Sammy Hagar's Tequila Supergroup

The rocker explains how and why he decided to sell a majority stake in his $60 million-a-year Cabo Wabo tequila business to Campari/Skyy

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The Entrepreneur: Sammy Hagar, 59

Background: Rock 'n' Roll Hall of Fame inductee and former front man of rock bands Van Halen and Montrose

The Company: In 1992, Hagar opened his Cabo Wabo Cantina in Cabo San Lucas, Mexico, and four years later launched his own brand of premium tequila, also called Cabo Wabo.

Sales: Cabo Wabo Enterprises, based in Novato, Calif., earned about $60 million in sales in 2007.

The Deal: In May, 2007, Hagar announced a deal to sell an 80% stake in Cabo Wabo Enterprises to Campari/Skyy for $80 million.

My original vision for this company started out with the Cabo Wabo Cantina in Cabo San Lucas, Mexico. I wanted to build a little tequila bar, where I could go and play acoustically with my friends, hang out, and, of course, drink tequila. And to have a great tequila bar, I needed a great tequila. I visited the town of Tequila in Jalisco, Mexico, and went around to all these little places. Most didn't even have their own bottles and I had to taste it straight from the barrel. I came across the Rivera family and it was then that I tasted my first really handmade, boutique Cabo Wabo-style tequila. It changed my life. And it was then that Cabo Wabo was born.

My first intention was just to have this little tequila brand for my friends at the cantina and then bring it to America. I thought it'd be awesome if we did 10,000 cases a year. Our first year, we sold 37,000 cases. Then it exploded and it really started getting away from me, because I'm not a good day-to-day business guy. You know, my feet are in the sand day to day. Cell phones on the beach—I don't like it. I feel like an idiot. People look at me funny. I get one white ear out of it, you know what I mean?

Ever since I started, people have been trying to buy Cabo Wabo—even when it was the smallest little company. And as it really started growing in the past few years, I've been bogged down with the business side of it. I love this brand but I also have my music business to look after.

Partner Valued the Brand

Long story short: I realized how important it was for it to be a global brand and not just a little thing in my backyard or just in America. My fans had been hounding me for years—in Japan, Australia, Russia. I get letters from all over and on my Web site asking, "Where can we find Cabo Wabo?" And it's kind of embarrassing. If it's the best tequila in the world, then why isn't it worldwide? The fact of the matter is that the brand outgrew my ability to take it to the next level.

So, when Campari/Skyy Spirits approached me late last year with an offer to go global, I agreed.

All I really wanted for Cabo Wabo was international distribution without sacrificing the integrity or quality of the brand. Campari had the same thing in mind. At every step of the negotiations, Campari gave me confidence that they were the way to go. We spent a lot of time together in San Francisco and in Cabo San Lucas, Mexico. They were not just a bunch of lawyers, but the real people who will run this company. That clinched it for me. Believe me, it felt right.

That's not to say that I didn't struggle with the decision to do this. I will still have some control, as I did before; the net result is that this will make Cabo Wabo an international brand, and this fact overcame any fear I had about selling the brand.

Getting It on the Radio

Hey, I'm a great singer. I'm a great guitar player. I'm a great songwriter. I'm a great performer. But I also have a great tequila that's maybe better than any of that stuff. I'm more proud of it than anything. And it's gotten such attention that my ego is saying I want the whole world to taste this tequila.

I knew I had to approach this like the record business. Like the record business, the spirits business calls for placement.