Guideline to determine the initial cost for a Tequila Start-Up

This guideline has been created with the purpose of helping you know all the variables involved in creating Tequila and may give you a approximate initial investment to accomplish it. I hope this article is helpful and if you need me to answer any other question feel free to contact me.

Bottle production

One of the highest investments at the beginning is the bottle production. It all depends if you are willing to start with a pre-existing bottle, also called generic bottle, from a Mexican or foreign manufacturer or you are planning to create your own design. The advantage of choosing a generic bottle is that you don’t need to invest in a designer to make it or the mold – and you save a lot of time. Of course the disadvantage is that you will not have an exclusive bottle and will have to share with many others. The cost of a generic bottle goes from .80 to 1.20 dollars plus 16% tax for a 750 ml piece. An example of a Mexican supplier is VITRO (www.vitro.com) and the name of the bottle process is called “automatic process”. Also VITRO manufactures unique bottles but I will talk more about this later on. I recommend this option when your initial investment is low or want to safe time to launch your product.

If you decide to have a unique bottle the approximate cost for the mold is 5 K dollars. Takes around 6 weeks to be made and the approximate bottle cost is no less than 1.70 dollars plus tax for a 750 ml piece. This production process is called “semi automatic” process. There are 3 or 4 options of manufactures in Guadalajara area for this particular process. I recommend this option when you are planning to start with a medium volume such as +-10 K bottles. An example of a “semi automatic” bottle is the late 90’s Cabo Wabo Tequila, Mañana Tequila, Oro Azul Tequila.

As I mention before, VITRO manufactures unique bottles but the volumes you have to buy is +-100K bottles and the mold cost is around 10K USD; but the cost of the bottle will be almost half the cost of a “semi automatic” bottle. VITRO is the company responsible for the production of almost all soft drinks glass bottles and beer glass bottles that are sold in Mexico.

The last option is called “artesanal” or “blown glass” and as the name stands is 100% hand made. From the three options this is the most expensive bottle but the cost of the mold is cheaper. An example of an “artesanal” bottle is Fortaleza Tequila and the unit cost per bottle is approximate 3 dollars each.

Label printing

I can divide this area into two groups: the traditional labels and the INNTEQ labels.

The traditional labels are labels massively printed on paper or clear sticker by offset, flexographic or any other industrial machinery. This type of labels have being used since the beginning of the industry and now days they continued being used by the Monster Tequila Companies, such as Cuervo, Sauza, Herradura, and Patrón, on most of their products. Because it is everything printed in a machine, the volumes must be big enough. This originates that the cost for a set of labels be very low. Exists thousands of colors available and type of papers to be used. Also, now days, these Monster Tequila Companies owns top technology machinery specifically to bottle and labels thousands of bottles per hour. This labels are compatible with their equipment.

The second group is called INNTEQ labels. I decided to call it this way for obvious reasons: is the name of my company. INNTEQ labels are innovative labeling processes on tequila bottles such as UV silkscreen, fired decals, sandblast or etch, color spray coat on glass, and hand painted art. The majority of the processes are done manually supported by machinery. The cost for these type of processes is higher than the traditional labels but at the end is worthy because consumers are searching for new or less common packaging. For example, one of the reasons the package of Gran Patrón Platinum Tequila is so luxurious is due to the etched label on crystal bottle. Just these two elements may represent more than 80% of the product total cost. For more examples of works done by INNTEQ please visit www.innteq.com, or our Facebook page INNOVACION EN TEQUILA.

Caps

Thanks to the tequila owners that everyday are trying to improve the packaging of their product, many caps and corks industries have being established in Mexico. We have natural and synthetic cork, plastic caps, aluminum caps, wood caps, pewter caps, and glass caps suppliers. The costs for these products vary from the size and weight. It is possible to make a special cap figure depending on the material. For metallic caps a mold is required and the cost may vary from 1 to 2K USD. Wooden caps also may have special shapes and a special knife is required and may cost around 500 to 1K USD. Plastic Guala caps are generic and are available in many colors, therefore no mold is required.

Box / Packaging

The box is the least problematic as all that it is needed are the dimensions of the bottle and number of pieces per case to determine the cost of it. The exterior can be printed with as many colors as desired.

Tequila

Last but not least the basis of all of this. There are four categories of 100% agave tequila: Blanco, Reposado, Añejo, and Extra Añejo. If you want to know the difference between these please visit the Tequila Regulatory Council web page www.crt.org.mx or the Tequila National Chamber web page www.tequileros.org

A little useful background and history is that in the last decade, the price for a kilogram of agave was established by the Monster Tequila Companies in around 0.50 Mexican Pesos. This was only business for them but not for the farmers. Therefore farmers decided to shortage their production and instead farmed other crops that are a little better pay such as corn, sugar cane and wheat. Right now the price of the agave has increased up to 10 pesos per kilogram.

Of course this will hit directly the cost of the liter of 100% agave tequila. An average cost per 80 proof liter of tequila is 6 dollars a Blanco, 8 dollars a Reposado, 9 dollars an Añejo, and 30 dollars and Extra Añejo.

Trademark and other costs.

Other costs you have to take in mind is the registration of the brand in Mexico, turn in of paper work to the Mexican chambers in charge or regulate the Tequila industry, and the help of an specialist in the field that can guide you through the whole process in Mexico. A complete advice job plus the cost of trademark and paper work has a cost of 3000 dollars.

As part of our services, Innteq provides consultancy to help you start your own tequila brand. For one-to-one guidance, contact me, Gonzalo at contact@innteq.com or via facebook  INNOVACION EN TEQUILA

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