Tequila has been an trade darling in current time. Double-digit progress on this class has helped lead the general spirits market greater for years now. How for much longer can the increase instances proceed for agave spirits?
One potential reply: Have a look at whiskey. This different stylish class exploded in reputation years earlier than tequila’s fast rise. Tequila has all the time appeared a number of years behind the trajectory of brown spirits, as extra bourbon drinkers found that additionally they loved the candy profile and comparable complexities of agave options.
Whiskey has now cooled off. Its personal annual double-digit good points have come down, approaching if not reaching the respectable single digits. After the mixed tequila and mezcal class grew 17% in 2022, in keeping with the Distilled Spirits Council of the U.S., will these spirits observe bourbon decrease? Depends upon whom you ask.
“The tequila market is stronger than ever,” says Mike Moreno, proprietor of Moreno’s Liquors in Chicago, a Beverage Dynamics High 100 Retailer, and the biggest vendor of agave spirits in America. “Tequila gross sales are up 20%. Cask energy tequila gross sales are up 25%. In 2023, tequila was speculated to outpace vodka by the top of the yr. As an alternative, it ended up outperforming vodka by the top of Q2. That’s how shortly it’s rising.”
From the standpoint of the center tier, the outlook can be optimistic however extra modest.
“As a class, progress has slowed fairly considerably during the last 12 months as the general spirits trade has additionally seen some softness,” says Zachary Poelma, Southern Glazer’s Wine & Spirits SVP provider technique & insights. “Tequila continues to outperform, and we consider will achieve this in 2024, however not on the identical fee we noticed in 2022 or 2023. “
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“We count on tequila to develop modestly in 2024 within the low-single digit vary, which we predict nonetheless outpaces general spirits once you exclude RTDs,” he provides. “The worth value tier trailed in efficiency versus the remainder of the class in 2023, and we predict that is one thing that continues into 2024.”
Preliminary information from The Beverage Data Group, the info accomplice of Cheers journal, reveals tequila at between 5% to 7% progress final yr. Class leaders Cuervo and Patron every shrunk round 2% — additional proof of leveling off.
Tequila Traits in 2024
Which is all to say that whereas the numbers could not bounce off the charts anymore, tequila will stay a progress driver this yr. So what can we count on from this class when it comes to tendencies?
Premiumization has been the dominant story in tequila — and far of the alcohol trade — for the previous decade. Whereas clients will proceed reaching for top-shelf bottles,
Moreno does see some pullback due to macro causes, coupled with a contact of tequila class overexpansion. “Economically, many customers really feel iffy or weary concerning the potential for a market crash in 2024,” Moreno explains. “I’ve observed that extra customers have been shopping for down. However rapidly, we now have all these additional anejos, anejos and even reposados priced between $200 and $400. We’ve by no means seen these costs earlier than. I feel the shoppers are extra comfy with the $50 to $100 value level.”
Maybe the 2 greatest tendencies in tequila at present are celebrity-launched manufacturers and “additive free” merchandise. Combining these two parts is Santo Tequila, from Sammy Hagar and Man Fieri.
“There is usually a backlash to superstar tequila manufacturers,” says Dan Butkus, Santo president and CEO. “Some [celebrities] don’t even drink the tequila first and put out merchandise crammed with components. We had thought-about shying away from the superstar focus, however felt that our celebrities really engaged with the model.”
It helps when the group is Hagar, a pioneer of superstar alcohol manufacturers, and Fieri, who has launched plenty of profitable meals and beverage manufacturers himself. Authenticity is every little thing when tying a product to a public star. The story and high quality should match the celebrity.
As an example: Santo, launched in 2019, focuses on additive free. The Tequila Regulatory Council, the class’s governing physique, permits 1% of any agave spirit to include components, with none discover on the bottle’s label. Many manufacturers that use 0% components now promote this truth prominently on packaging and advertising and marketing.
“You will have a better variety of individuals now searching for true tequila style,” Butkus explains. “Additive free will grow to be the dominant subcategory.”
It is a flip from some practices throughout earlier phases of the continued tequila increase.
“After we had been having the agave scarcity issues, individuals had been sourcing youthful and youthful agave merchandise,” Butkus says. “The price of agave was additionally going up. As tequila was booming, extra manufacturers, particularly the bigger ones, had been compelled to make use of youthful agaves. That meant that they had to make use of a lot of components to beat underripe agaves and different flaws within the liquid.”
Additive-free tequila and mezcal additionally ties into the “more healthy for you” life-style at present transcending all meals and beverage classes. So says Enrique Cobos, beverage director for the Chicago-based restaurant Moe’s Cantina, which has two places within the metropolis.
“Individuals recognize that mezcal is made organically and artisanally,” he says. “That’s why I really feel that additive free will likely be a powerful pattern. Personally, I discover myself getting increasingly into merchandise which can be additive free and made in smaller batches. Extra individuals will quickly understand that additive free is the way in which to go.”
However, Cobos notes, “you possibly can discuss concerning the manufacturing course of all day, however ultimately, all of it comes all the way down to taste. You don’t need to be an knowledgeable to understand one thing that tastes good.”
Cristalino unclear
Elsewhere on Moe’s backbar, Cobos sees cristalino tequilas — anejos filtered till utterly clear — staying sturdy.
“An increasing number of manufacturers are stepping up with these merchandise,” he observes. “I don’t assume that’s going to cease.”
However Cobos factors out that some customers get pleasure from cristalinos as a result of they don’t know that a lot about tequila. “Filtering a product makes it simpler to drink. Add in a flowery bottle, and other people fall for it. It doesn’t imply that cristalino is for everybody, however the extra traditionalist tequila and mezcal drinkers, the aficionados, they don’t like cristalino.
“Generally with cristalino, I feel they’re making an attempt to create a class that’s not there,” he provides.
Whereas Moe’s does promote a star tequila flight (George Clooney’s Casamigos Blanco, Kendal Jenner’s 818 Reposado and Kevin Hart’s Gran Coramino Añejo for $50), Cobos gives a broad caveat for these sorts of manufacturers.
“Simply because you are able to do it doesn’t imply it’s going to work,” Cobos says. “There’s a degree the place individuals have had sufficient. They may ask for extra high quality for his or her cash.”
Cobos believes that tequila bars will stay common.
“Tequila is nice, as a result of you possibly can construct a enterprise round it,” he says. Normally, there’s not an excessive amount of change happening in tequila. class. “That’s why you’ve gotten so many competing manufacturers making an attempt to come back out with one thing new as of late.”
But it surely’s key to not have too many manufacturers on the backbar, Cobos provides. “You need to preserve it trustworthy. I like to recommend having 30 manufacturers and coaching your employees in order that they’ll actually speak about all of them.”
Along with cristalino, there have been a number of current improvements within the tequila class.
“Ending tequila in barrels that different merchandise have been aged in — corresponding to port and even bourbon — continues to develop in reputation,” says Poelma of Southern Glazer’s. “We predict we’ll proceed to see extra innovation on this space from tequila manufacturers in 2024.”
“We’re additionally seeing tequila proceed to develop on-premise, with cocktail choices that stretch past the standard Margarita,” Poelma provides. “Together with mixologists together with tequila in additional drink menu choices, we’re even beginning to see accounts promoting the Glowing Margarita.”
Over the past couple of years, “we’ve seen customers grow to be extra within the alternative ways tequila can be utilized, and we don’t count on that to vary in 2024.”
Agave Scarcity Over?
Even earlier than sustainable, pure, eco-conscious alcohol merchandise grew to become stylish, a standard speaking level in tequila was the danger of an agave scarcity. In spite of everything, because the class skilled exponential progress, might farmers sustain with crops that take seven to 10 years to succeed in maturity?
– Zachary Poelma,
Southern Glazer’s Wine & Spirits
Moreno thinks this tide has turned. “We went by way of an agave scarcity not way back, however proper now, we’re on the up and up,” he says. “There was such a rush from the farmers to plant as a lot as potential.”
The agave market is just like Wall Avenue, Moreno says: There are ups and downs, but it surely ranges out. “I’ve very assured to say that we’re approaching a surplus now.
“We must always begin seeing extra of our favourite manufacturers quickly,” he provides. “If something, the glass scarcity is extra regarding for tequila. They’re nonetheless having points with that down in Mexico.”
Agreeing with Moreno is Poelma of Southern Glazer’s. “Whereas tequila has grown considerably in reputation, we’re not involved about agave shortages at the moment,” he says. “The value of agave has fallen by greater than 50% from the excessive through the pandemic.”
And as demand has slowed from the excessive double-digit progress in 2021 and 2022, Poelma says, “we count on adequate availability of agave for the following few years to provide present tendencies.”
