Why tequila is the spirit to watch in Australia

IWSR has forecast that international markets such as Canada, the UK and Australia are poised for a tequila boom, with expected volume growth of between 7% and 9% from 2022-27.

While it’s a mixed picture for spirits globally, with the category only growing +5% in volume in 2021-2022, agave-based spirits saw overall category volume growth of +13%.

And Australia is leading the pack. It’s now one of the world’s top 10 markets for tequila, with the spirit nipping at the heels of long-term favourite gin.

IWSR noted: “Gin is now in long term decline in the key UK market, and has also lost momentum in many of its previous growth markets such as Brazil, South Africa and Australia; future gin growth will be driven by countries including the Philippines and Nigeria.”

Drinks giants including Campari and Bacardi are eagerly eyeing the tequila market’s potential in Australia, once agave supplies – and prices – improve.

“Whilst we are currently constrained on tequila, we are able to support the strong double-digit growth of Espolòn in the US, and look forward to substantial additional capacity coming online in the second half of the year [2023], which would allow us also to support the international expansion of the brand,” said Campari CEO Bob Kunze-Concewitz.

“Australia is a major growth market, and … we see a lot of positive momentum in Mexico with the development of the cristalino segment for Espolòn.”

At Bacardi-owned Patrón, president and COO Mauricio Vergara Herrera is bullish about the prospects for Australia following a stint as the country’s MD.

“Australia is one of the markets that carries a lot of influence in Asian markets,” he said. “With tequila becoming more and more popular, together with other global trends, we expect Asia to follow the global and growing popularity of tequila.

“In Asia, the penetration is lower compared to Europe, but nevertheless we also see significant potential that can’t be ignored.”

Evolving off-premise preferences

Cellarbrations at Gisborne owner Tony Bongiovanni said tequila is going from strength the strength in the off-premise. However, smaller craft spirit producers are struggling in the current economic environment, especially in the craft beer, gin and seltzer categories.

“Tequila sales are on the move upwards, alongside Scottish, Irish and Japanese whisky, especially the premium $100 plus segment,” he said.

IBISWorld is forecasting annual growth in the craft beer sector to moderate from 7.4% per year over the past five years to 3.9 per cent per annum out to 2028.

Celebrities drive tequila growth

According to IWSR Drinks Market Analysis tequila will remain a high-profile affordable luxury thanks to the number of celebrities directly involved with brand offerings.

The rise of social media and product placement helped bring tequila to the forefront of celebrity culture. The brand Avion played a central role in the seventh season of HBO’s hit show Entourage, which followed a fictional actor and his Hollywood friends.

Since then, a number of celebrities have launched their own tequila brands, usually at the premium-end of the category. For example, in 2013, actor George Clooney founded Casamigos with Cindy Crawford’s husband Randy Gerber, which later sold to Diageo for $1 billion in 2017. In the same year, Sean Combs, also known as Diddy, saw volumes of his luxury DeLeon Tequila double.

IWSR data shows that by 2019, premium-plus tequilas grew 16.3%, driving the category’s overall momentum.

Celebrity-backed tequila has greatly benefited from its association with its famous owners, especially through marketing campaigns, IWSR said.

From 2018 to 2019, IWSR recorded a 31.7% volume surge of tequilas endorsed by influencers.

“What sets celebrity tequilas apart is a combination of a genuine relationship with suppliers and a purpose-driven marketing strategy,” said Mariana Fletcher, Head of US Insights and Analytics at IWSR.

Recent brands include Prospero, endorsed by singer Rita Ora, and Villa One, a collaboration between musician Nick Jonas and designer John Varvatos.

One of the more recent celebrity-owned tequila launches comes from Dwayne “The Rock” Johnson. He built his marketing strategy for Teramana, around an ethos of sustainability and spirituality – connecting with the mindset of his target millennial audience.

As the COVID-19 pandemic spread across the world, The Rock’s initial plans for a red-carpet launch had to be reworked. Johnson instead leveraged his far-reaching social media accounts to launch Teramana into the market.

For example, on Instagram, where he is the 3rd most followed person in the world, Johnson gives his fans a more personal introduction to his drink, from sharing videos of him enjoying tequila with his mother to hosting live cocktail-making videos.

IWSR said heightened consumer awareness of the category will boost agave alternatives as well – volumes of raicilla, bacanora, and sotol collectively increased by nearly 40% in the US in 2022, and will continue to grow.

Lenny Kravtiz goes global with Mexican spirit brand

Success! You're on the list.

Categories: Business