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.
The Tequila Boom isn’t Over: Why Craft Tequila is Growing 28.5% Transcipt
Jay Baer (0:01)
This is Jay Bear, co-founder and editor of the Tequila Report. Let’s talk about the fact that the tequila boom is not over. In fact, it’s just breaking up into two different markets.
Jay Baer (1:21)
People have said that the tequila boom is over and numbers are diminishing and that is true, but only to a point. What we’re actually seeing, based on our research conducted at the Tequila Report, is a massive research project called “Only the Differentiated Survive: Six Trends Shaping the Tequila Industry in 2026.” What we found is that the tequila boom isn’t over. It’s just breaking into two different markets.
The tequila business has long been dominated by big producers brands like Don Julio, Cuervo, Patron, Casamigos, etc. That group, which represents seven or eight dollars out of every ten spent in the category, is seeing flat or declining sales. But the other side of the market, the craft tequila market, inhabited by 100, 200, or maybe even 300 smaller artisanal producers that lean heavily into more artisanal production styles that group is growing.
Specifically, across 2025, the top 20 tequila brands in sales actually went down by 1.5% according to Nielsen IQ data. Conversely, the craft tequila brands were up 28.5%.
Jay Baer (2:16)
That’s a significant difference down one and a half versus up twenty-eight and a half. How can this be true within one category? What we’ve discovered is that the tequila business is actually two businesses. You have a significant portion of the tequila-drinking audience that doesn’t care very much about how their tequila is made, or even who makes it because in many cases, they don’t even know what brand is in their margarita, their Paloma, or their shot. They’re just drinking tequila, not a specific tequila. That is a big portion of the market and probably always will be.
Conversely, you have a growing portion of the market a more educated consumer segment that cares deeply about who makes their tequila, what’s in it, and where the agave was sourced. We’ve seen this trend before in other beverage alcohol categories. You saw it in bourbon. You saw it in craft beer. For many years in the United States, beer was just beer for the most part and then the craft beer movement occurred, and many people started making intentional choices about the beer they purchased, both at retail and on premise. We’re starting to see the same thing happen in the tequila business.
The mass market doesn’t care and probably isn’t going to care. Increasingly, it’s shopping on price due to challenges in the overall economy. But the enthusiast audience is reading tequila publications like the Tequila Report, spending time on Instagram learning about tequila, and talking to retailers and bartenders about new expressions. That group is treating tequila like a hobby like baseball card collecting not simply as something to put in a margarita.
Jay Baer (3:43)
Here’s the challenge. On the s)ce, this would seem like great news if you’re a craft tequila brand, more and more people care about the craft of tequila. True, but this isn’t a very small group; it’s pretty large. We included 130 craft brands in the research, and in truth there are probably 200 or 300, maybe even more, tequila brands that today might position themselves vaguely as craft or artisanal tequilas. That’s still pretty competitive.
What we’re finding is that craft tequila brands need a very strong and distinct narrative beyond just “craft” or the old category phrase “additive free.” They have to have a story that’s richer, more detailed, and more explanatory to the consumer, in order to differentiate not just from the big producers, but from the rest of the smaller ones as well.
Jay Baer (4:25)
It’s not coincidental that one of the great challenges craft brands face is competing against celebrity tequila brands. Many people will say and I largely agree that celebrity tequila has on the whole been good for the category, because it’s introduced a lot of people to tequila who might never have considered it at all.
But from a brand perspective, it is challenging when you have to convince a distributor, a sales rep, a bartender, or a retailer to learn and repeat your specific brand narrative, as opposed to simply saying “this tequila was made by somebody whose movie you liked.” Celebrity tequilas have a huge advantage because they’re easy to remember. Craft tequila has an advantage because more and more people care about how tequila is made but conveying that story is difficult and sometimes challenging.
Jay Baer (5:34)
What we discovered in this research again, it’s called “Only the Differentiated Survive,” available at tequilareport.com, is that even craft brands have to be sharper, better, more detailed, and more descriptive about their own differentiating factors. In fact, some of the best brands doing this are those leaning hard into their own education: detailed websites, detailed YouTube channels, and detailed Instagram accounts to convince consumers they are the better choice, rather than hoping that distributors, retailers, and bartenders will do that education job for them.
It’s going to be fascinating to see what happens this year and beyond as the tequila category continues to bifurcate. If you want more on this topic or other tequila trends facing the industry, go to tequilareport.com and grab the research it’s called “Only the Differentiated Survive.” Thanks for tuning in, and make sure to hit the subscribe button to keep up with the latest beverage alcohol industry insights.
Watch the full presentation above to hear Jay Baer’s complete analysis of the bifurcation of tequila in 2026.