Origins and Production of Tequila
Tequila has its roots in the Mexican state of Jalisco, where the blue agave plant used to produce tequila grows abundantly in the sandy soils. To be called Tequila, the spirit must be made from at least 51% blue weber agave plants that are cultivated for a minimum of 8-10 years and harvested by hand. Once harvested, the piñas or heart of the agave plant is roasted in stone or brick ovens, a process called autoclaving that releases the plant’s natural sugars. The cooked agave fibers are then mashed and fermented with water and yeast to produce a fermented juice called must. The must is distilled twice to increase the alcohol content and produce tequila. Tequila can be classified as blanco or white, reposado, añejo or extra añejo depending on the aging process.
Growth of Tequila Exports
In recent decades, Tequila has transformed from a niche Mexican specialty to a global powerhouse spirit. According to the Tequila Regulatory Council, annual tequila exports have grown from 6 million liters in 1995 to over 200 million liters in 2020. The United States remains the largest export market for tequila, importing over $1.4 billion worth of tequila in 2020 alone. However, tequila consumption is growing rapidly in new global markets like China, India, Brazil and Western Europe. The Chinese market for tequila experienced over 65% year-over-year growth in 2019. To meet growing global demand, tequila producers have massively increased production, with some distilleries expanding capacity by over 50% in the last 5 years.
Premiumization of the Tequila Category
As tequila gains popularity around the world, consumers are trading up to higher quality and aged tequilas. While shots of blanco tequila remain popular for mixed drinks, sippers now account for an increasing share of the category. Aged tequilas like reposado and añejo are leading the premiumization trend, growing at twice the rate of the overall category. Ultra-premium and luxury brands finishing their blanco tequila in rare casks are attracting higher spending consumers. Innovative artisanal brands experimenting with agave varietals and extended aging periods are creating excitement. The super-premium plus segment (retailing above $50 per bottle) grew by nearly 25% in 2019. This premiumization is allowing tequila brands to capture higher price points and margins in both established and new international markets.
Diversification beyond Mexican Markets
To sustain double-digit growth rates, tequila companies are diversifying their portfolios and distribution beyond core Mexican and American markets. Major players are launching new brands targeted at Millennials and female drinkers, categories where tequila adoption is rising fastest. Smaller brands are partnering with local importers to gain traction in high-potential growth countries like China, India and Brazil ahead of mainstream competitors. Digital-first marketing campaigns organized around influencers, events and experiential tasting are generating buzz in new metros. Foreign acquisitions are allowing large conglomerates to leverage existing networks of distributors and retailers globally. Cross-category innovations using tequila as an ingredient in foods, cocktails and premixed beverages aim to promote occasion-based consumption beyond traditional on-premise channels.
Rising Star or Fad Spirit?
With tequila’s relentless growth over the past 25 years, some argue that it has permanently transitioned from a niche spirit to becoming a mainstream global force on par with scotch or cognac. However, others caution that future growth will depend on the agave plant’s sustainable cultivation and tequila’s ability to resonate with the increasingly diverse tastes of younger consumers in new markets. While staying true to Mexican heritage, tequila will need to keep innovating to keep attracting new drinkers beyond its traditional aficionados. Meanwhile, growing international demand places increasing pressure on tequila producers to ramp up mass production while maintaining quality control. Only time will tell if tequila lives up to its promise of long term global dominance or peters out as another momentary liquor trend. But for now, it shows no signs of slowing down.
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Money Singh is a seasoned content writer with over four years of experience in the market research sector. Her expertise spans various industries, including food and beverages, biotechnology, chemical and materials, defense and aerospace, consumer goods, etc. (https://www.linkedin.com/in/money-singh-590844163)