May 21, 2024
Tequila Market

The Global Tequila Market Is Estimated To Driven By Increased Popularity Through Premiumization

Tequila is a distilled beverage made from the blue agave plant that is native to Mexico. It has a higher alcohol content than beer or wine and can range from light-bodied and soft to robust and spicy depending on aging and production methods. Tequila offers consumers a premium drinking experience and has experienced rising demand due to popularity among cocktail recipes and an upscaling trend that has elevated its perception beyond just shots.

The global Tequila Market is estimated to be valued at US$ 500.09 billion  in 2024 and is expected to exhibit a CAGR of 8.0%  over the forecast period between 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. The major players are focusing on expanding their business operations in the fast-growing emerging markets through strategic partnerships and joint ventures. Hitachi Ltd acquired GlobalLogic Inc., a digital engineering services company, to strengthen its digital business and expand its customer base.

The demand for tequila is growing rapidly across countries due to the rising consumption of premium alcoholic beverages and innovative marketing and promotion activities by major players. Social media influences such as launching branded profiles on Instagram and Facebook have also helped expand the brand reach and visibility of tequila globally. Celebrity endorsements of tequila brands have further popularized the spirit beyond traditional consumer bases and demographic sections.

The global Tequila Market Demand is witnessing significant expansion into new regions fueled by increasing export activities of major producers. The growth of cultural pubs and bars promoting Mexican food and drinks coupled with rising tourism and economic development in Asia Pacific and Europe have opened large untapped markets for tequila brands. Cross-industry partnerships for product placements in movies and TV shows featuring tequila are also enabling broader consumer awareness and trial.

Market key trends

One of the major trends driving growth in the tequila market is premiumization. Consumers are increasingly willing to pay more for higher quality and craft tequila produced using traditional and sustainable farming practices. There is a notable shift towards sipping tequilas made from 100% blue agave in premium categories like añejo and reposado rather than mixed in cocktails. This has pushed producers to focus on specialty and super-premium offerings harvesting from selectively matured blue agave to meet the demand for luxury experiences among affluent consumers.

Porter’s Analysis

Threat of new entrants: The threat of new entrants is moderate as it requires high initial investment and regulatory compliances for distillation.

Bargaining power of buyers: The bargaining power of buyers is high as there are many established brands for buyers to choose from.

Bargaining power of suppliers: The bargaining power of suppliers is moderate as suppliers of agave plants and other raw materials are many.

Threat of new substitutes: The threat of new substitutes is low as tequila has a unique taste and Mexico has intellectual property rights over tequila.

Competitive rivalry: The competitive rivalry is high among the key global players to retain market share and reputation in the market.

Geographical Regions

The tequila market in terms of value is highly concentrated in North America, mainly the United States. The U.S. accounts for over 80% of the global consumption of tequila owing to heavy demand among American consumers.

The fastest growing region for the tequila market is Asia Pacific led by China, Japan and Australia. This growth can be attributed to rising disposable incomes, shift in consumer preferences towards premium spirits and effective marketing campaigns by tequila brands targeting younger generations in Asia.