Eleanor Yates takes the temperature of an increasingly divided market
According to The Tequila Report 2026, as of January this year there are 2,526 tequila brand trademarks registered with the Consejo Regulador del Tequila, the governing body for production in Mexico. This equates to an increase of approximately 100% in three years, as each month sees 20 to 30 new tequila brands emerge. While there is no expiry on the trademark, removing brands that may have been discontinued or had a single run, The Tequila Report estimates in The 6 Trends Shaping Tequila in 2026 that in total there are approximately 900 viable tequila brands competing in the US.
However, in a category that keeps growing, Diageo, owner of Casamigos and Don Julio, reported a double-digit decline for tequila in the US, driven by this competitive pressure and category softness, in its Q3 results. In a similar story, Brown-Forman, owner of El Jimador and Herradura tequilas, saw net sales decrease 4% in its fiscal 2026 results. While Herradura’s net sales declined 9%, led by lower volumes in the US. El Jimador’s net sales decreased 2% driven by declines in the US and Mexico.
It seems that in the US, tequila’s largest market, larger brands are beginning to lose market share. Again according to The Tequila Report, looking at the US market, mass-market brands controlling 71% of sales are declining, however, ‘craft’ tequila brands are surging, growing 28.5% annually.
Fabien Re, brand architecture and activation director of House of Tequila at Pernod Ricard, says: “I don’t think the story is simply ‘premium down, value up’. Consumers are becoming more selective, not abandoning premium tequila. In this context, the brands that win will be the ones that offer the strongest value equation at their price point: quality, authenticity, taste and a clear reason to choose them. Brands such as Olmeca may benefit from consumers looking for quality without overstretching. At the same time, brands like the super-premium Olmeca Altos and Código can continue to thrive because they are able to justify the trade-up through true craftsmanship, great liquids and a more elevated consumer experience.”
Zachary Poelma, senior vice president, supplier strategy & insights at Southern Glazer’s Wine & Spirits, agrees: “Consumers aren’t seeking out ‘cheap’, they are seeking out value. More and more regardless of price segment, the brands that represent a perceived value coupled with authenticity are the brands that are winning.
“In spirits broadly, the $50-$99.99 tier is down 8.8% and the $100-plus tier down 9.3%. Within tequila specifically it’s sharper – the $50-$59.99 segment fell about 9% in volume and value, and the $100-plus tier plunged 16.5% in volume. Meanwhile, the premium price tier continues to grow at a mid single-digit rate. Some of the fastest-growing brands are in the ‘smart value’ zone, that $20-$30 band where a shopper still feels they’re getting a quality 100% agave product without the top-shelf premium price. That’s the sweet spot to watch, and it’s where I’d expect brands to fight hardest on price and promotion over the next year as agave suppliers remain above average,” Poelma continues.
Brands such as Ocho are among those still experiencing growth despite reports of decline in the US. “Ocho is still in significant growth,” says Jesse Estes, Tequila Ocho global brand ambassador. “Ocho seems to be going from strength to strength as a brand. We’re very fortunate that it seems as though the US consumer is gravitating increasingly towards these traditionally produced tequilas that respect the legacy and heritage of generations past.
“Where I see a lot of growth in the US is in brands that tend to be smaller and are more traditionally and more artisanally produced, I still think there’s a lot of growth potential there for that particular segment. With the state of the economy, I also think with value brands there’s room for growth there. Unfortunately, the brands I see in decline are premium and above that maybe are not the most traditionally produced,” Estes adds.
Carlos Londoño, co-owner of Café Pacifico, notes that the larger, mass-produced brands help pave the way for smaller brands to enter the market, and those are “needed for the market to give us wider choice and points of reference to try something else”. He adds: “Big brands have to exist and some of those break through because they have the muscle to do it, but that allows other brands to come in and that’s the beauty of agave.”
Celebrity status
A-lister endorsement and creation of tequila brands is showing little fatigue following the recent news that Sazerac invested an undisclosed sum in Kendall Jenner’s 818 tequila.
Stelios Papadopoulos, agave expert and co-founder of Barro Negro Athens, says: “For years the whole agave industry was dependent on the US – it’s like the rest of the world was drinking the leftovers. Celebrities have helped a lot to increase awareness around the category, which is great, but the only thing it has to be in my opinion is ethical.”
House of Tequila’s Re adds: “A few years ago the market was flooded with new celebrity-backed tequilas almost weekly. While a big name can drive initial awareness, longevity requires real authenticity. Consumers are smarter than ever; a famous face is no longer enough if the brand lacks a genuine connection to tequila heritage or fails to deliver on quality. The brands that will ultimately persevere are those that fight for authenticity, offer a distinct point of difference, build meaningful consumer connections and, above all, deliver an exceptional liquid.”
Transparency
This “fight for authenticity” is a key point. More than ever discerning drinkers want to know exactly what’s in the product they’re consuming, which makes the use of additives in tequila ever more controversial.
In July 2025, class action lawsuits were filed in Miami-Dade County, Florida and San Francisco, California against Diageo North America accusing the company of falsely marketing its Casamigos and Don Julio tequila brands as 100% agave, with one previously filed in New York. Diageo subsequently filed a motion to dismiss legal findings in the Florida class action lawsuit that accused the company of tequila adulteration.
At the time a Diageo spokesperson said: “The plaintiffs hinge their allegations on a scientifically unvalidated test; this is simply copycat conjecture based on other sham complaints. As previously stated, we are confident in our defence as all bottled Casamigos and Don Julio tequilas labelled as ‘100% agave’ are just that – proudly made from 100% Blue Weber agave.”
Regardless of the outcome, the topic of additive-free tequila must be causing consumers to lose trust in brands. The Tequila Report found that 84% of engaged consumers demand additive-free tequila, and 38% were willing to pay $10 more for an additive-free bottle of tequila. However, verification is the issue. The ongoing dispute between the Consejo Regulador del Tequila and the Agave Matchmaker website now means there is no official, fully universal registry to document which tequila contains additives and which doesn’t. Essentially, as The Tequila Report explains: “A criterion that matters deeply to consumers cannot be definitively ascertained, can be claimed by any competitor, yet can only be discussed in whispers due to regulatory prohibition.”
Papadopoulos adds: “I’m kind of against the whole additive-free campaign because it shifts the awareness to something people don’t understand anyway. We have additives in whisky, gin, vodka, wine, yet we have created a monster of this idea of additives but people don’t understand what it is. What’s missing is people understanding the production process, understanding what tequila you choose. You see many influencers talking about additives, but not educating people on the production process. Nowadays everyone asks for transparency, people now read the labels thoroughly so we need brands with transparency and with that need education.”
Londoño, who also chairs the agave section of the International Spirits Challenge, says: “Additive-free is a choice of the brand. When we do the ISC we see quite a number of them. More people are talking about it because they’re becoming more knowledgeable about it. It’s the choice of a brand and they’re allowed to by law. I think the majority of people tend to stay away from additives, it can give you a worse hangover and is harder to process in the bloodstream, but it’s still needed and people can make that choice. I’m glad it exists because it creates an opportunity for people to make their own choices and that’s important in any market.”
Giving consumers that choice and point of reference makes for a more diverse market. Additives are in many products all over the world for various reasons, as Poelma adds: “I think the word additive has gotten a much more negative context than it deserves. For example, oak extracts can help impart more consistent flavours while others help with consistency across batches. Also, most other categories have similar additives that don’t receive the same attention they seem to in tequila. That being said, I think we’ll continue to see it play a role in the category overall and see brands raise the bar on transparency and quality expectations. Those that fail to do so over time will lose share and consumers. It’s becoming a quality signal embedded in craft positioning rather than a label claim and, for the average shopper, brand equity and price still drive the purchase more than additive status does.”
Ultimately, the tequila category’s apparent slowdown in its largest market is more about recalibration and a maturation of the market, rather than decline. As mass-market dominance levels off and premium growth softens under economic pressure, competition is dividing into more distinct tiers where the small-batch and value brands are finding renewed momentum. At the same time, discussions around cost, authenticity and additives are reshaping consumer perceptions of value, forcing brands to prioritise transparency and quality as much as scale. Rather than contracting, see it as the US tequila market becoming more selective and discerning.
