WHITE SPIRITS: TEQUILA It’s tequila’s time in duty free
Tequila enjoyed a 5.5% rise in volume sales last year, outperforming fellow white spirits vodka, baijiu, soju and sambuca. Charlotte Turner discovers why premium tequilas could be driving market share gains.
P
rior to a pretty successful 2017, the tequila category had been experiencing a bit of a
rough patch. Between 2012 and 2017 the category’s compound annual growth rate (CAGR) was actually -0.2%, which makes the result last year (+5.5% in volume sales yoy) all the more impressive and surprising. “In 2017 the growth was basically
within the Mexican market and slight growth in the LatAm markets,” insists Raffaele Berardi, CEO of Fraternity Spirits which owns the Tequila Corralejo brand. “This year we see continuing
expansion in to the EU and Middle east with growing numbers.” Brown-Forman owned brand,
Herradura also enjoyed an improved performance in 2017; which is clear from Eric Helm’s testimony. “Following two years of declining
sales in travel retail the tequila category grew by nearly double digits in 2017,” says the Marketing Director
for Brown-Forman,
Global Travel Retail. Helms also concurs with Berardi in
that growth was heavily in favour of the Americas region. “A further positive sign for tequilas
is that one-half of that growth was in the vital markets of the Americas. “Equally encouraging is that
tequilas enjoyed stronger volume in nearly every other global travel retail market with the exception of Africa and the Middle East where sales remained somewhat sluggish and flat.” Commenting on Herradura
itself, Helms tells TRBusiness that it continues to enjoy its role as a ‘primary influence in the tequila category’, not just in travel retail but in domestic markets as well. “In travel retail this award-winning
premium tequila enjoyed what can only be described as a break-out year in 2017 with a robust growth rate,” he adds.
Billion-dollar deals Interestingly, as Berardi mentioned, many travellers appear to be looking for more premium tequilas. “Ninety percent of that growth
volume was in the vital tequila markets of the Americas and the super-premium Herradura Ultra accounted for the overall majority of that growth. Ultra’s sales performance serves to verify the on- going trend of international travellers to insist on authentic products of a premium nature. So far in 2018 there is every indication that this growth trend for Herradura and Herradura Ultra is continuing.” The premiumisation trend is
Tequila Corralejo's 20th anniversary product which was released towards the end of 2015.
SEPTEMBER 2018
obviously good news for one of the world’s most famous tequila brands, Patrón, which was recently acquired by Barcardi Limited. According to the most recent International Wines & Spirits Research (IWSR) data, the acquisition makes Bacardi the number one spirits company in the super-premium segment in the US and second largest in market share
Demand for super-premium tequila, like Herradura's Ultra, is growing.
“[Herradura] Ultra’s sales performance serves to verify the on-going trend of international travellers to insist on authentic products of a premium nature.”
Eric Helms, Marketing Director, Brown-Forman, Global Travel Retail
by value in the US. “Tequila remains one of the
fastest-growing categories in the spirits industry, with Patrón the clear market leader in the super- premium segment,” insists Bacardi. However, competition in
this segment is intensifying; especially since Diageo bought George Clooney’s Casamigos super-premium tequila last year for $1bn. At this stage it is too early
to tell how this brand will perform under the drinks giant’s stewardship, but according to IWSR, the brand shifted 120,000 9-litre cases in 2016, and was expected to hit 170,00 by the end of 2017. «
Above: Patrón Spirits has been acquired by Bacardi in a $5.1bn deal.
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