The Rockstar Entrepreneur. How Sammy Hagar Is Building His Next $100M Brand.

0:10Hello friends, I'm Ray Latif and you're listening to the number one podcast for anyone building a business in food or beverage, Taste Radio. This episode features an exclusive interview with rock and roll icon and tequila innovator Sammy Hagar. Sammy Hagar's passion for tequila runs deep, but his commitment to earning and preserving the trust of his fans runs even deeper. Santos Spirits is where those two worlds meet. The legendary rock star, best known for his time as the frontman of Van Halen made his mark on stage. But it's in the world of consumer packaged goods where he truly built his fortune.

0:52Sammy is the mastermind behind Cabo Wabo Tequila, a trailblazer in the celebrity spirit revolution that's now a staple in the beverage alcohol industry. In 2008, Campari made a historic move, acquiring Cabo Wabo for a groundbreaking $100 million, an unprecedented deal at the time. Nine years later, Sammy made a triumphant return to the spirits world with Santo, a tequila-focused brand he co-founded alongside fellow musician Adam Levine. Building on the success of Santo, the brand grew even stronger in 2019 when celebrity chef, television personality, and restaurateur Guy Fieri came on board as a co-founder, bringing his flair and influence to the brand.

1:39In this candid conversation, Sammy opens up about his vision for Santo, emphasizing the brand's dedication to purity and excellence. He shares his insights into the challenges of the celebrity tequila market, why, despite his success with Cabo Wabo, he remains cautious about creating a mass-market brand, and the importance of authentic relationships within the spirits industry. Sammy also discusses his approach to building teams, and why, for him, hiring the right people is about finding fresh perspectives. not yes men.

2:13Hey folks, it's Ray with Taste Radio. Right now, I am honored to be with the one and only Sammy Hagar, the founder of Santo Tequila. Sammy, great to see you. Thank you. Happy to be here, Ray. As I mentioned before we hopped on the mics, this is an interview that I've been wanting to do for some time. And I'm so glad that you're here with me on this Friday afternoon. Where are you based? Are you in California? Yeah, I'm based in California. I always have been born and raised here. And as much as I don't agree with a lot of things in California, I stay here. I keep saying, well, I tried another state.

2:48I tried another state and I live in Mexico part-time and I lived in Hawaii for quite a while. So yeah, I live in California, like everyone else. Why do I live in California again. Well, I guess I love the coast, you know. Me as well. I am a West Coast guy. Literally, the coast, I think, is more important than the West part of it. And anytime you're near water and look out at the ocean, it's one of the greatest experiences you'll ever have. Absolutely. Well worth the price. It's expensive out here. Yeah. You know, I mentioned you were the founder of Santos Tequila, and I kind of skipped over everything else you've done in your life, you know, in your professional music career, I imagine there's a lot of ups and downs and kind of knocking your head against a wall.

3:34And, you know, with all the winds and fun, it can be difficult. But in the beverage alcohol space, I know for sure it can be a very difficult road. But what do you think is more difficult, professional music or beverage alcohol? Well, you know, now they've both gotten more difficult. How about that? Because, you know, back in the old days, when I was first starting out as a musician, before MTV. And it's all there was, was kind of like rock radio. And it was really fun and easy, quite honestly, you know, like in Montrose, I mean, it felt like it was a struggle maybe getting financially on your feet, but the actual business was just, man, record companies would sign you and they would sign you for a three record deal and they would pay for you to go out on the road and open for big bands, you know, that was awesome.

4:20You know, it's just not like that anymore. Now you have to have some kind of a gimmick or you have to go out and starve yourself to death and just play and play and play anywhere for free and for, you know, no money sleeping in a car and stuff and going from club to club to club, playing for 15 or 20 people. After years, maybe you get an audience or you get some crazy whacked out thing on YouTube and have 500 million views and all of a sudden you're a superstar, but not necessarily longevity. So it's a whole different world. And when I first started out with tequila, I built a club called Cabo Wabo in Mexico, 1986, 87, 85, somewhere around there.

4:56I started building that place and I wanted it to be a tequila bar and I wanted to have my own tequila. And it was real simple. I just built the cantina, went down there and played all the time for free, which is what I was doing. Play music is fun, it's easy. And I launched a tequila brand from that. And 1988, I believe it was, I mean, I'm not good with years and stuff, but I just know that it was fun and easy. I just went on tour. So we're like what I always do. I built my stage to look like the inside of the Cabo Wobble cantina. I had 50, 60 people sitting on stage partying with me in bleachers.

5:32I had waitresses come out serving my tequila. I did that for about five years. And I had the second to the largest premium tequila in the world, Cabo Wobble. And it was like, that was easy. That was fun and easy. And then Campari comes along and said, we want to buy it. I'm going, geez, it's not for sale. I'm having a ball here. What are you talking about? and then they showed me the figures and i went damn that's life-changing so i did it wanted to do it again because it was so much fun with tequila and it's all changed now it's it's really hard you know to start a spirits you gotta be talking about 40 50 60 million dollars throwing out a brand to grow it and make it big in this day and age so music and spirits have both gotten really difficult i don't know which one i'd say would be easier i'd say probably rock and roll because once again, you just go out and do your passion.

6:22You don't have to have any money. But if you're going to get in the spirits industry, you better have some cash and people backing you. You've got to build a team or you've got to find someone, like I said, to back you or use your own money like Guy and I do. You know, we don't have backers. You know, our goal is to make the best tequila in the world, not to be the biggest tequila in the world. See, we're not trying to build to outdo Clooney, those guys who outdid me, you know, When I saw Cabo Wabo, I was like, Mr. Feather in the cap, how did you do that? Well, I don't know how I did it, but I know how to do it.

6:55I don't know what I did, but I can do it. Those guys came along, kind of copied that model, and everybody's kind of building a cell, building a cell. Well, we're not necessarily doing that. We're building to have the best tequila in the world, and we're just trying to build a brand that's solid. and the celebrity thing which i'm sure you'll bring up eventually it hurts us believe it or not it's like in the old days when i did it the first time i was the first celebrity to do it it was like wow sammy hagar has got a tequila wow that that was news so you got a lot of press about it and a lot of wow what does he know about tequila then i do an interview i said i know a lot about tequila i make the best tequila in the world you know and it was fun to do it like that but now it's like, shh, don't use their name.

7:40You know, it's like people think we're a celebrity tequila. Celebrity tequilas, 90 % of them are garbage. And, you know, anybody that doesn't know that, just go out and go ahead and buy them, you know? So now the celebrity thing is kind of a black mark, but we're always fighting to say, no, blind tastings is what I'm all about. As you mentioned, you've been in this business for a long time, the tequila business that is, and passion is important. And I think, you know, on the point of a celebrity spirit or a celebrity-backed brand, it's hard to verify authenticity. It's hard to verify that the person behind the brand is doing it for the right reasons, that they really love the product, they love the category, they love the business.

8:21And in your case, I think you loved all of them. You love tequila to start with. You love making people happy and sharing your passion with others. But, you know, just to back up for a second, And I mean, how'd you get into tequila? What was your moment of discovery when it came to the spirit? Even before I was a musician entertainer, I kind of was, I guess, you know, when I look back on my high school years and stuff, you know, I was all about, you know, having a good time, party, being the life of the party, if I could, you know, and having all the girls want to dance with me and all that, you know.

8:55So I liked tequila back then, even when I was younger, you know, but because of the ritual you're like wow you do a salt you do a shot and bite the lime and go you know there was just something about that that was a really good buzz even though the tequila we were drinking back then the next day it's good never again never again then so that's really what hooked me into tequila and the first time i went to cabo back in uh 1978 79 there was nothing there were three hotels you're at the hotel dirt roads one flight in a week one flight out a week and uh when i checked into the hotel this resort called twin dolphins not there anymore it's now a montage the guys you know they brought you out a shot of tequila and i'm going oh no no no no thank you senor you know and uh finally the guy says no you know it's a ritual you have to do it so i said yeah you know and i tasted it and i don't know what it was but it was pure 100 agave it was real tequila and I had never had it before.

10:01And it was just like a reposado and a tiny bit of salt on the rim, you know, a little bit of lime if you want it. And man, I just went, wow, I've never had tequila like that. So I'm there for a week or so. I start talking to a guy that kind of run the place a little bit, Jorge Villano, who's still my partner in Cabo Wobble, still runs the cantina today. And the first guy I met there, and I said, wow, I want to build a place here. You know, I fell in love with Cabo. So he took me down and we found the piece of property and I bought it. Not the first time, but, you know, after I'd go back a couple of times a year.

10:36So long story short, finally, when I bought my first condo, which was the first condos they had in Cabo at Terrasol, I said, I said, let's go get some furniture. And he took me to Jalisco and to Guadalajara. And then we said, he said, let's go to tequila, drink tequila and eat some of the food. and I went around with him to these little small distilleries and the farmers had their own little special batch and I just fell in love I just said this is unbelievable I saw them cutting the agave I saw them putting it in wood-burning ovens back then some of them were wood-burning you know to make the steam and the smokiness and the and the food and then you hear a mariachi band and you just go man I'm in love I mean it's like honestly life-changing back then I'd never seen anything like it and the passion of them cooking the agaves and working so hard, I fell in love with it.

11:28I really did. I mean, it got me like, oh, I was in the boat filleted up, man, I'm a sushi in five seconds. For those of you who are not watching the video, Sammy just hooked himself. So that's what he's talking about. So anyway, I just fell in love with it. And I said, man, I'm going to build a cantina in Cabo. You know, there's nothing there. All dirt roads. Back then, there wasn't even electricity. They didn't even have telephones, no telephones. You had to go into town. They had a telephone company where you went and paid the lady operator and she dialed the number for you, 35 pesos to talk for three minutes, you know, and that's all there was.

12:04No newspapers, no one flight in, one flight out a week. And I'm dreaming, I want to have a bar down here and I want to have my own tequila. I want to have that tequila that I'm drinking in Jalisco. And that was the beginning a Cabo Wabo. I did it. I kept going back and I found people that would send me the tequila. They sent me tequila in the Cabo Wabo days in frigging gasoline cans. I mean, I'm talking about plastic ones, metal ones, you know, five gallons, and they'd send the Blanco. And I would put it in these little barrels at the Cabo Wabo, and that's how Cabo Wabo started. Such a simpler time back then.

12:41I mean, it feels like it didn't take a lot to be happy. You just kind of set up shop and served as you wanted and shared that passion, as I mentioned, with others. Starting a second brand, as you alluded to, as you noted, that it's a very different kind of industry that we're in right now. And to come to market, you've got to be very differentiated. You've got to have something because maybe the second celebrity tequila brand, or at least the second tequila brand that was backed by or founded by a celebrity, that was kind of still interesting differentiated. Now there's, I don't know, a few dozen of them out there.

13:18So when you started Santo eight years ago and launched a pretty innovative and first-of-a-kind product, it was that Mezquila, which is a blend of mezcal and tequila. What was your mindset? What was your vision for the brand at the time? And what was the initial reception for it? Well, yeah, it was a trip. I just didn't want to compete with Cabo Wabo because Campari bought it for me. It's such a beautiful amount of money that it changed my life. And I thought, well, well, why would I step on them? You know, it's like it was my first baby. But, you know, then they changed it. They went and bought another distillery because I didn't own my distillery.

13:53I just was using, you know, this Meravalle at that time because Juan Eduardo got in trouble. So I said, I don't want to make tequila again, but I want to get in the agave business because I love it. The passion to smell it. All I'd have to do is just go down. So I went down to Oaxaca and I spent time in Oaxaca. And I had a friend down there that took me around to all, you know, the small productions of Mezcal and watch how that was made. And that was very romantic to me. I was going, wow, now this is really cool, you know, totally handmade. And the most expensive ones were the ones that I couldn't even drink.

14:28I mean, you know, I'd take one drink and it was great with, you know, jalapenos on an open fire and, you know, grilled ribs and grilled rabbit and, you know, things that just burnt on a grill with tortillas, salsa and drinking mezcal was cool. But by itself, it was a little too smoky for me. So I thought I wanted to make mezcal is what I'm saying. And then I found out how hard it is. Small production, you can never make money with it. You know, I don't see how anyone could ever make money with a mezcal, but people have done it. but I couldn't mass produce it enough for my fan base even you know I mean I got a fan base so I that's all I think about when I make something when I make music when I make tequila when I open a restaurant all I think about is my fan base I say I want to make sure that they're happy and I got to cater to them and that's where I start by the way on a business level that's where I start anything that grows from there I'm lucky to have that happen and it's wonderful that it has happened but anyway so I want to make mezcal and I don't like mezcal so I thought well what if you water it down and i found out that the mezcals that weren't so smoky and so almost like eating a cigar eating a ashtray they were the cheaper stuff you know like if it wasn't really so i said well let's take the good stuff and what if i take a good blanco tequila from juan eduardo first guy i went to i said can we blend this together he goes oh hell no man all the mexicans are freaking out now they're like going man no no yeah man you cannot put tequila in oaxaca together they're both uppity when you're in oaxaca you have a hard time finding a damn bottle of tequila yeah it's like you go into a bar and say i want a margarita with tequila say whoa hey you're in the wrong place buddy so it's really cool but at the same time it's it's trippy so anyway i couldn't get anybody doing i said one come on help me out man so we went and found this mezcal that i liked i said this is really good, just too powerful.

16:16And of course he made the best Blanco tequila in the world to me still, you know, the way he made his tequila. And he did it off premise, like on the side. It took about a year. He kept mixing it. So I wanted to make Mesquilla. So I came up with the name. I said, Mesquilla, we'll make Mesquilla. He's going, there's no such thing. Mexican government. No, there's no such thing. No such thing. Can't trademark it. Nope. So I still can't trademark the name. Anyone can use it because there's no such thing, but I, there is, because I made it. It's called Santo Mesquilla. So long story short, we finally found the recipe.

16:48He found it. He finally came to me and he said, this is not tequila. This is not mezcal. This is mesquilla. And it makes the best smoky margarita on the planet, brother. You don't have to mess around. Because when you try to blend the two, they don't taste good together. They taste nasty. You know, put them in a shaker, you try it out, all this stuff. Nope. So he had to re-aerate it and he had to do something with the distillation that I guess it's his secret. You know, I'm not trying to be funny here. I couldn't make it. And we tasted it and went, oh, wow, this is great. So Adam Levine was my partner then because Adam Levine came to me and said, I want to make tequila.

17:21Can you help me out? I said, yeah, I'm making, you know, musquila right now. You want to join in? So he kind of came on board. He wouldn't promote it. You know, I'm not dogging him. He's a dear friend. He's a wonderful musician, one of the great singers on the planet and a superstar. But he didn't, he, oh, no, I can't promote it, man. You know, my management gets upset, you know, because my fans are real young and we can't promote, you know, and I'm going, well, dude, I need a partner that can promote. I don't need your money, man. I got plenty of that, you know? So we left on good terms and Guy Fieri came and said, dude, come on, you know, we're going to make tequila again.

17:55So Guy's the one that forced me out of just Musquilla. I would still be promoting just Musquilla because I love it. And I think it's brand new. It's fresh. And any bartender would taste it and go, yeah, I can make something out of this. This is not as powerful as mezcal for those guys that have a different kind of palate. So Guy comes on board. He wants, he tasted the Blanco first. How do you make this stuff? I said, here's the Blanco. And he's going, oh my God, this is the best tequila in the world. We're making this and we're putting it in barrels. Whoa, whoa, hold on. He just ran over me. Anybody that knows Guy Fieri, he's a powerhouse.

18:31The guy works harder and longer than anyone. He's going to outwork you. If you're going to say, let's get in the same business, well, he'll outwork you eventually and you'll give. You'll say, okay, you win. You know, he's really, really a driven guy and he's smart. He's got a great palate. So now we got in the full blown tequila business. Now we even have an extra Añejo. Some people in this business, a lot of celebrity brands, they come out with their first skew. They've got a Blanco and they got a Reposado and they got an Añejo. And I know one of them that even came out with an eight year extra Añejo all at once.

19:02And you go, wait a minute, How'd you do that? So it just makes me laugh because we make tequila. You start with a Blanco. And when that's perfected, then you put it in a barrel and you taste it as it goes. And if that barrel ain't giving it the right love because it's too old and been charred too many times or whatever, you try it again. And we dumped out our first Reposado. We gave it to somebody else and bought all new barrels. When I say new barrels, one choose whiskey barrels. And we're all about that. We're all about the perfection. it's still a growing brand. There's still a lot to do. There's still a lot more places where it can be sold.

19:38There's still a lot more awareness that needs to happen. And bringing on Guy Fieri, I think that's certainly one way to elevate its visibility among a lot of folks in the industry. But it's also, I think, potentially something that, I mean, you briefly touched on this, could affect the way people perceive the brand. And they're like, oh, I have this sort of perception of Guy Fieri and what he represents. And, you know, I don't want to necessarily drink his tequila. So, you know, how did you consider that? How did you consider how the public views Guy Fieri and, you know, yourself and to a certain extent, when you are marketing the brand?

20:20Yeah, it became difficult when this whole celebrity thing came in, you know, like it's a celebrity tequila. We kept getting thrown into that category. and I'm going, wait a minute, I invented 100 % agave tequila. Cabo Wabo was the first with Patron. There was no John Paul DeGioia. He's my dear friend. I just spent 10 days with him in Costa Rica and we just were laughing about it. Him and I getting on the phone back in those days, you know, like I was using his hair products, that John Paul Mitchell product. And I called him about a hair product because a guy, another friend of an artist of mine was buying his, John was buying his artwork and I owned some of it too.

20:54And so we got on the phone and we, you know, we're talking about tequila. And it was like, wow, we were just laughing about how we were really the first. And so how could you throw me into a celebrity brand? I was making the first really real tequila with Patron. I mean, they were better businessmen than me, obviously, you know, they did really well. So, Guy, the way we go about it is we just try to, you know, ignore the celebrity thing and try to say we really don't like being that. and we're not trying to capitalize on it. The only reason I use it is for my fan base so that they know I have a tequila, you know, because my fan base will buy it.

21:29His fan base will buy it. But we just keep pushing the fact that we're additive-free. We're not like 99 % of the tequilas out there. We are additive-free, and I mean additive-free, nothing. We care about every step. We made it from a Blanco to a Reposado to an Añejo, now to an extra Añejo, and we did it right. every step we made sure that it was the best it could be and that's different than somebody just signing up with some big spirits company and putting their name on something because we go down there i mean i i spend time down there just like i said i before i made musquila i went to oaxaca for 10 days and i mean i i worked the area so that's why we do interviews not to uh make ourselves more famous, I do them because I want to enlighten people that this is a real deal.

22:20In my opinion, Santo is the best tequila on the market. And I tell you, my next favorite is Ocho. I think Ocho does a freaking great job. And there's some other even smaller ones that I can't even remember the name that I've had. And I go, wow, this is real tequila too. This is great. You know, I'm for all these guys and I'll help them promote their tequila to get rid of this, some of the crap that's on the market. The problem with these additives and everything, You know, you've got somebody that doesn't like tequila or doesn't know tequila, and they take a shot of one of these things and they go, oh, this is delicious.

22:52Well, tequila is not necessarily delicious. You know, if it doesn't give you the, you know, I only distill twice, you know, that these people that distill more and make the cristalano or cristalino, whatever it's called. To me, that's just crazy. I just don't. You're drinking something else, you know, go drink a soda pop or something, you know, or, you know, I'm about real tequila. And I think, you know, we'll still be standing when things fall apart. I've seen this movie before, back when I was making Cabo Waba. There was a time when tequila prices went through the roof. It tripled. And we were going, wow, we got to raise our prices or something.

23:28I said, no, no, no, no. And my partner at that time, not my partner, the guy who was running my company said, we can make a Meekstone, man. Let's start looking at a Meekstone and keep the price the same. I said, oh, no, no, no, no, no. I will never make a Meekstone. That's why I got in this business, was to make 100%. So I kept my prices the same and lost my margin. I was making a few dollars a case. And it didn't matter to me. I'm a rock star. I've got plenty of money, you know? So that's the way I've always done it. And Guy and I are doing the same thing now. And, you know, they're falling out.

23:58Everybody jumped on the wagon and used up all the good agave. You got to pay all this money to get a good six-year-old plus, you know, was almost impossible to get an eight-year-old agave. And we waited out. And sure enough, it's coming around again, as you well know. So it sounds like the contracts that you have and the relationships that you have are just as important as the brand itself. Because as you noted, there are some folks trying to get into this business right now and they can't because they're priced out of it. Yeah, relationships is the spirit's industry. Let me tell you, I'll tell you that right down to the distribution, right down to the stores, the liquor stores, the bars.

24:34It's all about relationships. I get on the phone and guy gets on the phone and we call up our friends that have, you know, a guy like Michael Mina. There's a bunch of restaurants. Michael, come on now. It's your buddy here. You know, you know how much money I've spent at your damn restaurants on fine wine and steaks. You know, you almost got to go about it that way. And the same thing with your distributors, you know, Southern Glacier Wine and Spirits, who we're with nationally. They're huge. I don't want to say this, you know, but they don't give a crap about us. You know, we're out there selling 35 ,000, 40 ,000 cases for them.

25:07They're looking at these guys that are selling 2 million cases. You know what I mean? They're going to get the favor. But I call up Wayne and Guy calls up Wayne and we call up Marcus' son and we say, hey, you know, we're over here. You know, we're out there promoting. We've got a few restaurants ourselves. You know, your brands are in there. You know, everybody rely on friends. And same thing in Mexico. You know, Juan Eduardo, three generations. His dad made the first Cabo Wabo tequila, and he was working for his dad. I first met him at 17, 18 years old, maybe. Yeah, he just got relationships.

25:43He calls up his farmer friends and, hey, I need some agave, you know. And without all that, you're in a whole different business, you know what I mean, without relationships. Quick break. If this episode has you thinking about what's next in food and beverage, explore BevNet and Nosh Insider, our subscription platform with deeper insights from the BevNet team. Visit tasteradio.com slash insider to learn more. One thing you mentioned, Sammy, which was interesting to me, is that you want to sell Santo to people who know tequila, who have a good palate. But what about those people who are new to tequila and want something good, but don't necessarily know much about the spirit?

26:24Again, you know, this industry, the spirits industry, is having a hard time reaching legal drinking age consumers for a variety of reasons. Younger kids just don't drink as much as past generations. There's alternatives, cannabis and otherwise. So the future is just as important as the present, I think, when it comes to the spirits industry. And you've got to think about how are we going to attract that new generation? How are we going to get them interested in our brand? Do you have a strategy? I mean, is that something you constantly talk about with your team? well yeah the marketing people constantly talk about and it bores me because honestly i've always said about my music you know people say hey you're not that relevant with your music anymore you know you're a classic rock artist and you're still making the same music you know if i signed with a big record company which doesn't interest me really you know if i make a record i usually go independent and sign a run record deal here's my new record you like it i pay for it myself because I like to do things my way.