Casamigos: From an Accidental Passion Project to the $1-Billion Tequila Company
Over recent years, demand for high-end tequila has been on the meteoric rise across the U.S., thanks to which, the spirit’s luxury end is reaping the most benefits, with 100% blue agave Tequilas dominating at 57.6% of the overall category, according to Impact Databank. In light of such boundless popularity, a flurry of new labels has flooded the market, offering sophisticated Tequila fans a wealth of choices. Yet, notwithstanding more competition arises, a plethora of brands have maintained their hold on the category, and Casamigos is among the strongest. After “bursting onto the scene” in 2013, the ultra-premium brand has enjoyed robust upward momentum.
Founded by the award-winning Hollywood star George Clooney, the impresario Rande Gerber - Cindy Crawford’s husband and model-of-the-moment Kaia Gerber’s dad, together with the real estate magnate Michael Meldman, Casamigos is undoubtedly a favorite among the Hollywood crowd, experiencing consistent double-digit growth and ultimately being sold for staggeringly $1 billion. Whilst Casamigos is just too well-known, a lesser-known fact is that the actor and two friends started their business and nurtured “one of the fastest-growing tequila brands in the world” by accident in 2013. Let’s read on to uncover the fascinating founding story behind Casamigos.
Casamigos: How George Clooney Accidentally Started The $1-Billion Tequila Company
Casamigos as a “House of Friendship”
Many have shared a tequila-fueled night with friends that resulted in a drunk idea - are two for “business ventures”, but George Clooney and Rande Gerber actually made theirs happen. Particularly, the Hollywood star came up with the tequila idea with his friend and partner Rande Gerber while the two were spending time at their houses in Mexico.
Before, they had met nearly 30 years ago while George was shooting one of his first films in New York. "He was coming into one of my bars called Morgan's at the time... so I met him at the bar over a tequila," Rande Gerber shared. "He was spending three months in New York, and every night we would hang out at the bar and we became great friends." The two would go on golf trips around the country with other friends. "It was called 'the Golf trip,' but we played maybe nine holes now and then" — which is where they met real estate guru Mike Meldman.
"A mutual friend connected us, saying we should play at one of Mike's golf courses," the impresario added. "He took care of us and we developed a friendship through that, then we built our homes in Mexico in Mike's development."
Clooney and Gerber's houses were located beside each other on the piece of property, which was called Casamigos. "It felt like one compound," Gerber said. "We'd have a bunch of our friends there — breakfast at our place, lunch at his, dinner at ours. It felt like one big house." And their meal times often involved sipping tequila.
Casamigos started by accident as far as a company. Actually, “Casamigos loosely translates to ‘house of friends’ [think “Casa” and “Amigos”]. Our tequila wasn’t intended for the public; we made it strictly to drink and share with friends. But after word got out, we knew we had something special.”
As Gerber recalled their old days in Mexico, “As you do in Mexico, we would drink a lot of tequila. We'd go out to bars and restaurants and bartenders would recommend them. Some were good, some not so good, and some expensive. There came a point where George turned to me and said, ‘Why don’t we just make our own, one that’s perfect for us?’” And they did – stunningly nailed it!
He added, "We wanted one that didn't burn going down, that was super smooth, and had the right flavor profile. One that we didn't have to mix, no salt or lime needed — typically we drink it straight or on the rocks — that we could drink all day long and not be hungover in the morning."
The Tequila Pilgrimage with the First Foolproof Recipe
Starting their tequila pilgrimage, the duo jumped on doing market research, meeting with distillers, trialing samples as well as performing blind taste tests with their friends and family until they finally found a recipe with no burn at all. "It ended up being almost two years and 700 samples later — we finally got it perfect," Gerber said. "There was a point where we all chose one, and it was ours. Not only did we know we had something great that we loved, but all of our friends loved it as well."
Once the satisfactory tequila formula had been devised, bottles were ordered, served, and drank at their homes in Casamigos." While the pair vowed to concoct a tequila that could be sipped all day without conjuring a hangover, it's probably not recommended for inexperienced tequila drinkers since the average bottle contains approximately 40% alcohol.
For two years, it was served exclusively among Gerber and Clooney’s friends and family, who Casamigos was originally made for.
“It was just for us,” Gerber shared. “We didn’t really want to be in the business. We figured, George is an actor and a director. I own restaurants and bars and wasn’t looking to get in another business.”
“But then the distiller called and said, ‘Hey guys, we have a little problem: In the past two years, we’ve been sending you about a thousand bottles a year. Either you’re selling it or you’re drinking way too much — either way, we can’t keep calling it samples. You guys have to get licensed and do this right.’”
The celebrity entrepreneurs figured they had no choice as “We wanted to keep drinking it.” Hence, George Clooney and Rande Gerber met with a distributor in the U.S. who wished to get on board, and facilitated the launch of Casamigos as a tequila brand, along with the help from their well-connected friend Meldman. "He's wonderful at marketing, and caters to the high-end market," remarked Gerber. "He's smart, and has incredible relationships."
The year of 2013 marked the official launch of Casamigos, making it available to the public.
Casamigos & Its Tequila Gold Rush
The organic evolution of Casamigos made the process of starting a business less stressful. “This all happened naturally. We just wanted the best tequila for us to drink — so when it turned into a business, it was easy, because we didn’t really care about whether or not it was a huge success or not.”
What started as a passion project turned into a successful private-label tequila business.
Given that any product backed by George Clooney would probably sell itself, Casamigos is the real deal. This liquor is made from 100-percent Blue Weber agaves roasted in traditional brick ovens for 72 hours, which helps create Casamigos’ one-of-a-kind taste. Afterward, the tequila is fermented for an 80-hour period, sealing in the refined, unique flavor. Casamigos is meant to be sipped slowly and enjoyed with good company, making it the perfect gift to exchange amongst friends.
“We have an inexpensive bottle, but the best quality tequila inside” - Rande Gerber, Co-founder of Casamigos
Speaking of his “golden child”, Gerber proudly shared that, “the ultra-premium small-batch tequila is aged and barreled while a master distiller chooses the right moment to take it from the barrel to the bottle.” He added, "We use old brick ovens, and the Blue Weber Agaves are grown for seven to nine years — it’s a long process."
Partly due to having George's name attached, the Casamigos brand "immediately took off" through word of mouth, according to Gerber. Yet, "we started winning awards, which legitimizes you." The brand has won competitions coast-to-coast, from the Los Angeles Spirits Competition to The New York Wine & Spirits Competition – particularly, gold medals at the Los Angeles International Spirits Competition, the San Francisco World Spirits Competition, The New York World Wine & Spirits Competition, The Spirits of Mexico Tasting Competition, and from The Beverage Testing Institute. "From then on it gained momentum."
In fact, these marvelous drinks quickly translated to fast-growing sales. The brand doubled its volume of sales from 38,000 nine-liter cases in 2014 to impressively 80,000 in 2015, according to Ad Age, which said it was part of a tequila "gold rush." Casamigos more than doubled its volume again in 2016, although Gerber, who worked full-time running Casamigos, declined to reveal the exact sales figures and would not discuss the company's earnings. Such stunning growth made it one of the fastest-growing tequila businesses in the world.
"What started from a friendship and an idea to create the best tasting, smoothest tequila as our own house tequila to drink and share with friends has quickly turned into the fastest-growing super-premium tequila." - Rande Gerber, Co-founder of Casamigos
Casamigos: $1-Billion Business Acquired by Diageo
Eventually, Casamigos’s success captured the attention of Diageo, whose alcoholic wares include Guinness beer and Johnnie Walker Scotch. Among the attractions of Casamigos is the high demand for tequila, which has surged in popularity as the agave-born spirit has transcended its frat-house base.
Sales of tequila rose by 7.4 percent in 2016, based on data from the research firm IWSR, outpacing virtually every other hard liquor category. Plus, according to the Distilled Spirits Council, upscale brands enjoyed the highest growth pace, with sales of “high-end” brands increasing by 292% from 2002 to 2016 and “super-premium” brands astonishingly climbing 706% during that period.
Whereas Diageo already owned the Don Julio brand, the company’s executives argued that they could take Casamigos to even greater heights by selling it beyond American shores.
“It supports our strategy to focus on the high-growth super-premium-and-above segments of the category,” Ivan Menezes, Diageo’s chief executive, remarked on the deal. “With the global strength of Diageo, we expect to expand the reach of Casamigos to markets beyond the U.S. to capitalize on the significant international potential of the brand.”
When it comes to the deal, Diageo said it would initially pay $700 million, with the potential for another $300 million based on the tequila’s performance over 10 years. It was not clear how much each of the Casamigos founders would take home from the sale. Yet, George Clooney, who had two new reasons to welcome the cash — twins born that month — said he and his co-owners would remain involved with the brand in some capacity after the transaction closes, by year’s end.
“If you asked us four years ago if we had a billion-dollar company, I don’t think we would have said yes,” shared Clooney. “This reflects Diageo’s belief in our company and our belief in Diageo. But we’re not going anywhere. We’ll still be very much a part of Casamigos. Starting with a shot tonight. Maybe two.”
For the time being, Casamigos products are sold in 37 countries including the US, Canada, UK, Australia, New Zealand, Hong Kong, Spain, Italy, Peru, the Dominican Republic, and Jamaica. Still, everything is conducted in-house in offices in Los Angeles, where Gerber is based, as well as New York and Arizona.
He added that Clooney and Meldman are still heavily involved. "We all contribute an equal amount. Even though I run the company, we all play our own role.” In fact, the two always make sure they taste every batch. "We have our master distiller, and he's so great that we know they're all consistent, but when a new batch comes out he'll send a bottle and Clooney and I will taste it," he said. "We always want to be the first or the second one to taste it. It’s kind of a tradition. We open the bottle, toast, and take a sip."
"It's always perfect. If you have a great master distiller, they have this palette and sense of smell and taste that has almost been passed down from generation to generation," he said. "We want to be part of that process."
The Bottom Line
From a ‘house of friends’, Casamigos has undoubtedly become one of the most well-renowned high-end tequila brands around the world. Started as an accidental passion project by celebrity entrepreneurs, the liquor brand has sailed through, riding the crest of a wave within the tequila landscape and earning robust upward momentum across those years.
SUBSCRIBE FOR THREE THINGS
Three links or tips of interest curated about technology, web development
and best practices from greatest leaders in the industry.