Tequila and mezcal remain red hot. Both spirits tap into numerous trends that should keep the categories very much on the minds of consumers in 2020.
Recent growth has been impressive. In 2018, tequila sales increased in America by 7.1%, according to the Beverage Information and Insights Group, reaching 18.60 million 9-liter cases. That growth rate beat every other category in this country in 2018 except for Irish whiskey (+9.9%). And it was good enough to capture 8% of the overall U.S. spirits market, up from 7.6% in 2017.
No doubt, tequila and mezcal both have bright futures. They are in the middle of a boom period, with no imminent end in sight.
Premium Tequila Remains Trendy
“It doesn’t hurt that the number-one selling brand in the category is Patron, which is either premium or super-premium, depending on how you categorize it,” explains Jeff Feist, category lead, spirits and more, for BevMo!, which counts more than 100 West Coast stores.
Patron has helped consumers move past their college days of drinking cheaper tequilas in favor of sipping craft alternatives. Accordingly, BevMo! has over-indexed their tequila category to become a destination store for these top-shelf products.
“It always amazes me how Don Julio 1942 remains one of our best sellers,” Feist says. “Clase Azul Reposado as well. It doesn’t matter what store, up and down California, they are both top-10-selling items in spirits.”
“People are willing to pay those prices on an every-day basis for what tequila they drink every week,” Feist adds. “Premium tequila is no longer just a special occasion.”
Another sign of premium tequila’s rise is the advent of store-pick tequila barrels. “We were offered that opportunity by a distributor in 2018, and we jumped on it,” says Tom Agnes, liquor operations manager at the two-unit Brooklyn Center Liquor in Brooklyn Center, MN. Agnes and his staff choose barrel-selects of Patron añejo and reposado.
Although these bottles have been a bit slower to move, perhaps due to the newness of the concept, tequila overall is still growing significantly at Brooklyn Center.
“It’s the fourth spirit category for us, after only vodka, American whiskey and brandy,” Agnes says. “It’s up over 14% in 2019 over 2018, when it was up 17%.”
Mixology has obviously helped drive this premium tequila and mezcal boom, as has the health-conscious movement.
“We see consumers trying different cocktails as well as tapping into agave-based spirits for a ‘healthier’ alternative to sugary mixed cocktails,” says Eric Dopkins, CEO of Milestone Brands, which is behind the flavored tequila line Dulce Vida. “The skinny margaritas seem to be developing and gaining in both on-premise and off-premise consumption as consumers seek less carbs and calories.”
The level of consumer interest and experimentation that began with American craft whiskey has continued into tequila.
“Consumers are increasingly more interested in the ingredients and history behind their drinks, and are gravitating towards higher-end tequila as the availability of quality options continues to grow,” explains Christina Choi, SVP of tequila, Diageo NA.
In the day and age when everybody carries a smartphone, there is no hiding the facts behind a brand. Tequilas can no longer conceal their ingredients or distilleries. An educated, curious consumer will check.
“A lot of connoisseurs will notice if a tequila’s denomination number is off,” says Mike Moreno of Moreno’s Liquors. This Chicago destination store boasts more than 700 varieties of tequila, and nearly 500 types of mezcal. “Some companies will change distillery to save money, which can negatively impact the flavor profiles,” Moreno continues. “So people really want to know now where their tequila comes from, the same way that a whiskey drinker today will want to know what company is behind something like Eagle Rare.”
Interest from Blanco to Añejo
One of the more interesting aspects about tequila consumers is that in seeking authenticity and quality, they do not necessarily reach for the priciest bottles.
“Five years ago, you saw more consumer interest in añejo,” says Moreno. “Now it’s shifted more towards blancos.” As in the unaged, first tier of tequila, before reposado and añejo.
“I think people are trending towards tequila that showcases agave flavors, and are not as interested in the profiles of the barrel finishing,” Moreno adds. “Though you will always have people interested in the añejos and extra añejos. I don’t see that drastically slowing down, but I do see a blancos trending with a massive uptick.”
To Moreno’s point about añejos not going away, many brands are doing their best innovation right now in this category.
Dulce Vida, for instance, is experimenting with “versions of extra añejos with whiskey barrels, or wine barrels, that all add flavorful alternatives to bourbons and whiskeys,” says Dopkins of Milestone Brands. “We have a Dulce Vida 5-year Extra Añejo aged in Napa Valley Cabernet barrels . . . truly amazing sipping tequila.”
Ask a tequila fan their favorite style, and you may be surprised how many will answer reposado. This middle tier typically spends two to 11 months in oak. Here, too, is room for innovation.
“This year, we released the limited edition Tequila Don Julio Reposado, Double Cask, which features our traditional reposado finished for two weeks in casks which previously held Lagavulin Islay Single Malt Scotch Whisky,” says Choi of Diageo.
Cristalino or Añejo?
Look across the tequila shelves these past few years and you’ll notice that the color is disappearing from añejos. More companies have released cristalino variants, which filter the barrel color out of the spirit for a clear, aged product. This trend began in Mexico and has moved up north into America.
“We sell several cristalinos that are doing very well,” reports Feist of BevMo! “But it’s tough to get drinkers of authentic tequila into these products, because they believe that in stripping out the color, you’re also losing some of the flavor.”
Another issue is the price point. Remember, these are still añejo tequilas.
“There’s no such thing as an entry-level cristalino,” Fiest says. “These are priced between $49.99 and $59.99. It’s not like a new brand of tequila that can come out at $29.99 and be successful.”
Other retailers have reported a hesitancy from consumers to fully embrace cristalino.
“The consumers that I see who prefer añejo would rather it retain its color,” says Oniel Mendenhall, Jr., owner and president of the Fiesta Beverage Mart & Liquors chain in Houston. “I think a lot of that has to do with what their father, grandfather or someone older has taught them. They tend to think the clear is just a more expensive blanco/silver, or it will not have the wood notes like a colored añejo. We try to explain that it has just as much flavor, but they want to go with what they know.”
Moreno, meanwhile, wonders whether brands are trying to tap into the rise of blancos.
“You have brands that have produced so much añejo, only to have the trend towards blanco, so perhaps they believe they can move more barrels of aged tequila by playing towards the clear tequila trend,” he surmises.
Mezcal in 2020
Perhaps more than any other alcohol category, sustainability remains a concern for mezcal. The rarer agave varietals, which often take longer to blossom, are not so easy to farm sustainably, especially with mezcal demand spiking.
“A lot of the varietals that used to be easier to find are now a lot harder to track down,” Moreno says, like tobaziche. “Preservation remains a hot topic because people are worried where a lot of these varieties are going to go.”
But even if the harder-to-find varietals become tougher to track down, there’s no reason to believe that consumer interest will taper off. If anything, the category could expand in new directions.
“What I believe is next for mezcal in 2020 are flavors, like tamarindo, coffee, passion fruit, etcetera,” says Mendenhall of Fiesta Beverage Mart & Liquors. “I already had a vendor approach me with flavors within the last month, and few others want to discuss putting in flavors next year.”
Which all speaks towards the need for greater education in the category.
“Even though mezcal has been around for a while, the market still needs more education on it,” Mendenhall says. “Once there is a push for education, I believe it will transform from a trendy spirit into a mainstay.”
One of the driving factors behind this agave wave has been the cross-cultural appeal. As that continues, expect an even broader consumer demographic reaching for tequila and mezcal in 2020.
“Our community has a high Hispanic population, which is helping grow the category, but a lot more than Latino customers are buying tequila,” reports Agnes of Brooklyn Center. “It seems that everybody likes tequila around here.”
Though of course the broader appeal of tequila and mezcal does pose problems in terms of stock and sustainability.
“Unfortunately, the trend I see for 2020 is more out-of-stocks, more discontinued brands and price increases,” says Mendenhall of Fiesta Beverage Mart & Liquors. “I just do not think the supply can keep of with demands. Something has to change, either by allowing tequila to be produced in more states in Mexico, or lessening the new brands of tequila.”
Accordingly, forward-thinking brands like Dulce Vida continue to operate with an eco-conscious mindset.
“Dulce Vida has utilized sustainable farming and production practices since inception, and we continue to partner with growers that are extremely advanced in sustainable growing, production and how they deal with agave waste,” says Dopkins of Milestone Brands. “We turn it into compost and put it back into the ground where it came from. There are very advanced facilities today using the agave waste to create straws, paper, soluble fiber and many other creative uses.”
Add it all up, and there’s ample room for growth and excitement with tequila and mezcal in the new year.
Kyle Swartz is editor of Beverage Dynamics magazine. Reach him at firstname.lastname@example.org or on Twitter @kswartzz. Read his recent piece How a Craft Distillery Captured the Flavor of Texas.