The research study covers the present scenario and growth prospects of the tequila market for 2016-2020. “The rising demand for tequila, especially premium tequila, and extensive agave planting in the past have contributed to the growth of the market in the last five years. However, rise in the prices of raw materials due to the lack of availability, the growing demand for non-alcoholic beverages in the US, and the highly regulated nature of the alcohol industry in the US may hinder market growth,” says Vijay Sarathi, a lead analyst at Technavio for alcoholic beverages research.
Technavio food and beverage analysts highlight the following three factors that are contributing to the growth of the tequila market in the US:
- Rise in demand for premium tequila
- Growing cocktail culture
- Increase in demand for handcrafted tequila
Rise in demand for premium tequila
Tequila is a high-quality artisanal spirit that is the result of a complex distillation and aging process. There has been rising demand in the US for high-end, super-premium tequila distilled from superior-quality 100% blue agave. Apart from its enhanced taste owing to superior craftsmanship, it is also coveted as a status symbol, especially among the youth.
Herradura, Don Eduardo, and El Jimador are the leading brands by Brown-Forman. The sales of super-premium tequila showed a 14.8% year-on-year growth in 2014 and sales of premium tequila were the highest among other price segments (value, high-end premium, and super premium) in 2014.
Growing cocktail culture
A resurgent cocktail culture has resulted in a rise in demand for tequila. Demand for tequila in cocktails is not restricted to bars and restaurants, it has also gained interest in homes. There is also a marked shift, especially in the younger population, from binge drinking to drinking sophisticated cocktails using premium tequila and vodka. As this demographic ages, so will its income and spending power, resulting in a substantial consumer base for white spirits like tequila.
Margaritas were the most popular cocktail consumed in the US in 2014. Some of the more popular tequila cocktails include Empire Sunset, Mexican Highlands, Tequila Mocking Bird, Herradura Cane, and Strawberry Basil Margarita. Vendors continually innovate to offer unique flavor blends and cocktail recipes in a bid to promote their brands and boost sales.
Increase in demand for handcrafted tequila
The demand for handcrafted, or artisanal, tequila across the US has risen at a higher rate than the overall tequila market here. Sales of handcrafted tequila in the country has registered growth of almost 6% each year since 2002, with more than 117 million liters sold in 2013.
Artisanal tequila is distilled the traditional way in unique methods at small, family-owned distilleries in extremely small batches. These small distillers have shown the ability to cater to a wide range of taste preferences and price points, which explains their growing popularity. “The handcrafted varieties are usually priced higher than regular brands and are positioned as premium offerings. Often, the exclusivity extends to the unique handcrafted bottles and packaging,” says Vijay.
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