In focus: Tequila and mezcal trendsBy Phoebe French
Tequila and mezcal are increasingly popular, and their success has been driven by celebrity endorsements and high-end expressions. With an ongoing agave shortage, Phoebe French finds out if future growth is sustainable.
The appetite for agave shows no sign of diminishing. With the likes of Hollywood heartthrob George Clooney, pop star Justin Timberlake, singer Rita Ora and Sex and the City’s Chris Noth putting their names behind Tequila and mezcal, the influence of celebrities in the category is marked.
And there’s more to their involvement than just superficial marketing. Following the sale of Clooney’s Casamigos to Diageo in 2017, it was reported that the actor pocketed a cool US$173 million (£136m) from the deal in the 12 months afterwards. This made him the highest-paid actor of 2018, despite not having appeared in a single film, proving that sometimes, its Tequila, not Hollywood, that calls the shots.
Tequila, however, is not short of admirers outside the ranks of the rich and famous. According to data from the IWSR, in the past three years, it has been the second-fastest growing spirits category, rising at a rate of 9% year-on-year, just behind gin at 12%. Tequila exports are also on the rise, posting record levels in 2018 for the ninth year in a row, according to the National Tequila Regulatory Chamber (CNIT).
Tequila producers are also upping production volumes to meet this demand. According to CNIT figures, 309.1 million litres of Tequila were produced in 2018, up by 13.9% on 2017, and the second-highest volume ever recorded.
A key characteristic and well-established trend in the Tequila industry is that of premiumisation. While it is still ordered in shot form, accompanied by a wedge of lime, Tequila has taken on a new mantle as a spirit to be sipped and savoured rather than consumed in record time.
John Tichenor, global director of Tequilas for Brown-Forman, explains: “Global Tequila trends have continued to perform extremely well, driven by the premium-plus and luxury segments. What was once led by the popular price category is now led by super-premium and luxury priced brands.”
Tom Bishop, co-founder of the newly launched El Rayo Tequila, which uses a blend of highland and lowland agave to make the spirit, believes premiumisation has become so widely adopted that it can be called “a behavioural change”.
“This is obvious in the Tequila category, as consumers look to shun mixto Tequila (and the associated lime and salt) and turn their attention to the premium end of the spectrum,” he says.
Nick Gillett, managing director of spirits importer and distributor Mangrove UK, adds: “100%-agave Tequila is now the starting entry point, reflecting the significant growth in demand for quality Tequila. Consumers are taking the category far more seriously, and perceptions are changing as they realise that it is a rewarding drink.”
With experimentation on the rise, one of the ways in which brands in this premium segment have highlighted their credentials is the release of single estate or ‘terroir-driven’ expressions. Brands such as Ocho, Pernod Ricard’s Olmeca, and Brown-Forman’s Casa Herradura place the emphasis squarely on the region, and in some cases the estate in which the agave was grown.
“We think terroir will play a crucial role, and take pride in the fact that we are the first in UK to be offering a Tequila that is a blend of both highland and lowland agave,” says Jack Vereker, co-founder of El Rayo. “The message needs to continue to be pushed to consumers that Tequila is a natural product and that growing conditions are crucial to the overall flavour and taste.”
Producers are also testing the waters by using different cask finishes and ageing techniques to created added variety.
Last year, Diageo, for example, released a Reposado Double Cask variant of its Don Julio Tequila in the US. Made like the original Reposoda expression, it was then finished for 30 days in casks used to make Buchanan’s Blended Scotch whisky. The limited-edition expression was the brand’s first launch in seven years.
Don Julio is also one of the brands responsible for another category that is gaining traction. Cristalino Tequila, an aged variant that has undergone charcoal filtration to remove the colour and some of the more assertive wood flavours, has grown massively since the first examples were launched a few years ago, with Don Julio 70 unveiled in 2011.
Tichenor adds: “Cristalino continues to be the biggest trend driving Mexico’s category growth, with premium brand introductions bringing new consumers into the category that may have previously rejected the drink. As consumers experience the unique Cristalino taste profile a huge opportunity exists to accelerate the category beyond Mexico.”
As well as cask finishes, using different types of oak, and experimenting with toast and char levels are among other methods being employed.
For Tichenor, the range of effects that can be achieved, from light agave expressions to richer, aged Tequila “rivals any aged whiskey”.
There’s no shortage of famous faces taking on Tequila and mezcal. Ambhar Tequila (Chris Noth), Casamigos (George Clooney), Santo Mezquila (Adam Levine of Maroon 5 and Sammy Hagar), Thunderstruck Tequila (AC/DC), Wild Shot Mezcal (country singer Toby Keith), Sauza 901 (Justin Timberlake, DeLeón (P Diddy) and Casa Noble (Carlos Santana) are among a long list of celebrity-backed brands. But how does the industry feel about such endorsements?
Gillett of Mangrove says: “I don’t see a downside to the current celebrity interest in the category. For starters, it gives a ringing endorsement that Tequila tastes great, and if consumers decide to try Tequila because a celebrity has invested in a brand, then this is simply recruiting more people to the category, which can only be a good thing.”
Tichenor of Brown-Forman similarly believes high-profile involvement in brands has attracted new faces to the category, but adds that Tequila has room to grow with or without celebrity involvement. “Tequila isn’t the first spirits category to have celebrity brand ownership, but it appears to have the most celebrities trying to gain their fair share of the growing category,” he says.
“It has helped accelerate Tequila’s mainstream appeal and welcomed new consumers to the category at the super-premium and luxury segments. With only a 3% share of the global spirits market, however, Tequila has a huge opportunity for growth, with or without celebrity-backed investments.”
Raffaele Berardi, the CEO of Fraternity Spirits, which owns Tequila Corralejo, believes high-profile figures will help the spirit to vault a major hurdle on the horizon. “Celebrity participation is helping the category to get the reputation and premium image it needs to survive the fluctuations in the price of agave in the future,” he says.
As well as celebrities, the growth of Tequila has been driven by the cocktail market. With the Tequila-laced Margarita still proving the most popular cocktail in the US, according to Nielsen, serves such as the Paloma and the T&T (Tequila and tonic) are gaining ground. The focus, according to producers, is on simplicity and preserving the natural vegetal flavour of the agave.
Bishop, of El Rayo, says: “We feel that the biggest trend will be the T&T, or Tequila and tonic. We see the T&T as the trend that can galvanise the category and take it into new territory, crucially in attracting new consumers to the category.
“We are all about showcasing the natural flavour of agave that is prominent in Tequila and we felt that sometimes this can get a little lost in cocktails. Pairing El Rayo with tonic enhances the flavour of the Tequila while also providing a refreshing experience at the same time.”
Patrón, which was bought by Bacardi last January in a US$5.1 billion deal, is such a fan of the T&T serve that it even has its own name for it: the Patrónic.
Lee Applbaum, global chief marketing officer for Patrón Tequila, says: “The bar community has really been at the forefront of introducing consumers to new ways of enjoying Tequila, both through putting a Tequila twist on classic serves as well as creating more experimental, innovative offerings. Recently the success of long classic drinks along with their twists has helped us spread interest in and demand for serves such as the Patrónic, our signature Patrón Silver Tequila and tonic. This trend is set to continue in 2019.”
In September 2018, Patrón teamed up with mixer brand Fever-Tree to launch a citrus tonic water flavoured with Mexican limes, tangerines and bitter orange, which was specifically designed to be paired with Tequila. Such has been the demand that recent months have witnessed a proliferation of such products, including the Artisan Drinks Company’s agave lemon tonic water and Sekforde’s Tequila and mezcal mixer.
The rise of gin, and the omnipotence of the G&T, could work in Tequila’s favour, believes Gillett, of Mangrove. He says: “Premium Tequila is now appealing to a young adventurous audience, as people seek out new trends and flavours. The jump from gin to Tequila is less challenging on the palate than vodka, so it is increasingly coming into people’s drinks repertoire.”
But what about Tequila’s elusive smoky cousin, mezcal? Taking up the equivalent of 1% of the Tequila category, according to IWSR, mezcal remains a fledgling sector, albeit one that is championed by the trade and bartenders. Not restricted to being made from only blue agave, Tichenor of Brown-Forman believes the spirit’s more relaxed production regulations allows for greater experimentation. “There are opportunities to experiment with blended and wild agave sourcing to develop unique taste profiles and further the craft heritage of mezcal,” he says.
Gillett anticipates a shift towards different bottles so that cost is not prohibitive. “Mezcal is an expensive spirit, so we’re anticipating a trend towards smaller bottle sizes to enable consumers to try it,” he says.
He stresses that while the bartender community champions and showcases the spirit’s smoky character, it is a harder sell in shops.
“It has a challenging flavour profile – think peaty whisky – and is yet to break into the UK consumer market, and isn’t stocked in major supermarket chains yet, with the exception of Waitrose,” he says.
However, while still an outlier, mezcal has exerted some influence on the super-premium Tequila category. The launch of the US$199 Gran Patrón Smoky last year could be said to have been partly inspired by the unique qualities of the spirit.
Patrón’s Applbaum explains: “The smokiness of mezcal can be challenging for some consumers, therefore, the best producers create a delicate smokiness, which adds complexity to the liquid, making it fully integrated rather than just one-dimensional. We have recently launched Gran Patrón Smoky as a limited release, currently available in the US, and although it is absolutely not a mezcal, it has a unique and wonderful profile that plays with the classic style of Patrón and traditional production techniques to create its distinct, natural smoky notes.”
Agave on the rise
Rarely a month goes by without the threat of some form of shortage. From avocados and Prosecco to Provence rosé and carbon dioxide for fizzy drinks, db has seen it all. However, rather than an overblown news story designed to grab headlines, the agave shortage is proving a major threat to an otherwise buoyant sector. In 2015, Mexico’s National Committee for Agave Production stated that “volumes of agave do not provide enough for the Tequila industry”, with subsequent price rises ensuing as a result.
According to Berardi of Fraternity Spirits, agave prices have risen more than 10 times in just three years due to a shrinking supply of the plant.
In general, blue agave used in the production of Tequila is harvested when it is over seven years old, meaning that planting more does not yield immediate results. This, Applbaum says, has led some producers to cut corners, with knock-on effects on quality.
“With the growth of the premium Tequila category, keeping up with the very high demand is a challenge for producers who don’t have a guaranteed agave supply. As such, some have had to cut corners and harvest immature agave, which ultimately results in an inferior product for consumers,” he says.
Patrón, however, has long-term relationships with a number of reputable agave farmers ensuring it has a guaranteed supply that can also meet rising demand.
El Rayo’s Vereker believes there needs to be greater regulation in the supply of agave to prevent wild price fluctuations. As a result, he predicts that sustainability will be a growing trend.
“I think we will see sustainability continue to play an important role in the category, given its reliance on the agave plant and the threat that the species is currently under because of challenges to biodiversity,” he says.
Therefore, while global demand for Tequila is growing, plans to guarantee future supply need to be implemented to ensure that the current quality-driven approach is maintained.