Startup: AsomBroso Tequila
Security type: Common stock
Valuation (cap): $32.2 million
Price per share: $3.95
Discount: Eligible for the StartEngine Owner’s 10% Bonus
Minimum investment: $355
Where to invest: StartEngine
Deadline: September 29
I can’t take my eyes off the beverage space. Alcoholic beverage consumption was growing rapidly before COVID-19. In the months since, it’s really taken off. And tequila has been one of the most popular spirits during the pandemic.
Nielsen’s most recent numbers show that tequila sales increased in the U.S. by nearly 65% for the week ending August 1 (outdone only by cognac). Earlier this year, tequila consumption grew 55% over an 8-week period. And tequila consumption is projected to grow by more than 32% from 2020 to 2026.
Now, I have to admit tequila was never one of my favorite drinks … except for a very brief period many years ago. I was spending my junior year at a university in northern England. And my best friend that year was from a small town in western Mexico. His prized possession was a bottle of tequila he brought from home. It was dark brown and poured thickly. He was very protective of that bottle. I was one of the few people he shared it with. Despite his best efforts, it was gone by the second month of the academic year.
When I returned home to America, I couldn’t find a similar tequila anywhere. And that began a long period of only drinking an occasional margarita.
That changed three weeks ago when I strolled over to my neighbor’s house and asked if he wanted to try a rich brownish-colored tequila I just got from a California company called AsomBroso. The tequila was their Gran Reserva Extra Añejo. It was aged in new French oak barrels for five years. I was willing to give it a shot — no pun intended.
Man oh man. It blew me away. It went down smooth and warm. There were floral and vanilla notes. I’ve never had tequila like that before… at least not since my student days in England.
I went home that evening eager to learn more about this mysterious company. And what I found out amazed me.
AsomBroso was founded by Master Distiller Ricardo Gamarra. Never heard of him? Neither had I. But I quickly learned that he’s a major trailblazer in the tequila industry.
Ricardo was the first to use new French oak barrels for a 5-year añejo — the one I tried with my neighbor. He was also the first to market a pink-colored tequila poured into French Bordeaux wine barrels. And he was the first to rest extra-aged añejo tequila in a new French oak barrel for 11 years.
The great Irish playwright Oscar Wilde said “imitation is the sincerest form of flattery.” And many other companies are now making tequilas similar to AsomBroso’s. The quality just isn’t always there, though. And that’s what sets Ricardo’s tequila apart. You see, he’s not only a trailblazer. He has also won several awards for these new tequila styles…
- His extra-aged añejo rested in French oak barrels for five years was named the “Best of the Best” by Robb Report Magazine.
- His El Platino won “Top Tequila” (against more than 450 other tequilas) at the San Francisco World Spirits Competition.
- He made a 12-year double barrel rested tequila called The Collaboration. It’s made by resting his 11-year Extra Añejo in Silver Oak Cellars’ Cabernet Sauvignon American oak barrels for an additional 13 months. It received a 97 Rating from Testing Panel Magazine (the most widely circulated trade publication in the beverage industry). The Collaboration is the highest rated tequila in the world.
AsomBroso doesn’t fool around. Three of its bottles sell for well over $500 each. And people buy them. Ricardo even created a club just for these serious tequila drinkers. The Super-Premium Diamond Club has about 300 members. And all of them have bought either The Collaboration, AsomBroso’s Vintage 11-Year Anejo or its Del Porto Double Barrel Rested Tequila.
The company spent its first 15 years making some of the best tequilas in the world. In fact, Ricardo and his team have been so obsessed with making high quality tequila — and creating new tequilas — that they haven’t put much time into their marketing and sales.
AsomBroso’s revenue is solid despite that. The company made $1 million in 2019. Case sales have been growing at a double digit clip. AsomBroso tequila is sold in national chain stores including Costco, Total Wine & More, and BevMo!. It’s also exported to Germany and Japan.
And — unlike many startups — they’re profitable! They’ve had four straight years of profitability. This year will be the fifth. In 2019, the company was $100,000 more profitable than the previous year.
As I said, that’s pretty good. But it could have been better. AsomBroso is sold in only 11 states. Among the tequila cognoscenti, the brand is considered among the very best. Given the high quality of its tequilas, it seems like the company could be doing a lot more.
And that’s actually great news for investors. Because making some of the best tequila in the world isn’t easy. When it comes to super-premium tequila, not many companies are in AsomBroso’s class. In fact, AsomBroso just may be in a class of its own.
And now the company is taking the next step. It’s (finally!) raising its marketing profile to match the high accolades its brand has collected over the years. Ricardo told me that AsomBroso is launching in all the states they’re not already in… and it’s going to happen fast. “We’re razor focused. We have a plan. We know exactly what needs to be done.”
In brief, AsomBroso will be signing up distributors for every state. And it’s expanding its chain-store presence across America. Kroger, Vons and Albertsons will be launching within 60 days. Costco will be expanding its AsomBroso sales footprint (moving into new states). Safeway is launching in September.
The timing is no coincidence. Tequila sales are seasonal. The best months are October through December. AsomBroso wants its products in all these chain stores before October. It’s moving fast, and this raise will help it move even faster.
The plan also involves increasing their market reach from 11 states to 37 over the next year by focusing on online sales. The remaining 13 states will be launched in the first quarter of 2021.
AsomBroso’s 3 Year Plan
“There are at least 20 big companies I know of right now who are strong candidates to buy us,” Ricardo told me. And there you have it — why Asombroso is launching an aggressive nationwide marketing initiative… And why it’s raising now.
Ricardo and AsomBroso President Andy Ulmer have waited patiently for more than 15 years for the market to come to them. And now it has. They know it. The big beverage companies know it. And they want in! Ricardo and Andy have every intention of obliging them.
Their exit strategy calls for them to sell 60,000 cases of tequila. Ricardo says they’ll reach this milestone by year three. Why 60,000? That’s the sweet spot for tequila acquisitions. And the market is in a buying mood because most companies don’t have the patience to go through the whole process of making high-grade tequila and building up the brand… which — as we’ve seen with AsomBroso — takes many years.
The minimum price acquiring companies will pay is $4,500 to $6,000 per annual cases sold. The math says that Asombroso wants to be acquired for a minimum purchase price of $270 million to $360 million. Its current valuation is $32.2 million. Investors would see a 8.4-to-11.2 fold increase in valuation at minimum.
AsomBroso’s very specific exit plan is atypical of early-stage companies. It gives investors a very good idea of the gains they could get. It also begs an obvious question. Can the company get to 60,000 cases in three years? It might sound like a lot, but it really isn’t. Patrón sells 2.8 million cases a year. AsomBroso is trying to capture less than 2.5% of that.
Bottomline is, it’s not such a big task. It just has to pay as much attention to its marketing activities as it historically has to its tequila-making process.
Of course, you never know for sure. There’s still risk. But this is a mature company run by a veteran team. Founder Ricardo Gamarra — the master distiller of several tequila firsts — was a successful businessman (running a production studio) before AsomBroso. And President Andy Ulmer brings 15 years of executive level spirit brand building experience.
These guys know what they’re doing. And they know their time to shine is right now. They want their payday. They’re all in. And by investing now, their payday would also be your payday.
How to Invest
AsomBroso is raising up to $1.07 million on StartEngine. If you don’t already have a StartEngine account, you can sign up for one here. Once you’re logged in to StartEngine, go to the AsomBroso deal page. Now click the green “Invest Now” button. Enter the amount you want to invest and proceed through the required steps. Be sure your investment is confirmed, then you’re good to go.
This opportunity, like all early-stage investments, is risky. Early-stage investments often fail. AsomBroso might need to raise another round of funding in a year or two, if not sooner. If it executes well, this shouldn’t be a problem. But that’s a risk worth considering when investing in early-stage companies.
The investment you’re making is NOT liquid. Expect to hold your position for five to 10 years. An earlier exit is always possible but should not be expected. All that said, I believe AsomBroso offers an attractive risk-reward ratio.