TEQUILA RISING

Tequila consumption is growing faster in the control states than in the open states, despite the fact that only one control market is among the country’s top 10 states for the distinctive Mexican spirit and that some of the hottest tequila metro areas are in the license states.


The control states account for approximately 20% of the U.S. market for tequila, according to the authoritative Adams Liquor Handbook. In 1998, the most recent year for which complete 12-month data has been published for both the open and control markets, tequila consumption grew by more than 9% in control jurisdictions while the percentage gain in the open states was about half that. Washington State ranks ninth in U.S. tequila consumption (Michigan is 12th and Oregon 13th) with a 3% share of total U.S. tequila consumption and a 15% share of tequila consumption in the control states.


While margaritas continue to be the driving force in the tequila business, a raft of super and ultra premium entries is generating new consumer interest and adding luster to the category’s image.


The trend toward higher-end ultra premiums is gaining momentum and is expected to continue through most of this decade, although top tequila marketers question just how long the relatively small, upscale segment can continue to post 20% annual growth. At the moment, however, sustainable growth rates are beside the point.




Sauza launches a hot new ad campaign this month with its “Stay Pure” positioning. The target is 25- to 34-year-olds with a special emphasis on 26-year-old males. The national media effort will reach 60% of tequila drinkers seven times. Four “sexy, stylish, attention-grabbing” print ads are scheduled.


Instead, there is an ultra-premium free-for-all taking place as a growing number of boutique-style brands angle for distribution and shelf space. Not unlike the competition among single malt whiskies, the scramble among top-of-the-line tequilas features an interesting and sometimes confusing array of claims and questions over often arcane distillation and production techniques, aging, authenticity, heritage and geography, not to mention trivia. It’s all part of a battle to differentiate brands from their competitors while simultaneously creating a story for trendy and discriminating consumers searching for the next new thing.


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