US overtakes Mexico as tequila leader
Author: Catherine Mars
Date published: 23 Jan 2008
In 2007 volume sales of tequila in the US exceeded those in Mexico for the first time. While domestic consumption is flat, US sales are soaring due to growing multi-culturalism and continued premiumisation. Additionally, the signing of the historic Trade in Tequila agreement between Mexico and the US in January 2006 signalled the end of restrictions of bulk tequila exports to the US and contributed to surging sales in the country (in 2006 US imports of tequila were up by 34% in volume terms and 22% in value terms).
Patrón takes tequila premium
The tequila boom in the US coincides with the overall trend towards trading up which has been a key driver of growth across many mass-market consumer goods categories. With consumer tastes becoming more sophisticated and middle-income consumers seeking out better-quality luxury brands, premium spirits have increased penetration by around 20-30% in volume in sectors such as vodka and gin.
The premium Patrón brand has successfully raised the profile of the entire tequila category in the US. The third-largest tequila brand in the country, behind mass-market leaders José Cuervo and Sauza Tequila, Patrón's premium price confers a certain social status on those who can afford it, and has led more consumers to try tequila. This, in turn, has inspired the launch of more flavoured and small batch tequilas as producers seek ways to differentiate and position the spirit as a suitable mixer for cocktails.
Latin love
To the 28.3 million Mexican Hispanic consumers living in the US, tequila is a source of national pride. Hispanic consumers are the largest ethnic minority group in the US and those of Mexican descent account for 10% of the total population according to 2006 US Census data. The large and growing presence of Hispanics in the US, coupled with tourism to Latin America, has raised the profile of local drinks. Tequila is not the only one to benefit, as sales of Modelo Especial, considered “an everyday beer” by Mexican immigrants, almost quadrupled in volume between 2000 and 2006. Meanwhile Corona, which is positioned as a Mexican holiday in a bottle, saw total volume growth of 67% between 2000 and 2006.
Rosy future in the US
In spite of the predicted flat demand for tequila over the mid- to long-term in Mexico, tequila will remain the favourite national alcoholic drink. There is a delicate balancing act in maintaining a good supply:demand ratio of the blue agave plant used to produce tequila. An oversupply of tequila will force prices downward. This is unlikely to happen in the short term, with tequila sales expected to continue to boom in the US. According to Euromonitor International, the tequila sector will continue to benefit from the premiumisation trend, despite the uncertain economic environment in the US. Not only does premium alcohol represent an “affordable luxury” in times of slowed economic growth, but luxury alcoholic beverages will also find a strong market because they appeal to young adults, who are less likely to be worried about or impacted by an economic downturn.
| Comparison of major tequila markets by total volume |
| '000 litres |
2006 |
2007 |
% growth 2006-2007 |
Actual growth 2006-2007 |
| US |
90,205.8 |
101,030.5 |
12.0 |
10,824.7 |
| Mexico |
91,736.3 |
92,525.2 |
0.9 |
788.9 |
| Euromonitor International |
Alcoholic_Drinks
Alcoholic Drinks in the US