There exists a theory described as the “Golden Forty-Year Rule” that relates to trend cycles. The hypothesis proclaims that every four decades popular culture trends from fashion to music reemerge fueled by nostalgia. Speak to enough drinks professionals and you’ll hear general agreement that such a phenomenon exists in the alcohol space, too, though differing opinions prevail over the length of those cycles.
If we explore the best-selling spirits in America, there have been two clear heavyweight titans slugging it out over the past half-century. In the 1970s, vodka surpassed whiskey as the best selling liquor in America in terms of volume sales. It’s held that particular belt ever since. But in 2013, and driven by the exploding popularity of bourbon, whiskey regained the title of most valuable spirit in the U.S. Its current lead in that field hovers at nearly $4 billion in annual sales, according to data from the Distilled Spirits Council.
At this point, however, it seems highly unlikely we will ever see a heavyweight unification bout between vodka and whiskey — no distilled-spirits Thrilla in Manilla, if you will, mainly because the contender currently putting in the training hours on the steps of the Philadelphia Museum of Art is not super-premium vodka but instead tequila.
On the face of it, tequila seems like a natural, modern progression from vodka. It’s the earthy, vegetal-spiced yin to whiskey’s sweet, mellow yang — and by whiskey we mainly mean bourbon here — that’s ready to step up if nostalgia dictates that American culture should once again embrace a clear spirit as its champion.
Yet closer inspection reveals that Mexico’s famed agave distillate is so much more than this. In some respects it is a vodka-bourbon hybrid, but one that shares surprisingly more in common with America’s native spirit.
Beyond this versatility, what makes tequila such an imposing prospect are the very plays bourbon has used over the last two decades to reach its current-day popularity. The fact that tequila producers are only just beginning to call on them suggests that if — and this still remains a very big if — one category can knock whiskey off its perch, none is better placed than tequila.
Premiumization and Soaring Sales in the Pandemic
Many caveats and asterisks must be applied when analyzing sales data from the last year, especially off-premise sales figures, which have been artificially aided by pandemic-related closures. For this reason, Nielsen’s vice president of beverage alcohol practice Danelle Kosmal analyzes tequila’s recent performance against figures from both last year and 2019. But whichever way you slice it, tequila is on a tear.
“Even now with the really strong 2020 figures, tequila value is up year-to-date 26 percent,” she says. “When we compare to 2019, so that we have a better sense of a normal year, it’s up 85 percent year-to-date.”
Consumers haven’t just been stocking their liquor cabinets with more booze during the pandemic, they’ve also been paying more per bottle. Once again, this is a field in which tequila has performed more than admirably, particularly the ultra-premium ($50-plus) range. “Premiumization accelerated during the pandemic and tequila is a big driver of that,” Kosmal says.
Tequila now accounts for just under 12 percent of total off-premise spirits dollar sales. Yet Dave Williams, vice president of analytics and insights at BUMP Williams Consulting, says there’s much ground still to cover. “The whiskey category is still over three times larger from a dollar perspective and vodka is still around two times bigger,” he explains. “Those are still the titans but tequila is rapidly climbing the ladder and separating itself from everybody below it.”
It’s easy to draw correlation between the shift from on- to off-premise consumption as a reason for recent sales growth; the rise of home bartending and the popularity of cocktails such as the Margarita, Paloma, and, more recently, Ranch Water, have surely all played their part, too. On a grander scale, IWSR chief operations officer of Americas Brandy Rand says several other factors make the spirit hot right now.
“For one, because tequila is plant-based (and more visibly so), and because it’s seen to be ‘cleaner’ and ‘lighter,’ people tend to perceive it as better for them,” she explains in an email. As for the premiumization taking place within the category, Rand says that as more consumers enter the category, they’re then exploring more premium brands and aged expressions like reposado, añejo, extra añejo, and cristalino.
“It’s akin to the early boom of U.S. whiskey,” she writes, “where flavored variants were an entry point to the category for a lot of people, and once they got used to the taste profile, they wanted to try other expressions and more top-shelf brands.”
Bonded By Barrels and Beyond
Rand isn’t the only one to highlight parallels between tequila and whiskey, though others make even more direct links, especially to bourbon. Mia Simpson Culp, director of tequilas at Brown-Forman, says the two categories “share a lot of qualities,” from their use in classic cocktails, to their clear geographical identities, and rich, handcrafted production processes.
Fittingly, the tie to cocktail culture is often cited as helping ignite the bourbon renaissance in America. More recently we’ve seen single-barrel offerings and barrel picks add fuel to that fire. In this respect, tequila’s just getting started.
Herradura, one of Brown-Forman’s brands, offers single-barrel reposado expressions, with customers spanning bars, restaurants, and the liquor commissions of control states like New Hampshire.
In April 2021, the sports bar and casual dining chain Buffalo Wild Wings announced the introduction to its locations of a premium line of Single Barrel Corazon Reposado aged in Buffalo Trace barrels. While the shared “Buffalo” connection makes it feel like a no-brainer for all parties involved, it should also be noted that Tequila Corazon is owned by Buffalo Trace’s parent company, Sazerac Co.
This offering is far from the first time Sazerac has boosted the credentials of its tequila brand by way of its bourbon portfolio. Corazon has also released añejo expressions aged in former George T. Stagg and Blanton’s barrels — two labels that stand among the most hunted by bourbon lovers in the Buffalo collection.
Such symbiosis between bourbon and tequila should really come as no surprise in the age of alcohol conglomerates with bulging international portfolios. “Working for a company like Brown-Forman [which also owns Old Forester, Woodford Reserve, and Jack Daniels] we have this ability to share best practices across our different master distillers,” Simpson Culp says. “And we can share barrels so easily between distilleries.”
Then again, it’s not only those tequila brands owned by multinational conglomerates that are quickly cottoning to whiskey and other aged spirits trends. If single barrel and barrel picks have, for the most part, largely been the darling of the bourbon industry, cask finishing is a trend that’s infiltrated just about every style of aged distillate on the planet.
The examples within tequila remain relatively few, though not without note. El Mayor opts for rum casks as the final resting destination for its extra añejo expression, for example. Meanwhile, the LeBron James–backed Lobos 1707 finishes all of its tequila — including the blanco, which is subsequently stripped of color — in former Pedro Ximenez barrels.
The fact that tequila has been relatively slow out of the blocks with these innovations might not necessarily be a bad thing, says Scott Rosenbaum, CEO of Ah So Insights. “I don’t want to say that tequila isn’t a creative category, but because so many others are rushing to expand, tequila can take the lessons learned elsewhere and apply them rather than trying to reinvent the wheel or itself.”
When we turn to packaging, it could also be suggested that tequila is not just a scholar of modern history. In the online marketplaces where bourbon bottles are traded and sold for many times their suggested retail price, another healthy market exists for treasured vintage bottles, or “dusties.” Among the most treasured are sealed ornate decanters, such as the ceramic Old Crow Chessmen collection.
As both a spirits writer and bourbon enthusiast, it’s always astounded me that no American whiskey brand has tried to whip up hype by offering a modern reincarnation of these cherished collectors’ items. But whether directly inspired or not, tequila brands have.
Among the numerous examples of decorative non-glass tequila vessels, Clase Azul Reposado stands out above all. While the Old Crows of the bourbon world are the prey of a specific subset of drinkers, the popularity of this tequila has unquestionably reached the mainstream in recent times.
On TikTok, videos featuring the bottle — which bears more than a passing resemblance to a pawn chess piece — regularly notch up tens of thousands of views. Sales of Clase Azul Reposado were up 96 percent for the first 12 weeks of this year compared to the same period in 2020. That impressive figure becomes staggering when considering this is a reposado that retails for over $100.
Opportunities, Unique and Shared
Beyond the instances where tequila producers have specifically and successfully shared the tactics of bourbon brands, there still remain many avenues open for exploration.
Higher-proof bottlings have long garnered legions of fans in bourbon, yet they remain a scarcity in tequila where the liquid is almost always bottled at 40 percent ABV. Surely this won’t be the case for long. As Rosenbaum points out, bottling at a higher proof offers a point of differentiation that can be employed across all styles of tequila — an easy means for brands to stand out and win the hearts of the bartending community in an increasingly crowded field.
Others have even grander ambitions in mind. Jenna Fagnan, co-founder of Tequila Avíon (now owned by Pernod Ricard) and Teremana, points to the success of the Kentucky Bourbon Trail as something tequila producers would be wise to replicate. “We’re made in a small little town and the hospitality is unlike anything else,” she says. “I think there’s a lot we can do to educate consumers on how special both the place and the product is.”
If tequila is indeed to one day become bigger than bourbon, we shouldn’t overlook the category’s many unique strengths. Past the obvious blanco and reposado expressions, there’s the increasing interest in cristalino. Made using aged (or a blend of aged and unaged) tequila that’s stripped of color, the style’s softer flavor profile makes it an easier on-ramp to the category than blanco, for those who prefer their spirits clear.
U.S.-based agave aficionados may shudder at that last sentence, but the style has been widely embraced in Mexico, where it is the fastest-growing tequila category and particularly popular among younger and female drinkers.
Back here in the U.S., no conversation about tequila is complete without mentioning celebrity associations. An admittedly nuanced topic with much to unpack regarding how foreign A-listers can responsibly and respectfully launch a tequila brand, there can be no question over the value of celebrity association and the social media following that comes with it. “Celebrity and influencer involvement has definitely helped strengthen consumer awareness and trial,” IWSR’s Rand notes. (Case in point: The Rock’s Teremana.)
We could go on, and explore the merits of site-specific bottlings (such as those from Roca Patrón and Tequila Ocho) and the relatively untapped market of high-quality flavored tequilas, which Rosenbaum highlights as areas ripe for expansion. But it would be remiss not to also consider the factors that could stunt the category’s incredible growth. And it is agave — the very plant that gives tequila its identity — that can also be viewed as its largest limiting factor.
Potential Pitfalls For Tequila Producers
The Blue Weber agave used in tequila production typically takes around seven years to reach maturity. An outlier within spirits, this extended growing period traditionally leads to cycles of boom and bust for agave prices, impacting the entire industry from farmers to distillers.
When Fagnan launched Avíon in 2010, for example, agave prices were under a peso per kilogram. Now they’re close to 30 pesos. “I don’t know any other business that’s had their key raw material increase like that,” she says.
For those already established in the industry, sustained high prices do come with the benefit of creating a high barrier for entry for new brands. This all but protects the market from entrants seeking quick returns via lower-priced products, and continued premiumization is practically guaranteed.
Still, there’s no telling how long the boom will last. “It feels a lot like the Roaring ’20s for tequila, but one does wonder if the party can go on forever,” says Rosenbaum.
In this respect, perhaps the battle for America’s most valuable spirit simply hinges on time. Can farmers plant and grow agave faster than bourbon distillers can mature their stocks to a competitive level of high quality? And can either category defy the laws of physics and fashion and stay ahead of traditional trend cycles? It may take a few decades to find out.