McCann Wins Cuervo as Tequila Leaves Diageo in U.S.

New Owner Plans 'Significant' Investments to Build Spirits Brand

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Jose Cuervo will be run by new ad and media agencies in the U.S. as the nation's largest tequila brand transitions from Diageo to Proximo Spirits.

Interpublic Group of Cos.' McCann Erickson, New York, picked up the creative account after a review, while media will be run by independent Gotham Direct.

Proximo, which takes over U.S. distribution today, has signaled that it will spend more on marketing as it looks to revive the sluggish brand. "We plan to make considerable investments in brand building and innovation for the Jose Cuervo portfolio to accelerate its growth," Proximo President-CEO Mark Teasdale said in March, when the company announced the distribution deal. The brand got $11.25 million in measured media support last year, according to Kantar Media.

In a statement, Hank Summy, president of McCann Erickson North America, said: "Jose Cuervo's superb 250-year-old tequila recipe has made it one of the world's great brands. We are thrilled with the opportunity to tell its story and help accelerate its growth."

The win follows other recent McCann account pickups such as U.S. Postal Service, American Frozen Food Institute, as well as full global ad responsibilities for Chevy.

Proximo and Cuervo are both controlled by the Beckmann family of Mexico. Proximo's other bands in the U.S. include 1800 Tequila and Three Olives Vodka.

Diageo had distributed Cuervo outside of Mexico since 1997. Diageo began looking to end the distribution deal late last year after it abandoned talks to acquire the brand. The company had used various agencies in recent years, including CP&B, which lost the account in 2011.

Proximo's selection of Gotham is not surprising; the shop has handled the Proximo brand portfolio since 2006.

Jose Cuervo dominates the U.S. tequila market, but sales have been on a steady decline. Case volume sales dropped 10% to 3.5 million cases from 2007 to 2012, according to industry publication Shanken News Daily. Cuervo still controls a leading 33.66% share of the tequila category in the U.S., but share fell 1.89 percentage points in the 52 weeks ending May 19, according to IRI. The next closest tequila brand is Patron, which has 17.25% share, according to IRI.

"Proximo could inject new life into the franchise," Shanken reported earlier this year. But there are challenges. "Aside from leaving Diageo's formidable U.S. distribution network, Cuervo will continue to confront the proliferation of accessibly-priced, 100% agave tequilas that are competing in the same price arena as [Cuervo's] core mixto offering," Shanken wrote. (Mixto tequilas are blended with sugar and water.)

McCann is expected to unveil a campaign by the end of the summer.

Contributing: Alex Bruell

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