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Tequila’s Top Sellers Carving Out Progress While Category Keeps Premiumizing

January 24, 2017

Tequila continues to thrive in the U.S. market. Category volume rose by 6.5% to 15.8 million cases in 2016, according to Impact Databank estimates.

Few categories have embraced premiumization as enthusiastically as Tequila—the luxury and super-premium segments currently account for more than 35% of overall volume, up from around 20% a decade ago.

The pipeline of new entrants seems constantly full, with the lion’s share at the upscale end. Still, even with all the new product activity, three stalwarts—Jose Cuervo, Sauza and Patrón—maintain a majority share of the category and all are solidly on the rise.

Longtime leader Jose Cuervo ($19) has resumed its upward curve over the past few years after a period of stagnation. Cuervo grew by 4.5% to 3.6 million cases in 2016, according to Impact Databank. Proximo Spirits, the brand’s U.S. marketer, has made a concerted effort to focus on Cuervo’s Silver offering, and it has paid off, with Silver enjoying double-digit gains in 2015 and 2016. Yesterday, news broke that Casa Cuervo will forge ahead with its long-planned IPO on the Mexican Stock Exchange as soon as next month, after previously delaying the move owing to uncertainty in the market following the U.S. presidential election.

Fellow premium entry Sauza ($18) is also making headway. After averaging nearly 5% annual growth from 2010-2015, the Beam Suntory brand was up by 6.8% to 2.2 million cases in 2016. Much of the growth is coming from Sauza’s Hornitos and Blue offerings, which both generally retail for around $5 more than the core line.

Tequila’s luxury end has surely evolved in recent years amid the flurry of innovation that’s been occurring, but one thing remains constant: Patrón’s domination. Patrón ($45) currently accounts for around 70% of Tequila’s luxury segment. The upscale icon was up by 9.7% last year to nearly 2.3 million cases. Meanwhile, its high-end Roca Patrón extension is thriving, with a 16% advance to 44,000 cases last year. Introduced in 2014, Roca ($70-$90) has bolstered Patrón’s luxury credentials.

The influx of promising new entrants into Tequila has clearly made the category even more competitive than it has been in recent years. However, Tequila’s biggest sellers have shown that they’re not only prepared to stand their ground, but also to continue expanding. —Peter Zwiebach

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