The Troubling Success of Tito's Vodka (Forbes)

[TetonDistillery]

http://www.forbes.com/sites/meghancasserly/2013/06/26/haunted-spirits-the-troubling-success-of-titos-handmade-vodka/

Sometimes reality bites. That’s proving to be a challenge for Fifth Generation, maker of Tito’s Handmade Vodka. More precisely: how to maintain the fiction of being a small-batch brand that’s actually expanding rapidly in the $5.5-billion-a-year U.S. market for the colorless liquor. Tito’s has exploded from a 16-gallon pot still in 1997 to a 26-acre operation that produced 850,000 cases last year, up 46% from 2011, pulling in an estimated $85 million in revenue. One vodka basically tastes the same as any other. So, you need a shtick: a good price point ($20 a bottle, versus $30 for Grey Goose) and a legend.

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“Tito’s has been on a steady growth trajectory because its origins as a small-batch brand from Texas really strike a chord,” says Donna Hood Crecca, who oversees Technomic’s Fast 50 brands. But image requires cultivation. “When a story falls flat because it no longer rings true, a brand’s growth can be derailed.” No wonder Nicole Portwood, Tito’s brand manager, directs a FORBES photographer away from massive buildings containing ten highly automated, floor-to-ceiling stills and bottling 500 cases an hour and into the shack with the original still, cobbled from two Dr Pepper kegs and a turkey-frying rig to cook bushels of corn into booze.

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But success is starting to hurt his reputation. Tito’s is far too big to be judged a craft spirit by Discus, the industry lobbyist whose cutoff is 40,000 cases. “How can one guy make something handcrafted when he’s moving almost 12 million bottles a year?” asks a sales rep for one New York liquor distributor. “I’ve heard he’s not even making it all in Texas anymore.”

Beveridge insists it’s all still produced in south Austin. A probe of his property records shows not a single acre outside Texas (besides a Wisconsin fishing retreat he visits once a year with his wife, Lori, and their three kids). “If someone tells me my brand isn’t a craft-distilled spirit because it’s too big, I just say, ‘I make it the same way I’ve always made it. I just have a lot more stills.” And a growing challenge to the legend of Tito’s Handmade.

[Oregon Spirit Distillers]

If I get kicked out of the small-batch club someday, I think I will be OK with that.

[TetonDistillery]

Same here. But it raises a valid point.

The image Tito portrays is handmade and small.

In reality, it is fully automated and large.

[JohninWV]

I'm happy for Tito. Congrats on his success.

[fldme]

Good for him, he must be making it himself, we just assumed he was not.

[Roger]

Tito's is exactally what is wrong with the Craft Distilling industry. They are a mass producer, using automation at volume, masquerading as a craft distiller, who then sells their products at a price point that is low enough to endanger the success of actual craft distillers .

I think it's great that they are successful, but they shouldn't be allowed to harm this fledging industry by using a term that artificially depicts a process that they are not using. But like all business, people will take advantage of deceit until legislation is developed to stop it.

And for all the "Tito wannabes" out there, it ain't going to happen ($50,mil sales). Why, because the industry has some very large players, who are now pretending they are small, while maintaing price points that are so low through their automation, they hinder "Craft" from obtaining market share. This compounded with an ever increasing onslaught of imported bio fuel.

The industry needs a clear and concise definition of the term "American Craft Distiller" and then the price points can be maintained at a level that will sustain continued growth and development in the space. Once a brand hits a certain level, they lose their "craft" designation, and they can compete head to head with the bio fuel companies, and the "blenders" across the pond.

[Natrat]

Tito's is exactally what is wrong with the Craft Distilling industry. They are a mass producer, using automation at volume, masquerading as a craft distiller, who then sells their products at a price point that is low enough to endanger the success of actual craft distillers

Hm, I'm not sure Tito's is part of the craft distilling industry, anymore.

It's up to us to educate our customers, and hopefully without badmouthing successful startups like Tito's. It's always left a bad taste to me how we in the craft brewing industry like to lambaste MillerCoors and AB instead of just saying "try my stuff, then decide." And after almost 15 years of craft beer boom, the terms "craft brewer," and "micro" still cause debate and issues.

I'd say that these "issues" won't be going away anytime soon, and trying to make a bunch of rules that define what we can call ourselves based on how many cases of what we package where each year will only lead to a rulebook like the one the TTB uses to "define" what we make. Don't be quick to pigeonhole your operation into "craft" or "artisan" or "nano" in efforts to differentiate yourself...or you might find yourself in the same pickle that Tito's is in...trying desperately to appear to be what you aren't.

As far as I'm concerned, if my product can't stack up to ultra-mass-produced glop from a fuel producer, then no amount of exclusive designations on my label are going to help.

Ok, I'll crawl back into my hole, now.

[TetonDistillery]

I admire the success that Titos Vodka has had. The only issue I have with the brand is that they still use the term "Handmade" in the title of the vodka. There is nothing handmade about a brand that is moving 850,000 cases per year. It is a fully automated factory brand at this point.

This is not a comment on the quality of Titos Vodka. It is possible that they were able to scale up production and still maintain the quality. It depends on how they produce their vodka and how it gets cut.

At 850,000 cases per year, it might still be just as good as it was back in 2001 when it got a Double Gold at the San Francisco World Spirits Competition. We don't know because Titos no longer competes in any competitions.

http://www.proof66.com/vodka/titos-vodka.html

[Two Bit]

Man. If my biggest problem was an issue trying to convince people I'm smaller than I really am, I'd have it good. Good for Tito. As far as I'm concerned, he can continue to put 'handmade' on every stinking bottle. Because he's earned it.

[Roger]

Man. If my biggest problem was an issue trying to convince people I'm smaller than I really am, I'd have it good. Good for Tito. As far as I'm concerned, he can continue to put 'handmade' on every stinking bottle. Because he's earned it.

If you think that someone claiming to do something that they don't actually do is an appropriate way to conduct business, than please pick a different one.

[TetonDistillery]

If you think that someone claiming to do something that they don't actually do is an appropriate way to conduct business, than please pick a different one.

I agree Roger. There needs to be some basic level of honesty in the story of a brand.

[JohninWV]

If it touches anyone's hands, at any time, I guess it's handmade. That doesn't make it right, but.....

We do need to come up with some clear terms that are agreed upon by the industry.

[stillwagon]

Honesty is the best policy. Let those that create fictitious facades be found out by the consumer. It wouldn't be completely unethical to point it out to members of the media... But legislation certainly not the answer. We do not need laws that would eventually be twisted and used against those they were meant to "protect." Karma can work against you if you are not careful, "Those who live in glass houses should not throw stones."

[Two Bit]

If you think that someone claiming to do something that they don't actually do is an appropriate way to conduct business, than please pick a different one.

Except he did do it. For a long, long time. And paved much of the road that you are walking on right now. Simply because he is better at it and more popular than you doesn't make him any less relevant. Like I said, if my biggest problem is defending how big I've become, I'm ok with it. Best of luck to you and your super duper small, extremely small batch, small hands that touch everything small brand. May you always stay as small as you want to be. I assume you also grow your own grain, blow your own glass, and farm your own corks? And use your own letterpress to make your labels?

[Two Bit]

It's like when everyone "hip and indy" deserted Modest Mouse for signing with anything other than a tiny indy label. Still great music, but they're just making more money at it.

Few things bug me more than those who have vitriol against those who are successful.

[Denver Distiller]

My only thoughts on this pressing matter of what the meaning of what handcrafted is, is that Modest Mouse went to the dogs and ran out of musical ideas when they gave up and brought Johnny Marr on board.

There. I said it.

[Tom's Foolery]

Is Tito buying corn and yeast, and making vodka out of it? If so, that seems like craft to me.

[daveflintstone]

Well this is timely: just saw Tito's commercials on Hulu. Hulu! That is most awesome. I am planning my Superbowl commercials now.

From reading this thread it seems Tito's is the envy of all. And rightly so.

[Duck Pond]

Except he did do it. For a long, long time. And paved much of the road that you are walking on right now. Simply because he is better at it and more popular than you doesn't make him any less relevant. Like I said, if my biggest problem is defending how big I've become, I'm ok with it. Best of luck to you and your super duper small, extremely small batch, small hands that touch everything small brand. May you always stay as small as you want to be. I assume you also grow your own grain, blow your own glass, and farm your own corks? And use your own letterpress to make your labels?

Well Said. People just love to hate. Tito did pave the way for so many of the craft brands that exist today. Tito Beveridge and his brand have just become that band that has gotten more and more popular and doesn't belong to that small in crowd. Only difference is that Tito has not changed his ways. He still plays in the small venues and still puts out the same product the same way. Plus...he never caved to the big companies who I'm sure threw major dollars at him. I for one will be raising my glass of Tito's this weekend. Cheers!

[Hypnopooper]

Titos' used to provide distillery tours before moving to their newest location but they claim that they no longer offer them due to insurance costs. I have heard from one other distillery in the Austin area that Tito's is not quite as hand-made as is used to be. He refused to elaborate any further, to not speak ill of the brand. I just read several weeks ago that they just inked a deal with United Airlines to be their exclusive vodka served in flight. As for the success of Bert Butler and the 5th Generation Distillery, I raise my glass and hope to aspire at least to 1/10 of those sales numbers. Salud!

[zeiss]

Please google; Wayne Curtis distilling deceit. The article is from The Atlantic magazine; When that local craft liquor you pay

big bucks is neither.

[Duck Pond]

Titos' used to provide distillery tours before moving to their newest location but they claim that they no longer offer them due to insurance costs. I have heard from one other distillery in the Austin area that Tito's is not quite as hand-made as is used to be. He refused to elaborate any further, to not speak ill of the brand. I just read several weeks ago that they just inked a deal with United Airlines to be their exclusive vodka served in flight. As for the success of Bert Butler and the 5th Generation Distillery, I raise my glass and hope to aspire at least to 1/10 of those sales numbers. Salud!

Tito's is at the same location is has been from day one. Same land, same place Tito purchased 15 or 20 years ago. I'm pretty sure not a thing has changed with Tito's other than the amount they produce. They are just in that amazing/unfortunate place where people want to take shots at them solely based off of rumors....and i am no more than a fan of the brand (amongst many others across the world).

[Ralph at Tuthilltown]

A brand which starts out small and handmade, then grows to be multiple automatic stills redistilling GNS to produce 850,000 cases a year is in fact NOT a craft operation, nor the product a "crafted" product. I don't think I can name a single craft distiller I know who would deny the success or criticize the growth of any of their cousin distillers, it's what we pray for daily. The reasonable criticisms I hear are aimed at the promotion of the origin of the brand as the current situation. Truth in advertising is the issue. It is not unlike whiskey brands which claim craft origins but are not actually produced by the distillery which is bottling the brand. My basic feeling is that a distillery can not claim a "crafted" distilled spirit product is theirs if they are starting with alcohol made by someone else. It is not appropriate for the TTB or any Legislative body to define what "craft" means unless it's tied to some legislation which benefits, or doesn't, that segment of the production community. BIG SURPRISE! The big spirits producers are hopping on the "craft" bandwagon, this is nothing new. As one writer commented, the consumer who cares will know and the strategy may backfire. It is up to the actual small "craft" distillers to continue to organize and educate the consumer and the media the difference between the two segments of the industry, and the difference between industrial alcohol and "craft" alcohol products. TITOs success is well earned, congratulations. "Handmade" may be a stretch NOW, even if it was once true.

[Ralph at Tuthilltown]

Except he did do it. For a long, long time. And paved much of the road that you are walking on right now. Simply because he is better at it and more popular than you doesn't make him any less relevant. Like I said, if my biggest problem is defending how big I've become, I'm ok with it. Best of luck to you and your super duper small, extremely small batch, small hands that touch everything small brand. May you always stay as small as you want to be. I assume you also grow your own grain, blow your own glass, and farm your own corks? And use your own letterpress to make your labels?

I have not noticed any "vitriol" rising between those who wish their distilleries to grow and those who like their small operations. To each his own. The only antagonism I read here on this topic is in your comments. The definition of "craft" is yet to be agreed. Those who comment on such as TITOs growth and size don't appear to begrudge the success. The ongoing question is what constitutes "craft". But more importantly, the real issue is "truth in advertising". Agree with my opinion or not, but multiple automatic stills producing prodigious amounts of vodka by redistilling GNS from another producer is not "craft" as I understand it. Basing advertising and PR efforts on the way things "used to be" is not appropriate.

[bluestar]

Ralph, we have been focusing here on the term "craft", rightly so, but that does leave open the question of the meaning of other related terms commonly used in our industry now: artisanal, handcrafted, handmade, microdistillery, etc. All of which, as either a small or "craft" distillery grows or a large manufacturer adds a "craft" product, can become problematic.