Tequila Market Size, Share & Industry Analysis, By Type (Blanco, Reposado, Anejo, and Others), Grade (Value, Premium, High-end Premium, and Super Premium), By Distribution Channel (On-trade and Off-trade), and Regional Forecast, 2024 - 2032

The global tequila market size was valued at USD 11.04 billion in 2023 and is projected to grow from USD 11.69 billion in 2024 to USD 18.58 billion by 2032, exhibiting a CAGR of 5.97% during the forecast period. North America dominated the tequila market with a market share of 62.14% in 2023. Moreover, the tequila market size in the U.S. is projected to grow significantly, reaching an estimated value of USD 7.44 billion by 2032, driven by evolving consumer taste and their growing inclination towards agave-based spirits.

It is a Mexican distilled spirit made from fermenting the juices of the Weber blue agave plant. According to the International Wine and Spirit Research (IWSR), blue agave plant distilled beverage is the second-fastest-growing spirit in the category in the recent few years. It has emerged as a spirit to be sipped and savored rather than consumed in shot form with a wedge of lemon. The manufacturers are coming up with innovative flavors to keep up with the ongoing trend of artisanal spirits. The growing likeability for spirits worldwide has nudged the international liquor companies to exploit the beverage’s barrel-aged variants. Further, new celebrity endorsements in the spirit are projected to fuel its demand in the forecast period.

The COVID-19 pandemic outbreak has resulted in a global standstill of various sectors such as food and beverage, machinery, and medication industries, along with impacting the economy negatively due to closure of various manufacturing facilities, shortage of workforce, and supply volatility of raw materials. The leading market players witnessed a slight decline in their spirits sales during the initial months of lockdown because of a reduction in travel retail which recovered gradually due to the partial re-opening of the on-trade channel. For instance, Pernod Ricard S.A. witnessed a 9.5% decline in organic sales. There was a higher cost of goods mainly due to agave price pressure on the company.

Tequila Market Trends

Rising Cocktail Trends for Artisanal Craft Spirits to Boost Growth

The surging trend of infusing different spirits to formulate a cocktail to offer an exceptional alcoholic beverage experience to the consumer is prominently bolstering the tequila market sales. Initially, the spirit had a reputation for sipping a drink, which eventually changed with the introduction of new, exotic cocktails in the marketplace. The rise in cocktail culture has led to consumers' growing interest in tequila-based cocktails, including Paloma, El Diablo, and others. The COVID-19 pandemic changed consumer purchasing behavior and contributed a new push to the at-home consumption of tequila globally.  To cater to the consumer's at-home cocktail trends, many prominent drinks manufacturers have introduced cocktail kits and virtual cocktail-making sessions, which has augmented the market growth. For instance, in April 2023, Tequila CAZADORES, a premium tequila manufacturer in Mexico, launched two premium cocktails: RTD Paloma and Margarita cocktail in ready-to-drink canned packaging. This new line has been made from 100% blue agave tequila to offer a smooth taste.

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Tequila Market Growth Factors

Growing Interest of Consumers toward New and Exotic Flavors to Drive Market Growth

The rising popularity of various artisanal spirits among consumers across the globe is one of the prominent factors driving the demand for blue agave plant-based distilled spirits. Consumers worldwide demand fresh and delicious exotic drinks for a unique taste, thereby propelling the tequila market growth. Key manufacturers such as Patron Spirits International introduced flavors such as floral, black pepper, turmeric, and pumpkin to attract consumers and explore new flavors. According to the Distilled Spirits Council of the United States (DISCUS), in 2023, the spirit suppliers’ volume sales in the U.S. increased 1.2% to 308.8 million 9-liter cases from the last year. Within the spirit category, tequila/mezcal value sales up by 7.9% in 2023.

Despite the outbreak of the coronavirus pandemic, the craft spirits segment performed well across major consuming countries such as U.S., India, and Vietnam. Since the outbreak has boosted the demand for high-quality and exotic flavor spirits, the companies operating in the industry are embarking on the launch of new products that cater to customers who want to enjoy such drinks with their families and friends. For instance, in July 2021, Casa Aceves brand Rock N Roll announced the addition of a new flavor, strawberry tequila, to its line-up of award-winning spirits. The unique flavor will be the first premium strawberry-flavored tequila released in the U.S.

Rising Demand for Premium Spirits to Support Market Growth

Premiumization has become a trend in recent years as consumers are inclining toward quality over quantity. As consumers turn towards sophistication and premium quality beverages, it subsequently triggers the demand for such products. Leading companies, such as Diageo Plc and Pernod Ricard, are focusing on capturing evolving consumer trends to develop novel products to seize new market opportunities. These players are also focusing on merger and acquisition activities to strengthen their presence in the growing agave category. For instance, in October 2022, Pernod Ricard, a global liqueur company, acquired the majority share in Código 1530 Tequila, a premium and ultra-premium tequila-producing company. According to International Wine and Spirit Research (IWSR), 2020, the premium-and-above spirits are anticipated to grow exponentially worldwide, with a volume market share of 13% by 2024, owing to the consumer's demand for high-end sipping spirits and cocktails.

The premiumization trend is widely growing popular in the European countries due to the consumers shifting focus towards craft distilleries and locally produced drinks. In addition, these small craft distilleries are offering new propositions and flavors to the spirits, such as tequila is driving the craft spirits market in Europe. Furthermore, increasing urbanization and the disposable income of middle-class consumers have influenced their changing preferences. Thus, the new consumption habits continue to drive the premium spirits category and boost the market growth.

RESTRAINING FACTORS

Increasing Trend for Low Alcoholic Beverages to Dampen Growth

In recent years, as we see an upward trend in spirits consumption, especially in the developing regions, the developed countries are foreseeing the inclination of consumers towards low and non-alcoholic beverages. Their rising awareness about the ill effects of consuming alcohol has led them to turn to such low or no alcohol drinks as they taste just like the alcoholic drinks without the adverse effects. According to the IWSR research report, in 2019, nearly 52% of the adults in the U.S. drinking alcohol are trying to reduce their alcohol consumption. Furthermore, IWSR was estimated in 2020. Global alcohol sales slumped by 9.4% to reach 24.8 billion 9-liter cases, as the consumers are moving towards healthier and more appealing beverages. Further, manufacturers are exploring this sector by introducing various low and non-alcoholic drinks, which is likely to dampen the sales performance of the product.

Tequila Market Segmentation Analysis

By Type Analysis

Blanco to Account for Major Market Share Owing to its Unique Flavour Profile

The market is segmented into blanco, reposado, anejo, and others based on type. The blanco variants account for the significant tequila market share owing to their earthy, semi-sweet, distinctive agave flavor. Its smoother taste and vast availability result in its wide consumption. The broad utilization of blanco variants in various cocktails such as margarita and Paloma contributes to holding the market’s largest share.

Reposado and anejo variants are gaining significant traction in recent years as consumers are becoming more knowledgeable about the spirit and are willing to explore new varieties. Unlike blanco, reposado and anejo are aged in oak barrels ranging from a month to a year, giving them distinct honey and smoky finish.

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By Grade Analysis

Premium Variant to be Leading Segment Due to High Demand for Quality Craft Spirit

The premium variant is anticipated to hold the largest share as consumers demand high-quality craft spirits. The premium-grade spirit combines all desirable attributes, i.e., sensory appeal, mouthfeel, and texture, widely cherished by the consumers. The youngsters and millennials demand such luxury spirit variants, mainly driving the market.

High-end and super-premium products are among the fastest-growing categories due to consumers’ changing attitudes and willingness to spend more on drinks. According to the DISCUS, between 2012-2017, the super-premium and high-end premium spirits grew by 6-7% per year by volume.

By Distribution Channel Analysis

On-Trade Sales to be the Major Distribution Channel Owing to Increase in Bars and Outlets

The on-trade sales channel is one of the prominent sales channels to serve alcohol and is anticipated to dominate the market share. Consumers in developed economies prefer quick servings, entertainment, and ambiance, which drives on-trade sales. However, the off-trade channel is witnessing a strong growth as purchasing alcohol from supermarkets and bricks-and-mortar stores are much more economical. Further, the availability of door-step delivery of alcohol on buying alcohol online facilitates the segment growth.

REGIONAL INSIGHTS

The market is geographically categorized into North America, Europe, Asia Pacific, South America, and the Middle East & Africa.

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North America dominated the market and was valued USD 6.86 billion in 2023. This is owing to the growing consumers’ inclination towards agave-based spirits in the U.S. and Mexico. According to the Distilled Spirits Council of the U.S., in 2021, sales of agave-based spirits increased 30.1% year on year to USD 5.2 billion. Tequila was the second-fastest-growing spirits category, trailing only premixed cocktails. According to International Wine and Spirits Research (IWSR), tequila is one of the fastest-growing alcoholic beverages in the U.S., with consumption increasing by 40% in the last five years. The spirit's popularity has grown significantly in recent years, with the category evolving to meet different tastes and preferences.

Along with this, consumers are becoming more aware of higher-quality spirits and are choosing to trade up. They understand the various aging processes, terroir, and where the tequila is produced. The manufacturers in the region are producing blanco with clear, smooth quality, and completely natural flavors to elevate the experience to a new level. Also, the growing celebrities’ interest in the spirit is expected to further positively influence tequila sales in the region.

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European market is likely to exhibit significant growth due to artisanal spirits' increasing popularity in Germany, Spain, and the U.K. with its craftsmanship, heritage, and protected status, tequila is well-positioned to benefit from the popularity of craft spirits in the region, where more drinkers are looking to 'drink better and turning to premium brands. In March 2019, the spirit registered its geographical indication (GI), recognizing it as EU spirit and benefiting its market added value as EU-protected products. This is expected to further boost its performance in the region. In addition, the growth in cocktail culture and high-profile celebrity launches for some brands are fuelling interest and demand for tequila in the U.K. market.

In the Asia Pacific, the spirit has gained recognition among consumers, especially the millennials in countries like China and Australia. The increasing imports and consumers seeking quality over quantity and preferring spirits made in small batches have supported the market growth.

Latin American countries such as Brazil and Argentina are witnessing an upsurge in alcohol consumption, likely contributing to the overall regional performance. The Middle East and African regions observe premiumization and innovation trends in white spirits, which supports the market growth.

List of Key Companies in Tequila Market

Companies to Introduce Innovative Variants to Remain Competitive

The market is moderately consolidated due to the extensive production of the product in Mexico and the U.S. Along with this, the presence of prominent key players innovating and launching their products around the world. Companies such as Bacardi & Company Ltd., Diageo Plc, and Pernod Ricard S.A. are focusing on new product developments and increasing their exports to diversify their product portfolio and maintain an edge. For instance, In April 2021, Bacardi has introduced a premix RTD to the portfolio of its tequila brand Cazadores in the U.S. The RTDs, which have an abv of 5.9%, is made with 100% blue agave and come in a spicy margarita, margarita, and Paloma flavors. With the launch, the company is trying to give the consumer an expertly crafted and modern on-the-go experience.

LIST OF KEY COMPANIES PROFILED:

• Pernod Ricard S.A. (France)


• Diageo Plc (U.K.)


• Bacardi Limited (Bermuda)


• Suntory Holdings Limited (Japan)


• Heaven Hill Distilleries, Inc. (U.S.)


• Campari Group (Italy)


• Sazerac Company Inc. (U.S.)


• Brown-Forman Corporation (U.S.)


• Casa Aceves (Mexico)


• Constellation Brands, Inc. (U.S.)

KEY INDUSTRY DEVELOPMENTS:

• January 2024: Don Julio, a Diageo-owned tequila brand, launched Alma Miel, a blend of both añejo and blanco Tequilas with oven-roasted agave nectar.


• December 2023: Diageo Plc, a British multinational alcoholic beverages company, expanded its premium tequila by introducing Don Julio's entire portfolio in India.


• November 2023: PATRÓN Tequila, a global premium tequila manufacturing company, collaborated with Mexican racing icon Checo Pérez to introduce the 2023 limited-edition PATRÓN Mexican Heritage Tin.


• August 2023: Punta Santos, a premium tequila manufacturer, launched a premium tequila with a low ABV, made from 100% blue agave and crafted in Jalisco, Mexico. This product is available across the U.S.


• February 2022 - Pernod Ricard's Avión brand has introduced Avión Reserva Cristalino Tequila to its Reserva line-up. The company has created a product that pays homage to every step of their production process from field to bottle, showcasing the uniqueness of their terroir, the character of agave, the purity of distillation, and the delicate relationship with wood during aging.


• February 2022 - Suntory Holdings Limited’s brand Tres Generaciones® Tequila has introduced Aejo Cristalino, its new ultra-premium offering. The crystal-clear liquid was created by Tres Generaciones' master distillers at La Perseverancia Distillery in Jalisco, and is smooth yet full of character, demonstrating the brand's commitment to quality and innovation.

REPORT COVERAGE

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The market research report provides qualitative and quantitative insights into the market. It also offers a detailed analysis of the market size and growth rate for all possible segments in the market. Various key insights presented in the tequila market report are an overview of related markets, recent industry developments such as mergers & acquisitions, the regulatory scenario in critical countries, and key industry trends.

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