Nick Jonas Is Working With Vodka Maker Stoli to Launch a New Tequila

August 28, 2019, 1:15 PM UTC

Tequila is one of the liquor industry’s biggest hits—and singer Nick Jonas wants in.

Jonas, along with menswear designer John Varvatos, has cofounded a new premium tequila called Villa One, which is being produced and sold by Stoli Group, best known for selling Stolichnaya vodka. Debuting with three expressions—silver, reposado, and añejo—and priced between $45 and $60 a bottle, Villa One is aiming at higher-end tequila brands including Bacardi’s Patrón and Diageo’s Casamigos.

While the specifics of the deal haven’t been disclosed, Stoli Group says that Jonas and Varvatos are cofounders and partners in the brand with an equity stake. And though no money has been exchanged with their backing of the Villa One brand, Jonas and Varvatos would benefit from profits down the road.

The tequila launch is the third collaboration between Jonas and Varvatos. “The first was a fashion collaboration and then the fragrance,” says Jonas. “Given our affinity for tequila, [Villa One] was the perfect next step.”

“The most important thing for us is that we have the best tequila in the market,” says Varvatos. “It is less about us and all about the product.”

Designer John Varvatos (left) with Nick Jonas in a promotional image for Villa One, their latest collaboration.
Stoli Group

Rudy Costello, acting global president and CEO of Stoli Group, stressed that the partnership between Stoli and the celebrities is not an endorsement deal. “They weren’t interested in an endorsement deal, and neither were we,” says Costello. “We wanted to be partners and in it for the long term.”

For decades, celebrities have poured their money and marketing heft into the alcoholic beverage category, which comes with high margins and a potentially big windfall if the brand takes off. Academy Award–winning actor George Clooney scored a blockbuster hit—and we aren’t talking about movies—when Diageo agreed to pay up to $1 billion to acquire his tequila brand, Casamigos.

Other celebrities toasting tequila include singers Sean “Diddy” Combs (DeLeón), George Strait (Código), and Justin Timberlake (Sauza 901); actor Chris Noth (Ambhar); and reality-TV star Bethenny Frankel (Skinnygirl).

Why are so many backing the agave-based spirit? Tequila drove the liquor industry’s growth in the U.S. market last year. Revenue for the category soared 10% in 2018, more than double the pace of growth for all spirits sold in the U.S., according to data compiled by industry advocate the Distilled Spirits Council. Growth has been particularly strong on the high end, and that’s where many of the celebrity-endorsed brands sit. DeLeón, Código, Casamigos, and now Villa One all command relatively high price points.

Villa One, which debuts on liquor shelves in September, adds a second tequila to Stoli’s top shelf after the liquor maker debuted the new brand Cenote last year. Stoli has been on an expansion spree since 2013, when the company became an independent organization in the U.S. after ending a distribution and marketing contract with William Grant & Sons. Since then, Stoli Group’s parent, SPI Group, has acquired wineries in Argentina and Spain, took majority ownership of Bayou Rum, outright acquired tequila manufacturer Fabrica de Tequilas Finos, and last year launched Se Busca mezcal.

Villa One’s three expressions: silver, añejo, and reposado.
Stoli Group

The buying spree comes as sales for vodka have softened in the U.S. and larger established brands like Stoli have faced challenges from upstarts like Tito’s and New Amsterdam. Globally, vodka’s volume dropped 2.6% last year, and the category is projected to post sustained declines over the next five years, projects industry tracker IWSR.

“The tequila category is growing,” says Costello. “It isn’t a market-share battle, like it is in vodka.”

Costello, who joined Stoli from Beam Suntory, says he was initially apprehensive about working with celebrities. Shortly after he joined Stoli, he heard that there was interest by Jonas and Varvatos to launch a tequila, and by spring 2018, the parties met to potentially hash out a deal.

Before long, the trio were among a small group to visit Stoli’s tequila distillery in Mexico. It was at a pit stop in Cabo, while sipping tequila and smoking cigars, that Costello was reassured in moving forward with the creation of a new celebrity tequila brand.

Costello was at Beam Suntory when the deal was struck with Timberlake, and in his view, the “Can’t Stop the Feeling!” singer wasn’t particularly involved. And that’s the risk of a celebrity tie-up; you never know when his or her interest may wane. Timberlake’s latest videos promoting Sauza 901 are over four years old on YouTube, suggesting a lack of passion in the project.

Actress Priyanka Chopra, with husband Nick Jonas, in a promotional shot for Villa One tequila.
Stoli Group

Thus far, Jonas and Varvatos have been heavily involved. They spoke at a recent sales meeting with a Stoli distributor and spent some time in the weeds when joining a call with the Pennsylvania Liquor Control Board. Villa One will rely on a social media campaign featuring both celebrities and will lean on influencers to get the word out about the brand, while also appearing in lounges during the Jonas Brothers tour. Ultimately, both celebrities will need to be involved if they want to effectively compete.

“There are a lot of people entering tequila, and the category is crowded,” Costello admits. “But I’m not concerned about that. This will be different.”

More must-read stories from Fortune:

Australia’s new wave of winemakers won’t make Shiraz
—How fruit wines are becoming serious business
—How to drink—and enjoy—red wine in the summer
Vodka brands want to get in on the wellness movement
—This new Irish whiskey has deep roots in rock ‘n’ roll

Follow Fortune on Flipboard to stay up-to-date on the latest news and analysis.

Subscribe to Well Adjusted, our newsletter full of simple strategies to work smarter and live better, from the Fortune Well team. Sign up today.

Read More

Great ResignationInflationSupply ChainsLeadership