Utilising data from across the globe, CGA evaluates the tequila category in the on premise and looks to the opportunities it has for significant growth
Tequila has been subject to considerable global interest over the past decade, with suppliers and industry experts alike tipping it as a boom category, primed for growth. This has played out with nearly all major suppliers acquiring both niche and established tequila brands to capitalise on the potential that the category holds.
CGA’s global data suite suggests that, if this boom hasn’t already taken place, then we are certainly not far from it, with consumer interest in the category at an all-time high and on-premise sales around the globe in growth. “The category is one that is a perfect fit for the on-premise,” suggests Charlie Mitchell, research and insight director at CGA. “It plays perfectly with consumer needs in high-tempo occasions, in traditional shot or cocktail serves, but also has enough depth and complexity to be suited to low-tempo occasions through the exploration of new brands, ageing processes and serves.”
70% of spirits drinkers order tequila in Mexico’s on-premise
In no market is this more visible than Mexico, perhaps not unexpectedly. CGA’s latest On-Premise User Survey (OPUS) in
Mexico shows that a massive 70% of spirits drinkers drink tequila in the on-premise, 60% of whom do so “every” or “most times” they visit the sector, presenting a considerable opportunity for other markets.
And it is the US that is closest to this. Sales of tequila in the US on-premise have been steadily growing for a number of years and stood at just over 7% year-on-year volume growth pre-Covid.
The category had been the core driver of increased spirits sales, in what was otherwise a relatively flat market; 56% of spirits growth were contributed by tequila.
“Tequila has been one of the stable success stories of the US on-premise over the past few years,” explains Mitchell. “Growth has been predominantly driven through serve strategy, with cocktails at the core, alongside a renewed interest in sipping tequilas to supplement shot serves.”
Cocktails have, arguably, been the heartland for tequila in the US for some time. The margarita is by far the most popular cocktail in the on-premise there, with nearly two-thirds (63%) of cocktail drinkers choosing it regularly, while 44% say that tequila is their preferred cocktail spirit base.
Indeed, cocktail serves have fuelled substantial growth for tequila across the globe. CGA’s OPUS Australia shows that, while tequila marginally loses out to vodka as the preferred spirit base, margaritas are the most popular cocktail across the Australian on-premise.
There is a similar story in China too. Here, 31% of spirits drinkers opt for tequila when out and the margarita is beaten only by Long Island iced tea as the most popular cocktail in the channel.
In the UK, tequila is also growing. On-premise tequila sales were in 4% growth pre-pandemic, a figure only beaten by rum and gin for spirits. However, the UK growth was achieved in a slightly different manner. Mitchell explains: “Growth of tequila through cocktails has certainly been steady, but nothing to get too excited about. In the UK market, growth has been predominantly driven by premium and even super-premium tequila.”
Trading up to higher-calibre varietals could unlock growth
It is this avenue, alongside cocktail serves, that Mitchell believes offers incremental global growth for tequila. “Cocktails, the margarita in particular, are clearly a success story in engaging consumers with tequila and offer an accessible entry point into the category,” he says.
“However, capitalising on this increased interest through higher-calibre and different subcategory varietals will create further interest and expand the need states and occasions on which tequila can be enjoyed in the on-premise.”
Sales data aligns with this viewpoint, with tequila growth in the US highest among premium and ultra-premium categories. However, when examining Mexico as a case study, there are signs that there is further growth potential through premium.
Drinker profiles in Mexico are weighted towards higher-quality variants as standard. The most popular subcategory of tequila is reposado (aged two months to a year), followed by añejo (aged one to three years) and then blanco (also known as white, plata or silver; aged for less than two months). This is a stark contrast to the US, where gold especial (distilled in barrels for colour; typically aged from 60 days to a year) jumps in popularity, but white/silver dominates. This perhaps highlights the opportunity for añejo and reposado serves to capitalise on category interest and drive a higher price per serve and trade-ups.
Regardless of the route to growth, it is clear that the long-standing interest in the tequila category from within the trade is beginning to proliferate and could soon translate to the worldwide supercategory which has long been predicted.
