The tequila boom isn’t declining. The category is simply bifurcating into two distinct markets with dramatically different trajectories, according to Jay Baer.
In this Park Street University session, Baer, co-founder and editor of The Tequila Report, breaks down findings from The Tequila Report’s massive research project “Only the Differentiated Survive: Six Trends Shaping the Tequila Industry in 2026.” The data reveals a category splitting along fault lines that will reshape competitive dynamics for years to come.
Two Markets, Two Trajectories
The numbers tell a striking story. In 2025, the top 20 tequila brands were dominated by household names like Don Julio, Cuervo, Patrón, and Casamigos. These brands saw sales decline by 1.5% according to Nielsen IQ data. These legacy brands still command seven or eight dollars out of every ten spent in the category, but their growth engine has stalled.
Meanwhile, craft tequila brands grew 28.5% over the same period.
The Mass Market vs. The Enthusiast
Baer explains that this bifurcation reflects two fundamentally different consumer mindsets coexisting within tequila consumption.
The first group doesn’t particularly care how their tequila is made or by whom it’s produced. In many cases, they don’t even know what brand is in their margarita, paloma, or shot. They’re drinking tequila as a category, not as a brand choice, and increasingly they’re shopping on price due to broader economic pressures.
The second group consists of enthusiasts who care deeply about production methods, agave sourcing, and brand provenance. They’re reading publications like The Tequila Report, following distilleries on Instagram, and asking bartenders and retailers about new expressions. For this audience, tequila has become a hobby akin to craft beer appreciation or bourbon collecting.
The Craft Tequila Challenge
On the surface, this seems like unambiguously good news for craft producers. More consumers care about artisanal production, and the segment is growing at nearly 30% annually. But Baer identifies a critical challenge: competition within the craft segment itself is intensifying.
The research included 130 craft brands, but Baer estimates there may be 200 to 300tequila brands positioning themselves as craft or artisanal. Simply claiming “craft” or “additive-free” status is no longer sufficient differentiation in this crowded field.
Only the Differentiated Survive
The title of The Tequila Report’s research captures the strategic imperative for craft brands: differentiation beyond basic craft credentials is now essential for survival.
The most successful craft tequila brands are taking education into their own hands rather than relying on distributors, retailers, and bartenders to tell their stories. They’re investing in detailed websites, comprehensive YouTube channels, and Instagram accounts that educate consumers directly about what makes their approach unique.
This direct-to-consumer education strategy allows craft brands to build relationships with enthusiasts who will then seek out their products at retail and on-premise, rather than relying on three-tier intermediaries to prioritize their brand story over simpler celebrity narratives.
The tequila boom isn’t over, but it’s evolving into a more complex, segmented category that rewards differentiation and education while punishing generic positioning. Brands that recognize which side of this divide they occupy and develop strategies accordingly will be positioned to capture growth in their respective segments.
Watch the full presentation above to hear Jay Baer’s complete analysis of the bifurcation of tequila in 2026.