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Goodbye wine? Casa Pedro Domecq goes through the market of crystal clear distillates with Mexican mezcal and gin

The proposal that he was waiting for to take the next step in his career was finally on the table. Martin Skelton, who had been working in the González Byass family winery of Spanish origin for 33 years, had asked the owners of the company to consider him for a new project that might arise in the near future. The opportunity came in mid-2021, when he was asked if he wanted to be the new CEO of Casa Pedro Domecq in Mexico.

Four years earlier, González Byass had reached an agreement with Grupo Emperador – another winery of Spanish origin now owned by a Philippine holding company – to carry out the joint acquisition from Pernod Ricard of the Domecq and Pedro Domecq brands, as well as the brandy and wines linked to these brands in the world for 81 million euros. Casa Pedro Domecq was founded half a century ago by the Spaniard Pedro Francisco Domecq González – whose surnames show the family ties that have united the two wineries of Jerez origin, Domecq and González Byass, for centuries. But today the business has its main market in Mexico through the brandy brands Presidente, Don Pedro and Azteca de Oro, as well as a winery in Ensenada, Baja California.

Skelton, who had held a similar position for the UK subsidiary of González Byass for 17 years, was looking for new professional challenges, so when he was offered the chance to move to the other side of the ocean, he didn’t give it much thought and accepted. “Then they told me: Martin, you are going to Mexico. And I said ok,” he says.

The English executive, who speaks very fluent Spanish thanks to the years he lived in Jerez de la Frontera, arrived in Mexico in September 2021 and immediately assumed the position of CEO with the aim of continuing the successful work of repositioning the brand started four years earlier by Enrique Murillo, from Seville, who returned to Spain with his family last year, after fulfilling the task of laying the foundations for the new administration.

With an eye on the premium segment

Casa Pedro Domecq has sought to diversify its product offering through marketing alliances. Since 2017, it has distributed Emperor Group brands in Mexico and in April closed an agreement with the French group Rémy Cointreau to market several of its brands in Mexico, including ​Louis XIII, Rémy Martin, The Botanist and Cointreau, among others.

Major spirits companies are looking for merger and acquisition opportunities, or making alliances, to increase their offering of premium spirits , because sales of higher priced spirits are expected to grow more than moderately priced spirits in the next five years. .

According to IWSR’s beverage market analysis, the sales volume of premium spirits and wines of $200 or more – about 4,000 pesos – will increase 25.6% annually between 2020 and 2025. In contrast, sales of the lower priced drinks, at 10 dollars -about 200 pesos- per bottle, will grow only 0.8% annually during the same period.

“The lockdown created a renewed interest in cocktails. People were encouraged to pay for experiences of this type at home: they sent you the kit and gave you the class via zoom. This allowed consumers to try drinks that they may never have had before , such as whiskey, gin or brandy,” says Luis Gaitán, president and chief creative officer of Gray Mexico. The specialist believes that this is likely to motivate people to seek premium drinks when they return to bars, restaurants or hotels.

The return of customers to luxury restaurants and five-star hotels, due to vaccination-induced confidence, is also expected to boost demand for high-end beverages. In Mexico, hotel occupancy reached 63.6% of hotel occupancy, in the period of Holy Week and Easter 2022, this is 23.9 percentage points more compared to the same holiday period of 2021.

Casa Pedro Domecq is no stranger to this trend and that is why it has paid special attention to strengthening the offer of premium spirits –as distillates are also known–, with the incorporation of whiskey brands such as The Dalmore, whose price reaches 7,700 pesos. The company has also added brands of Cognac Louis XIII, whose bottles exceed 300,000 pesos.

While Pedro Domecq continues to analyze opportunities to expand his offer of premium and super-premium beverages, he also sees crystal clear distillates, such as tequila, mezcal and gin , as an area of opportunity.

The company closed a commercial alliance in 2018 with Casa Armando Guillermo Prieto to market the Señorío and Zignum mezcal brands. According to Kantar data, the category of maguey distillates, such as tequila and mezcal, is the second largest in Mexico, after beer. In the last year, spending on this type of beverage grew 8% in the country.

Skeleton, an old wolf of wines and grape distillates, knows about the variations in flavor that a drink can have after passing through the barrel. And that is precisely the differentiator of the new Mexican gin that has been added to the portfolio, called Cantera Verde, which has a touch of smoky flavor after spending a few months in mezcal barrels. In addition to this gin, Casa Pedro Domecq has also strengthened its gin offering with some other imported gins such as The London, Mom and Puerto de Indias.

Today the company’s offer is wide: there are around 50 brands, between its own and marketing licenses with which it covers various price levels and categories, from the core ones such as brandy and wine, to other smaller ones but with a lot of dynamism. , such as gin and mezcal, going through other niche ones such as cognac. Casa Pedro Domecq increased its sales by 16% in 2021 compared to 2022, according to company data, thanks to the repositioning of brandy brands, but also to the diversification of the product portfolio.

“We want to have an offer for different price bands. The Mexican market has consumers with great purchasing power, but also a very large base of customers who are looking for good products at affordable prices. We want to cover the spectrum, today we have from a Presidente brandy for 110 pesos to a Louis XIII cognac. If we can serve various categories and price bands, we can grow,” says Skelton.

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