Brown-Forman boosts tequila production to meet global demand

Brown-Forman has announced plans to expand its Casa Herradura tequila distillery in Jalisco, Mexico. The company said the approximate $200 million USD investment would allow the company to meet the increasing global demand for its premium tequilas. Construction is expected to begin in July 2023.  

“The world’s growing taste for premium tequila is driving double-digit net sales growth of our Herradura and el Jimador brands,” said Lawson Whiting, President and Chief Executive Officer, Brown-Forman Corporation.

“This strategic investment will improve our production efficiencies and increase our competitiveness.” We believe strong consumer interest in tequila will continue and we’re expanding our production capacity to meet this demand.” 

Casa Herradura is one of Mexico’s most historic and renowned tequila producers. It has been hand harvesting, producing, and estate bottling fine tequilas from the small town of Amatitán, Jalisco, since 1870. Brown-Forman acquired Casa Herradura in 2007. 

“This multi-phase project includes adding to our distillery operations, bottling, maturation, and processing areas,” said Elisa Gutierrez, Vice President and General Manager, Casa Herradura.

“This expansion is particularly exciting as it will also advance our existing waste-to-energy efforts with a new water recycling and treatment plant.”

The first phase will expand the water recycling and treatment plant, followed by the expansion of capacity for distilling, bottling, maturation, and processing. It builds upon Casa Herradura’s commitment to environmental sustainability.

Casa Herradura was a pioneer in establishing a water recycling and treatment plant that met government standards and is one of Brown-Forman’s zero waste to landfill sites. Less than one percent of the solid waste generated goes to landfill, creating a more sustainable process and product. Over the past decade, Brown-Forman has made significant investments in state-of-the-art technology and implementation of processes for environmental care.

Tequila is the fastest growing spirits category globally by value with the majority of the growth within the category driven by the super premium+ price segment.

Australians trade up to super premium tequila

We may be more than 14,000 kilometres and halfway around the world from Mexico, but Australians can’t get enough of its national spirit, tequila.

Tequila continues to be the fastest growing spirit segment in the country, with Australians being the world’s third-biggest tequila consumers per capita, behind the United States and Mexico.

The desire for higher quality drinks, at premium prices, thrived during COVID-19. IWSR reports that when consumers were restricted from going out to their favourite restaurants and bars, they pent their discretionary budgets on luxury experiences they could bring into the home, such as streamed entertainment services, gourmet meals, make-at-home cocktails, and sophisticated wines and spirits.

A report from CGA by NielsenIQ has also found that drinkers are opting for tequila over higher-end dark spirits. Agave-based spirits is challenging whiskey and vodka, with recent growth outpacing both categories on more than one price tier. 

Tequila’s percent change in dollar sales is ‘higher in every price tier’ versus the same price tier in whiskey and vodka. Across all tiers the agave-based spirit is demonstrating stronger sales than other subcategories so far in 2022. The category’s price tier percent growth in ultra premium reached 171%, while premium saw growth of 133%.

Premiumisation is also driving consumers to ‘trade up’, with 20% of tequila lovers drinking the spirit neat.

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Categories: Business