Jack Daniels Owner Brown-Forman Secures $200 Million Tequila Investment; New Facilities on the Way

Jack Daniels owner Brown-Forman is betting big on a rapidly changing tequila industry. The company will need to make some big adjustments. (Photo: Casa Herradura)

The spirits juggernaut behind brands like Jack Daniels, Woodford Reserve and Old Forester has just announced a $200 million expansion to its Herradura tequila distillery in Jalisco, Mexico.

Brown-Forman says that the multi-phase project will help it meet growing demand while expanding its waste-to-energy efforts. Above all else, the centuries-old, nearly $30 billion company is likely hoping to adjust to a rapidly changing market.

“The world’s growing taste for premium tequila is driving double-digit net sales growth of our Herradura and el Jimador brands. We believe strong consumer interest in tequila will continue and we’re expanding our production capacity to meet this demand,” said Lawson Whiting, President and Chief Executive Officer of the Brown‑Forman Corporation.

The phrasing here is interesting given that neither Herradura nor el Jimador would typically be considered “premium” tequilas in the conventional sense.

Both brands have existed for decades, selling the kinds of $20-$50 bottles that defined tequila as college dorm party fodder up until recently. The growing trend towards so-called premium tequila — embodied by celebrity investors,  $100+ price tags and slender bottles — is arguably a very different category.

More likely than not, Brown-Forman will use its new tequila distillery to expand Herradura and el Jimador into luxury-focused directions.

The “premium” tequila look. (Photo: Tequila Herradura)

Last November, Herradura debuted its first “ultra-premium” tequila in the form of Herradura Legend, an $150 12-month-aged añejo that took clear inspiration from the likes of Clase Azul and Don Julio 1942. el Jimador has yet to release a similarly priced bottle, though, at this point, it seems like an inevitability.

This shift is being witnessed everywhere.

Speaking to the Financial Times, President and CEO of rival spirits company Suntory, Takeshi Niinami, ominously said the following about the American tequila industry:

“A polarization is happening in the U.S. market: one is toward the premium; the other one is less alcohol drinking.”

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