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THE LEXICON OF tequila is changing. Where once it was about the shot, now it’s about the sip. Where a gulp led to a grimace, now it’s a grin. Where the taste was sharp, now it’s smooth. This is not merely semantics either – although ‘premium’, ‘super-premium’ and ‘ultra-premium’ are words liberally bandied about by producers and marketers, there are figures to back up the notion that tequila is indeed ramping up the quality level and attracting new consumers as a result.

Tequila is currently globally a 26m-case category, but the majority is concentrated in its biggest markets, the US and Mexico.

Brandy Rand, IWSR vice-president, US marketing & business development, says: “Tequila has been on an upward trajectory of growth in the US market over the past 10 years. In 2015, the category reached more than 15 million 9-litre cases, a 5% growth over the year prior. We do not see this trend slowing down and forecast the US tequila market to reach 18m 9-litre cases by 2020. The US is the number one market for tequila globally.

“Premiumisation is a trend across the entire spirits category, driven in part by cocktail culture. As consumers become better educated, they are choosing better quality spirits, which is the case with 100% agave tequilas. Super-premium tequilas (priced $40 and up per 75cl bottle) such as Don Julio, Patrón, 1800, Herradura and Avión are driving much of this growth.”

Rand continues: “However, we are also seeing volume growth across all price tiers (even value brands) being driven by consumption in cocktails such as the Margarita, which is the top-selling cocktail in the US. Overall, tequila’s share of spirits category consumption is growing as others, such as rum and gin, are declining.”

Indeed, the most recent IWSR data shows that tequila has overtaken rum to become the third best-performing spirit in value terms in the UK, with vodka leading and whisk(e)y in second place.

SHOT REPUTATION

This is pretty groundbreaking as it was always going to be a tall order for tequila to start turning its image around. For decades it has endured a reputation as the shot that caused the hangover for countless frat boys, sorority girls and anybody else across the world who liked to party in their late teens and early 20s.

But, as Eduardo Gomez, organiser of the UK’s Tequila & Mezcal Fest, points out: “When you have been drinking beer and cocktails all night then drink a tequila shot, the only thing your body will remember the next day is the tequila, because it’s so strong.”

The memory of that first spirit hangover can linger for years, so it’s no wonder those first hasty tastes didn’t lead to a lifelong love affair with tequila for most – those college years were enough to make them leave the category and not feel inclined to return.

There’s also the fact that most of the spirit being consumed as shots and slammers was mixto – not the high quality 100% agave tequila that is currently at the heart of its new-found popularity, and which outsold mixto in the US for the first time last year, hitting 51% of total tequila sales, according to Rodolfo Aldana, director, tequila reserve, Diageo North America.

Diageo last year took full control of super-premium Don Julio in an asset swap involving its Bushmills Irish whiskey, proving its continued dedication to top-tier tequila.

Aldana says: “We are very encouraged to see great momentum by Don Julio. It’s helping premiumise the category and we are one of the fastest-growing brands in super-premium. In the last years Don Julio has had a consistent approach to growth drivers.

“One is the recruitment of consumers through sampling, using certain vehicles to connect them with the story of our founder, Don Julio Gonzalez.”

Aldana is convinced one of the main category drivers is demand for true brands with a genuine backstory: “There’s a consumer trend for authentic brands and those that are made with quality. There’s the way tequila is made – the planting, harvesting, putting in ovens, distillation. And the ageing takes many years, sometimes more than scotch.”

Gomez points out that tequila is one of only five spirits categories to enjoy a designation of origin, with all the regulation that goes with it, adding that, in terms of raw material, agave is already a quality product, being that it needs to be at least five years old before harvesting.

“Every other spirit comes from a weak raw material, which is why the producers have to age them and add botanicals, because you can’t drink a white spirit without botanicals.”

The excitement among brand owners about premium tequila’s sudden perceived potential is palpable, but where exactly is the increase in 100% agave’s fortunes coming from and what is causing the turnaround?

MILLENNIAL APPEAL

Certainly some entrants to the category are the result of 100% agave cannibalising mixto, but El Jimador’s Mark Grindstaff says research points to vodka being a casualty. The vice-president/group brand director for tequilas at Brown-Forman says tequila’s the kind of white spirit that is appealing particularly to the millennial consumer: “It has more flavour than vodka and, more importantly, real depth of story in terms of heritage, the way it’s made – it takes years to mature the agave, it’s cooked in china ovens, pot stills, barrel aged…”

So that production story certainly seems to be piquing consumers’ interest, but how are they getting to hear about it in the first place? Popular culture is a tough concept to avoid – when celebrities get involved in anything, everyone tends to hear about it, and tequila has had its share of big names vying to get in on the act.

“There are definitely celebrity brands and they are only at the upper end and ultra priced,” says Grindstaff, pointing to George Clooney’s Casamigos and Justin Timberlake’s 901 and he says that, although the drinks may not be seen much outside the US, “there’s no question it can’t hurt. It helps for rediscovery”.

But the repositioning of tequila goes way beyond celebrity endorsement, involving a great deal of behind-the-scenes work by the brand owners. Diageo’s Aldana says Don Julio has invested in mentorship schemes, participation at festivals and large cultural events, and is offering sampling and telling stories.

“We have 1942-era trucks that go across the US. That’s the same vehicle Don Julio used to drive when going through the agave fields.

We also have an Airstream speakeasy with cocktails on draught to help consumers understand the spirit better.

For the trade we have an event called Farm to Shaker. Bartenders go into ranches or farms and go harvesting and collecting different fruits and we tell them the story. We have a team of brand ambassadors driving knowledge.”

For El Jimador soccer sponsorship in the US is a marketing focus: “We’re targeting the millennial consumer who doesn’t necessarily follow major sports, looking at soccer as not mainstream,” says Grindstaff.

“They’re independently minded so open to things such as tequila. We are working a lot with bartenders to help them understand the category so they understand the process and pass it on.”

COCKTAIL CULTURE

And there’s the route that is driving awareness most outside of tequila’s Mexico and US heartland – the on-trade and cocktails.

John Tichenor, VP global brand director for Brown-Forman’s Herradura, expands: “The resurgence of classic cocktails, craft cocktails and premium shots is driving tequila consumption in the US. A large piece of this trend is seen with super-premium shots and premium Margaritas. Additionally, 100% agave silvers are currently outpacing the rest of tequila expressions, with trends indicating that consumers are leaving the mixto categories and entering the 100% agave, silver categories – in both the premium and super-premium spaces.

“Furthermore, reposados and anejos are enjoying remarkable success, as consumers are becoming more aware of tequila expressions and seeking flavour taste profiles from barrel-aged products. This trend aligns with other industry trends, such as whiskey and other full-flavoured products.

“Silver is bringing consumers into the category and stealing share from other categories, such as vodka for example, because of the mixability of craft tequila cocktails and the classic Margarita, which is current contributing to growth in the US.”

Pierre Aymeric-Du Cray, vice president International at Pernod Ricard México, agrees, pointing out: “One cocktail in four sold in the US is a Margarita – that’s 250,000 per hour. It’s the hero drinks in the US and this has helped all the growth and changed the category drastically.”

He continues: “Good tequila is no longer an oxymoron. The versatility of tequila has helped to grow the category – from long drinks to shots – and that explains a lot of the success.

“Bartenders find tequila very interesting to work with. The range of creativity and possibilities are endless.”

Speaking of Pernod Ricard’s Altos brand, created by Dre Masso and the late Henry Besant, Du Cray says it was crafted as “a tequila made by bartenders for bartenders” and as “a third way” of drinking the spirit. He says: “Normally, there are two types of consumers. The first are those who drink poor quality tequila for shots – the spring breakers. The second is the exclusive tequila consumer and celebrity endorsement. We made a choice to go a third way – to create a top tequila with great juice at an affordable price. One that won’t burn your throat or your wallet. We saw a possibility for a tequila to really address the bartender trend. We thought the best way was to ask them.”

Bartenders are the focus of the main brands when it comes to educating consumers, and already that concentration has led to some changes in the popularity of serves.

Patrón’s chief operating officer Dave Wilson points out tequila’s versatility as a long drink. He says: “Patron and tonic is very big and a real driver. Once they’ve tried it people wonder why they were drinking G&T.”

Meanwhile, El Jimador’s Grindstaff says his brand is focusing more on the Paloma in the US than the Margarita. “Four or five years ago our idea was to come up with something ownable. Our positioning is to be more authentic and real. We wanted to promote the authentic Mexico way – what was authentic to Mexico rather than the US.”

But, while marketing and education may be paying off in the US and Mexico, they already account for some 80% of global tequila consumption, what are the prospects for tequila outside of its heartland?

MARKETS

Wilson says Patrón invests heavily in brand ambassadors across the globe and is now in “well over 150 countries around the world”.

But he says the brand has narrowed its focus and “all of western Europe is going gang busters”. He points to Australia as a great market and says business in Japan is doubling “all of a sudden, but from a very small base”.

He continues: “Asia’s the smallest market. We are going to continue to invest in China where they prefer dark, aged tequila. It’s going to be a long road in China. We are restricted to what we can do above the line because of the sheer geography.

“Everybody had high expectations when China opened up to 100% agave and it’s growing nicely, but not doubling or tripling each year.”

He’s backed up by Pernod’s Du Cray, who observes: “The Mexican heritage is very appealing to consumers. We see the Chinese people are really starting to like it. El Consejo Regulador del Tequila – the tequila governing body – says China could be the number two market by 2020. That remains to be seen, but China is clearly something.”

He adds that Russia, Turkey, South Africa and Colombia are all growing “extremely fast”.

So maybe the spirit of tequila is finally reaching beyond the frontier of the US and Mexico.