What was once regarded as a mere “farmer’s drink” has come a long way indeed. We’re talking about Tequila of course and, suffice to say, this prized Mexican liquor is peaking to new and greater heights right now.
That last fact is easy to deduce following UK-based distilling giant Diageo’s recent acquisition of the Casamigos Tequila brand from its founding trio that included Hollywood powerhouse George Clooney as a key share- and stakeholder.
While it’s not hard to see how Clooney’s star power was crucial towards Casamigos’ branding and image, the US$1 billion figure fetched in this deal with Diageo said a lot too: Tequila has arrived and positioned itself in the premium liquors and spirits arena.
Not an “overnight sensation”
Tequila’s current peak didn’t come out of the blue. It may still be the smallest category overall to come under scrutiny in any annual volume sales report, but sales and consumption have been growing worldwide for a while now.
The US however remains Tequila’s biggest market where sales reportedly grew 7.4% from 2015 to 2016, equalling to over 16 million cases and 7.5% of all liquor sales in the country. In fact, Tequila sales in the US have risen by a whopping 706% since 2002.
Several key players caught this rising trend early on and had already scrambled to acquire more agave plantations in Mexico and brands since then. In Diageo’s case, it already had the Don Julio, DeLeón and Peligroso brands under it reign before acquiring Casamigos.
Additionally, besides the independent brands such as Jose Cuervo and Patrón, it’s also easy to see that much of the key global alcohol players have at least one or two Tequila brands in their respective portfolios:
Pernod-Ricard – Avion, Olmeca
Diageo – Don Julio, DeLeón, Peligroso, Casamigos
LVMH – Volcan De Mi Tierra
Gruppo Campari – Cabo Wabo
Brown Forman – El Jimador, Herradura
Tequila’s ‘premium’ evolution
What’s also surprising to note here is how rapidly Tequila elevated itself into a ‘premium’ or ‘luxury’ drink, especially for brands and makers who market 100% de Agave offerings.
Setting the standards here were the likes of Don Julio and Patrón, with the latter brand successfully creating its very own niche. Both have thrived in Tequila’s high-growth, super-premium sector – an area that represents 3.5 million cases with successive years of double-digit growth.
Even Diageo’s chief rivals Moët Hennessy (LVMH) are getting into this lucrative segment. The firm revealed its first ever Tequila offering called Volcan de mi Tierra back in May that was developed in secret with partners the Gallardo Family.
Evolving consumers and the race to meet demands
More importantly, this evolution at the premium end of the Tequila business also signals the way its consumers are evolving too. More and more are grasping Tequila’s more refined personality by looking past its shots and margaritas image.
Through perseverance by the companies that make and market it (and perhaps a little bit of luck), this growing Tequila trend won’t die out just yet as how Rum and Vodka did – Rum fizzled out when the 80s ended while Vodka lost its edge as makers went too far with flavours.
No doubt, it would be interesting to see how the big players slug it out in the coming years when it comes to premium Tequila offerings. Likely, the brands that will succeed here will be those that invested in training and engagement beyond what’s already across the board.
With what we’ve just laid out, perhaps its time we all put our shot glasses and margaritas up and give Tequila the recognition it deserves.
About Editor 2.0
An avid boozer and word-stringer who's paid to drink and write for the revamped Boozeat Blog 2.0
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