Cuervo, Patrón Make Solid Gains Amid A Thriving U.S. Tequila MarketJanuary 23, 2020
Premium-and-above Tequilas continue to drive substantial gains in the U.S., with market leaders Jose Cuervo and Patrón both enjoying solid progress in 2019, according to Impact Databank.
Grupo Cuervo subsidiary Proximo Spirits has now seen five consecutive years of U.S. growth for Jose Cuervo, which rose an estimated 4% to 3.75 million cases last year. The Cuervo brand has expanded by nearly a half-million cases in the U.S. since 2015. Proximo has been heightening its focus on 100%-agave range Jose Cuervo Tradicional ($23 a 750-ml.), which includes blanco and reposado variants and has been growing at double-digits, cresting 200,000 cases last year. Tradicional was recently backed with a multi-million dollar advertising push called “The Father of Tequila,” which tells the story of brand founder José Antonio de Cuervo.
The strong growth of Tradicional, combined with ongoing progress for both the core Especial Silver and premixed Jose Cuervo Margaritas (up an estimated 4.4% to 2.3 million cases in 2019), led to a 10% jump for Proximo’s North America sales to MX$3.8 billion ($199m) in the three months through September, on a volume increase of 8.4% to 2.7 million cases. The Jose Cuervo brand accounted for around 36% of the company’s global sales on a value basis in its third quarter, while its ready-to-drink portfolio comprised approximately 8%.
At Tequila’s luxury end, Bacardi-owned Patrón saw a 3% increase to more than 2.5 million cases in 2019. Looking to bolster its stocks of aged Tequilas, Patrón recently unveiled a new barrel-aging facility that will bring its total capacity for aging spirits to over 20,000 barrels. The new space—a nearly 17,000-square-foot extension named for master distiller Francisco Alcaraz—roughly doubles Patrón’s aging capacity, and features a tasting area for brand education and an underground bar called La Cava for VIP entertaining.
Antonio Rodriguez, Patrón’s director of production, said the expansion allows the brand to ramp up its aged production as consumers embrace more premium marques, such as the recently launched Extra Añejo 10 Años ($350 a 750-ml.)—its oldest release to date. “We want to have enough capacity to supply the core line, to remain ahead of the growth curve and let the Tequila achieve the right age, and to just play, because that’s how innovations become reality,” Rodriguez said.
The brand also recently took specialty offshoot Gran Patrón Smoky into national distribution. Retailing at $200 a 750-ml., the extension is at 50.5% abv and gains its smoky character from roasting the agaves with mesquite in stone pits for nearly a week.
With the higher end in growth mode, the 100% blue agave segment is approaching a 60% share of the U.S. Tequila market. While that dynamic has furthered premiumization in the category, it has also pressured near-term agave supplies, which continue to be strained.—Daniel MarstellerSubscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning.