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THE RAW MATERIAL used to produce tequila, the plant that makes this such a compelling spirit, has a way of ensuring that there’s never a dull moment for those involved in this category. Whether it’s the seemingly unavoidable cycle of oversupply and shortage brought about by its long growing cycle, or the risks associated with the use of a single variety, agave certainly knows how to keep everyone on their toes.

Just as the situation in the fields is ever changing, though, so is the world around it. The global spirits industry isn’t the same as it was just a few years ago, let alone two decades past when total tequila exports were little more than a third of what they are now, and when the premium segment, 100% agave tequila, accounted for an almost negligible amount of that total.

Much of that growth was achieved before the global gin craze we’re still in the midst of, and before mezcal’s meteoric rise in popularity, with other agave spirits – raicilla, bacanora and sotol – on the way too. The upward trend for tequila continues – exports for 2018, according to the Consejo Regulador del Tequila (CRT), are not only up, but show 100% agave tequila to be marginally in the lead for the first time. But there are both challenges and opportunities ahead.

THE MEZCAL EFFECT

Tequila and mezcal probably have as much in common as they have differences, and opinions about whether the effect of the latter’s recent success will prove to be a positive or negative one for tequila varies.

“Mezcal supplements the category of agave-based spirits in an exceptional way and helps to further promote Mexican lifestyle in intriguing ways,” says an optimistic Dr Tina Ingwersen-Matthiesen of Sierra Tequila’s German owner Borco. The company put this approach into practice recently, taking on global distribution – aside from the US, Canada and Mexico – of mezcal brands Marca Negra and Meteoro at the start of 2018. “In our daily work we see tequila and mezcal as separate spirits in their own right and with their individual charm,” she adds.

At London’s Cafe Pacifico, general manager and director Carlos Londoño has seen mezcal encroach on tequila’s share of back bar, growing from 10 bottles to 50 in three years. He considers both categories to have benefited from each other. “It seems to me that whenever someone talks mezcal, tequila pops up in the conversation, either in a good or bad light. Nevertheless it’s talked about and compared with mezcal,” he says.

For others, it’s the differences between these two Mexican spirits that limit the impact they can have on each other. “Mezcal has its own taste profile – we don’t feel that it’s impacting on tequila consumers,” says Raffaele Berardi, chief executive of Fraternity Spirits, which includes Tequila Corralejo and Los Arango Tequila in its portfolio.

Jordi Xifra, marketing manager for Beveland Distillers, with Tequila Tres Sombreros in its stable, has a similar view. “The consumer doesn’t yet know the differences between mezcal and tequila. They know they both come from Mexico, from the agave plant,” he says.

“Mezcal is in a very different category to premium tequila, with a number of inherent differences,” points out Patrón Tequila chief marketing officer Lee Applbaum, although he adds: “The interest in agave spirits can only be a good thing for tequila.”

For Claes Puebla Smith, founder of Stockholm-based Mexican spirit distributor Alias Smith, the issue lies rather with a growing consumer trend towards hand-crafted spirits in general, and tequila’s place within this.

“You’ve got a global trend where people are less interested in buying industrial products. They want to know where it was made, and how, and are willing to pay more for hand crafted. The tequila industry is dominated by industrial businesses that looked upon the growing mezcal industry with interest, saying they had no chance to make a business out of it,” he says. “But the mezcal industry has proved them wrong, and it has been clear in making a distinction between industrial and hand-crafted production.”

As a result, he believes, the focus is moving away from tequila, which may represent significantly more volume than mezcal, but isn’t growing at nearly the same pace. “Until six years ago tequila had the monopoly on attention from media and influencers talking about Mexican spirits, but it doesn’t have that anymore,” Smith adds.

COCKTAILS AND SPIRITS

Meanwhile, the thing everyone else seems to be talking about – and drinking – is gin. Cocktail culture is undoubtedly important to tequila globally, as are simpler spirit-and-mixers, and these are the arenas in which gin and similar categories are having so much success. But Mexico’s main spirit has a few advantages of its own – not least its home country.

“I do like my gins, but tequila has great history and a big identity. When you talk about tequila you talk about Mexico, which is not the case with gin, which is made widely around the world,” says Eduardo Gomez, founder and director of Tequila & Mezcal Fest UK. “The dynamism and quality of 100% agave tequila, together with the great work of the Mexican government promoting Mexico as a tourist destination means that more people around the world are encountering tequila in a different setting, away from the shots and slammers of the past,” he adds.

“Cocktail culture is booming and so is tequila, for it proves a diverse ingredient to create appealing drinks – new ones or twists on classics,” says Ingwersen-Matthiesen.

Londoño agrees. “You only need to go out anywhere in the UK, one of the fastest-growing markets for the past 10 years, to find tequila more often on cocktail menus, with better ranges in places such as pubs and non-Mexican restaurants too,” he says, adding: “Tequila and mezcal can compete with gin any day, neat or in mixology.”

Speaking of neat, there’s relatively untapped potential at the very top end too, where tequila has the añejos and extra añejos to compete, but yet remains to truly take its place among the prestigious cognacs and whiskies on the top shelf. Smith agrees there’s potential here, but thinks there’s still work to be done. “It’s another challenge. There are phenomenal products, but the packaging is generally very poor,” he says.

Patrón is one producer addressing this, as the first tequila producer to collaborate with Lalique to create the packaging for its limited-edition luxury expression, Patrón en Lalique. “Lalique previously had only collaborated with prestige whiskies and cognacs – it is great for tequila to be considered in the same regard,” says Applbaum.

At the opposite end of the spectrum, there’s ongoing work from some producers to bring tequila cocktails to a wider audience through RTDs. So far these have hardly been seen in Europe, but this looks set to change with the recent introduction of the new Sierra Tequila RTD Margarita, for example.

THE ROAD AHEAD

In spite of all its challenges, there’s no doubt that there are some great opportunities for tequila in global markets. Berardi is optimistic. “Tequila is still a young category,” he says. “It’s still growing in popularity, and internationally there’s still more for people to understand about the quality of 100% agave tequilas.”

“The tequila category has hardly peaked and continues to experience strong growth, driven largely by the premium segment of the market. Tequila is growing from a much smaller base than say, gin, vodka or rum, and the opportunities for continued incremental growth on the global stage are immense,” adds Applbaum.

The trend towards handcrafted spirits and traceability mentioned by Smith is here to stay though, and one that looks likely to be increasingly important to the fate of this category. In addition to general work within the sector, and ongoing education, there are some initiatives that aim to address this issue.

Patrón, for example, helped to create the Know Your NOM website with this in mind. “It helps people to track which of the 140 regulated tequila distilleries make the 1,400 or so brands of tequila available, using the information collated by the CRT,” says Applbaum.

Meanwhile, Smith is about to launch a service entitled Agavista, with which producers of Mexican spirits will be able to provide information about various aspects of their production process, with the goal of “more transparent communication between producer and consumer”, he says.

“Before the internet, you could do a beautiful bottle and mix a product from different sources, with low production costs, and then sell it for a high price, and tell a story that wasn’t really true. That doesn’t work anymore. I hope the tequila industry grabs this opportunity,” Smith adds. He says that about 100 producers have already signed up.

With initiatives such as these, and with tequila continuing to rise to its challenges and seize its opportunities, the future looks bright, and filled with agave spirits.