LONDON--(BUSINESS WIRE)--Technavio’s latest tequila market in Latin America report highlights three key emerging trends predicted to impact market growth through 2019. Technavio defines an emerging trend as something that has potential for significant impact on the market and contributes to its growth or decline.
“In the first half of 2014, the Mexican tequila industry exported more than 568.8 million liters of tequila. Exports is a major driver of the tequila market in Latin America and it is estimated that approximately seven in 10 bottles of tequila produced in Mexico are meant for exports to other countries like the US, Germany, Spain, France, and Russia,” said Arushi Thakur, one of Technavio’s lead industry analysts for alcoholic beverages research.
“The US is the largest market with nearly 77% of the global demand. In comparison to the first half of 2013, the country experienced a 16% increase in the exports in the first half of 2014, contributing close to USD 568 million in revenue. Among Asian countries, China emerged as an important market, as it is home to about 300 million customers with high purchasing power. The most popular liquors in China are cognac, whiskey, and vodka. However, tequila has the chance to burst into the liquors landscape in China during the forecast period,” added Arushi.
Technavio’s food and beverage market research analysts identify the following three emerging trends expected to propel the growth of the tequila market in Latin America:
- Flourishing exports to China
- Increasing cocktail culture
- Rise in demand for premium tequila
Flourishing exports to China
Before 2013, imports of foreign liquors with more than two grams of methanol per liter were constrained in China. The deal between Mexico and China in June 2013 to end the prohibition has however transformed the scenario into a promising one. It is expected that this deal will open up a phenomenal market opportunity leading to exports worth close to 10 million liters of tequila in the next five years.
Chinese consumers are eager to try new foreign products, resulting in China becoming the fastest growing and largest market for spirits globally, with their annual consumption of spirits totaling around five billion liters. This trend is expected to have a strong base for high-grade tequila in China. In 2014, tequila exports to China increased 158% to 39,214 liters, with the majority being represented by white tequila, followed by young, rested, and aged tequila. This trend is likely to persist and contribute significantly to the growth of the export market for tequila until 2019.
Increasing cocktail culture
With changing drinking habits and the growing cocktail culture, consumers are demanding fresh flavors. Many innovative drinks are thus being introduced along with craft cocktails to address this appetite. Presently, the market is experiencing a renewed demand for tequilas in cocktail drinks among many Latin American countries, Brazilians and Mexicans, are particularly exhibiting a growing appetite for luxury drinks and it is predicted to buoy the market over the next four years.
Cocktail drinks that are classic include, the Manhattan, which is combined with luxury tequila. There were many cocktail drinks that were originally mixed with whiskey and now find renewed demand with tequila. Bloody Mary cocktails made with tequila have also become popular among consumers. These trends are predicted to impel growth of the tequila market in Latin America through 2020.
Rise in demand for premium tequila
A preference for premium tequila with superior craftsmanship, aging, and style is trending in the market. In August 2014, Patrón Spirits announced the launch of the Roca line of products, with three new tequilas that retail between USD 70 and 90. These products are more expensive than the traditional Patrón line and the alcohol content is also significantly higher.
The highest growth was reported in the super-premium and ultra-premium segments. For instance, Casa Herradura and Ejimador, the leading labels of Brown-Forman, experienced 11% growth in net sales in its fiscal year ended April 30, 2015. Herradura Ultra, a premium brand, launched in 2014 globally, experienced 10% growth in sales in Mexico. Marketing efforts for premium tequila are largely focused on creating differentiation from the competition. With the robust flavor of Roca, the upcoming trend of mocktails in bars is also expected to favor the tequila line during the forecast period.
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