George Clooney is selling his tequila company to Diageo for as much as $1 billion, the company announced on Wednesday. But Clooney and business partner Rande Gerber didn't set out to make money by launching Casamigos Tequila.
While building their side-by-side vacation homes in Cabo San Lucas, the long-time friends were spending a lot of time in Mexico — and consequently, drinking a lot of tequila.
"As you do when you're in Mexico, you drink a lot of tequila," Gerber tells CNBC. "After a couple of months trying a lot of different tequilas, George turned to me and said, 'Why don't we just make our own? One that's perfect for us to drink?'"
That's just what the pair did, along with their friend Michael Meldman.
The team found a distiller in Jalisco, Mexico, and explained exactly what they were looking for. "It was important that it tasted great and didn't burn going down," Gerber explains. "We wanted one that we could drink straight or on the rocks. One that we could drink all day and all night, and not be hungover in the morning."
After months of back-and-forth with the distiller, and tasting and developing their tequila, the duo found the perfect product, Gerber recalls: "George opened the sample, poured one for me, poured one for him, and we tasted it. We both looked at each other, had another taste of it, and we were like, 'This is it. It's perfect.'"
Casamigos, which loosely translates to "house of friends," was never meant for the public. For two years, it was served exclusively among Gerber and Clooney's friends and family.
"It was just for us," Gerber says. "We didn't really want to be in the business. We figured, George is an actor and a director. I own restaurants and bars and wasn't looking to get in another business.
"But then the distiller called and said, 'Hey guys, we have a little problem: In the past two years, we've been sending you about a thousand bottles a year. Either you're selling it or you're drinking way too much — either way, we can't keep calling it samples. You guys have to get licensed and do this right.'"
The celebrity entrepreneurs, who brought Casamigos to the public in 2013, figured they didn't have a choice. "We wanted to keep drinking it," Gerber says.
The organic evolution of Casamigos made the process of starting a company less stressful, Gerber tells CNBC: "This all happened naturally. We just wanted the best tequila for us to drink — so when it turned into a business, it was easy, because we didn't really care about whether or not it was a huge success or not."
What started as a passion project turned into a successful private-label tequila business. "It immediately took off," says Gerber, and now, Diageo will initially pay $700 million for it, with the potential for another $300 million depending on the tequila's performance.
As for the key to their success?
Focusing on the product inside the bottle — not the bottle or label itself, says Gerber. "We have an inexpensive bottle, but the best quality tequila inside."
This is an updated version of a story that was previously published in November 2016.
Don't miss: How a 172-year-old spirits company that survived Prohibition is still thriving today
