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Tequila’s Mainstream Tier Sees Growing Influx Of 100%-Blue Agave Entrants

June 6, 2019

While much of the excitement in Tequila is at the luxury end (above $40), there’s also plenty of growth at the more mainstream premium tier ($15-$25). Over the past several years, premium Tequilas have seen an influx of 100%-blue agave contenders, who’ve carved out a significant share in a space once reserved for mixtos.

Overall, Tequila volumes in the $15-$25 range have expanded by 18.5% over the past three years in the U.S. market, with the segment reaching just over 9.2 million cases last year, according to Impact Databank. Much of the growth has been fueled by 100%-blue agave expressions, whose share of the total Tequila category has grown from approximately 48% in 2015 to 57% last year.

Category leader Jose Cuervo has had success with its 100%-blue agave Tradicional expression, which surged by 26% to 190,000 cases last year. That has helped boost gains for the Cuervo franchise overall, which has added more than 350,000 cases to its total since 2015, and saw a 2.5% increase to a total of 3.6 million cases last year.

Sauza and Hornitos, both from Beam Suntory, rank second and third in the $15-$25 tier. The larger brand, Sauza, faced some headwinds last year, dropping 3.2% to 1.6 million cases, but Beam Suntory remains optimistic that Sauza can adapt to the changing Tequila market. “We’re seeing consumers trade up from mixtos to our Sauza Blue 100%-blue agave, both on- and off-premise,” says Matt Plumb, senior marketing director for Tequila at Beam Suntory. He adds that Beam Suntory is accelerating retail focus and programming for Sauza Blue to engage consumers. Sauza Blue has been boosting momentum for the brand, earning Impact “Hot Brand” honors with 12.2% growth to 381,000 cases last year.

Meanwhile, Hornitos—another Impact Hot Brand—has been thriving. It jumped nearly 24% last year and crossed the million-case mark for the first time. Beam Suntory supported Hornitos with its first-ever TV commercial in 2018, tying in with Hornitos’ overall “A Shot Worth Taking” campaign. With the brand outpacing its competitive set, Beam Suntory continues to spur growth through its innovations, including Hornitos Black Barrel, an Añejo Tequila that’s rested for four extra months in whiskey barrels, and Hornitos Cristalino.

Brown-Forman and Heaven Hill are also seeing gains in the $15-$25 Tequila segment with their El Jimador and Lunazul brands, respectively. El Jimador rose 8.2% to 619,000 cases in 2018, while Lunazul jumped 55.2% to 312,000 cases. While growth has been solid, a new question mark is hanging over the category in the form of the U.S. administration’s threat to impose 5% tariffs on all Mexican products beginning next week. For now, producers are hoping the tariff talk marks a momentary bump in the road rather than a long-term problem.—Shane English

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