21Seeds: Taking Shots at Breakout Growth

21Seeds, a female-founded flavor-infused tequila startup launched in 2019, had made inroads into the alcoholic beverage industry by focusing on an underserved consumer segment in spirits—women, primarily in their 30s and 40s, many of whom were moms—and by following a non-traditional playbook of circumventing the traditional on-premise channel (bars and restaurants) and selling primarily to the off-premise channel (retail stores, such as supermarkets and liquor shops) where their target consumer shopped. The all-female founding team had no background in the alcohol industry, yet had grown annual sales to 66,000 cases within just three years—a highly unusual feat for a new spirits brand.  Excited about the new “white space” opportunity that 21Seeds offered, Diageo, the multinational beverage company with a portfolio of other major tequila brands, including Don Julio, Casamigos, and DeLeón, acquired the fledgling brand in March 2022, retaining the co-founders as brand ambassadors. Diageo placed 21Seeds in its new Breakout Growth Brands Division, a select small group of brands to be nurtured for aggressive growth, with a goal of turning 21Seeds into a major player within the super-premium tequila segment. Diageo was considering several strategic initiatives for growing the brand, including product innovations, distribution opportunities, and marketing and branding approaches. 21Seeds had been successful to date by executing on a highly focused sales and marketing approach. Now, as the brand was under pressure to accelerate sales, its identity was being reassessed by Diageo. How important was it, at this stage in the lifecycle, that 21Seeds adhere closely to its founding brand story and brand positioning, or was now the time to evolve the brand en route to becoming a much bigger player in the market? The 21Seeds co-founders had views on how to grow the brand, but recognized that it was now part of a large portfolio of brands and ultimately under Diageo’s control.