TL;DR
Tequila’s popularity is surging worldwide, with Diageo’s new CEO Debra Crew driving its expansion. Independent retailers should consider stocking up on Tequila brands like Don Julio and Casamigos, which offer diverse flavor profiles and cater to various occasions. Diageo’s investment in Tequila aligns with the industry’s premiumization trend, making it a profitable addition to store shelves.
Tequila, the iconic Mexican spirit, is making waves on the global stage, and it’s a trend that independent retailers should take note of. Debra Crew, the new CEO of Diageo, the world’s largest premium spirits group, is leading the charge to take Tequila to every corner of the world. Much like Johnnie Walker did with Scotch in the 1800s, Crew envisions Tequila becoming a global sensation.
Currently, around 80% of Tequila consumption is concentrated in North America. However, the potential for Tequila to expand its volumes and premiumize its offerings is immense. Tequila’s rise to prominence is evident, with the spirit topping luxury spirits sales in the US during the pandemic-induced cocktails-at-home boom. In 2021, Tequila sales in the US soared by 75%, contributing to a market worth $6 billion out of a global sales total of nearly $10 billion.
Surpassing American whiskey, Tequila became the second most valuable spirit category in the US, with the prediction that it will claim the top spot by the end of 2023. However, as Debra Crew emphasizes, Tequila is still primarily sold in a few markets, implying substantial growth potential beyond North America and Mexico.
According to Fortune, global demand for Tequila exceeded $10 billion last year and is projected to increase by 50% to $15.57 billion by 2029. In Europe, including the UK, Tequila sales doubled in just one year.
Debra Crew aims to harness Tequila’s growth potential as part of Diageo’s strategy to increase its share of the alcohol market. Diageo, with its portfolio of over 200 brands, intends to expand its market share from 4% to 6% by 2030. This strategy involves leveraging the success of scotch, beer (primarily Guinness), and Tequila categories.
Tequila’s growth is already evident in Diageo’s financial performance. In the year leading up to June 2023, Tequila emerged as the company’s fastest-growing category, with brands like Don Julio and Casamigos experiencing organic net sales growth of 20% and 16%, respectively. This aligns with the industry’s premiumization trend, where consumers aspire to move up the quality and price scale.
For independent retailers, stocking up on Tequila brands like Don Julio and Casamigos could prove to be a lucrative decision. These brands offer distinct flavor profiles, making them suitable for various cocktail occasions and sipping experiences. As the premiumization trend continues, Tequila’s appeal is expected to soar further.
To make the most of this trend, independent retailers can take advantage of companies like Evidnt, which drive advertising traffic to their stores. By providing customers with a diverse range of Tequila options, retailers can tap into the growing demand and capitalize on Tequila’s worldwide surge.
In conclusion, Tequila’s global rise presents a promising opportunity for independent retailers. With the guidance of industry leaders like Debra Crew and the investment of companies like Diageo, Tequila’s expansion and premiumization offer a profitable avenue for retailers to explore.
