SPIRITED DEFENSE
Eduardo Morales, CEO of Mexcor, evangelizes for Latin America’s craft distillers
Eduardo Morales grew up chopping sugar cane for his grandparents’ rum distillery in Veracruz, Mexico. Now, he’s carrying on the family legacy in Houston with a liquor distribution company projected to reach $300 million in sales this year.
Morales, 41, moved to Texas from Mexico with his mother three decades ago as she launched Mexcor International, which has since grown from serving one supplier over the border — his grandparents — to 500 international suppliers with 14,000 labels.
It is a business that came naturally to Morales.
“I was learning how to walk carrying one-gallon bottles,” he said.
Now Mexcor’s chief executive, Morales recently relocated the company’s headquarters from northeast Houston to a larger space on Compaq Center Drive in northwest Houston to accommodate his aggressive growth plans. Revenues are projected to reach $300 million this year, up from $255 million in 2020.
Before small-batch became synonymous with trendy exclusivity, Morales decided he’d focus on small, Latin-American brands in need of a platform. While big, national distributors focused on selling the Makers Marks of the world, Morales carved himself a niche, said Stewart Skloss, chairman and founder of Frontier Spirits Co., a Houston craft distiller.
“He took a bull by the horns and took a segment of the market that was underserved and just exploded it,” Skloss said.
Morales’ mother founded the company in 1989 as a way to bring products from her family’s distillery, founded in 1945, to the
U.S. When he took Mexcor’s reins in 2000, Morales set his sights on Mexcor’s expansion, dropped out of college and began branching into distribution of the family’s Agavales branded tequila.
With help from some college friends, he met with restaurateurs and began landing accounts such as Pappasitos and El Tiempo, offering them brands they had never heard of before. Decades later, he said, the Agavales tequila Mexcor sells is still the house tequila at Pappasitos.
“People don’t recognize it as a famous brand,” Morales said, “but it is in a lot of margaritas across the state.”
Morales wields family connections in the distillery industry — his mother and uncle now own the distillery Morales’ grandparents started. His mother owns a separate distillery with Morales’ stepfather that develops brands that meet the needs of the market. Morales has also built a reputation for handling brands that are popular with the Hispanic community with care, educating retailers and bartenders about
“(Mexcor CEO Eduardo Morales) took a bull by the horns and took a segment of the market that was underserved and just exploded it.”
Stewart Skloss, chairman and founder of Frontier Spirits Co., a Houston craft distiller
how best to use products.
“His family taught us a lot about tequila,” said Roland Laurenzo, president of the Tex-Mex chain El Tiempo. “They had the actual plants down in Mexico to produce what we wanted.”
Mexcor now supplies 17,000 restaurants, liquor stores and grocery stores in Texas, Morales said. He sells to retail chains such as Specs, Total Wine and H-E-B, and restaurant chains including Molina’s and Escalante’s.
The pandemic year proved to be a good one for liquor sales. Retail sales were up 32 percent during the pandemic, he said, helping offset the temporary decline in restaurant sales. The company’s distribution of hand sanitizer also helped the bottom line.
Tequila sales are up 70 percent from prepandemic sales, he said, and whiskey and canned cocktails are also performing well.
Something new
Mexcor started taking off around 20 years ago, when the market was ripe for a new type of tequila — blue agave of high enough quality to appease customers at popular restaurant chains but affordable enough to pour into margarita machines by the handle. Morales worked with his family’s distillery to develop a tequila called Agavales.
Ricardo Molina, owner of Houston-based Tex-Mex chain Molina’s, said that at the time there was a chasm between highpriced brands such as Patrón and low-grade alternatives. Morales and his family’s distilleries in Mexico changed that.
“He approached us with this option,” Molina recalled. “I said, ‘That’s exactly what we’re looking for.’”
Morales saw a hole in the tequila market and “hit the nail on the head,” Skloss said.
“Agavales was the first 100 percent blue agave tequila that was at a price that restaurants could pour in their house margaritas,” he said.
For his part, Skloss took his Texas-based Pura Vida Tequila to a big, national distributor because he wanted to go global quickly. For smaller brands with less capital, Skloss said Mexcor nurtures and elevates them.
“If you’re a small craft brand in Mexico and Texas,” he said, “he’s the first one I would go to.”
It’s hard for newcomers to break into the liquor business because booze is brewed in years-long cycles. Tequila takes between eight and 11 years, Morales said, and bourbon takes around five.
Carlos DeAldecoa, president of Gulf Coast Distillers, said Mexcor gives more play to new brands like his company’s Giant Texas Bourbon than a large, national distributor would.
“Some of these national distributors are so overwhelmed by the large brands that sometimes fantastic brands of great quality don’t get the attention they deserve,” he said.
Over the years, Morales said he has expanded Mexcor’s distribution networks in order to better control of how its brands get sold, and that work is ongoing. The new facility, at 11177 Compaq Center Drive, will help house Mexcor’s 116 local employees — there are 273 altogether. The building, once used for assembly operations on the former Compaq Computer campus, sits on 28 acres near the Lone Star College-University Park campus.
Morales branched out to Florida in 2009 with a distribution facility and later added one in California. Both states have large Hispanic populations, he said. He also branched into Louisiana in 2019.
“It benefits us because we will grow the brands a lot faster,” Morales said. “And we’ll be able to manage the customer’s experience inside the retailers.”
Mexcor also sells to third-party distributors in areas where it doesn’t have distribution facilities, which means relying on those distributors to market the brands he manages properly. He said they often aren’t familiar with Latin-American brands and don’t know how to push them.
“Most of the big companies are just used to taking up an order for Patrón, Cuervo or Bacardi,” he said. “They’re not used to having to explain the details and the features of the products, which is what we take pride in.”
Take Antioqueno Aguardiente, for example, a licorice flavored spirit popular in Colombia. When Mexcor took over distribution of the brand, he deployed his 100-person sales team, putting Antioqueno’s bottles on shelves in Fiesta stores, inside Colombian bars and promoting them at festivals.
“In Miami it became a shooter,” Morales said of drinking shots of Antioqueno Aguardiente. “Not only Colombians, but Americans started buying it.”
Because the distillery industry in Latin America stayed small, it never lost its old-world artistry, Morales said. While Americans were flavoring vodka, distilleries he works with were still spending more time and resources aging products in wooden barrels. But unlike their American counterparts, their packaging wasn’t pretty.
At first Americans weren’t interested in a bottle without flashy labels, he said. Craft cocktails came on the scene around 2008 and Americans grew more interested, and Mexcor was well-positioned to take advantage.
“I consider myself a risk-taker and I believe in future thinking,” he said.
He gets his drive from his mother, who raised him by herself while starting her own company. “She never gave up and she was a great example,” he said. “She was a mom, a dad and a provider.”
Building on the company she started has taught him about responsibility, which he wants to impart to his children.
“Hopefully one day our kids or grandkids will keep that going.”