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Tequila Market Growth To Be Driven By Rising Demand For Premium And Super Premium Tequila Products

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Ashish Thapa
Tequila Market Growth To Be Driven By Rising Demand For Premium And Super Premium Tequila Products

Tequila is a distilled spirit made from the blue agave plant that is primarily produced in Mexico. It is known for its distinctive flavor and taste and has gained immense popularity over the years owing to increasing demand for premium and super premium products. Premium and super premium tequila varieties appeal to the discretionary spending power of affluent consumers. Tequila is usually consumed neat or on the rocks and is also widely used in cocktails. Rising consumer preference for craft spirits with unique flavors has boosted demand for premium aged tequilas which command higher prices.

The global tequila market is estimated to be valued at US$ 500.09 Bn in 2024 and is expected to exhibit a CAGR of 8.0%  over the forecast period from 2024 to 2030.

Key Takeaways

Key players operating in the tequila market are ABB Ltd., Hitachi Ltd, Emerson Electric Co., Alstom, International Business Machines Corporation, Honeywell International Inc., Schneider Electric, Rockwell Automation, Inc., JFE Engineering Corporation, ICONICS, Inc., Mitsubishi Electric Corporation, and others.

Growing demand for tequila as a mixer in trending cocktails from millennials and Generation Z consumers is expected to drive market growth over the forecast period. Premiumization trends have also led to new product innovations like flavored and aged tequilas catering to evolving consumer preferences.

Advancements in brewing and distillation technology have led to improved yield and consistency in production. Automation is also being incorporated to streamline harvesting, processing and bottling operations to meet rising demand and ensure quality compliance.

Market Trends

Premiumization - There is growing consumer demand for premium and super premium aged tequilas priced $50 and above. Craft distillers are experimenting with unique flavors, aging techniques and packaging to attract affluent consumers willing to pay higher price points.

Sustainability - Major players are focusing on sustainable production practices like using agricultural waste for energy generation and implementing water recycling systems. Product positioning increasingly highlights responsible production methods.

Market Opportunities

E-commerce Sales - Online retail channels provide an important opportunity to target younger consumers and expand offerings to new international markets.

Innovation - Growing experimentation with barrel aging varieties, flavored infusions and ready-to-drink formats present lucrative opportunities for new product development catering to evolving palates.

Impact of COVID-19 on Tequila Market Growth

The COVID-19 pandemic has significantly impacted the global Tequila Market Demand. During the initial lockdown phases in 2020, on-trade channels such as bars, restaurants and clubs were forced to shut down in several countries. This led to a steep decline in sales volume for the tequila market. However, as people were confined to their homes, off-trade channels like retail outlets, hypermarkets, supermarkets, and online stores witnessed increased demand. Premium and super premium tequila brands in particular experienced growth in off-trade sales as consumers stocked up and engaged in at-home cocktail making. Now with economies reopening, the on-trade volume is recovering gradually yet demand in the off-trade remains relatively strong. Going forward, companies will need to focus more on expanding their online and retail sales channels to sustain growth in the post-COVID environment. Diversifying packaging formats suitable for at-home consumption as well as innovating new product launches can further aid market recovery.

Geographical Regions with Highest Tequila Market Value Concentration

The tequila market in terms of value is highly concentrated in North America and Europe. Mexico being the sole origin of 100% agave tequila also accounts for a major share. Within North America, the United States represents the largest and most valuable tequila consuming country globally. The premiumization trend and growing popularity of cocktails and mixed drinks have been major drivers of the tequila market growth in the US. Europe is another lucrative region driven by rising affluence as well as cultural influences from Mexico that have increased tequila's appeal as a spirit of choice. Both North America and Europe are expected to continue dominating the high-value segments of the global tequila market over the coming years.

Fastest Growing Region for the Tequila Market

Asia Pacific has emerged as the fastest growing region for the tequila market in recent years and offers significant future potential. Factors such as rising disposable incomes, increasing socialization at bars and lounges, growing influence of Western cocktail cultures, and innovative marketing by tequila brands have contributed to accelerated growth. Countries like China, Japan, India are displaying strong recruitment of new tequila consumers. Moreover, Asia Pacific presents opportunities for premium and super premium variants as consumers experiment with taste profiles. As Asia Pacific economies continue to prosper, companies should make major investments towards establishing brand awareness, expanding distributor networks and tailoring products to local preferences for capitalizing on the region's high-growth prospects.

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