George Clooney's tequila company just sold for $1 billion — here's the story of how it was set up by accident

George Clooney's success in the world of Hollywood is well known — as are his efforts in political activism and humanitarian work.

A lesser known fact is that the actor and two friends founded one of the fastest-growing tequila brands in the world by accident in 2013. That company is Casamigos, which was just sold to Diageo for up to $1 billion in a transaction set to close during the second half on 2017.

Diageo is set to pay $700 million initially, with the potential of another $300 million based on the tequila's performance over 10 years, according to CNBC.

In an email to CNBC, Clooney said: "If you asked us four years ago if we had a billion dollar company, I don't think we would have said yes. This reflects Diageo's belief in our company and our belief in Diageo. But we're not going anywhere. We'll still be very much a part of Casamigos. Starting with a shot tonight. Maybe two."

The news comes after Casamigos co-founder and ex-bar and nightclub owner Rande Gerber told Business Insider in March that making money was never the reason for launching the brand.

"What was really important for George and I was that we have the best tequila, but we make it affordable for everyone," he said. "George doesn’t need the money, I didn’t need it, Mike didn’t need it — it wasn’t the reason behind launching a tequila. We wanted everyone to be able to drink it and not be exclusive."

Clooney came up with the tequila idea with Gerber — who also happens to be the husband of supermodel Cindy Crawford — while the two were spending time at their houses in Mexico.

They had met nearly 30 years ago while George was shooting one of his first films in New York.

"He was coming into one of my bars called Morgan's at the time... so I met him at the bar over a tequila," Gerber told Business Insider. "He was spending three months in New York, and every night we would hang out at the bar and we became great friends."

The two would go on golf trips around the country with other friends — "It was called 'the Golf trip,' but we played maybe nine holes now and then" — which is where they met real estate guru Mike Meldman.

"A mutual friend connected us, saying we should play at one of Mike's golf courses," Gerber said. "He took care of us and we developed a friendship through that, then we built our homes in Mexico in Mike's development."

Clooney and Gerber's houses sat beside each other on the piece of property, which was called Casamigos.

"It felt like one compound," Gerber said. "We'd have a bunch of our friends there — breakfast at our place, lunch at his, dinner at ours. It felt like one big house."

And their meal times often involved sipping tequila.

"Casamigos really started by accident as far as a company," he said. "As you do in Mexico, we would drink a lot of tequila. We'd go out to bars and restaurants and bartenders would recommend them. Some were good, some not so good, and some expensive. There came a point where George turned to me and said, 'Why don't we create one that's perfect for us?'"

"We wanted one that didn't burn going down, that was super smooth, and had the right flavour profile. One that we didn't have to mix — typically we drink it straight or on the rocks – that we could drink all day long and not be hungover in the morning."

Tequila pilgrimage

The duo began their tequila pilgrimage. They did research, met with distillers, trialled samples, and did blind taste tests with their friends and family until they found a recipe with no burn at all.

"It ended up being almost two years and 700 samples later — it was perfect," Gerber said. "There was a point where we all chose one, and it was ours. Not only did we know we had something great that we loved, but all of our friends loved it as well."

Bottles were ordered, served, and drank at their homes in Casamigos, which fittingly means "House of Friends."

While the pair may claim they can drink it all day and not be hungover the next, it's probably not recommended for inexperienced tequila drinkers — the average bottle contains 40% alcohol.

Without even realising, Gerber said he and Clooney were bringing in about 1,000 bottles to the UK, and were told by the distiller that they needed to get licensed.

They met with a distributor in the US who wanted to get on board, and launched the tequila as "Casamigos" along with the help from their well-connected friend Meldman.

"He's wonderful at marketing, and caters to the high-end market," Gerber said. "He's smart, and has incredible relationships."

The tequila gold rush

The ultra-premium small batch tequila is aged and barreled, Gerber said, while a master distiller "chooses the right moment to take it from the barrel to the bottle." He added: "We use old brick ovens, and the Blue Weber Agaves are grown for seven to nine years — it’s a long process."

They use a simple stick-on label on an unfussy bottle, with a plain cork to seal it. The brand sells reposado, anejo, and blanco tequilas, which range from $32 (£26) to $42 (£34), depending on where you buy them, according to Gerber.

Partly due to having George's name attached, the brand "immediately took off" through word of mouth, according to Gerber.

"We started winning awards, which legitimises you," he said. The brand has won gold medals at the Los Angeles International Spirits Competition, the San Francisco World Spirits Competition, The New York World Wine & Spirits Competition, The Spirits of Mexico Tasting Competition, and from The Beverage Testing Institute. "From then on it gained momentum."

The brand doubled its volume of sales from 38,000 nine-litre cases in 2014 to 80,000 in 2015, according to Ad Age, which said it was part of a tequila "gold rush." Casamigos says it more than doubled its volume again in 2016.

It is sold in 20 countries including the US, Canada, UK, Australia, New Zealand, Hong Kong, Spain, Italy, Peru, the Dominican Republic, and Jamaica.

Gerber, who now works full-time running Casamigos, declined to provide exact sales figures for last year and would not discuss the company's earnings.

Everything is done in-house in offices in LA, were Rande is based, as well as New York and Arizona. He added that George and Mike are still heavily involved, and CNBC reported that Clooney, Gerber and Meldman are expected to stay with the company after its acquisition.

"We all contribute an equal amount. Even though I run the company, we all play our own role," Gerber said in March. "George is very involved in the business. He's in LA this week, and he’ll be in the office when he’s here to go over ideas."

The two also make sure they taste every batch.

"We have our master distiller, and he's so great that we know they're all consistent, but when a new batch comes out he'll send a bottle and George and I will taste it," Gerber said. "We always want to be the first or the second one to taste it. It’s kind of a tradition. We open the bottle, toast, and take a sip."

"It's always perfect. If you have a great master distiller, they have this palette and sense of smell and taste that has almost been passed down from generation to generation," he said. "We want to be part of that process."

Brits are turning to tequila

Gerber added that Casamigos has been "incredible" growth in the UK, where beforehand it "wasn't that big of a thing." It is sold in Selfridges and Harvey Nichols, but it is pricier than it is in America, with a bottle of Añejo setting you back £77.99 in the former.

"George and [his wife] Amal have a beautiful home in the UK now, and he wanted to make sure he could drink it there," Gerber said. "Even though Brits aren't known as tequila drinkers, a lot of whisky drinkers and vodka drinkers have switched to drinking Casamigos."

Gerber added that it's "not your typical tequila" as it is low in calories and made from 100% Blue Weber Agaves, which he says has helped it catch on with both men and women.

"The authenticity of everything that we've done, from making it ourselves to naming it, has been an extension of who we are and our lifestyle," Gerber said. "It's been a fun thing for us to do."

While the pair recently sold their homes in Mexico, Geber said they're looking at building new ones in the same place. Who knows what idea their next abodes will inspire.

George Clooney's tequila company just sold for $1 billion — here's the story of how it was set up by accident

Tequila pilgrimage

The tequila gold rush

Brits are turning to tequila

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George Clooney's tequila company just sold for $1 billion — here's the story of how it was set up by accident

Tequila pilgrimage

The tequila gold rush

Brits are turning to tequila

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JOIN OUR PULSE COMMUNITY!

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