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High-End Tequila Soars In The U.S.

May 15, 2019

In just under 20 years, 100%-blue agave Tequila has gone from being a small slice of the U.S. market—8.6% in 2000—to reach a 57.2% share last year. The shift toward 100%-blue agave Tequila has pushed the market into higher-end expressions. Brands at $40 a 750-ml. and above have propelled Tequila’s expansion for much of this decade, and now account for more than 20% of category volume in the U.S., according to Impact Databank.

Patrón remains the world’s highest-ranked Tequila brand by value, ringing up nearly $1.5 billion in retail value last year. It’s second by volume in the U.S., behind Jose Cuervo, and was up 3% last year. While Patrón faces rising competition, it remains the dominant force in the luxury segment, far ahead of second-ranked Don Julio, and it has continued to expand at a healthy clip, averaging growth of about 100,000 cases annually over the past three years. According to CMO Lee Applbaum, the brand intends to intensify its focus on its aged expressions such as Reposado and Añejo, as Patrón Silver has been the traditional driver of the franchise.

Don Julio grew 38.3% to 745,000 cases in the U.S. market in 2018, earning Impact “Hot Brand” honors. Last year the Diageo-owned brand launched Don Julio Reposado Double Cask, which was aged an additional 30 days in Buchanan’s Scotch casks, and the company will be rolling out a new cask finished Reposado this summer. Don Julio 70 Cristalino is another example of the brand’s very deliberate focus on innovation.

Casamigos, meanwhile, is also continuing its rapid ascent, nearly two years after Diageo acquired it in a deal worth up to $1 billion. Last year it grew by 69% to reach 333,000 cases. “2018 saw continued explosive growth for all four types of Casamigos,” says Lee Einsidler, CEO of Casamigos Spirits Company. “We’re always thinking ahead and have a few ideas in the works, but we’re really proud of what we’ve done and are focused on the continued growth of our Tequila and mezcal.” Rounding out the top performers in the luxury segment are Brown-Forman-owned Herradura, up 7.3% to 192,000 cases last year, and Pernod Ricard’s Avión, which rose 3.2% to 126,000 cases.

Tequila’s super-premium tier ($25-$40) is booming, tacking on roughly 380,000 cases last year on a 14% increase to just over 3 million cases. The leader at the $25-$40 tier is 1800, which was up 10.5% last year, cracking the 1-million-case mark. While the Cuervo-owned brand has been built on 100%-agave Tequila that balances quality and price, 1800 isn’t averse to strategic innovations such as its 1800 Coconut, a 35% abv expression. The brand also has a foothold in the luxury tier with its limited Colección releases.

Behind 1800 in the super-premium segment is Bacardi-owned Cazadores, which was up 14.5% to 395,000 cases last year and has expanded by 70% since 2010. Campari America’s Espolòn also continued its sharp rise last year, up 32.9% to 392,000 cases. At the beginning of the decade, the brand was at just 25,000 cases.

William Grant & Sons’ Milagro label is also enjoying dynamic progress, reaching 295,000 cases on 15.7% growth. Since 2010, the brand has more than doubled in size, rising to be a top contender in a competitive segment. “We’ve found for Milagro that a targeted city-by-city approach, focusing on the on-premise in concentrated neighborhoods, has led to great success,” says Harvey Purchese, senior vice president of marketing at William Grant & Sons. Pernod Ricard-owned Altos also earned a spot among the top performing super-premium brands, reaching 269,000 cases on nearly 30% growth in 2018.—Shane English


U.S.―Top Five Luxury-Priced Tequila Brands
(thousands of 9-liter case depletions)
Rank Brand1 Importer 2017 2018 Percent
1 Patron2 The Patron Spirits Co (Bacardi) 2,350 2,420 3.0%
2 Don Julio Diageo North America 539 745 38.3%
3 Casamigos Casamigos Spirits Co (Diageo) 197 333 68.9%
4 Herradura Brown-Forman Beverages Worldwide 179 192 7.3%
5 Avion Pernod Ricard USA 123 126 3.2%
Total Luxury-Priced Tequila1 3,580 4,010 12.0%
1 over $40 per 750ml

2 includes Roca

3 based on unrounded data

Source: IMPACT DATABANK © 2019

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