How Clase Azul Built A Billion-Dollar Tequila Business Beyond The Top Shelf

Arturo Lomeli is transforming his super premium tequila brand into Mexico’s first luxury house—including hotels and boutiques—while maintaining the brand’s independence.

_{By Chloe Sorvino, Forbes Staff}

Inside his modern home in the hills of Guadalajara, Mexico, Arturo Lomeli is eating one of his favorite foods—taquitos, piled high with crema, salsa and guacamole—as tequila is poured into crystal flutes around the table. The blue-and-white hand-painted ceramic bottles that Lomeli’s brand, Clase Azul, has become famous for dot the room.

Next up are mezcals in decanters painted a matte black, red or teal. And then there’s the special edition añejo tequilas, featuring artisans from around Mexico. To the right of the overflowing lunch table, Lomeli starts pulling out more bottles from his bar—where a large surrealist-style portrait of Clase Azul’s founder and CEO with a bird on his shoulder watches over his personal collection.

“My spiritual soul was chosen to protect it. I’m the guardian. A Mexican messenger,” says Lomeli, 52, as sips of the $1,500 Dia De Los Muertos collection 2024 release—in a purple bottle featuring a metal skeleton playing an accordion—make the rounds for everyone but Lomeli. He gave up drinking a few years ago, he says, partly because he wants to live past 100.

That doesn’t stop him from running his super-premium tequila brand that’s exported to 92 countries. Over the past three decades, Lomeli has perfected a playbook that relies on authenticity, from the distillation process to keeping the business Mexican-owned. He takes a longterm view and has invested vertically even where it might seem absurd.

For example, one of the most recent additions to his sprawling bottling plant in the state of Jalisco—where a team of 50 artisans each glaze 100 signature ceramic decanters per day five-days a week—is a box-making facility pumping out custom packaging as fast at 18,000 sheets per hour. Clase Azul even manufactures the metal caps for its decanters, at a rate of 476 caps per hour. This strategy of going deep has created one of the hottest tequila brands ever sold.

“They’ve carved out a niche. Arturo’s got this vision that is very different than all the other tequilas,” says Wayne Chaplin, CEO of $26 billion (annual sales) Southern Glazer, which has distributed Clase Azul for two decades. “Sometimes people are very anxious to sell more, quicker. He’s not willing to compromise the luxury aspirations for his brand to get additional sales.”

Analysts in the food industry say that if Clase Azul were to ever sell, the deal would be in the billions. Which says as much about the sky-high multiples that spirits trade at these days as it does about the strength of Lomeli’s business. Clase Azul says it keeps its financials private. From 200,000 accounts globally, Clase Azul has estimated annual revenue of $150 million—surpassing the sales Casamigos had when Diageo purchased it in 2017 for $1 billion, or a deal value of 10 times revenue.

Forbes estimates Clase Azul could be worth more than $1.5 billion. That’s using a multiple of 10 times sales, which is on the lower end of today’s market, particularly for a tequila brand. Beyond the Casamigos sale, Bacardi acquired Patron in 2018 at 8 times sales for a total of $5.1 billion. In 2022, actor Dwayne “The Rock” Johnson’s Teremana tequila sold a minority stake to Jägermeister in a deal industry insiders peg as high as $4 billion, or as much as 25 times estimated sales. Other spirits acquisitions are just as high—in 2020, actor Ryan Reynolds’ Aviation gin, for example, sold for $610 million, or an estimated 24 times revenue.

Those high multiples match the profitability. Clase Azul’s net income margins are estimated above 30%. Gross margins approach 70%. That tops publicly traded spirits conglomerates like $9 billion (sales) Constellation Brands (owner of Svedka and tequilas Casa Noble and Mi Casa) or $20 billion (sales) Diageo (Don Julio tequila, Johnnie Walker and Smirnoff).

But don’t expect an acquisition or public offering any time soon—Lomeli says Clase Azul will remain independent, as well as 100% Mexican-owned. Lomeli is the brand’s majority shareholder. A minority stake is owned by his brother-in-law from his first marriage, Juan Sanchez, who advised Lomeli as a banker based in San Francisco before starting full-time in 2003.

Together, the two men built Clase Azul through a combination of small business loans and grit, and Lomeli says they have no interest in changing that now: “We’re not in a rush.”

After growing up in Guadalajara, Mexico’s second-largest city, Lomeli graduated from the university there with a degree in political science and decided to open his own bar. But the fun had faded by his 24th birthday, and he tried making and selling alcohol instead. He first launched a pomegranate liquor called La Pinta. Then came a tequila—a low-quality volume play with generic branding. Both ventures failed.

“To be unattached is one of the keys,” Lomeli says of his business philosophy. “If you’re attached to something, and if that disappears out of your control, you’re going to suffer.”

Lomeli adds, “I am attached to the things that I can control, which is my emotions, my reactions, my way of thinking, my discipline, my determination.”

He’s learned that stoicism the hard way. (Though Lomeli still serves La Pinta at his home.) After going back to school in 1999, he realized a luxury brand with Mexican-made ceramics could set his tequila business apart.

The first bottles of Clase Azul reposado launched in 2000 with 58 cases. Early on, an importer in San Diego nearly tricked Lomeli, then unable to read English, to give up all of the U.S. rights. But Lomeli had asked Sanchez to review the contract and narrowly avoided getting ripped off.

To secure debt in the early years, Sanchez counseled to focus on profitability. That meant it took longer to build the consumer brand, but Lomeli could retain his equity without giving up shares to outside investors.

“When you’re independent and private, although the journey is harder, you’re more in control,” says Sanchez. “A lot of people think it’s an overnight success story, but it’s truly been nearly 28 years of a lot of hard work and pain and suffering.”

Lomeli started seeing results after bringing on Sanchez full-time to focus on America. After waiting 18 months for an importer’s license, Lomeli and Sanchez found a few popular establishments around San Francisco to try bottles. By the time Southern Glazer called, Clase Azul was sold at 100 of the area’s top restaurants and bars. Southern took over distribution in 2005. Sales tripled within six months, and America became so important that Lomeli moved to San Diego for four years.

Through the growing pains, a group of celebrity investors offered to inject capital into the business. Lomeli and Sanchez agreed and prepared to double production. But the deal fell through, and they got caught overextended with too much inventory and not enough cash. Lomeli moved back to Guadalajara to steer the business back to profitability.

As brand recognition grew from resorts in Los Cabos, Mexico, expansion mode hit again by 2013. It caused Lomeli, an avid golfer who today owns a local soccer team in Baja, to relocate once again—this time to New York City, an underperforming market event though it was one of Southern’s biggest.

After more than 1,000 tastings around New York—for which he lugged bottles around the city—cases of Clase Azul started selling out. Emboldened, in 2014 Lomeli approached Southern to end his distribution agreement in New York. After some negotiating, Southern agreed, and Lomeli built up his own local salesforce.

“We control for longevity,” adds Lomeli. “If you don’t face the fear, you’re not going to evolve yourself.”

By 2019, Lomeli’s strategy paid off—revenue surpassed $55 million. That year, he and Sanchez got an offer to buy the company for $1 billion. They said no.

“It’s not authentic,” Lomeli recalls telling one of the bankers at the time.

More investors have been turned down since then. They also considered turning parent company Casa Tradicion into a conglomerate with vodka and other spirits, but ultimately decided to only sell what’s “rooted in our culture.”

As Clase Azul has grown, Lomeli has invested in infrastructure on a big scale. Its bottling factory opened in Jalisco in 2022 with the capacity to make 150,000 bottles per month. All the while, Clase Azul maintained quality while doubling down on exclusivity. Some editions have produced just 10 bottles.

Tequila has been on a rollercoaster with more ups than downs. In 2022 tequila was America’s fastest-growing major spirits category, with double-digit growth or more among super premium brands. But there’s been a recent slowdown. Projections were off for 2023—so much that Clase Azul expected the market to grow 44% but it only grew 4%. In the aftermath, Lomeli shut down a tequila factory and a ceramics-making facility.

“Growing at triple digits put us in a machine of growth that was very stressful,” says Lomeli, who often works at home from his hyperbaric oxygen therapy chamber and is building a dream spa there to extend what he believes could be his last reincarnation. “Most successful people are not the ones who have more money. They are the ones who have enough. So the question is, when is enough?”

At an unlisted-on-Google-Maps space in downtown Brooklyn called The Loft, Clase Azul has been building a community through collectors-only tasting events and concierge services for its top customers that has even included a marriage proposal. On a recent December night, The Loft was packed with about 30 collectors who had all pre-ordered a trio of special edition bottles of Clase Azul’s Master Artisan collection for $22,500, without tasting a single drop.

As the husband-and-wife duo Fernando Jimón and María Elena López who specialize in the dying Mexican art of barro bandera (or “flag-colored clay”) unveiled the designs and their inspiration, the collectors sipped the tequila for the first time. A green bottle featuring the Mexican folkore of nahuales (people who can shape-shift into animals) in the form of cats. It comes with tequila aged eight years in American whiskey casks and finished in barrels from Tuscany. The tequila inside a red bottle with a moon ended up in wine barrels from Bordeaux. A white decanter with an eagle inspired by Mexico’s flag had tequila finished in fortified wine barrels from Bombarral, Portugal.

“It’s the Porsche of tequila,” says serial entrepreneur Ronak Patel, who spent about $26,700 on all three of the night’s releases, as well as two other bottles from Clase Azul’s breast cancer awareness collection. “It’s only going to appreciate in value. And they’ve created a community of appreciation for the art that they do.”

That’s the essence of the latest evolution of Lomeli’s strategy. In addition to The Loft in Brooklyn, there’s Clase Azul properties in Tokyo, Japan, opened this year, as well as in Los Cabos, Mexico. Set on the Pacific Coast, Clase Azul opened La Terraza in 2022 featuring a high-end restaurant, bar and boutique. These locations often feature limited-edition tequilas only sold there. Next up is a new distillery built for top customers to come visit with immersive experiences. Called La Hacienda, the hospitality space is set to open in Jalisco next year, after being in the works for eight years.

“You have much more control,” Lomeli says, “and you are not in the hands of somebody who can destroy you.”

It’s community-building 2.0 – for some of the richest people around the world. This core is the future of Clase Azul. Lomeli wants Clase Azul to become the first Mexican luxury house. His big vision extends beyond tequila to ceramics and more. A cerveza-style beer or a Mexican-grown wine could easily join the lineup, and a line of luxury hotels across Mexico, like Nobu’s extension, is another goal.

“That’s the biggest dream. It goes perfectly with our purpose to exist—to captivate the world of the magic of Mexican culture,” says Lomeli. “We have that in our veins, in our DNA.”

And he can afford to build his company over time. “The luxury industry requires another thing,” Lomeli says. “The other pillar is patience.”

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