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« Tequila Breakthrough | Main | Consumer Value »
Tuesday
Feb212012

Why All the Talk About Value?

What are you getting at, David?  Why do you keep posting articles on the blog, breaking down the qualities of a spirit, meticulously explaining every little detail about why whisky is priced the way it is?

I'm notoriously slow about getting to the point sometimes.  My wife is always telling me to hurry up with my explanations.  Jacob Lustig, the founder of ArteNOM Tequila, is the same way.  We both want to make absolutely sure that you're with us before we go any further.  We met up today about a super secret tequila project that we've been working on for some time.  More on this in a minute.

When David and I went to Cognac last month, we were shocked at how much boise is used to flavor the brandy.  If you didn't read those posts, it's completely normal for a Cognac producer to create a substance known as boise: a maceration of sugar, caramel, flavor additives and oak chips that sits in low proof brandy until it becomes a dark and sweetly-concentrated liquid.  Boise is the reason that some VS Cognacs are brown and supple, while other XO Cognacs are straw-colored and light-bodied.  It's not the wood aging, people.  It's a totally normal practice to alter the flavor of a spirit through chemical compounds.  Companies need the product to be consistent and they want it to appeal to a large audience.  There's nothing wrong with these products at all.  Many of them are totally delicious.  But if VS Cognac only has to be two years old, what are you really paying for?  The brandy or the boise?  Trust me, it doesn't taste the same without the boise.  It's not even close.

Cognac is not the only world-class spirit to allow flavor additives.  Tequila is just as notorious.  There's no such thing as a soft, supple, rich and smooth one year old spirit - at least I've yet to taste one.  Nevertheless, we've all tasted anejo tequila that goes down like silk.  It's not natural.  But who said it has to be?  There are plenty of wonderfully tasty tequilas out there that have vanilla flavoring, banana-concentrate, or other unorganic flavor enhancers to round out their profile.  It's completely legal.  That being said, should they cost $100?  What are you paying for - the tequila or the flavor enhancer?

When I sat down with Jacob earlier this morning to taste samples of potential K&L exclusive tequilas, this was the main subject of discussion.  Jacob's source (more on this in a later post) has devised a system for pricing his tequilas by taking into account the cost of agave at the time of production and the amount of time they've spent in wood, with interest added on per year.  He takes a small cut for himself, but ultimately he's not thinking "what can I get for this?"  That's the difference between the producers we're looking to do business with and some other luxury-driven companies.  Our model is based around sourcing unmodified spirits of quality and distinction, with the intent of selling them at a fair and accessible price.  Other models are based around creating something "smooth" and attempting to convince the public that it's more valuable because it tastes better.

Fritos corn chips taste good to me, but they're not worth $40 a bag because they're not expensive to make.  I'm beginning to think that many "luxury" brand spirits might also be quite inexpensive to produce.

So, again, why the need to break down value in a spirit for the K&L readership?  Because soon we'll be bringing in new exclusives of Cognac, Armagnac, Calvados, and Tequila that don't necessarily taste like what you're used to.  There's nothing going into these bottles except distilled spirits that were aged in wood - period.  We're bringing in extremely old Cognacs, but they don't taste as supple as some of the younger releases from larger brand names.  We're bringing in tequilas much older than five years of age, but they won't taste as sweet or as smooth as some of the one or two year old brands on the market.  Nonetheless, the younger, brand name products will cost the same or more as our older, unadulterated exclusives. 

Some people might taste an eight year old tequila from us and say, "This isn't smooth or rich! What the heck?"  Some people might taste a thirty year old Cognac from us and say, "What the F? Where's the sweet caramel finish?"  That's my worry.  The luxury brand market has consumers convinced that wine and liquor are expensive when they're smooth - the less alcohol you taste, the better it must be.  Unfortunately, this is entirely wrong. 

Alcohol should only be expensive if it's costly to produce, old and rare, or high in proof - period.  Yet, there are plenty of brands that are hell-bent on convincing us their product is expensive because it tastes better.  What makes it taste better, however?  Is it the extra time in wood?  Is it the quality of the barrels?  Is it the quality of the raw materials?  The expensive distillation process?  WHAT IS IT??!!  Oh........it's caramel coloring and sugar?  That's it? That's why it costs $100?

So what's the point?  The point is: know what you're paying for.  When our new exclusives hit this year there will be some people who go crazy for them.  Others will be merely satisfied.  A few may be entirely unconvinced.  However, no one who buys any of our Cognac, Armagnac, and Calvados from Charles Neal, or our Tequila from Jacob Lustig will have overpaid.  No one will have paid any more than what the product was worth based on what it cost to make it, bottle it, label it, and import it.  Whether it's worth that price will be up to you. 

-David Driscoll