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Diageo Brands Lead Impact’s “Hot Prospect” Tequilas

October 24, 2018

As recently as 2013, the above-$25 Tequila category had total U.S. volume of 4.7 million cases, according to Impact Databank. Since then, the above-$25 segment has expanded by 40% to 6.6 million cases, and it shows no sign of slowing down. The rise of upscale Tequila is well-documented on Impact’s most recent “Hot Prospects” list, which features a number of high-end brands making impressive progress, with Diageo leading the way.

Diageo’s largest Tequila Hot Prospect, Casamigos, joined the portfolio last year in a deal worth $700 million (and another $300 million in potential earnouts). Last year, Casamigos reached 170,000 cases—or more than twice its 2015 total—and it continues to rise this year, with control state volume up nearly 50% in the year-to-date through August. The Casamigos range retails from around $45-$55 a 750-ml. In addition to its Tequilas, Casamigos extended with a mezcal offshoot this past spring, positioned at $60.

Diageo is also taking share within the high-end Tequila space with Don Julio, whose Reserva de Don Julio Reposado and Reserva de Don Julio Añejo both earned Hot Prospect honors at 96,000 cases and 70,000 cases, respectively. The brand’s Don Julio 1942 label also made the grade after reaching 57,000 cases last year at a price point of around $140 a bottle. In the first six months of this year, the total Don Julio franchise was up an impressive 33% by volume in control states.

Don Julio launched two new innovations this summer. Its Reposado Double Cask ($60) takes Don Julio’s traditional 8-month-old Reposado and finishes it for an additional 30 days in ex-Buchanan’s Scotch barrels. Diageo has also expanded Don Julio Reposado with a Private Cask program that allows retailers to select a private barrel of 10-month-old Reposado for their customers.

In the more accessibly-priced Tequila segment, Luxco’s Exotico has gained traction, earning a Hot Prospect award for its second year in a row after reaching 126,000 cases. According to Luxco president and COO David Bratcher, the 100%-agave range continues to see robust growth in a markets like Texas and Colorado, and Luxco is looking to keep pace with demand with the opening of a new Tequila distillery in Jalisco, Mexico, which will serve as home for both Exotico and sister brand El Mayor.

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