Beverages: Tequila's On-Premise Triumph and Future Trends

What is the Tequila Market Trend?

The tequila market trend is a dramatic and sustained increase in the consumption and sales of tequila in the U.S. on-premise market. This trend is defined by tequila’s evolution from a niche "shot" spirit to a versatile, premium category that is now the top-performing spirit by dollar sales, driving growth in a contracting market.

• This trend represents a significant shift in the spirits landscape, with tequila leading the way.

• The core of the trend is premiumization, as consumers show a growing appreciation for higher-end expressions.

• It is a multifaceted issue influenced by consumer education, cocktail culture, and strategic brand innovation.

Why It's Trending: A Perfect Blend of Versatility and Consumer Education

The popularity of this trend is fueled by a confluence of consumer demand and market forces that have made tequila a highly desirable option.

• Versatile and Adaptable: Tequila has evolved beyond the "shot" occasion, becoming a versatile spirit for sipping and a wide range of craft cocktails.

• Consumer Knowledge: A deeper understanding of the category's production styles, aging processes, and quality cues has driven demand for more premium expressions.

• The Margarita Gateway: The enduring popularity of the margarita serves as a powerful entry point for consumers into the wider tequila and cordials categories.

Overview: Tequila as the On-Premise Leader

A new report from CGA by NIQ reveals that tequila has emerged as the standout success story in the U.S. on-premise spirits landscape. It is not only the largest spirits category by dollar sales, but also the fastest-growing, with a 1.9% increase in a market where total spirits sales are down 1.6% year-over-year. This growth is being driven by more premium expressions like reposado and extra añejo, while less premium options like blanco and gold are beginning to decline.

Detailed findings: The Numbers Behind the Trend

The data provides a clear picture of the scale of this beverage-driven trend across the U.S. on-premise market.

• Sales Growth: Tequila sales are up 1.9% year-over-year, while total spirits sales are down 1.6%.

• Top Performance: Tequila is now the top-performing spirits category in the U.S. on-premise by dollar sales.

• Category Contrast: Cordials are the only other spirits category showing growth.

• Varietal Trends:

  • Blanco sales are down -1.0% year-over-year.

  • Gold sales are down -5.1% year-over-year.

  • Reposado is the most notable driver of growth.

• Cocktail Preference: 43% of cocktail drinkers choose tequila as their favorite spirit base, ahead of flavored vodka (34%).

• Margarita's Dominance: The margarita's rate of sale is four times higher than the next-ranked cocktail, the mojito.

Key success factors of the trend: A Recipe for Growth

The success of the tequila trend is a direct result of the industry's ability to meet new consumer demands with agile and profitable solutions.

• Product Premiumization: The industry has successfully shifted consumer focus from price to quality, driving demand for higher-priced, premium expressions.

• Cocktail Versatility: Tequila's flexibility as a cocktail base has allowed it to dominate the mixed drink scene and appeal to a wide range of consumers.

• Consumer Education: Brands and operators have successfully educated consumers on the nuances of tequila, elevating its status to that of a connoisseur spirit.

Key Takeaway: Tequila is Maturing, Not Plateauing

The rise of tequila proves that consumer tastes are evolving toward premium, complex, and versatile spirits. However, as the category matures and becomes more crowded, future success will depend on smart differentiation, thoughtful portfolio management, and a clear understanding of the shifting cocktail culture.

Core Trend: The Premiumization of a Powerhouse Spirit

The core trend is a significant shift in the spirits industry, where tequila has moved from a niche "shot" spirit to a premium, versatile, and dominant on-premise category, redefining consumer expectations and drinking habits.

Description of the trend: The Rise of the Tequila Connoisseur

The tequila trend is a cultural phenomenon defined by the deliberate choice to consume tequila in more sophisticated ways than ever before. It represents a shift from a low-end, high-volume category to a premium, diverse market segment that appeals to a wide range of drinkers.

Defining Features of the Tequila Market Trend

The rise of the tequila market is driven by a number of defining characteristics that shape modern consumer behavior.

• Mainstream Adoption: The market is moving beyond a niche health-conscious segment to become a mainstream option for a wide range of consumers.

• Brand-Led Growth: The trend is heavily influenced by major alcohol brands that are diversifying their portfolios and elevating the category.

• Consumer Knowledge: A significant increase in consumer understanding and appreciation for the intricacies of tequila production.

• Premiumization: The growth is driven by a shift from lower-end expressions (blanco, gold) to more aged and complex varieties (reposado, extra añejo).

Market and Cultural Signals: The Shake-Up in the Spirits Industry

The trend of the tequila market sends clear signals to the market about the future of the alcohol industry and consumer expectations.

• A New Revenue Stream: For the spirits industry, tequila offers a new and rapidly growing source of revenue in an otherwise contracting market.

• Strategic Focus: The trend signals that investment and innovation will continue to flow into the tequila category and its adjacent markets, like cordials.

• The Power of Cocktails: The enduring popularity of the margarita highlights the importance of classic cocktails in driving category growth.

• Evolving Tastes: The trend signals a societal move toward a more sophisticated and discerning approach to spirits consumption.

Consumer Motivation: The Desire for a Premium Experience

The primary motivation for consumers in this trend is a desire for a premium experience that goes beyond simple consumption.

• Seeking Sophistication: Consumers are motivated to find a spirit that offers a complex and sophisticated taste profile, similar to what they would find in a high-end whiskey.

• A Quest for Versatility: The underlying motivation is the desire to have a single spirit that can be enjoyed in different ways, whether as a cocktail base or a sipping spirit.

• Deliberate Choice: Consumers are making a conscious choice to select a tequila that fits their mood and occasion, rather than simply ordering a shot.

Motivation Beyond the Trend: The Quest for a New Classic

Beyond the immediate motivations, the core driver for this trend is a subconscious quest for a new classic spirit. In a market where traditional categories like vodka and whiskey are slowing, tequila offers consumers a fresh and exciting alternative that is both familiar and new.

Description of consumers: The Tequila Explorer

The consumer driving this trend is an individual who is deeply engaged with cocktail culture and is willing to invest in a more sophisticated drinking experience.

• Consumer Summary: The "Tequila Explorer" is a cocktail drinker who is knowledgeable about spirits and is actively seeking premium and versatile options. They are not defined by a specific age, but by their behavior and their desire for a sophisticated and flavorful drinking experience.

• Detailed summary:

  • Who are they?: A segment of cocktail drinkers who are driving demand for tequila.

  • What is their age?: The text does not specify an age range, but the trend is likely to be broad across adults who frequent on-premise establishments.

  • What is their gender?: The text does not specify.

  • What is their income?: They are likely to have disposable income, as they are willing to pay for more expensive, premium expressions like reposado and extra añejo.

  • What is their lifestyle?: Characterized by a desire to explore new flavors and experiences in the on-premise market.

How the Trend Changes Consumer Behavior: From Shots to Sips

This trend fundamentally alters consumer behavior by introducing a more deliberate and discerning way to consume tequila. It shows that consumers are willing to engage with a spirit on a deeper level, moving from a simple "shot" occasion to a more thoughtful "sip" or cocktail experience.

Strategic Forecast: The Future Is Nuanced

Looking ahead, we can expect to see this trend lead to new service models and innovations that cater to the sophisticated tequila consumer.

• Increased Market Saturation: The market for tequila will become more saturated with new brands and product lines.

• Brand Differentiation: Brands will need to focus on smart differentiation and clear portfolio management to stand out in a crowded market.

• Focus on Cocktails: The industry will continue to innovate with new cocktail creations that highlight tequila's versatility.

• On-Premise Education: Bartenders and operators will play a key role in educating consumers and guiding them toward premium expressions.

Areas of innovation: The Tequila Blueprint

The success of a strategic response to this trend can inspire a wave of innovation across several sectors.

• New Tequila Expressions: The development of new reposado and extra añejo expressions to meet growing consumer demand.

• Craft Cocktail Menus: The creation of more extensive and innovative cocktail menus with a focus on tequila-based drinks.

• Educational Programs: The implementation of on-premise educational programs to teach consumers about tequila's production and tasting notes.

• Strategic Partnerships: Collaborations between brands and on-premise operators to create unique experiences and drive sales.

Summary of Trends

• Core Consumer Trend: The Rise of the Tequila Connoisseur Consumers are choosing premium expressions and are more educated about the category.

• Core Consumer Motivation: The Desire for a Premium Experience Consumers are motivated by a desire for a sophisticated and versatile spirit that offers a complete on-premise experience.

• Core Social Trend: The Nuanced Approach to Spirits There is a growing shift toward more complex and sophisticated spirits, with tequila leading the way.

• Core Strategy: The On-Premise Focus The business model thrives on adapting products and marketing to cater to the unique needs of the on-premise market.

• Core Industry Trend: The Category Triumph Tequila is the top-performing spirits category, driving growth in a contracting market.

Final Thought: The Art of the Perfect Drink

The rise of the tequila market is a powerful statement about how modern tastes are shaping the spirits industry. It's a trend that highlights a critical need for the beverage industry to see a simple drink not as a commodity, but as a symbol of personal sophistication and an opportunity to connect with a growing and valuable market.

Source: https://cgastrategy.com/after-tequilas-triumph/