Rana Daggubati and two partners invest $10 million in new tequila brand

Actor Rana Daggubati has launched a new tequila with south Indian musician Anirudh Ravichander and Sree Harsha Vadlamudi, owner of microbrewery Ironhill India. The three have invested a combined $10 million in the company, Ironhill Hospitality Pvt Ltd. The tequila, called Loca Loka, will be made from 100% agave grown in the Jalisco region of Mexico.

Sales will begin in the US and the brand will be launched in India in the following 18-24 months, Daggubati told Mint. "We worked with a good master distiller and started contract manufacturing but the branding began about a year ago. This is a celebration drink, and there's a unique way that India celebrates. Telangana, for instance, has a palm wine called Kallu which is used as a celebratory drink. Mexicans also celebrate their local spirits, and we wanted to get into this business because there has been an evolution in the way Indians drink tequila," said Daggubati. He has previously partnered with Prasad Vanga from Anthill Ventures, which was an investors in gin and tonic mixer brand Salud Beverages.

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Vadlamudi owns a dozen breweries across the country under the brand Ironhill India. The company is betting that tequila's popularity in India will grow over the next decade. About $5 million are already deployed for production and white labelling, and the rest will be spent on distribution and expansion until the company turns profitable in two years, he said. The next phase, when the brand comes to India, will require another tranche of investment, he added.

India's getting a taste for tequila

India has just a handful of brands that sell high-quality sipping tequila. Not long ago, Diageo launched its Don Julio tequila in a few variants made from agave grown 6,500 feet above sea level in the highlands of Jalisco. 

Others such as Jose Cuervo and Patrón from Bacardi also have a presence here. DesmondJi, an Indian firm cultivating agave in the Deccan plateau, has emerged as a key supplier for companies looking to produce agave-based spirits in India, such as Maya Pistola Agavepura.

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"When you go to Goa, for instance, you find so many different types of craft brands. A lot of the new, young drinkers want to know where their tequila is made. This is the beginning of the tequila industry in India," he added. The category, albeit small, is growing in double digits in India, similar to how gin about fix to six years ago, the founders said. 

It plans to sell two variants – Blanco, with fruit flavours of cooked agave, and Reposado, which will be aged in French and American oak barrels and retail for $46-55.

According to a recent report, about 600 million people Indians are between the ages of 18 and 35 and 33% of the population is of drinking age. However, India is primarily a brown-spirits market with some interest in vodka and gin. Gin has seen rapid growth in the past few years but vodka is still the leader in white spirits, with volumes still four times higher than gin's, especially in the economy category.

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Vikram Achanta, founder and CEO of beverage consultancy Tulleeho said, “With the influx of tequila and agave spirits igniting curiosity across India, this spirit category is on a good growth trajectory. Consumer interest in understanding tequila and its sister spirits Mezcal, Sotol, Raicilla and Bacanora is now higher than ever before."