Tito's Analysis

Delivered July 23rd, 2019. Contributors: Emma H., Michael B. and

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Story and Brand Positioning

Tito's Vodka is Texas' oldest legal distillery and paved the way for microdistilleries in the state. Tito works to expand its brand by continuing to stay true to its roots. To expand outside of Texas the company works with local distributors.
TITO'S VODKA BEGINNINGSTito's Vodka was founded by Bert Beveridge, and began as a hobby. Beveridge fought against Texas's distillery laws and set the way for microdistilleries.
Bert Beveridge began his vodka business in 1997, failing to get his product into stores at first.
Using $90,000 in credit cards, Beveridge purchased 13 acres in Travis Country. By re-creating distilleries seen in old photographs he began to create his homemade vodka.
Tito's Vodka is made with yellow corn, as opposed to the traditional wheat. 
The brands big break came in 2001 when Beveridge entered into the World Spirits Competition in San Francisco and won.
Today, Tito's Vodka gives back. They created a charity, Vodka for Dog People and all online profits go to designated non-profits.
EXPANDING INSIDE TEXASTito's Vodka worked to corner a market that was not currently available in Texas. The company wanted to provide a Vodka that was not just used in cocktails but that could be drunk alone.
At a local level, Tito's has worked to expose the brand via outdoor events and local broadcasting. Strategies include custom murals and local venue sponsorships.
As a company that has not forgotten its roots, Tito's has positioned itself as a Texas brand. Tito's partnered with Chili's, another Texas company, to showcase its vodka.
EXPANDING OUTSIDE TEXASTo expand overseas Tito's has partnered with different distributors to enter each market. 
In particular, Tito has worked with Dufry, the world’s biggest duty-free retailer, to expand to new markets through airports.
When Tito expanded to Mexico in 2018, the company was not just focused on the Mexican market, the company also wanted to target American and Canadians on vacation.
They used Société Dugas to expand into France. The company used on-trade activations to entice new customers.
In 2019, Tito's has launched in Mongolia, an area they see as the gateway further into Asia.
As Tito's continues to expand into Europe, the company is using branded installations, wall bays and gondolas that highlight the brand's Texas roots. They plan to offer promotions and offer samples in stores.
BRAND POSITIONINGTito's Vodka positioned itself as a handmade vodka, a claim that can not be used by the larger vodka manufacturers. The lower cost also drives demand for the beverage.
Today every batch of Tito's is created in an old-fashioned pot still and is taste tested.
The brand has not forgotten its humble beginnings and still connects with customers on social media on a one-to-one basis.

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On-Site Marketing

Tito's Handmade Vodka has, since the very beginning, depended heavily on word-of-mouth marketing based on being approachable and charitable, as well as having a "folksy" story to tell. They have been very consistent in advertising to the everyman — their main mottoes are "If you have a liver, we deliver" and "Turning spirits into love and goodness" — and as a result, there is no difference in how they position themselves to their on-site sales (e.g., bars and restaurants) channels and very few examples of targeting their marketing at only these channels.


OVERARCHING STRATEGY: TITO'S STORYTito's won Ad Age's 2017 Marketer of the Year award despite not running a single TV ad in its first 20 years of doing business, focusing instead on word-of-mouth and magazine ads created by their three-person, in-house marketing team.
Tito's positioning is based on its origin story: Austin, Texas native Bert Beveridge began making homemade vodka to give to friends on Christmas as a hobby. Upon realizing the potential opportunity, he "built a distillery after running up a debt of $88,000 on 19 credit cards." These efforts paid off in 2001 when Tito's Handmade Vodka won double gold awards at the World Spirits Competition. 
However, after an over-wordy attempt to tell that story sunk their 2013 billboard campaign, Tito's launched a new campaign which summed up their story in a single line: "America's original craft vodka."

OVERARCHING STRATEGY: APPROACHABILITYTito's has very carefully built up its reputation for being personable from the beginning.
Tito's ads, particularly those featuring its founder Bert "Tito" Beveridge, tend to have a "folksy" vibe, as in one billboard which shows the founder as "a Texas cowboy ... with a dog sitting on cases of Tito's."
Beveridge considers the Tito's "humble, approachable bottle" to be "the fundamental basis for our brand aesthetic." The burnt orange color deliberately matches the color representing the University of Texas, connecting to Austin customers.
Tito's avoids demographic-specific ad targeting, operating under the motto (or "Titoism"), "If you have a liver, we deliver."

OVERARCHING STRATEGY: "LOVE AND GOODNESS"Tito's has built a reputation for "creating a corporate culture of love, sustainability and philanthropy"; for example, its "Vodka for Dog People" campaign raised money for animal organizations and no-kill shelters and it recently partnered with Hire Heroes USA to help military veterans and their families in advancing their careers.
The Vodka for Dog People campaign was Tito's first and so-far only TV ad.
Tito's also empowers employees to support the causes that they care about.
After helping a given charity, Tito's sends a "Thank you for inviting us to help the cause," signing off with, "Love, Tito's."
Other charities featured in a recently-produced series of "Love, Tito's" videos include Soldiers' Angels, Health Alliance for Austin Musicians, and One Good Turn.
Tito's has also summarized these efforts with the tagline, "Turning spirits into love and goodness."

ON-SITE SALES CHANNEL STRATEGYIn 2019, Tito's ramped up its visibility in airports and leading cruise lines (as well as in border stores) internationally by conducting storefront takeovers, setting up permanent displays, and providing free samples.

RESEARCH STRATEGY
We began our research with a broad-based search for examples of Tito's recent marketing tactics, i.e., those within the last two years. We particularly prioritized sources such as Ad Age and Billboard Insider which could provide commentary from experts in the marketing industry. However, we also viewed videos and images of recent campaigns directly for the sake of context. We found no shortage of sources, as Tito's brilliant marketing strategy has been the subject of an almost overwhelming number of op-ed pieces in the last few years. Indeed, our primary challenge was in choosing sources to serve as the representative sample. 

We ran into a difficulty when it came time to divide Tito's positioning into on-site and off-site segments, namely, that Tito's itself does not appear to offer different messages to different advertising segments; in fact, it makes a point of eschewing that approach, as shown in the motto, "If you have a liver, we deliver." While there were a few examples of targeting one or the other, particularly from Tito's early days, for the most part, the advertising has been sales channel-agnostic. 

Therefore, we have attempted to be as complete as possible about Tito's overall positioning first and foremost while also providing examples of how they have used that positioning in the context of their different sales channels. Consequently, there is an enormous degree of overlap in two of the reports in this project. 

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of four

Part

Off-Site Marketing

Tito's Handmade Vodka has, since the very beginning, depended heavily on word-of-mouth marketing based on being approachable and charitable, as well as having a "folksy" story to tell. They have been very consistent in advertising to the everyman — their main mottoes are "If you have a liver, we deliver" and "Turning spirits into love and goodness" — and as a result, there is no difference in how they position themselves to their off-site sales (e.g., retail) channels and very few examples of targeting their marketing at only these channels.

OVERARCHING STRATEGY: TITO'S STORYTito's won Ad Age's 2017 Marketer of the Year award despite not running a single TV ad in its first 20 years of doing business, focusing instead on word-of-mouth and magazine ads created by their three-person, in-house marketing team.
Tito's positioning is based on its origin story: Austin, Texas native Bert Beveridge began making homemade vodka to give to friends on Christmas as a hobby. Upon realizing the potential opportunity, he "built a distillery after running up a debt of $88,000 on 19 credit cards." These efforts paid off in 2001 when Tito's Handmade Vodka won double gold awards at the World Spirits Competition. 
However, after an over-wordy attempt to tell that story sunk their 2013 billboard campaign, Tito's launched a new campaign which summed up their story in a single line: "America's original craft vodka."

OVERARCHING STRATEGY: APPROACHABILITYTito's has very carefully built up its reputation for being personable from the beginning.
Tito's ads, particularly those featuring its founder Bert "Tito" Beveridge, tend to have a "folksy" vibe, as in one billboard which shows the founder as "a Texas cowboy ... with a dog sitting on cases of Tito's."
Beveridge considers the Tito's "humble, approachable bottle" to be "the fundamental basis for our brand aesthetic." The burnt orange color deliberately matches the color representing the University of Texas, connecting to Austin customers.
Tito's avoids demographic-specific ad targeting, operating under the motto (or "Titoism"), "If you have a liver, we deliver."

OVERARCHING STRATEGY: "LOVE AND GOODNESS"Tito's has built a reputation for "creating a corporate culture of love, sustainability and philanthropy"; for example, its "Vodka for Dog People" campaign raised money for animal organizations and no-kill shelters and it recently partnered with Hire Heroes USA to help military veterans and their families in advancing their careers.
The Vodka for Dog People campaign was Tito's first and so-far only TV ad.
Tito's also empowers employees to support the causes that they care about.
After helping a given charity, Tito's sends a "Thank you for inviting us to help the cause," signing off with, "Love, Tito's."
Other charities featured in a recently-produced series of "Love, Tito's" videos include Soldiers' Angels, Health Alliance for Austin Musicians, and One Good Turn.
Tito's has also summarized these efforts with the tagline, "Turning spirits into love and goodness."

OFF-SITE SALES CHANNEL STRATEGYFrom the beginning, Tito's has worked to build personal and emotional connections with its customers; in the 90s, it sent a representative to individual parties in the Austin area to pour drinks and create conversations about the brand.
In 2018, Tito's launched their "Barkeep" bartender chatbot, designed to converse "with users about cocktails and mixology in real-time, helping spirits enthusiasts make hand-crafted cocktails with ease" as well as enabling users to purchase Tito's through Drizly for delivery. Nicole Portwood, VP Brand Marketing, called it a new an innovative way "to connect with our fans and to make enjoying a Tito's cocktail as simple as it should be."

RESEARCH STRATEGYWe began our research with a broad-based search for examples of Tito's recent marketing tactics, i.e., those within the last two years. We particularly prioritized sources such as Ad Age and Billboard Insider which could provide commentary from experts in the marketing industry. However, we also viewed videos and images of recent campaigns directly for the sake of context. We found no shortage of sources, as Tito's brilliant marketing strategy has been the subject of an almost overwhelming number of op ed pieces in the last few years. Indeed, our primary challenge was in choosing sources to serve as the representative sample. 

We ran into a difficulty when it came time to divide Tito's positioning into on-site and off-site segments, namely, that Tito's itself does not appear to offer different messages to different advertising segments; in fact, it makes a point of eschewing that approach, as shown in the motto, "If you have a liver, we deliver." While there were a few examples of targeting one or the other, particularly from Tito's early days, for the most part, the advertising has been sales channel-agnostic. 

Therefore, we have attempted to be as complete as possible about Tito's overall positioning first and foremost while also providing examples of how they have used that positioning in the context of their different sales channels. Consequently, there is an enormous degree of overlap in two of the reports in this project. 

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Vodka Drinkers

Due to the ubiquitousness of vodka consumption (with nearly two-thirds of the drinking-age population consuming vodka at least semi-regularly) it is nearly impossible to separate the differences between vodka consumers and the rest of the population. Nevertheless, some salient details do emerge, if anecdotally in many cases, which help to provide at least some insight into the demographics and psychographics of vodka drinkers. Those which serve to distinguish them from other consumers of spirits are provided below.

Note that in the course of our research, we came across these demographics for Tito's Homemade Vodka. As the demographics don't indicate that Tito's customer base is different from other alcohol consumers, we have not included this source in the body of our findings, but given the background of this request, have included the link due to its possible relevance.

PREVALENCEVodka comprises 36% of spirits by volume sold in the US, making it the most popular liquor in the country. 
Vodka market share is both the largest and fastest-growing in the US, increasing from an index of 54 in 1996 to 66 in 2016.
 60.68% of US consumers age 18-29 drink vodka in a given three-month period. (Note that the full graph is not publicly available; the above statistic is taken from the side text.)

SALES AND DEMOGRAPHICSWhile vodka sales plummeted in 2009, the market recovered by the following year, outperforming other spirits.
Baby Boomers (born 1945-65) are the largest age demographic for vodka, comprising 31.1% of the market. 
However, Generation Z (under age 25) has the greatest market penetration at 35.4%, followed by younger Millennials (age 25-34) at 30.8%.
Vodka has become even more popular in the LGBTQ community; in fact, "Pride is synonymous with vodka." 
Higher-educated individuals are more likely to be vodka drinkers; e.g., 47.2% of vodka consumers in Canada have at least some university education. (See below on why we have included data from Canada.)
However, the largest segment (32.9% of the market) make under $20,000 per year "with $50-$75000 earners as the second-largest bracket" at 17.6%.

GROWTH OF PREMIUM VODKAThe observation on earnings brackets is important to vodka marketers because vodka is broken into tiers — value, premium, high-end premium, and super-premium — and those with higher earnings are more inclined to buy higher tier vodka.
Non-premium vodka's market share fell 1.4% from 2015 to 2016, but this was more than made up for by a 10.3% increase in the market share for premium brands, indicating that vodka drinkers are becoming more sophisticated in their tastes. 
Only brandy and tequila saw a faster shift to premium brands, but both of these have only a fraction of the market share of vodka.

OTHER VODKA DRINKER TRAITSVodka drinkers are noted to be "adventurous" by marketing experts, "willing to try new flavors and innovations," as evidenced by increasing flavored vodka sales each year.
However, the preference for new flavors is far from universal, and Tito's Handmade Vodka, for example, has skyrocketed to the top despite offering only its original flavor.
Vodka drinkers are also very brand loyal compared to other spirit drinkers, with four different vodka brands (including Ketel One and Grey Goose) appearing in a study of the top 50 brands for loyalty. We hypothesize that this may explain vodka's recovery during the Great Recession.

ADVERTISING DIFFERENCESDespite appealing to a more progressive audience, vodka advertising "is still routinely criticized for lacking the sophistication and nuanced messages that are now commonplace in the strategies of other categories, such as gin." 
We hypothesize that this lack of sophistication is at least partially responsible for the high brand loyalty (i.e., it explains why new brands fail to capture their competitors' customers) rather than a reflection on vodka drinker's preferences. 

RESEARCH STRATEGYWe began our research by seeking marketing studies or surveys of US vodka drinkers from both research firms and industry media sources like The Spirit Business. We soon found that vodka is an incredibly popular — in fact, the most popular — spirit in the US. Nearly two-thirds of people age 18-29 drink vodka in a given three-month period. Consequently, it is difficult at best to separate the habits of vodka drinkers from other spirit consumers. Therefore, we focused on learning as much about vodka drinkers as possible; some valuable insights came from Canada rather than the US. Where possible, we have sought specifically US-based data but where such was not available, we have included Canadian data with the understanding that the two countries are similar enough culturally that data would be similar.

Our first source is an undated paper which proved highly useful in that it pulled multiple studies together. Some of these studies are older, some dating to 2011, and so we have in each case attempted to find more recent data. Where this was not available, we used the information from this well-researched and footnoted paper to fill in the gaps. 