Tequila’s Sweet Spot Shifts To The $25-$40 Segment

After three consecutive double-digit gains, the Tequila market in the U.S. decelerated to 5% growth last year in depletion volume terms, according to Impact Databank. Prior to the pandemic, the fastest-growing price segment in the category had been the over $40 a bottle sector, which accounted for roughly a quarter of total Tequila volume in the U.S. last year. But the sweet spot for the category has recently shifted to the $25 to $40 a 750-ml. segment.

Proximo’s 1800 remained the largest-selling Tequila brand in this sector at 2.1 million cases in 2023, and continues to lead its closest competitor by more than 700,000 cases. Momentum is also strong globally for 1800, which posted a solid 9% gain outside the U.S. last year, according to Impact Databank.

Second-ranked $25-$40 Tequila brand Espolòn is a shining star within Campari’s portfolio and has gained 600,000 cases since 2020, even though there was a buildup that year due to the pandemic. “We’ve invested a lot in brand-building on Espolòn,” Campari America managing director Melanie Batchelor recently told SND. “We’ve also ramped up a huge amount on production capacity. We’ve made significant investments in our plant in the last few years, and that capacity has enabled us to accelerate the brand.”

Teremana, from Dwayne “The Rock” Johnson and partners, crossed the million-case mark in 2023 and is on the cusp of selling 3 million cases total since its launch in 2020. The brand is now embarking on international growth, announcing launches in five new global markets. The move is part of its plan for global expansion in partnership with investor and distributor Mast-Jägermeister. Teremana CEO Richard Black told SND there is “significant potential for category growth through further consumer education,” and the brand is investing in both above-the-line marketing with a new “Share the Mana” campaign and in production expansion to drive future gains.

Beyond the top five, other brands within the $25-$40 Tequila segment with notable growth include Cuervo’s Gran Centenario, Diageo’s 21 Seeds, Trinchero’s Tres Agaves, and Kendall Jenner’s 818 label. Above $40 a bottle, Diageo’s Don Julio posted its 13th-consecutive double-digit gain in 2023, while the fastest-growing Tequila below $25 a bottle last year was Heaven Hill’s Lunazul (+38%), according to Impact Databank.

Proximo’s Jose Cuervo remains the largest-selling Tequila in the U.S. and worldwide, and together with three $40 and over brands—Bacardi’s Patrón as well as Diageo’s Casamigos and Don Julio—there were four Tequila brands in the U.S. that depleted at least 2 million cases in 2023 and exceeded $1 billion in retail sales.

Although Tequila ranked fourth by category volume last year among all spirits in the U.S.—behind vodka, RTDs, and American whiskies—it ranks second in dollar terms, behind only vodka, according to Impact Databank.—Juan Banaag

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