By Andrew Cleary Nov. 26 (Bloomberg) — Patron Spirits International , which outspent all other U.S. liquor brands on marketing last year, plans to grab more “blockbuster” billboards, ousting auto, phone and beer ads to catch up with tequila rival Jose Cuervo. Patron, controlled by shampoo billionaire John Paul Dejoria , this year gained control of a 225-foot-tall billboard, New York’s largest, near Penn Station. Formerly held by AT&T Inc., the billboard says shoppers can “eliminate regifting” by buying Patron for their loved ones this weekend, the busiest of the U.S. Christmas shopping season. Clear Channel Outdoor Holdings Inc. says such a billboard can cost $1 million a year. Chief Operating Officer John McDonnell said the third- biggest U.S. tequila maker is raising its marketing budget by 10 percent to secure similar billboards in the 10 biggest U.S. spirits markets. Sales of Patron, which costs between $40 and $500 a bottle, rose 10.6 percent in the year to Sept. 6, Chicago-based researcher Information Resources Inc. says. Patron is “taking advantage of opportunities that haven’t been available in the past, like choice outdoor locations,” McDonnell said yesterday. “Increased awareness and exposure is very much attributable to our advertising.” Las Vegas-based Patron may pick up sites being vacated by automakers, he said. A Patron ad replaced Heineken NV on a billboard above the I-93 expressway in McDonnell’s home town of Boston last year. Heineken, which is cutting costs like advertising to stay profitable, saw U.S. sales of its Dutch beer plunge 12 percent by volume in the first half. Diageo Plc , the largest liquor maker and Cuervo’s U.S. distributor, cut its marketing spending by 9 percent in the year ended June 30. Seagram Veteran For Patron, “it is particularly smart to increase that spend,” said Tom Sebok , chief executive officer of advertising firm Young & Rubicam North America. “Those who are aggressive will get long-term dividends. Those who aren’t will have a much harder time clawing back in better times.” Patron, which also owns Ultimat vodka, may buy more brands, McDonnell said. The veteran of Seagram Co. said the company has no debt, and declined to provide sales or profit figures. Larger tequila rivals Casa Cuervo SA de CV and Fortune Brands Inc. ’s Sauza, which both sell for less than Patron, saw their revenue decline 2.4 percent and 8.9 percent, respectively, while total U.S. liquor sales rose 1.6 percent over the same period, according to Information Resources. Patron is also spending more to secure inside covers and pull-outs in magazines including GQ, Sports Illustrated, and Forbes, McDonnell said in an earlier interview in London. “You have to have these blockbuster positions,” he said. The company generates 90 percent of its revenue in the U.S. and spent $50.9 million on advertising its tequila in 2008, more than any other liquor brand, Taylor Nelson Sofres Plc says. Dejoria, worth $2.5 billion according to Forbes, founded Patron in 1989 with business partner Martin Crowley , who died in 2003. His passing sparked a four-year battle between Dejoria and Bacardi Ltd., with both claiming to have had an offer accepted by Crowley’s estate. The two parties reached an out-of-court agreement and split Crowley’s stake, giving Dejoria control. Bacardi and Patron both declined to give more ownership details. To contact the reporter on this story: Andrew Cleary in London at acleary7@bloomberg.net .
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Patron’s Tequila to Push Autos and Beers Off `Blockbuster’ U.S. Billboards
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