*This article was originally released in June 2023 and updated with additional material in October 2024.
The U.S. tequila market is poised to outpace the growth of the total spirits category on a global scale between 2022 and 2027, with an expected compound annual growth rate (CAGR) of 9% during that period. Tequila overtook whiskey as a valuable subcategory in the U.S. spirits market in 2023, with sales totaling $6.5 billion and whiskey sales trailing behind at $5.3 billion, according to the Distilled Spirits Council of the US (DISCUS).
Tequila consumption grew from 19.7 million 9-liter cases in 2019 to 30.6 million 9-liter cases in 2023. According to DISCUS, tequila has increased its U.S. volumes by 294% at an average rate of 7.1% per year since 2003. As tequila continues to extend its horizons, we have compiled a comprehensive overview of the category.
How Big Is the Tequila Market in the United States?
Tequila in the U.S. is currently led by mainstay brands such as Jose Cuervo, Patron, Casamigos, Don Julio, and 1800, but high-growth brands like Lunazul, Milagro, Mi Campo, and Gran Coramino are pushing the category forward. Each of these high-growth brands saw their 9-liter case volumes grow by at least 28% from 2022 to 2023, with 400 Conejos Mezcal leading at 75.9% growth in that timeframe. The states responsible for the highest sales of 9L cases of tequila are:
- California – 6.3 million cases
- Texas – 3.7 million cases
- Florida – 1.8 million cases
- Illinois – 1.1 million cases
- Arizona – 1.1 million cases
The states and territories responsible for selling the most tequila cases per capita included:
- Nevada – 298.0 per 1,000 adults
- California – 220.2 per 1,000 adults
- Colorado – 202.3 per 1,000 adults
- Arizona – 197.8 per 1,000 adults
- Texas – 173.0 per 1,000 adults
Trends Behind Tequila’s Popularity
Premiumization
While a consumer preference for trading up to higher price tiers within spirits has been well-documented across categories, this trend is particularly evident within tequila. In 2023, 27.3% of Supplier Gross Revenues for Tequila/Mezcal was Premium ($100 to $175), 19.5% was High-End Premium ($175 to $255), and 48.2% was Super Premium ($255+), per the Beverage Information Group.
This increase is partially due to increased demand for añejo and extra añejo tequilas, aged for longer periods in oak barrels, as well as single-barrel aged tequilas. Consumers are now consistently trading up to fine and rare sipping tequilas, treating the category much like they treat whiskey due to the nuance and complexities attained through the aging process.
Blossoming Consumer Awareness
Consumer awareness of tequila has expanded remarkably over the past decade. This is partly due to brands securing attractive placements for tequila in retail outlets and the willingness of bartenders to embrace tequila as a staple of bar menus across the country. Tequila Fortaleza, for example, made a push in the mid-2010s to solidify its presence in the on-premise, and as a result, established itself as a bar-industry standard for quality tequila in many states.
Cocktail culture has played a key part in educating consumers about tequila and spreading its awareness as well. The margarita, for example, has retained its position as the most popular cocktail in U.S. bars for many years, according to CGA by Nielsen IQ.
Celebrity tequila brands have also contributed to generating awareness for the category. Notable examples include George Clooney’s Casamigos, Kendall Jenner’s 818 Tequila, and Dwayne “The Rock” Johnson’s partnership with Teremana Tequila. A slew of celebrities have joined this movement, endorsing their brands in recent years, further cementing tequila’s presence in the spotlight.
Supply Chain Limitations
The clamor for agave spirits had caused constraints on production. High demand for tequila in the U.S. limited the availability of agave, which in turn increased prices for the plant from 2010-2022. However, agave prices have since plummeted compared to 2022 prices, according to IWSR. They were a record-high of $2 per kilogram and have fallen to $0.30 per kilogram as of February 2024, with expectations that prices will continue to decline as more agave plants mature.
This price volatility resulted from an oversupply caused by a substantial increase in agave planting, with registered growers more than quadrupling since 2018. To mitigate future supply and pricing volatility in this challenging supply chain, some large companies are working toward more integrated production models, such as Don Julio and Casamigos introducing the use of drones on agave farms, driving efficient farming and environmental benefits. Efforts also include expanding farmland and securing long-term contracts with growers.
There are also long-term practical environmental considerations for the sustainability of agave production. Blue Weber agave, the primary plant used in tequila production, can take five to ten years to fully mature, a stark difference compared to the mere months required to cultivate the critical grains to make whiskey and vodka. Brands like Tequila Cazadores, Jose Cuervo, and Codigo 1530 have all incorporated sustainability initiatives to ensure that agave growth can continue over time. Pernod Ricard started planting its own agave in 2023 to curb the effects of supply limitations in the future.
More Resources on Category Trends
Park Street’s Roundup of Distribution How-To’s for Suppliers