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Russ: This is The BusinessMakers Show, heard here and online at thebusinessmakers.com. It's featured guest time on the show this morning and I am fortunate to be in the headquarters of Riazul Imports and my guest is Inaki Orozco, Founder and CEO. Inaki, welcome to The BusinessMakers show and thanks for having me.
Inaki: Thank you very much Russ-a pleasure.
Russ: Why don't you start by telling us about Riazul Imports.
Inaki: Riazul Imports is in the business of importing premium tequila that is made in the Highlands of Jalisco. We import into the U.S. through Texas and are currently only selling in Texas but soon enough, we will be able to sell it in other points such as Illinois and New York.
Russ: Okay. So, you're importing from the Highlands of Jalisco. Who is growing your agave?
Inaki: Well believe it or not Russ, we own our own agave. I was blessed enough to inherit a piece of land in the Highlands of Jalisco-great land for the production of agave because of two main factors, one being the high-mineral content in the soil and the second one being the fact that it's an island which exposes the plant to extreme temperatures which segregates more agave nectar. And so we own the agave plants so that our outsource through a distillery that's owned by a third party-by a business associate. We put all the components together-we bottle the product-and we ship it to the U.S.
Russ: Cool. I know a little bit about tequila. I've enjoyed it a couple of times in my life.
Inaki: Good for you.
Russ: I am under the impression that Jalisco is perhaps the best state in Mexico to grow the agave for tequila.
Inaki: That is correct Russ. It was where tequila was born. And there's actually the City of Tequila where it all took place about 500 years ago. But given the very popular demand that our blessed spirit has been having worldwide, the government has been forced to expand the denomination of origin to a couple of other states. Not the whole state but yes, some municipalities and some different areas within those states that comply to the soil properties that are needed to grow agave successfully.
Russ: And I'm also under the impression, Inaki, that a few years ago there was an American-grown agave in an attempt to call that tequila-and I believe that the businessperson that was doing that was unsuccessful.
Inaki: That's absolutely correct. There was a whole issue and a hearing Russ to where Mexico won that fight because the agave has to be grown in only certain areas that present soil characteristics as well as temperature-and micro-climate characteristics that are prone for the agave sugars to be at the level where after the processes that they undergo make for a good tequila. And not only the U.S.-let me tell you countries like Australia and countries like South Africa have come forward to hearings presenting their cases, but luckily for us in Mexico-which we believe and truly believe that tequila is an icon of our country-this has been widely protected. But this is not new-this is just like a cognac or champagne in France. It's the same story.
Russ: Okay. I also know that when you talk about good tequila, we're not talking about tequilas that fraternity houses shoot at parties-we're not even talking about tequilas that you put in margaritas, right? We're talking about sipping tequilas.
Inaki: You're absolutely right Russ. In Mexico, there is a culture for sipping tequila and this is really how it's been drank. But a funny story is that tequila has progressed from being the beverage of the blue-collar employees to the white collar. Back in the '50's, tequila was considered-as I said-the beverage of the lower class.
Russ: In Mexico.
Inaki: In Mexico. It's always been drank in a sipping fashion but the way it made itself to countries like the United States, was without that culture. And so Mexican companies decided to ship only stuff that would kind of comply with the way that the tequila was drank in those countries. And it was only through shooting and through mixing. So that kind of blends in beautifully to the progression that tequila has had in countries other than Mexico.
Russ: So you're saying that for us gringos here-for a long time-we were sent the lower quality tequila since all we were going to do is mix it or shoot it and the finer premiums were not sent here in the past.
Inaki: Absolutely Russ. That is the progression that tequila has had, not only in the U.S. but worldwide. It has been considered as a strong drink-not enjoyable-which if you go to Mexico you see that that's not totally true. But that culture is the effort and the learning curve that players like myself are engaging in-we're here to educate the consumer.
Russ: Okay. But now you also mentioned the in the '50's-even in Mexico-it was more of a blue-collar drink so that's progressed over time as well.
Inaki: You know how it is. Things progress and tend to get better. When tequila started, the techniques behind tequila were not what we have today. Everything has evolved. Evolution is usually better-just like technology. So that's what I mean when I say that in the '60's and the '50's-tequila was really a blue-collar beverage but it progressed and it got better and more expense to where it attracted people in the higher class. And that's exactly the progression that tequila is seeing, not only in the U.S. but in other countries around the world.
Russ: Now I know for a fact, Inaki, that you grew up in Mexico. Share your background with us.
Inaki: Absolutely Russ. I was born in Mexico City-pretty much lived there all my life. I did live a couple of years in Jalisco-which is as we said the state where we have the ranch house where we grow the agave. I lived abroad a couple of years-actually I used to play a lot of tennis. I lived in Florida for a year and I lived in France for another year. I grew fond of wine and believe it or not, agave is very similar to grapes-where you have a good grape, you have a good wine. You have a good agave-you have a good tequila. I did my college years in Mexico City. I worked for a bank-a very known bank for a long time-decided to pursue a Masters in Business. I came to the U.S.-to Houston to wonderful Rice University. Got my Masters and then I got hooked into the tequila industry because of my background in agave.
Russ: Great. We're going to want to talk more about that background, specifically the fact that you family owns property in Jalisco, after this. We're talking to Inaki Orozco, the Founder and CEO of Riazul Imports and this is The BusinessMakers show heard here and online at thebusinessmakers.com
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Russ: This is The BusinessMakers Show, heard here and online at thebusinessmakers.com. And continuing on with my discussion with Inaki Orozco, the Founder and CEO of Riazul Imports. Inaki, a key part of this story-I think-and your success so far, is the fact that you own actually land in Jalisco.
Inaki: That's essential Russ. I am blessed in a way that I inherited a piece of land that was passed on to me by generations and I guess it all starts going back to the independence days of Mexico where my great-great-grandmother was involved-not directly in the armed forces but yes-as a strategic advisor to the conspiracy group. To make a long story short, she kept part of that land which she passed on generation after generation-which I'm blessed it got passed on to me-and I seized the opportunity because I saw an unused piece of land within the denomination of origin for tequila and I started growing agave when there was shortage. And that's where I put my business cap on and understood that it could be a good business going forward.
Russ: Wow. Now wait a minute. It's you great-grandmother?
Inaki: It's my great-great-grandmother.
Russ: Your great-great-grandmother.
Inaki: Just to give you an idea, we're talking about 1810.
Russ: Okay. And she was awarded the land.
Inaki: She was awarded the land-she was in charge of concentrating the armed forces that eventually fought to make Mexico independent from the Spanish-and yes, after that she was awarded about 5,000 acres of land which she sub-divided with and shared with the people that she congregated back then.
Russ: Okay. What size is the land that you inherited?
Inaki: The land today-I want to say-is about 250 hectors, which is about 500 acres.
Russ: Okay-wow. Can you grow lots of agave on that?
Inaki: Just to give you an idea Russ, you can grow about 6,000 agaves per acre.
Russ: Whoa.
Inaki: So you do the math. That's a lot of agaves we can have there.
Russ: And so since you grown your own and you have this land, I assume that you have a fairly substantial work force that goes out and harvests the crop?
Inaki: Yes. We do at the time of harvest-just so you know-agave is a plant that takes anywhere from six to eight years to mature. It's a very hardy plant and what I mean by that is that it doesn't take the usual care of an annual crop. It still takes some care-you apply fertilizers, insecticides, pesticides, etc., etc.,-but it's a succulent plant. So what that means is that in the rainy season, it sucks the water that it then auto-administers itself when it's dry-because it's a semi-deserted plant.
Russ: So did you actually decide to pursue your MBA and go to Rice University knowing that, "Hey, I own this land and it has some value and maybe I want to be a business person and become an entrepreneur" or were those two things not necessarily connected?
Inaki: No connection Russ. I pursued my MBA to round out my skills. I believe in corporate America and I think that I needed that piece to compliment the skills that I was creating in my background and my resume. But when I saw an opportunity as big in tequila as I did-and having the ties and connections and the relationships-that's when obviously the MBA came into play and it's all been working out so far.
Russ: Describe the opportunity-because in that era, we already had tequila here.
Inaki: We believed, Russ, that tequila has been having a constant shift-a transformation -not only on the visual-on the packaging side-but also on the enjoying side. Tequila-as we were talking beforehand-has progressed from being a shooting and a mixing drink to a sipping experience and at Riazul, we firmly believe that we have-as I said-the connections and the relationships in Mexico where we can satisfy that need that the consumer is laying out for us today.
Russ: And so you're actually seeing the interest in a sipping tequila taking off in the United States.
Inaki: Oh-it's overwhelming Russ. Tequila-in its premium category-has been growing at double-digit growth for the past couple of years and there's no relenting.
Russ: Okay. Now obviously, as premium tequila, the purchase price would be a little bit higher. How much does a bottle of Riazul cost?
Inaki: Within our two tequilas, Russ, that we have today-we have our Riazul Silver and our Riazul Anejo-the Anejo is priced at $55.00 per bottle. The Silver is priced at $45.00 but what we heard from enthusiasts and connoisseurs, is that they're getting a hundred-dollar-worth tequila for half the price.
Russ: Okay. Is there anything, Inaki, that you do that's unique in the process of creating Riazul?
Inaki: Absolutely Russ. It all starts with a rigorous selection of the baby agave plants. We are very, very rigorous in that process. We keep a close eye on the plant during its maturation stage-which is anywhere from six to eight years-and we only harvest the plants that have the highest quality of sugar content in them. Which that is going to be paramount for a good fermentation. In terms of the fermentation, we utilize top-of-the-line yeast-we own our own yeast. And then our master distiller has been doing that for centuries-passed on by generations on his side-to where he is a true expert at separating the tails and the heads and maintaining the heart of the agave syrup or nectar which is what then is going to be bottled and what we come to enjoy. The beauty of our Anejo, which has been so highly rated, is that we age it for periods longer than the average brands and we age it in French Oak compared to American Oak which is what traditional brands utilize.
Russ: And how long have you been doing this now?
Inaki: This has been a brainchild for about three years Russ. However, we just launched Riazul about four months ago, after we were able to lock in the amount of capital that I knew I needed to launch a brand and compete with the fierce competitors that are out there.
Russ: We're talking with Inaki Orozco, the Founder and CEO of Riazul. We'll be back with more of Inaki after this. You're listening to The BusinessMakers Show, heard here and online at thebusinessmakers.com
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Russ: This is The BusinessMakers Show, heard here and online at thebusinessmakers.com and continuing on with Inaki Orozco, the Founder and CEO of Riazul Imports. Well, Inaki, this is a cool story-inherited land from your great-great-grandmother that happens to be in Jalisco-just perfect land for growing agave and creating your own premium tequila. And you're just out there really getting substantiated in the market. How in the world do you market it?
Inaki: That's a key and focal point Russ in which we are concentrating our efforts. Let me start by saying that our tagline is "Flow Freely." And that's the perfect two words that describe the whole life of this project. We have been doing things differently and that differentiation has really allowed for us to bring the value to the table which is what we offer today to our consumers. And our master tequileros and distillers just supply beautiful stuff in the progression and the doing of this product that we're able to-as I said-come forward with a high-quality product. And then we went a different route with the packaging as well. Our packaging is sexy-elegant-because we understand that tequila is making a firm statement toward that direction. If you see it-traditionally what you have are short, round bottles-we're drifting away from that. Tequila is fashionable and it's sexy today. And that's what Riazul is all about.
Russ: Okay. How do you let the market know about it?
Inaki: As you obviously know, we have a story in itself. This product is blessed with a story and great packaging and a great product-and that allows for us to engage our consumer Russ. So we go out there-I am working the pavement-I roll up my sleeves-I'm there with venues and restaurants, bars-talking to people, sharing stories, tasting the products, sampling-and that really creates an amazing word-of-mouth-that gets waterfalled (sic) and we've been having a great response. Also, we have done tradeshows-we attended the Las Vegas Nightclub and Bar Convention. That proved very beneficial, as now we have legitimate opportunities to lock down distributors in other states like California, Illinois and New York.
Russ: Okay.
Inaki: And we're also building a relationship with an up-and-coming fashion show company-we've paired up in fashion events with them in the past-so I guess that's in a nutshell the marketing strategy that we've been following.
Russ: Well, Inaki I really, really appreciate you sharing your Riazul story with us and we wish you all the success in the world.
Inaki: Thank you so much Russ-a pleasure.
Russ: You bet. We've been talking to Inaki Orozco, the Founder and CEO or Riazul. You're listening to The BusinessMakers Show, heard here and online at thebusinessmakers.com