muscle and the deep pockets to take those slots.
• LALO will soon be able to leverage Tito’s global distribution network.

Which leads us to the part that will be interesting to watch:

• In 2023, LALO went national with Republic National Distributing Company (RNDC), and this year, followed Tito’s to Reyes Beverage Group in California. But Tito’s distribution is fragmented, so does this mean more bad news for RNDC? 

• Unless you count someone’s hand pressing the start button on the still, Tito’s isn’t exactly “handmade” these days. But to his credit, LALO co-founder “Lalo” González has been personally calling influencers and popping in on Reddit threads to assure fans that nothing about the product will change, clearly aiming to get ahead of skeptics. Tito’s isn’t a conglomerate, where agave brands typically go to be killed by a thousand cuts, but people are right to question how an agave spirit will maintain its ethos as it expands (see above re: possibly cane sugar-spiked tequila). 

Time (the other essential ingredient in agave spirit production) will tell.

The customers who didn’t get as drunk as they would’ve liked when they mistakenly got a malt-version of Fireball are back in court. 

• Sazerac is facing legal heat again for selling malt-based versions of Fireball and Parrot Bay that allegedly misled consumers who believed they were spirits-based products.
• A class-action lawsuit accusing the whiskey giant of deceiving customers with malt-based spinoffs of the two brands can proceed after a judge ruled in favor of the plaintiffs last week. 

Read more

Are THC-infused beverages the next chapter for craft distillers? The leaders of one Milwaukee business believe so. 

• Central Standard is among the first craft distilleries to release a THC-infused line: Delta Dawn, a 12oz can with 10 mg of THC in two flavors. 
• To extend into the new category, Central Standard is using flavors familiar to its brand ethos and portfolio, like locally sourced cherries. 
• The craft distiller approach to THC beverages may represent one way brands will begin to distinguish themselves. Brandon Hanson, the co-founder of Hanson of Sonoma is also among the first spirit makers to jump into THC-infused beverages with Goodmellow. 

Read the full story

Bev-alc sales declined in the two-week period ending September 6, but there are some bright spots. 

• Ready-to-drink beverages are driving growth for spirits, with sales picking up (+22.6%), while sales of wine-based RTDs remain fairly steady (+26.8%).
• Among RTDs, independent brands like Surfside are still hitting major growth numbers, while extensions from The Coca-Cola Company such as Jack & Coke and Fresca Mixed are struggling. 

If you attended BevNET Live this summer, you likely met social butterfly Lexx Mills, the co-founder of Stursi, who has been publicly sharing the highs and lows of her company’s journey. 

• The new non-alc cocktail brand debuted this summer, after over a year of the co-founder sisters sharing their journey from concept to can, which may have given them an initial sales boost. 
• Stursi joins other young brands such as Junglee that have taken to social media to share their ups and downs in a complicated industry – and that transparency has earned Stursi some fans, enough to fulfill their first production run. 

Check it out

When Kin Euphorics debuted in 2018, the nootropic-infused non-alcoholic alternative was just ahead of its time – and helped set off “the brain-care as self-care” wave. Now, the largest U.S. spirits and wine distributor has caught up. 

• Kin Euphorics has announced a new partnership with Southern Glazer’s Wine & Spirits (SGWS), joining other recent adult non-alc (ANA) additions in the powerhouse distributor’s book. 
• The deal represents a push for more volume from Kin, and an embrace from traditional bev-alc distributors as they aim to offset declining wine and spirits sales. 
• With ANA on the rise, we chatted with the founder on how brand loyalty may evolve, why functional beverages need to be up on the supplement business, and the next frontier for ANA.

Read the interview

We’re been checking in with bar and restaurant operators on how they are approaching non-alc, and this convo with the CEO of José Andrés Group is worth a very quick read. The brand’s sommeliers and bartenders have been instructed to make a quarter of spirits and wine non-alcoholic within five years, up from around 10% now, and the group is experimenting with psychedelics where legal.