Special Report, Part 1: Luxury Tequila’s Robust Growth Takes Category To New HeightsAugust 13, 2015
Tequila, perhaps more than any other spirits category, has undergone a dramatic transition within the U.S. market over the past two decades.
Margaritas and shots—usually utilizing mixto Tequilas containing 51% blue agave—have given way to 100%-agave brands that have raised the profile of the Mexican spirit enormously.
The four brands that dominated the luxury Tequila segment in 2014—Patrón, Don Julio, Avión and Herradura—enjoyed overall 6.5% growth, according to Impact Databank. Patrón, which has long led the luxury tier, carved out 4% growth and surpassed 2 million cases, while Don Julio, Avión and Herradura all achieved double-digit progress. The category’s luxury end (at least $40 a 750-ml.) is now significantly larger than the $25-$40 tier, although that segment is also showing strong gains.
Dominic Alcocer, brand director for Tequilas at Pernod Ricard USA, which markets Avión ($40-$60), says more American consumers “are realizing that Tequila doesn’t have to be what they remember,” referring to the shots and Margaritas that dominated consumption in the 1980s and 1990s. “People are becoming more interested in quality and craftsmanship, and that’s a very good thing,” Alcocer adds. Avión is thriving in the U.S. market, where it advanced by 24% to 136,000 cases last year.
Luxury Tequila marketers are now touting the aging, production processes and other attributes that make their Tequilas unique. Don Julio brand director Jeff Parrott says consumers have become much more Tequila-literate than in the past and more appreciative of nuances of individual brands. “Don Julio González began making Tequila more than 70 years ago and was considered an industry innovator,” says Parrott, noting precise planting and harvesting techniques that are “the hallmark of our process.” Diageo gained full ownership of Don Julio ($48-$132) earlier this year, following completion of a deal to acquire the 50% stake in the brand that it didn’t already own from Casa Cuervo. The brand grew by 15% to 230,000 cases in the U.S. in 2013 and advanced by 17.4% to 270,000 cases last year.
Overall, Tequila’s top players are enthusiastic about the direction of the market, and a continued march upscale appears likely. As Parrott says: “What was once a bottom-shelf spirit has truly become a major player in the luxury space.”
A special report on high-end Tequila appears in the August 1&15 issue of Impact.
|U.S. – Leading Luxury-Priced Tequila Brands1
(thousands of nine-liter cases)
|1||Patron2||The Patron Spirits Co.||1,950||2,025||3.8%|
|2||Don Julio||Diageo North America||230||270||17.4%|
|3||Avion||Pernod Ricard USA||110||136||23.6%|
|Total Top Four||2,403||2,558||6.5%|
|1 over $40 per 750ml
2 includes RocaSource: IMPACT DATABANK For more spirits data, order the upcoming 2015 Impact Databank Spirits Report.