Wall Street Asks ‘Is Tequila Going to Go Through a Tito’s Moment?’

In case you haven’t heard, tequila is having a moment right now. A serious moment. Last year, the agave-based spirit overtook sales of American whiskey — including bourbon — and is predicted to overtake vodka as America’s preferred spirit within two years. Over the course of the pandemic, tequila experienced a compound annual growth rate (CAGR) of 20.7 percent from 2020 to 2022, blowing the industry’s total growth rate of 6.7 percent over the same period completely out of the water. Most of tequila’s growth can be attributed to category adoption — like a focus on higher quality ingredients and quality production — and consumers’ desire to trade up for more premium expressions. But with the tequila boom mimicking some of the same patterns of the turn-of-the-century vodka boom, some in the industry fear that the Mexican spirit may be having a Tito’s moment.

Prior to Tito’s introduction to the vodka market, consumers frequently traded up for premium brands like Grey Goose and Kettle One. But once Tito’s launched in 1997 as an affordable, premium vodka for everyday drinking, growth experienced by more luxury brands started to plateau.

Will tequila experience a similar shift? According to the investment banking company Jefferies Group, which analyzed Diageo’s growth in the tequila category over the last few years, the short answer is no, as they claim there are more differences than similarities when it comes to the spirits’ respective rises. However, the investment bank and financial services company did indicate some similarities with the vodka boom that may be pertinent to tequila’s future.

https://vinepair.com/booze-news/tequila-category-growth-assessment/