Mixing Equal Parts Style and Substance with Patrón Spirits' CMO

CMO Spotlight: Lee Applbaum, Patrón Spirits

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Lee Applbaum
Lee Applbaum Credit: Patron Spirits

Any master brewer or vintner will tell you that too much of one ingredient can ruin an entire batch. The same is true for a luxury brand, says Lee Applbaum, chief marketing officer of Patrón Spirits and winner of The CMO Club's Creativity & Storytelling Award.

"A lot of luxury brand marketing is brilliant fiction -- storytelling," Applbaum says. What can spoil their sales over time is too much glossy imagery, and not enough substance. Even brands that dominate their categories have lost market share because consumers eventually gravitated towards a competitor's more compelling, and authentic, story.

A brand's last call

Applbaum can speak on this point because it was a threat Patrón faced when he joined in 2013. "While the ultra-premium tequila category was experiencing rapid growth prior to my arrival, our growth, while continued, had slowed on a relative basis," he says. At the time, Patrón enjoyed a high-60's share in the luxury tequila category. Its brand image -- high-end, dashing and smooth -- had penetrated every facet of American pop culture.

"Fundamentally, we had just one card we were playing, the swagger style card," Applbaum says. "We were embedded in pop culture and movies and TV, in rap, hip-hop, rock and country. Celebrities and athletes as well." However, Patrón's two-dimensional brand story had achieved peak potency. "There were a lot of factors, one of them being that a theoretical maximum was reached in terms of market share," he says.

Enter 'The Knows'

To expand sales, Applbaum and his team sought to add depth to their appeal, and decided to pull back the curtain on Patrón's artisanal, small-batch production process. This opened up the brand to an entirely new target. If Patrón's existing customer base could be called "The Bros," its new target was "The Knows." Where The Bros are drawn by style, The Knows are drawn by substance. "They're the farm-to-table movement," he says. "They want to know who makes the product, [and ask], 'Where does it come from, is it sustainable?'"

In truth, the Knows and the Bros have more in common than they know. "While there are always extreme ends of the spectrum with Bros and Knows, Bros still desire to be smart and validated," Applbaum says. "Conversely, there are Knows, who might shoot down the image, but most of them want to be smart and stylish." Applbaum adds: "At the end of the day, a Bro wants to be smart, and Know still wants to be cool."

Serving the perfect story

One factor that separates them, however, is that The Knows are often the ones behind the bar. This makes them key influencers and Patrón storytellers. "The Knows are increasingly influential, not only for their audience, but for the Bro audience as well," Applbaum says. "A lot of what they consume is not only based on peers, but experts. For them, the expert is going to be the mixologist."

Applbaum and his team began educating mixologists on the Patrón product. "Many of them served us enthusiastically, but never understood the authenticity piece," he says. The team took an innovative approach to sharing the company's story through VR and trips to Mexico, letting the mixologists experience the liquor production firsthand. The effect rippled as influencers then spoke with restaurateurs, spirit writers, luxury professionals and, ultimately, consumers. "Having the people who make the product talk about it has been a really key part," Applbaum says. "Then, taking a step back and letting those mixologists become our marketers, talking objectively about our brand and our product."

It's a refreshing about-face from Patrón's earlier encounters with consumers. "A couple of years ago, 'haters' would get on social media and talk about our brand as this swagger-only brand with no substance," Applbaum says. "We'd have to enter these conversations and explain in great lengths why that isn't true. The irony is, the harder you work to market yourself, the less genuine you appear."

Today, mixologists chime in unprompted to defend the brand. "I think that makes us more authentic than anything we could accomplish in advertising," Applbaum says.

A measured mix

Patrón now enjoys 70% market share in the ultra-premium tequila sector, with a 98%-99% brand awareness. As Patrón's CMO puts it: "We were sitting on our greatest asset: authenticity. The organizational pivot not to move away from swagger, but to balance it with substance, has really been the key and has resulted in accelerated sales growth."

In the end, it came down to the right proportion of ingredients. "That's the thing that so many [luxury] brands don't have," Applbaum says. "They're incredible marketing engines, but it doesn't rest on a foundation that's real. We enjoy that, and we're never going to lose sight of what is ultimately motivating consumers to purchase luxury brands."

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