Comments on: Patron’s Tequila to Push More Beer, Autos Off U.S. Billboards http://www.tequilarack.com/blog/?p=19 Tequila Rack Blog - Tequila & Relevant Beverage News Sat, 03 Jul 2010 16:20:16 -0700 http://wordpress.org/?v=2.8.6 hourly 1 By: - Z http://www.tequilarack.com/blog/?p=19&cpage=1#comment-142 - Z Tue, 01 Dec 2009 15:17:53 +0000 http://www.tequilarack.com/blog/?p=19#comment-142 It appears that Patron is spending somewhere north of $40/case on marketing which based on my research suggests they are spending between 10% to 20% more per case then the industry average for "large growth brands" which is probably closer to $35/case(in 2008). When you are doing close to 1.3 million cases(full portfolio)this is not an outrageous spend. Given the vertical integration they now have: · They now have their own distilleries · Bottles are made on site (satisfying at least a portion of their volume requirement) · Mature distribution (probably SWS most important customer/supplier right now) · Dropping prices on agave .01 per kilogram This brand is probably dropping something north of $30 per bottle as net revenue (after cost of goods, shipping, customs, etc.) which would give them a gross profit number of probably $300 per 9 liter case … even if it half that $50 per case on marketing is nothing. Said another way … they are frickin profitable out the wazoo · Gross sales are probably between $400 and $500 million per year now · Marketing spend of 12.5% of gross sales is pretty typical in consumer products (non-durables) which would translate to about $50 million on the low end and $65 million on the high end · Even if all other expenses were another 30% which would be a big number they are achieving $200 million plus in gross profit … privately held I wonder how Patron profitability compares to their hair care products biz? It appears that Patron is spending somewhere north of $40/case on marketing which based on my research suggests they are spending between 10% to 20% more per case then the industry average for “large growth brands” which is probably closer to $35/case(in 2008).

When you are doing close to 1.3 million cases(full portfolio)this is not an outrageous spend. Given the vertical integration they now have:

· They now have their own distilleries

· Bottles are made on site (satisfying at least a portion of their volume requirement)

· Mature distribution (probably SWS most important customer/supplier right now)

· Dropping prices on agave .01 per kilogram

This brand is probably dropping something north of $30 per bottle as net revenue (after cost of goods, shipping, customs, etc.) which would give them a gross profit number of probably $300 per 9 liter case … even if it half that $50 per case on marketing is nothing. Said another way … they are frickin profitable out the wazoo

· Gross sales are probably between $400 and $500 million per year now

· Marketing spend of 12.5% of gross sales is pretty typical in consumer products (non-durables) which would translate to about $50 million on the low end and $65 million on the high end

· Even if all other expenses were another 30% which would be a big number they are achieving $200 million plus in gross profit … privately held

I wonder how Patron profitability compares to their hair care products biz?

]]> By: - Z http://www.tequilarack.com/blog/?p=19&cpage=1#comment-138 - Z Thu, 26 Nov 2009 15:13:38 +0000 http://www.tequilarack.com/blog/?p=19#comment-138 $50.9 million on advertising its tequila in 2008. Which means that the first 509,000 bottles of Patron sold just about covers the marketing expense. $50.9 million on advertising its tequila in 2008. Which means that the first 509,000 bottles of Patron sold just about covers the marketing expense.

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