Tequila has become a category driven by the expectations of an increasingly demanding consumer base. Perhaps no category has had such an extreme evolution in reputation over the past 15 years as tequila. Back then, outside of a small group of fanatics, tequila wasn’t something that met the threshold for analysis, but now, conversations around the category are dominated by additives and authenticity.

“There’s been a very virtuous movement, driven not so much by brands but by consumer curiosity,” says Tim Croizat, managing director at Pernod Ricard’s House of Tequila. An industry veteran, Croizat’s time at Pernod Ricard has seen spells as international marketing manager for Havana Club, global marketing manager for Chivas Regal, global brand director for Champagne Perrier Jouët, vice-president of business acceleration & transformation for Martell Mumm Perrier-Jouët, and, most recently, as Pernod Ricard’s global strategy & insights director.

“There’s a consumer interest for sophisticated drinks, quality products ultimately, this is what obliged the brand to deliver – it would be a failure for the industry not to be at the level of the expectations that have been set by these recent years of growth.”

This high level of scrutiny from consumers sowed the seeds of a potential scandal within the industry. Nothing has yet been proven, but accusations levied against Diageo’s subsidiary north of the Mexican border have thrown the authenticity of some of tequila’s major players into central focus. Whether valid or not, the viral nature of the claims has the potential to undo the reputational hard yards that the category has put in over the last decade.

“There’s a specific and growing suspicion for tequila, whether it’s of its origin, the brands that represent it, or the bodies that are regulating it,” says Croizat.

“Now, consumers are ready to pay more, but it’s also an era where consumers have the very legitimate demand to be absolutely sure of what they get.

“We have to accept the era in which we live. Never in the past has the consumer had access to so many sources of information. Two decades ago, this would’ve been dealt with in the secrecy of the courts. Back in around the year 2000, I remember a single malt Scotch where there was a kind of nuance around the importance of its age statement. It created advanced discussion within the Scotch industry, but only within a close circle.

“I'm confident that the self-regulation would do what it’s meant to do. This is exactly why we create self-regulation in an industry – it’s for the sake of those kinds of conflicts of interest. The Tequila Regulatory Council (CRT) is backed by most of the main brands, and if the CRT is the authority, let it self-regulate the matter – if it works for cognac, if it works for Scotch, and it works for champagne, there's no reason why it should not work for tequila. This isn’t a totally chaotic industry. It’s an industry that is anchored in a proven know-how and regulated by people who have a job to do so.”

Different category

Regardless of the pending lawsuits, tequila is already a different category from several years ago. From 2018 to 2023, the IWSR reports that the category grew at a compound annual growth rate of 11%. Between 2023 and 2024, the category grew by just 1%. Earlier in the year, the threat of tariffs for Mexican products imported to the US could’ve been a heavy blow for tequila, but the signing of the USMCA, a free trade agreement that exempts tequila and Canadian whisky from US tariffs, gave the category some welcome relief.

“It’s not necessarily the same dynamics of three years ago, but I foresee a lot of growth,” says Croizat. “Over the past three years, especially in the US, there’s been a tequila boom that might have turned into a tequila bubble. But true geographical expansion has not really happened yet, not to the magnitude of the US, and I think this category has all it takes to enjoy very positive momentum outside of the US.”

Since the high-profile and big-money sale of Casamigos to Diageo, the number of new brands entering the category has ballooned. Now, while still a category in the zeitgeist, the gold rush is over, and there will inevitably be a thinning of the herd.

“There’s a Darwinian element. There was a huge atomisation of brands, lots of new entrants in a very short space of time.  I’m tempted to call it a bubble because, for many brands, it’s not sustainable.  Tequila is not a category that has very little barrier to entry, not everyone can compete to source mature agave, so there are going to be a lot of fragile players in terms of a supply model and quality commitment that will naturally disappear.”