A Margarita Maker Worth His Salt

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Like any proper royal, former restaurateur Giovanni Fernandez takes his title seriously. Crowned "The Margarita King" in 1981 by the San Francisco Chronicle, Giovanni (he has gone by his first name only for a number of years) owned a clutch of Bay Area eateries that served margaritas named as the best in Northern California for seven years straight.



"Everybody was always telling me I should bottle them," he says. And two years ago, Giovanni, who now prefers to go solely by The Margarita King, did just that.



The push for to enter the drinks business came at the height of the dot-com boom in 2000. Giovanni decided at that time to shutter his successful five-year-old San Francisco restaurant, Barcelona, when his landlord nearly tripled his monthly rent. "I said, 'Thank you very much', and sold the lease rights to a dot-comer who paid cash up front," recalls Giovanni, who was born in Rome and raised in Bogota, Colombia.



RECEPTIVE MARKET. After traveling for three months, he realized he wanted to get out of the restaurant business altogether. The margarita world intrigued him. "I thought, 'Why not start this?'" And this Cinco de Mayo, business is better than ever.



Giovanni spent two years and $2.5 million researching the best tequilas in Mexico and experimenting with different mixes. He came up with a combination of blue agave double-distilled Espolon tequila, orange liqueur, natural lemon and lime, and sugarcane instead of processed sugar. "We did everything -- the mix, the bottle, the labels, everything," he says. Of course, when it came to a name for the drink, there was no need for deliberation. It would simply be: The Margarita King.



This offering joins a drinks market that's already receptive to margaritas. According to Adams Beverage Group, an alcoholic beverage research outfit based in Norwalk, Conn., polls of bar and restaurant owners have consistently ranked the margarita as the most popular cocktail in America for more than a decade. Tequila sales reached an estimated $230.8 million last year, up from $218.8 million the year before, according to a 2004 study by Business Trend Analysts, a research group based in Commack, N.Y.



RIVALS ABOUND. "There are two key reasons for this: The rise in the Hispanic population, and the popularity of margaritas with young and middle-aged adults," says Gregg Palazzolo, senior market research analyst at Business Trend Analysts.



Ready-to-serve margaritas are still a niche segment, albeit a fast-growing one, of the premixed cocktail market. Jose Cuervo, the reigning tequila leader, now has its own line of bottled margaritas and announced in April that it was launching a high-end version called Jose Cuervo Gold Margarita. Tequila maker Sauza also has its own ready-made product line, and Barton Brands makes Chi-Chi's Margarita.



And a number of brands make margarita mixes -- sans alcohol -- such as the popular Lt. Blender's Margarita-in-a-Bag ("just add tequila and triple sec, and freeze and squeeze"). Although numbers aren't broken out on the bottled margarita market itself, Palazzolo says "sales of bottled margaritas appear to be doing well, and the outlook looks good in the future."



STICKER SHOCK. But The Margarita King has set the bar higher. At 34 proof, a higher alcohol content than nearly all of its competitors, The Margarita King runs $19.99 for a 750 ml bottle -- almost twice as much as anything else on the market.



"Premixed cocktails are pretty popular as a whole category," says Brian Bowden, head liquor buyer at Beverages & More, an Oakland (Calif.)-based chain of large liquor-club stores. "The Margarita King is trying to create a new niche within the category. They're doing a lot of hard work to make it work." But he adds, "Most premixed bottles are 1.75 liters, and theirs is half the size for more money."



Indeed, when Giovanni approached one of the largest alcohol distributors in California early on, he met resistance. "They loved it," he says, "but when I told them the price, the room went dead quiet. I said, 'I respect that, but they have half my alcohol content, and I used a premium product.' They said, 'Get 30 accounts and come back.'"



SPREADING THE MESSAGE. Instead, Giovanni and his partner, Gigi Hong, took a grassroots approach that has grown popular within the industry -- going to bars, restaurants, and nightclubs themselves, giving away free samples and generating a buzz among customers.



"We got 150 clients in a couple of months," he says. And when he couldn't get a meeting with Beverages & More, he sat outside of its offices and personally delivered The Margarita King to its buyers. "I said, 'I just want to show you a bottle. Try it, if in two or three days you don't think it's a great product, don't call me.'" The Margarita King is now sold in all 45 Beverage & More locations and on the chain's Web site.



Giovanni expects to sell 25,000 cases this year and 100,000 cases within 24 months -- with a goal of 1 million cases in three to five years. The Margarita King is already available in 20 states, and Giovanni says he has received interest from buyers in Brazil, Japan, Russia, and Israel. And last year, his concoction won a gold-medal award from Chicago-based Tastings, formerly known as the Beverage Testing Institute.



CHILLING WITH CELEBS. Giovanni continues to build his brand. He worked carefully on an eye-catching bottle design to help the product stand out -- or at least keep pace -- on the shelves of liquor stores, which have placed emphasis on style as much as substance in recent years. "We focused specifically on the packaging," he says. "In the spirits industry, it's one of a product's main differentiators." The Margarita King comes in a sleek frosted glass bottle with a heat seal instead of a metal screw-off cap. "We spent two years just on the bottle."



And, in a Paris Hilton world, he has also done his best to make The Margarita King the unofficial elixir of the celebrity party circuit, using connections from his restaurant days to network. Getting it in the hands of A-listers is an ongoing project. Giovanni is regularly photographed with his movie-star friends -- almost always with a bottle of The Margarita King. His Web site has a virtual photo scrapbook of Giovanni with such stars as Jessica Simpson, Sheryl Crow, Usher, and Jamie Foxx (Giovanni's table-tennis partner).



In 2003, his premixed elixir served as the official backstage cocktail at the MTV Video Music Awards, and this year he was part of E!'s Golden Globes postshow, shaking up margaritas and serving them to the likes of Martin Scorsese, Leonardo DiCaprio, and the cast of Desperate Housewives as they made their way for the backstage interviews.



Next up? He says he's in the process of legally changing his last name to The Margarita King. For the man born Giovanni Fernandez, it seems, every day is Cinco de Mayo.