Tito’s Handmade Vodka might be on every bartender’s shelf now, but back in the 1990’s when it launched, you’d have to be a little crazy to think taking on established Vodka brands like Smirnoff, Skyy, Stoli, Ketel One and Absolut was a good business idea.
Still, after a series of jobs that left him feeling unfulfilled, from oil wildcatter to mortgage broker, Bert “Tito” Beveridge did just that, drawing inspiration from a late-night infomercial to turn his passion for making small batch vodka infusions for his friends into a big business.
Beveridge (yes, that’s his real name) still retains 100% ownership of Fifth Generation, a company that makes just one product: Tito's Handmade Vodka. There are no special flavors or editions, just plain vodka.
Though the company’s financials are not public, it’s been reported that Tito’s sells more than 10.35 million cases a year, has an estimated revenue of $1.4 billion dollars, and has made Beveridge a billionaire many times over. The company is said to have a valuation of $2.5 billion.
But Beveridge’s path to becoming a vodka mogul was anything but smooth. Along the way, he fought to open the first legal distillery in Texas and racked up credit card debt to get the company off the ground.
A native Texan, Beveridge enrolled at the University of Texas as a pre-med student, but changed directions before graduating in 1984 with a major in geology and geophysics. A rowdy collegian, Beveridge faced arrests for exposure, assault, and DUI before graduation, though all the charges were ultimately dismissed.
After graduating, Beveridge got a job as a seismic data processor with a major oil company in Houston. The Texas oil industry was expanding internationally, and Beveridge jumped at the chance to work in Venezuela and Colombia. It was in South America that Beveridge first began making his own alcoholic concoctions by picking wild fruits and fermenting them into wine.
A few years later, Beveridge returned to Texas and worked as an independent oilman, commonly known as a wildcatter. He next moved to Austin and got a job as an environmental engineer before trying his hand as a mortgage broker.
By then, Beveridge was in his mid-30s, and he had no idea what he wanted to do with the rest of his life. But, as it happens, he’d recently started making small batches of habanero-infused vodka for his friends.
Then, one night, Beveridge happened to catch a late night infomercial, and the host said something that would change his life: "If you want to find your dream job, find your passion. Then sit down with a pen and paper, draw a line down the middle of the page, and on the left make a list of everything you love to do, then on the right, write down what you are good at doing. Once you've done that, find what you're best suited for, and make it happen."
This spoke to Beveridge. In the middle of the night, he did the exercise, despite being well lubricated, having just gotten home from a party.
It made him realize three things: 1. He was an extrovert who loved meeting new people. 2. Sales came naturally to him. 3. He loved infusing vodka with flavors. That night, he decided to make vodka his business.
When he approached a local liquor store owner about the idea, Beveridge received a key piece of advice: if he could make a really smooth vodka that women would like to drink straight, he’d have a winner.
But there were bumps in the road from inspiration to an actual business. Back in 1993, there wasn’t a single distiller in the state of Texas.
When Beveridge went to the Texas Alcoholic Beverage Commission to apply for a license, he was told the laws of the state clearly forbid distilleries. Beveridge did some research and discovered that wasn’t true. So, the commission said they'd grant him a state license IF he could manage to get a federal license first.
Beveridge spent two years getting a federal license, and the TABC honored their promise. Beveridge’s license was also the first one issued in the United States since Prohibition.
License in hand, Beveridge had to figure out how to actually make vodka. So, he visited bourbon distilleries and watched their process. He went home, built his own still and began working on the recipe for Tito's Handmade Vodka.
He experimented with different grains and eventually chose to use corn.
But a recipe wasn’t enough. Beveridge began taking his business plan to banks, but the loan officers had no interest in investing in a vodka company. He also struck out with private funding.
Forging ahead, Beveridge opened up 19 credit cards to finance his business. At one point he had around $88,000 in charges on those credit cards.
Tito’s was a one man operation in those early days. Beveridge mixed the vodka, distilled it, bottled it, and drove it around to prospective customers. He studied Prohibition-era stills for inspiration and constructed his first still out of two empty kegs of Dr. Pepper hooked up to a turkey-frying pot that he had previously used to fry catfish.
Beveridge sold his first case of vodka in 1997 and just in time – his credit cards were maxed out and he was transferring the balance from one card to the next to free up credit.
The odds were against him. Vodka is the most competitive part of the liquor business by far, accounting for nearly a third of the United States' distilled spirits consumption, and many upstart vodka brands launch with big hopes only to be squashed by the major distributors.
He didn't make a single penny in profit for the first eight years of his business.
But he did make vodka that people wanted to drink. Tito's Handmade Vodka dominated the 2001 San Francisco World Sprits Competition, to the great surprise of more established vodka makers. The brand walked away with the Double Gold Medal, the competition's top prize, beating out Smirnoff, Skyy and 70 other brands of vodka in a unanimous decision by the judges.
Tito’s Handmade Vodka was just five years old, and the win was a big boon to the fledgling business. Beveridge made a profit with Tito’s for the first time that same year.
Eventually, Beveridge moved the operation out of his backyard shack and into a state-of-the-art distillery in Austin. Despite explosive growth, Beveridge still considers Tito’s a craft distiller, because he still makes it the same way he did in 1997. He just has many more stills to make it in.
However, the American Distilling Institute distilling guidelines disagree and call Tito’s a “refinery” since the company makes many more than the max 52,000 cases that define a craft distillery.
In retrospect, Beveridge is lucky he never found an investor for Tito’s when he was starting his company. Since its start in his backyard, Tito’s has grown to become not just the best-selling vodka in the U.S., but also the best-selling distilled spirit. Sales of Tito’s Handmade Vodka have almost doubled in the last five years. In 2019, Tito’s sold $190 million worth of vodka. And its 2021 sales projections were at two million bottles a week.