It’s the turn of the century, and you’re at SeaWorld San Diego, a sprawling complex of saltwater semi-captivity that Anheuser-Busch, the country’s largest beer company, has owned for the past decade. But you don’t care about who owns the place. You’re just there because some guy who works for a beer brand you’ve barely heard of invited you and 300 other 21- to 25-year-olds to the compound to see some dolphins and drink some free suds. Is it weird that he hired a limo to drive you and a bunch of strangers to SeaWorld? Kind of, but hey — it’s Y2K, baby! Anything goes!

“At the time, there’s no such thing as Uber, so from a liability standpoint, we had to pick them up and drop them off. … We got like every taxi in town — buses, limos, whatever was available — to take these people back and forth,” says Edmundo Macias, Tequiza’s former brand manager. “We said let’s throw a big party, and there’s gonna be free Tequiza.”

Introduced in 1997 to ride the first wave of American tequila curiosity and protect St. Louis’s flank from growing threats from imports and spirits, Tequiza was A-B’s hottest new product launch of the ‘90s, rolling out con gusto across the American South and West to solid early sales. A Brandweek article from February 2000 that Macias shared with VinePair proclaimed that “Tequiza was launched cheap by A-B standards and already has eclipsed No.1 craft beer brand Sam Adams in volume, putting it well on the way to 1 million barrels.”

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But that was then. The brand never hit a million barrels, and never gained any sustained traction with American drinkers. Tequiza limped along for another decade or so until A-B — which by then had been reconstituted as Anheuser-Busch InBev — retired the beer from its rotation for good. What happened to Tequiza? It’s a classic tale of cross-segment ambition, dubious distributors, and flagship fealty. But even though the beer itself has long since hit the trail, Tequiza’s liquid legacy helped spawn the flavored malt beverage boom currently remaking the American drinking landscape.

“It was ahead of its time,” says Gerry Khermousch, the former Brandweek editor, who has covered the beer and non-alcoholic beverage industries for decades. But what a time it was. Here’s how it all went down.

Blending trends: tequila & cerveza

Some beers are borne of centuries of tradition, of closely held recipes, of many generations of brewers learning from those who came before. Tequiza’s origin story, on the other hand, is entirely contained in its awkwardly bilingual portmanteau of a name. The beer was a drinkable embodiment of a couple contemporary trends A-B hoped to tap into:

  • The premiumization of full-proof tequila amidst full-proof spirits’ growing popularity with American drinkers
  • The remarkable deluge of imported Mexican lagers, led by what was in hindsight one of beers’ first lifestyle brands — Corona

Both strategies represented A-B playing defense — or more charitably, insurance — with its market might. Categories in the late ‘90s were much more segregated than they are today, and losing a lifelong beer drinker to full-proof spirits was anathema to a company like A-B. But peeling them away from booze was tougher, too, recalls Tim Schoen, a three-decade Anheuser-Busch marketing veteran who worked on Tequiza, among other brands. “Back then the specific target was spirits drinkers. The spirits category was encroaching on the beer category and so [Tequiza] was certainly trying to attract some of those potential lost [beer] customers, the ones that [were] looking elsewhere.”

“Interest in hard liquor was starting to be resurgent,” echoes Colleen Beckemeyer. As A-B’s director of new products through the ‘90s, she oversaw the launch of Tequiza. “Maybe tequila wasn’t the most upscale option for the hardcore liquor drinkers, but it did have its footprint in the Southwest. For that reason, I think it was kind of interesting to us,” she says.

To American drinkers, tequila was also interesting, period. The spirit was strong, far-flung yet available, and retained remarkable pop-cultural prominence before, during, and after Tequiza’s release. Consider:

  • 1972: The Rolling Stones embarked on what Keith Richards would later recall in his memoir as “the cocaine and tequila sunrise” tour
  • 1983: Shelly West’s “Jose Cuervo” topped country charts
  • The 1990s: Van Halen’s “Cabo Wabo” (released 1988) begot Sammy Hagar’s eponymous cantina concept (1990) and tequila (1996)
  • 2002: “Jose Cuervo” was atop Billboard’s country charts again, courtesy of Tracy Byrd’s “Ten Rounds with Jose Cuervo.”

But while the agave distillate was some cause for concern, Tequiza’s bigger bogey was Mexican beer, and one brand in particular. “This was developed to try to compete with Corona,” says Macias, who worked for Beckemeyer on Tequiza’s rollout. “That was the genesis of the brand.”

Chasing Corona

The competition would be fierce. In 1998, Corona overtook Heineken as the U.S.’s best-selling import beer. “In less than a decade, Corona’s manufacturer, Grupo Modelo S.A. de C.V., has transformed a once-obscure Mexican beer into a global brand whose name recognition — if not its sales — approaches that of Coca-Cola and Marlboro cigarettes,” The New York Times noted the following year. Corona, with its endless-summer attitude, primo painted label, and iconic clear glass bottle, was a big deal in the U.S. beer business, and marked a tectonic shift in drinkers’ attention toward the southern border.

“Corona was a sensation, there’s no question about it,” says Benj Steinman, publisher of the long-running trade publication Beer Marketer’s Insights (BMI), “and it was strongest in the biggest market, California. A-B in the ‘90s was 50 share of the [beer] market in California. … They saw it as a problem.” William Knoedelseder, in his best-seller about the Busch family, “Bitter Brew,” reported that by 1991, A-B’s own internal research showed that Budweiser was slipping among “contemporary adult drinkers … who were turning to upstart American microbrew brands such as Samuel Adams and imports like Corona Extra.” Despite the runaway success of Bud Light — which had been introduced in 1982 and was, by the mid-90s, neck-and-neck with nemesis Miller Lite for America’s overall best-selling beer — drinkers’ excitement for the Mexican “vacation in a bottle” was enough to spur a response from A-B.

The response was Tequiza. By the time Macias moved from A-B’s Hispanic marketing team to new products in 1998, the Tequiza experiment was already rolling. Both he and Beckemeyer say the liquid itself was developed by A-B brewer Jill Vaughn, who incorporated agave nectar and actual tequila into the brew at A-B’s St. Louis pilot brewery. “She really was able to help bridge the brewing and the marketing” considerations for Tequiza, says Beckemeyer. (Vaughn no longer works for the company and did not respond to messages sent via social media.)

Maybe even more calculated than the liquid itself was the vessel that it would be sold in: 12-ounce clear-glass longnecks, Corona-style. “Corona owned clear glass, and they still do, to a certain extent,” says Schoen. Selling Tequiza in similar packaging, with a similar, bold yellow color scheme, was a way to get customers keen on A-B’s would-be Corona counterpoint. “The clear bottle was really the standard, and we didn’t necessarily want to deviate from that,” says Beckemeyer of the decision.

Selling sweetness

But was it ever any good? Opinions differ on this front. “The product was great,” says Schoen. Macias remembers early iterations being too sweet, something he believes hamstrung the offering among male consumers, and the brew was reformulated at least once after complaints of sweetness from rank-and-file drinkers.

“I remember the first test market was someplace in Texas,” said Beckemeyer. “I was out and we were having a first batch, and it was terrible. It was so sweet. So we went back to the drawing board and made it less sweet.”

A canvass of review forums suggests Tequiza was, at best, a polarizing option among American drinkers. The beer boasts an impressive all-time rating of 0 on RateBeer.com, and a score of 50 (“Awful”) on BeerAdvocate. It’s hard to say how many of those reviews came from people who’d actually tasted the beer, though, and the brand clearly had some fans. When news of its discontinuation hit the internet, real Tequiza heads made their distress known. “The only beer my dad has ever liked was Tequiza, which is now out of business. Any recommendations of something similar?” queried one redditor in 2012.

Regardless, Tequiza’s national debut in 1999 predated the heyday of user-generated review forums like RateBeer and BeerAdvocate. Traditional advertising, marketing, and distribution still held serious sway over the average supermarket shopper looking for a 6-pack. “We had initial success right out the gate, and what we kept hearing was, ‘I don’t normally drink beer but I would drink this,’” says Macias, adding that that feedback mostly came from women. The team rolled the beer out with the print and billboard ads with the slogan “Give it a shot” to suggest full-proof braggadocio, plus a radio spot featuring a riff on The Champs’ horn-heavy 1958 classic, “Tequila.”

The ads may have helped, though Macias believes that A-B never gave Tequiza enough money to really give the brand a fighting chance with more sustained marketing or a costly TV commercial. Marketing for A-B’s new products all came from a shared budget, so “if you’re spending that money on Tequiza, that means you’re not going to [be able to] spend money on other innovations,” he says. And with no obvious ties to the firm’s flagships, A-B had no obligation to throw money at Tequiza’s post-launch performance. If it did well on a shoestring, great. If not, the company could cut bait without damaging the aura of its portfolio champions. “If it was part of the Bud Light family, or Budweiser, or even Michelob at that point, it would have had a separate, sizable budget,” speculates Macias.

(A spokesperson for Anheuser-Busch InBev, Lacey Clifford, says the company today doesn’t employ any “relevant spokespeople who could discuss [Tequiza] in any kind of detail.”)

But more than anything, Tequiza — or any beer in any macrobrewers’ U.S. portfolio, really — needed buy-in from drinkers to succeed. And to get in front of drinkers at retail, it needed support from distributors. A-B’s much-ballyhooed, nominally independent wholesaler network was the envy of the industry in 1999, and it went to work in service of St. Louis’s latest creation.

“They blasted [Tequiza] out, like they often are able to do with that distribution system,” says Steinman. “That just really [got] the product out immediately and everywhere.” Wholesalers aligned with A-B were thirsty for a beer to offer retailers fielding increased demand for Corona. They didn’t have rights to distribute actual Corona in the U.S. at the time (particularly vexing given that A-B then owned 50 percent of the brand’s parent company, Grupo Modelo) but how about this product that looks like it, and has real imported agave and tequila in it to boot?

According to BMI’s internal figures, Tequiza sold 570,000 barrels in 1999 — a respectable national debut. “That’s pretty good,” allows Steinman. But Macias knew it wasn’t enough to secure Tequiza a permanent spot in A-B’s portfolio. “A lot of smaller companies would love to have 600,000 barrels … but we [Anheuser-Busch] spill more than that,” he says. Tequiza’s agave-based sweetness was holding it back from popularity with male drinkers, a vital cohort. “As I’d sit in these focus groups, especially with males, they would say, ‘It’s too sweet, not enough tequila taste, and we [want] something with higher alcohol.’” (Hence the SeaWorld San Diego mission: a mass taste-test to gauge the popularity of three different Tequiza formulas, each with a varying amount of agave sweetener.)

In a bid to convince hard-drinking American dudes to, as the slogan said, “give it a shot,” Macias pitched the idea for Tequiza Extra — higher alcohol, less sweetness, and a black label that didn’t even mention agave. “It looked almost like a Cuervo bottle, the fonts were similar,” says the one-time brand manager, who these days works for a San Antonio spice company, Twang, that back in the day had provided flavored salt packets for Tequiza’s launch. “I thought it had all the potential in the world, but when we introduced it at one of the big distributor conventions, we kept hearing the distributors [say] ‘that’s not something I would drink.’”

“That basically killed the brand,” he concludes.

But Steinman is skeptical. “If the distributors weren’t signing up for repeats, that’s because the consumer wasn’t really signing up for repeats,” he says, adding that the fact that A-B never sprung for Tequiza TV ads was “not dispositive” of its eventual failure, either. In other words: If people wanted to drink Tequiza, wholesalers would have kept ordering more, regardless of whether it was on TV or what they personally thought of it.

Schoen offers another important bit of context. “There was one reason [Tequiza] didn’t work at the time, and that reason is very simple: Bud Light growth,” he says. Between 1990 and 2000, A-B went from producing over 11 million barrels of its flagship light adjunct lager to over 31 million barrels, per “Brewing Industry” by Victor J. and Carol Horton Tremblay. (The economic reference text opted not to even bother with Tequiza’s category, known then as “phantom specialty,” because it was too small to merit mention, and “malt-alternatives are not close substitutes for beer.”) “It was on just an incredible run, so [Tequiza] got what we’ll call ‘mixed’ distributor support and execution. There were so many other things [wholesalers] were doing” at that time that Tequiza simply wasn’t as much of a priority, remembers Schoen.

“I don’t know if wholesalers lost interest or consumers lost interest, but for whatever reason, there just wasn’t as much interest,” says Beckemeyer. Why dwell on Tequiza? A-B had the Bud Light juggernaut; the first craft beer boom was busting; and products like “Doc” Otis’ Hard Lemon malt beverage were testing well with consumers. “We [weren’t] going to fight a tidal wave,” she explains. And so Tequiza was swept away. The brand was still available in select markets until 2009, but it was effectively “gone by 2005,” says Steinman.

The Tequiza legacy

Tequiza’s short life wasn’t particularly glamorous — unless you count radio ads and SeaWorld glamorous — but it wasn’t totally pointless, either. Tequiza’s legacy, to the extent that it left one, can be traced in the products A-B and ABI pursued once it was gone. After unceremoniously laying the brand to rest, A-B leaned more heavily into flavored beers. In 2006, A-B released Shock Top, brewed with orange and lemon peel; in 2009, Bud Light Lime (a “significant new entry” for its time, says Steinman); and in 2012, Bud Light Lime-A-Ritas, full-blown fruited FMBs. Vaughn herself was involved in the development of nearly all of them. Tequiza made A-B “more comfortable with the [idea of] introducing flavors to a beer,” says Beckemeyer. “That was a foreign idea at the time.”

With the benefit of hindsight, Tequiza, like Coors’ Zima, another contemporary FMB punchline/product, could be seen as a premonition of American drinkers’ recent thirst for FMBs, canned cocktails, and perceived “better for you” ingredients. Schoen (whose current firm, BrewHub, works with several clients that use agave in their products, with more on the way) points to the red-hot popularity of the loosely defined Ranch Water category as an indication that A-B’s agave-infused failure was the right idea at the wrong time. In its day, Tequiza “just wasn’t big enough to make it sustainable,” he says. “But I would argue that if someone had it out there today, it would have been a hell of an entry.”

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