A new Tequila Category Assessment report published by IWSR Drinks Market Analysis has forecast a bright future for tequila worldwide, including in Australia.
According to the report, tequila is expected to expand at a CAGR of seven per cent between 2021 and 2026, ahead of the total global spirits volume rate, which is expected to expand by two per cent in the same time frame. Several positive consumer trends are influencing this growth, which is expected to be focused on super premium and above price points and higher value product segments.
This kind of growth is predicted to cause somewhat of a reversal of the category. In 2016, it was dominated by standard tequila products, which accounted for more than half of global tequila volume and almost half of global value, compared to super premium tequila’s 13 per cent volume and 33 per cent value share. By 2026, IWSR predicts the super premium tequila sector to have a 55 per cent share of the category’s value globally, with an almost 40 per cent volume share.
Brandy Rand, Chief Strategy Officer at IWSR, said: “Over the years, tequila has evolved from being a low-price shot to a more premium option used in cocktails and high-end sipping. The category has grown alongside consumer awareness to offer experimentation across blanco, reposado, añejo and cristalino.”
The US continues to lead growth of the category, with tequila even poised to overtake vodka in terms of dollar value within the next two years. The US, Mexico and Canada are the three top markets for the spirit, and together account for more than 88 per cent of global volumes at the moment.
“This indicates that a significant export opportunity exists for the category in markets outside North America,” added Rand.
IWSR noted smaller markets such as Australia, the UK, Japan and Spain show particular promise for this opportunity. The elements that are set to drive growth in these markets include celebrity involvement in the category, consumer migration from mixto to 100 per cent agave products, rising cocktail consumption and growing interest in Mexico’s food and drinks.
This mirrors wider global trends, that show 100 per cent agave and cristalino products growing at the highest rate for all tequila product segments.
The celebrity factor, meanwhile, is helping consumers feel confident to enter tequila’s higher price points. Celebrities like Rita Ora, George Clooney and Kendall Jenner all have connections to tequila brands (joining a raft of famous faces in other spirits categories), and help fuel consumer awareness and interest through social media. In fact, IWSR notes that celebrity tequilas grew at a volume CAGR of 50 per cent between 2016 and 2021.
Mariana Fletcher, Head of US Insights at IWSR, explains: “Celebrity participation adds sophistication to the category, and elevates the drink to a luxury status and lifestyle offering. Celebrities organically expand the base of demand for tequila by attracting a global and diverse group of followers and fans.”
While this growth of premium tequila continues, there will be challenges for the market, including historically high agave prices, rising production costs and international supply chain issues. From these challenges, IWSR predicts that other agave spirits (like those produced in Australia) could successfully leverage the interest in tequila to create growth in their own segments.