During Covid-19, U.S. Drinkers Are Finally Sipping Tequila, Not Shooting It.

In the past, the average American drinker would sip tequila on celebratory occasions—shot back and chased with lime, poured into margaritas on Cinco de Mayo or sipped in Palomas on Taco Tuesdays. Though tequila is a rich, diverse category—full of everything from hyper-local liquors to brash shooting spirits to elegant sipping drinks—it was often written off, relegated into a category reserved for specific spirited occasions. 

According to major e-commerce platform Drizly and a host of agave experts, the tides are changing for tequila. 

“More consumers consider it their go-to,” says Francisco Terrazas, the national brand manager for Mezcal Vago. “People are also starting to pair tequila with a more diverse array of cuisines.”

Drizly has found the category more than doubling over the last five years, expanding from 3.09% of share in 2016 to 6.52% in 2020.

Drinks analysis firm IWSR corroborates this information, tracking US tequila sales as growing by 8.3% in volume over 2019. Nielsen noted similar growth, capturing sales of tequila as growing 54.9% year-over-year, generating $1.25 billion in sales year-to-date as of July 25, 2020.

“While vodka and whiskey still retain a higher overall share on the platform, tequila is nipping at their heels,” Paquette. The category is maintaining consistent year-over-year and month-over-month growth on Drizly.  

“While tequila sat at 6.52% from January to July 2020, when looking at the summer specifically, the share of the tequila category increased to 7.13% on Drizly,” says Liz Paquette, the head of consumer insights for the e-commerce spirits giant. “This shift would indicate that people are continuing to move towards tequilas, particularly in the warmer months, as they are making cocktails at home.”

If that farcical ‘just-for-shooting’ stereotype had any say, tequila would be faltering during the pandemic. With clubs and bars shuttered and taco Tuesday house-bound, who’s in the mood for tequila shots?

But as sales trends prove, the American consumer is leaning further into the category. 

“If anything, the Covid-19 pandemic has strengthened the outlook for retail sales of tequila,” says Paquette. Nielsen credits tequila for accounting for 12.7% of U.S. off-premise sales, up 9.1% for the 52 weeks prior to the pandemic.

Why is tequila just now having a moment?

Globalization is fueling generational shifts in consumer behavior that are in turn generating an expanded interest in new categories, particularly premium-and-above tequila. (Drizly confirms this—Paquette notes that there has been a 4% shift in share YOY to premium tequilas.) 

The IWSR found the category grew 15% YOY between 2015 and 2019. The firm anticipates that in the wake of Covid-19, premium tequila will be one of the first categories to return to healthy growth levels. The IWSR anticipates it growth will resume normal trajectory by 2021.

It’s this rise in the premium category that is helping shift the tequila narrative in the United States.

“The rise in more premium, aged sipping tequilas has helped transcend tequila’s image to be more sophisticated,” says Adam Rogers, the North American research director for the IWSR.

Other factors to consider of Tequila’s step into the spotlight is the wave of celebrity endorsements—characters like George Clooney, Nick Jonas, and Dwayne Johnson have thrown their names behind their own branded tequilas.

Also of note, is the increased interests in sugar-free and ‘healthier’ drinks. 

Not to say tequila is healthy, per se, but the way the ancestral production process leans on natural ingredients is appealing to younger generations increasingly conscious of what they put in their body. (A way to fully authenticate your tequila’s ingredients is through Tequila Matchmaker).

Tequila sales have been strong leading into the pandemic, but how has tequila been performing through the last few months? 

The category has seen huge jumps on Drizly, one of the foremost e-commerce spirits platforms in the U.S. Other categories saw share declines, but tequila experienced one of the largest year-over-year share jumps on the platform, growing 1.54% in overall order shares year-over-year. That’s 6.65% of shares as compared to 5.11% in the same period last year.

Comparatively, whiskey increased 0.96% and vodka, 2.37%. Interestingly, Paquette points to tequila’s strength as the cause of vodka’s slump.

Casamigos (there’s that celebrity endorsement), Don Julio, Espolon, Patron and Jose Cuervo are the top-selling brands on the platform. No surprise here—these are big brands that have dominated consumer mindset. 

But variety is what has helped push the category forward in the US market. There are shooting tequilas, but also a wide range of tequila that reflect the terroir of where they came from; completely unique in flavor, smell and story. 

Mark Lewis, the CMO of Tres Agaves Tequila notes for retailers, “It is important to provide customers a choice of not just blanco tequila, but also aged tequilas,” he says. “[People will] see that tequila has a much wider range than they may have previously been aware of.”

Should we expect tequila to continue on its trajectory?

The IWSR has previously noted that tequila will grow by a 4.7% compound annual growth rate between 2019 to 2024. But that’s not accounting for the effects of the pandemic.

2020 has crippled the category, so looking into the end of the year won’t be promising. But compared to other categories, tequila is poised to continue its rapid growth.