According to Diageo’s latest market report, tequila now represents 3% of its net sales, which is a +43% increase on last year’s results.
The premium spirits conglomerate owns Don Julio and Deleón tequila brands, which according to Diageo’s latest report, are growing in popularity.
Bacardí’s recent acquisition of Patrón Tequila for more than US $5bn is another sign of the confidence that big companies now have in the agave spirit.
According to market research provider, Euromonitor International almost 291m litres of tequila were sold in 2016 globally. The US and Mexico represent the largest markets and Bacardi ranks number 11 in the global tequila market, with 1.7% company shares in 2016.
Jeremy Cunnington, project manager at Euromonitor International, said: “There is little surprise in Bacardí’s acquisition of Patrón due to its existing minority stake in the company and the fact that all its major rivals have a super-premium tequila brand.
“The price, while seemingly high, too is not a surprise, with the dearth of high quality brands available making it a sellers market. At least this one has the advantage of buying an established brand and with strong revenues rather than potential as many of the other recent acquisitions such as Diageo’s one of Casamigos or Pernod’s of Smooth Ambler bourbon/other US whiskey and thus a better chance of getting a return on investment.
“The purchase will broaden the category spread of Bacardí and give a much needed premiumisation boost to its portfolio.
“Nevertheless the US centric brand will do nothing to help Bacardí’s other major weakness which is a narrow geographic spread based on North America and Western Europe.”
Another big player benefiting from the rising tequila trend is Pernod Ricard.
The spirits company recently completed the acquisition of Avión Spirits LLC, owner of the ultra-premium tequila brand Avión, from its joint-venture partner Tequila Avión.
“Avión has become a leading aspirational lifestyle brand in the fast-growing ultra-premium tequila category,” said Paul Duffy, CEO, Pernod Ricard US.
“This acquisition is important for Pernod Ricard US as we focus on premiumisation and building brands that consumers are passionate about.”
It cannot be a coincidence that three of the biggest international spirits companies have made big investments in the tequila category over the past 12 months and if the agave spirits’ popularity increases outside the US and Mexico, it could be a gold mine for the big companies.
