Impact Databank: Upscale Tequila Brands Drive Spirits Industry Growth

Even as retail dollar gains for spirits have decelerated markedly this year, the resilient Tequila category continues to increase at double-digit rates, and among all spirits categories, only pre-mixed, single-serve cocktails have outperformed the upscale Tequila sector in 2021. Due to tough comparisons against last year’s pandemic-driven surge off-premise, total spirits volumes declined 0.7% in the 44 weeks ending November 6 in Nielsen channels, while eking out a 1.4% increase in dollar terms. RTD spirits led all segments with a year-to-date rise of 54.3%, followed by Tequila brands priced at least $35 a 750-ml. bottle (+42.7%).

Tequila shipments from Mexico to the U.S. increased 13.4% in the year-to-date through November, with 100% blue agave offerings comprising over two-thirds of that volume—up from less than 60% in 2020—according to the Consejo Regulador del Tequila. Year-to-date Tequila volumes in control states rose 22.7% through October, according to NABCA, surpassed only by the 39.9% growth of pre-mixed cocktails, and far outpacing spirits’ total increase of 4.7%. Tequila brands priced at least $25 a bottle are projected to account for over half of the total category’s volume by the end of this year, according to The U.S. Spirits Market: Shanken’s Impact Databank Review & Forecast, 2021 Edition.

Upscale Tequila has received a boost from the breakout launch of Dwayne Johnson’s Teremana label—which surpassed 600,000 cases this year—but the highly profitable segment is still led by Bacardi-owned Patrón, the third largest-selling spirit overall in the U.S. in dollar terms, according to Impact Databank’s 296-page report. While upscale brands have further advanced Tequila’s premiumization, the dynamic has also pressured near-term agave supplies, which continue to be strained. Production outages and supply chain issues related to the ongoing pandemic are also expected to continue into next year.

Campari’s Espolòn brand and two Diageo labels, Don Julio and Casamigos, have continued to drive rapid gains within the upscale Tequila segment in 2021. Don Julio surged past the million-case mark in the U.S. last year, while both Espolòn and Casamigos are expected to do so this year, according to Impact Databank. Overall, Proximo’s Jose Cuervo remains the top Tequila brand by volume in the U.S. and worldwide.

For more information regarding The U.S. Spirits Market: Impact Databank Review & Forecast, as well as other exclusive Shanken reports and publications, click here.

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