Download Sample, The Growth of Premium Tequila Due to Craft Spirits, Urbanization, and Changing Consumer Preferences
Premium brand development and increasing demand for craft spirits are primary drivers behind the expansion of the tequila market. Shifts in consumer preferences toward premium and more superior quality and craft products, driven primarily by younger consumers with more disposable income, are helping to fuel premium and super-premium tequila development. In the US, premium and super-premium tequila make up almost 30% of overall tequila sales, and keeps on rising.
Craft spirits, which are made by smaller, sometimes boutique distilleries, also attract consumers who want distinct, small-batch products that deliver a different experience, as premium tequila is typically made authentically, and most high-end brands highlight their use of 100% blue agave and the traditional production processes that ensure authenticity. These changes within the tequila scene are framing the market in general, as premium and craft lead the vast majority of the growth.
Urbanisation and higher discretionary spending are key drivers of growth in the tequila industry, as it is more city-dwelling consumers who tend to be more attuned to worldwide trends like tequila's growing popularity in bars, restaurants, and social occasions, and this parallels a widening interest in craft cocktails and high-end priced spirits, with tequila being one of such categories.
The sales of tequila are higher across the board, as its overall market share in regions like the United States is, and although different unique methods vary to estimate categories; overall value and volume of liquid are two that have increased in tequila's value and liquid volume, surpassing many other spirits less than several years ago. Also, with every scant sign of consumers' discretionary spending patterns, it is clear that this trend is not going away, thereby promoting ongoing engagement and expansion potential with tequila in the market.
The tequila sector is expanding by leaps and bounds because of the high consumption of high-end spirits, taking an 18% share of the spirit category. People are gradually moving towards finer, more upscale alcoholic drinks, and therefore, ultra-premium and premium tequila products have emerged as favorites among consumers in the market. Premium tequila has seen tremendous growth in volume during the last several years, ranging from over a 50% premium tequila growth in volume in some markets.
This shift has been most extreme among millennials and Generation Z shoppers who demand artisanal and high-end forms of their spirit drinking. Consumers value the flavor, smoother profiles, and quality craftsmanship that comes with premium tequilas, such as longer aging and traditional methods of production and as consumers are becoming more willing to pay for premium tequila due to the general spirits category trend towards consuming better quality, premium spirits.
Craft spirits, which are made by smaller, sometimes boutique distilleries, also attract consumers who want distinct, small-batch products that deliver a different experience, as premium tequila is typically made authentically, and most high-end brands highlight their use of 100% blue agave and the traditional production processes that ensure authenticity. These changes within the tequila scene are framing the market in general, as premium and craft lead the vast majority of the growth.
Urbanisation and higher discretionary spending are key drivers of growth in the tequila industry, as it is more city-dwelling consumers who tend to be more attuned to worldwide trends like tequila's growing popularity in bars, restaurants, and social occasions, and this parallels a widening interest in craft cocktails and high-end priced spirits, with tequila being one of such categories.
The sales of tequila are higher across the board, as its overall market share in regions like the United States is, and although different unique methods vary to estimate categories; overall value and volume of liquid are two that have increased in tequila's value and liquid volume, surpassing many other spirits less than several years ago. Also, with every scant sign of consumers' discretionary spending patterns, it is clear that this trend is not going away, thereby promoting ongoing engagement and expansion potential with tequila in the market.
The tequila sector is expanding by leaps and bounds because of the high consumption of high-end spirits, taking an 18% share of the spirit category. People are gradually moving towards finer, more upscale alcoholic drinks, and therefore, ultra-premium and premium tequila products have emerged as favorites among consumers in the market. Premium tequila has seen tremendous growth in volume during the last several years, ranging from over a 50% premium tequila growth in volume in some markets.
This shift has been most extreme among millennials and Generation Z shoppers who demand artisanal and high-end forms of their spirit drinking. Consumers value the flavor, smoother profiles, and quality craftsmanship that comes with premium tequilas, such as longer aging and traditional methods of production and as consumers are becoming more willing to pay for premium tequila due to the general spirits category trend towards consuming better quality, premium spirits.
Rise in Flavoured Tequila and Increasing Popularity of RTD Drinks Propel the Tequila Market
Flavored and infused tequilas provide a compelling path to growth in the tequila marketplace environment because of the enthusiasm for distinctive flavor and new and different occasions to drink. Younger consumers, in general, and specifically the Millennial and Gen Z generations, are attracted to bold flavors for mixing cocktails and customizing the drinking occasion experience. Within five years, the volume share of flavored tequila of all tequila sold in the U.S. has grown from 5% to almost 9%.
The opportunity for growth is in the creation of differentiated products while maintaining authenticity and increasing the versatility of tequila. There is potential for brands to gain share among various consumer profiles if they can combine authenticity, real tequila, with innovation in flavor profiles. The growing popularity of ready-to-drink (RTD) drinks and cocktails is a huge opportunity for tequila in the market, as the preferences of consumers towards convenience, variety of taste and experiences shift. The trend also caters to the globalization towards outdoor consumption and informal social gatherings.
In the United States alone, RTD cocktails have experienced double-digit annual growth year on year for the past three years, with tequila RTDs being one of the largest growth subsectors, expected to contribute 18–20% of overall volume to spirit-based RTDs in 2024. With tequila maturing to be considered a premium spirit, consumers are looking for alternative ways to enjoy the taste without getting it mixed. Companies using this trend through original product innovation and branding have the potential to build longer-term revenue streams and try to grow tequila use beyond traditional consumption occasions.
The opportunity for growth is in the creation of differentiated products while maintaining authenticity and increasing the versatility of tequila. There is potential for brands to gain share among various consumer profiles if they can combine authenticity, real tequila, with innovation in flavor profiles. The growing popularity of ready-to-drink (RTD) drinks and cocktails is a huge opportunity for tequila in the market, as the preferences of consumers towards convenience, variety of taste and experiences shift. The trend also caters to the globalization towards outdoor consumption and informal social gatherings.
In the United States alone, RTD cocktails have experienced double-digit annual growth year on year for the past three years, with tequila RTDs being one of the largest growth subsectors, expected to contribute 18–20% of overall volume to spirit-based RTDs in 2024. With tequila maturing to be considered a premium spirit, consumers are looking for alternative ways to enjoy the taste without getting it mixed. Companies using this trend through original product innovation and branding have the potential to build longer-term revenue streams and try to grow tequila use beyond traditional consumption occasions.
Recent Trends in the Tequila Industry
- Growth in demand for premium drinking experiences among younger consumers who have more disposable income.
- Flavored and infused tequilas are rapidly gaining popularity as cocktail culture and flavor mixing grow.
- Additive-free and organically produced tequilas are reported, with brands never more sustainable.
- Tequila popularity is increasing in bars, restaurants, and social events owing to urbanization.
- Innovation with functional drinks and reduced-calorie drinks to meet these health-oriented trends.
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The Impact of Agave Supply Constraints and Shifting Consumer Trends on the Tequila Industry
The agave supply constraints pose a real danger to the stability and growth path of the tequila industry. With growing global demand for tequila, primarily from the United States (more than 60% of the world's tequila exports in 2023), there is immense pressure on agave supply. Since 2016, the agave price has increased by over five times, and small distilleries are especially exposed to rising raw material costs since they do not have long-term contracts or land ownership, which large distilleries have.
Farmers have started planting agave beyond normal cycles, due to short-term gains, resulting in over-planting, causing distressing longer-term crop quality problems and degradation of the soil. Unsustainable practices can cause cycles of abundance and scarcity, and much more volatile prices. If agave growth continues to be in disequilibrium with demand in the market, it will have a considerable negative effect on product consistency and price relative stability throughout the tequila category.
The increasing trend towards health awareness and the changing tastes of consumers are a significant threat to the tequila market, mainly among urban and younger drinkers. Current drinking habits indicate that about 25% of the millennial segment and over 35% of the Gen Z segment worldwide have reduced alcohol intake or chosen lower-alcohol content drinks. The current shift towards lower alcohol or no alcohol products is altering demand curves for alcohol as a whole.
This new generational attitude is not only placing pressure on the desirability of tequila as a celebratory or premium party drink, but it is also a consumer segment that is looking for functional beverage options with perceived health benefits. If tequila manufacturers fail to innovate to remain relevant to health-focused consumers, they risk going out of favor with a new generation of consumers who are less concerned with tradition or sales trends.
Farmers have started planting agave beyond normal cycles, due to short-term gains, resulting in over-planting, causing distressing longer-term crop quality problems and degradation of the soil. Unsustainable practices can cause cycles of abundance and scarcity, and much more volatile prices. If agave growth continues to be in disequilibrium with demand in the market, it will have a considerable negative effect on product consistency and price relative stability throughout the tequila category.
The increasing trend towards health awareness and the changing tastes of consumers are a significant threat to the tequila market, mainly among urban and younger drinkers. Current drinking habits indicate that about 25% of the millennial segment and over 35% of the Gen Z segment worldwide have reduced alcohol intake or chosen lower-alcohol content drinks. The current shift towards lower alcohol or no alcohol products is altering demand curves for alcohol as a whole.
This new generational attitude is not only placing pressure on the desirability of tequila as a celebratory or premium party drink, but it is also a consumer segment that is looking for functional beverage options with perceived health benefits. If tequila manufacturers fail to innovate to remain relevant to health-focused consumers, they risk going out of favor with a new generation of consumers who are less concerned with tradition or sales trends.
A New Wave of Premium Tequila Sustainability and Aging Redefining the Category in 2024
The introduction of new ultra-premium, additive-free, and sustainably crafted tequila expressions in 2024 has driven consumer interest in aged high-quality versions and reinforced the quality positioning of premium tequila within the global tequila category. For instance, in May 2024, Mijenta, a gold award-winning, additive-free, sustainably crafted tequila from Jalisco's highlands launched Symphony #2, an 8-month aged Reposado tequila. Bottled at 45% ABV, this limited release expresses the terroir of the highlands with deep and intricate barrel nuances, distinct from any other aged tequila.
For instance, in September 2024, Zamora Company USA introduced Tequila VOLTEO, an ultra-premium, additive-free and organic luxury tequila brand, distilled and bottled at Destileria Casa de Piedra in Jalisco, Mexico. For instance, in May 2024, 818 Tequila, Kendall Jenner's upscale tequila brand, launched officially in India and is being distributed solely in the Indian market by Berry Beverages. Berry Beverages and Zoup Beverages brought the product to India.
For instance, in September 2024, Zamora Company USA introduced Tequila VOLTEO, an ultra-premium, additive-free and organic luxury tequila brand, distilled and bottled at Destileria Casa de Piedra in Jalisco, Mexico. For instance, in May 2024, 818 Tequila, Kendall Jenner's upscale tequila brand, launched officially in India and is being distributed solely in the Indian market by Berry Beverages. Berry Beverages and Zoup Beverages brought the product to India.
North America Leads the Global Tequila Market, Consuming 60% of All Global Tequila
The North American tequila market is the world's largest and most dominant, led by the U.S., which consumes more than 60% of all tequila globally, as through 2024, tequila accounts for almost 10% of total spirits sales in the U.S. and has surpassed rum and is closing in on whiskey in volume and value, making Tequila one of the region's fastest-growing categories in the spirits market. Tequila market share.
The constant growth of the Hispanic population, especially in California and Texas, has provided stability to cultural familiarity and tequila celebration. Canada is also experiencing tequila growth, especially in Toronto and Vancouver cities which are experiencing increased cocktail and premium spirit consumption. Both Canada and the U.S. are more mature yet expanding markets, appealing to both international companies and artisanal brands.
The European tequila market is on an upward growth path fueled by growing consumer demand for premium spirits and changing cocktail culture. In 2024, European consumption of tequila represented almost 12% of all global tequila sales, with major markets in the United Kingdom, Germany, France and Spain. The UK is the largest importer of European tequila, supplying close to 35% of overall tequila volume to Europe, with a thriving nightlife.
The super-premium and premium tequila segments are expanding fast and now represent more than 45% of tequila consumption in Europe, as consumers move away from value brands to premium agave spirits. Demand for organic and sustainably grown tequila is also a market trend in line with European interest in sustainability.
The Asia-Pacific tequila market is still expanding, fuelled by higher disposable income, urbanization and evolving consumer tastes. The expansion is taking place in China, Japan, South Korea, Australia and India. Japan and Australia have seen heightened demand for tequila, mirroring their cocktail culture and high-end spirit appreciation. This is in line with the fact that consumers in the Asia-Pacific region are making drinking experiences more diverse and looking for more advanced drinking options.
Government policies and import taxes on tequila brands still pose a challenge in the future by increasing the price of tequila brands and products. But the tequila industry seems to be on a trajectory towards opportunity and increased brand building in the Asia-Pacific, creating new opportunities and offerings for diverse consumers and business owners in a complex drinking environment.
The constant growth of the Hispanic population, especially in California and Texas, has provided stability to cultural familiarity and tequila celebration. Canada is also experiencing tequila growth, especially in Toronto and Vancouver cities which are experiencing increased cocktail and premium spirit consumption. Both Canada and the U.S. are more mature yet expanding markets, appealing to both international companies and artisanal brands.
The European tequila market is on an upward growth path fueled by growing consumer demand for premium spirits and changing cocktail culture. In 2024, European consumption of tequila represented almost 12% of all global tequila sales, with major markets in the United Kingdom, Germany, France and Spain. The UK is the largest importer of European tequila, supplying close to 35% of overall tequila volume to Europe, with a thriving nightlife.
The super-premium and premium tequila segments are expanding fast and now represent more than 45% of tequila consumption in Europe, as consumers move away from value brands to premium agave spirits. Demand for organic and sustainably grown tequila is also a market trend in line with European interest in sustainability.
The Asia-Pacific tequila market is still expanding, fuelled by higher disposable income, urbanization and evolving consumer tastes. The expansion is taking place in China, Japan, South Korea, Australia and India. Japan and Australia have seen heightened demand for tequila, mirroring their cocktail culture and high-end spirit appreciation. This is in line with the fact that consumers in the Asia-Pacific region are making drinking experiences more diverse and looking for more advanced drinking options.
Government policies and import taxes on tequila brands still pose a challenge in the future by increasing the price of tequila brands and products. But the tequila industry seems to be on a trajectory towards opportunity and increased brand building in the Asia-Pacific, creating new opportunities and offerings for diverse consumers and business owners in a complex drinking environment.
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The report provides a detailed overview of the tequila market insights in regions including North America, Latin America, Europe, Asia-Pacific and the Middle East and Africa. The country-specific assessment for tequila market has been offered for all regional market share, along with forecasts, market scope estimates, price point assessment, and impact analysis of prominent countries and regions. Throughout this market research report, Y-o-Y growth and CAGR estimates are also incorporated for every country and region, to provide a detailed view of the tequila market. These Y-o-Y projections on regional and country-level markets brighten the political, economic and business environment outlook, which are anticipated to have a substantial impact on the growth of the tequila market. Some key country and region included in the tequila market report as follows:
| Regions | Countries |
| North America | United States, Canada |
| Latin America | Brazil, Mexico, Argentina, Colombia, Chile, Central America Countries, Caribbean Countries, Rest of Latin America |
| Europe | Germany, United Kingdom, France, Italy, Spain, Russia, Poland, Netherlands, Switzerland, Belgium, Sweden, Austria, Norway, Denmark, Czech Republic, Rest of Europe |
| Asia Pacific | China, India, Japan, South Korea, Australia & New Zealand, Indonesia, Singapore, Malaysia, Philippines, Vietnam, Thailand, Bangladesh, Rest of Asia Pacific |
| MEA | GCC Countries, South Africa, Nigeria, Egypt, Turkey, Morocco, Ethiopia, Algeria, Israel, Iran, Iraq, Kenya, Rest of MEA |
Tequila Market Research Report Covers In-depth Analysis on:
- Tequila market detailed segments and segment-wise market breakdown
- Tequila market dynamics (Recent industry trends, drivers, restraints, growth potential, opportunities in tequila industry)
- Current, historical and forthcoming 10 years market valuation in terms of tequila market size (US$ Mn), volume (Units), share (%), Y-o-Y growth rate, CAGR (%) analysis
- Tequila market demand analysis
- Tequila market pricing analysis over forecast period (by key segment and by region)
- Tequila market regional insights with region-wise market breakdown
- Competitive analysis – key companies profiling including their market share, product offerings, and competitive strategies.
- Latest developments and innovations in tequila market
- Regulatory landscape by key regions and key countries
- Supply chain and value chain analysis in tequila market
- Tequila market sales and distribution strategies
- A comprehensive overview of parent market
- A detailed viewpoint on tequila market forecast by countries
- Mergers and acquisitions in tequila market
- Essential information to enhance market position
- Robust research methodology
- Frequently Asked Questions -
What are the key factors driving the growth of the tequila market?
Key factors driving growth include changing consumer preferences towards premium spirits, increased demand for flavored tequila varieties, and the rising popularity of tequila-based cocktails, particularly among millennials.
How is the demand for tequila expected to evolve in the coming years?
Demand for tequila is projected to grow as consumers shift towards high-quality and premium offerings, driven by expanding global markets, especially in regions like North America and Europe.
What are the main challenges faced by tequila manufacturers?
Manufacturers face challenges such as fluctuating agave prices, regulatory hurdles, and competition from other spirits. Maintaining product consistency and quality also remains a key challenge.
