E-Malt.com News article: USA & Mexico: People in the US more likely than ever to opt for a Mexican beer or tequila

People in the U.S. are drinking less alcohol than they used to, but when they do indulge, they’re more likely than ever to opt for a beverage originating from Mexico, CNBC reported on October 8.

The U.S. is the largest market for Mexico’s agave-based spirits and its top beers. In recent years, Mexican brands have begun to dominate the U.S. alcoholic beverages industry as drinkers develop a thirst for premium-priced products with authentic backstories.

Last year, Mexico’s native agave-based spirits tequila and mezcal overtook American whiskey to become the second-fastest growing spirits category by revenue and volume within the U.S., according to analysis by the Distilled Spirits Council of the United States, an industry trade association. In 2022 alone, nearly 30 million 9 liter cases of tequila and mezcal were sold in the U.S.

Experts say the segment is poised to pass vodka in 2023 to become the country’s fastest-growing spirits category in terms of volume.

“Tequila has been such a national treasure here in Mexico,” said Guilherme Espagnoli Martins, global brand director of Diageo-owned Don Julio Tequila. “Now, it’s breaking through geographies and flying to other countries as well.”

“It’s putting Mexico on the map,” he said.

The rise of Mexican alcoholic beverages into the mainstream U.S., more than 20 years in the making, is the result of authentic, savvy marketing aimed at making Mexican brands palatable to consumers outside of the brands’ home country, while still resonating with their traditional market.

Other factors driving the higher sales include consumers’ increasing willingness to spend more on higher-quality products across wine, spirits and beer.

The growth of tequila and mezcal in particular has been propelled by sales of premium or high-end brands such as Casamigos and Don Julio, which are priced higher at retail and are produced with 100% agave, without flavoring or additives.

The George Clooney-founded Casamigos, which came into the market a decade ago and paved the way for other celebrity-owned premium tequilas, is so far this year’s top-selling tequila across the alcohol e-commerce site Drizly, a Drizly spokesperson told CNBC. Don Julio was the second.

Since 2003, the tequila and mezcal category in the U.S. overall grew 273% in volumes, or at an average rate of 7.2% per year, while premium agave-based spirits skyrocketed 1,522%, DISCUS found. All the products driving the tequila boom originate from Mexico. While some brands such as Casamigos are based outside the country, the spirit legally has to be produced there.

Don Julio, a more than 80-year-old Mexican business now owned by British spirits giant Diageo, is rebranding and finding fresh success amid the new wave of appreciation for tequila. Martins said Don Julio’s smooth taste, versatility and perception as a purer, cleaner spirit has boosted the product.

This year-end, the brand saw double-digit growth in global sales and is up 20% in 2023 compared to last year, a spokesperson told CNBC. Last month, it debuted a new look and promotional film as it seeks to replicate the success it has had in the U.S. overseas.

“As we take this brand global, there is a huge responsibility for us to put modern Mexico on the world stage,” Martins said of the campaign.

It’s not just tequila and mezcal — Mexican beer is booming, too.

Mexican beer imports into the U.S. are up 10.6% in 2023, according to alcohol research firm Bump Williams Consulting.

Earlier this year, Mexico’s Modelo Especial became the best-selling beer in the U.S., dethroning Bud Light, which held the top spot since 2001.

“Once [the beer’s owner] Constellation got their hands on Modelo, the company was really able to step up marketing investment and drive tremendous growth,” said TD Cowen analyst Vivien Azer.

Constellation Brands acquired Modelo in 2013 following an antitrust deal that blocked rival Anheuser-Busch InBev from buying the brand. Its rise to the top started before the conservative boycott against AB InBev’s Bud Light that began this spring.

Modelo, along with Constellation’s Corona Extra, has benefited from the U.S.′ steadily growing Hispanic population, Azer said. But the company sought growth outside of Hispanic drinkers as well.

“It was a deliberate strategy by Constellation to diversify away from Hispanic consumers and toward a wider market,” said Azer.

A spokesperson for Constellation told CNBC that Mexican beer sales grew as Hispanic culture gained a stronger foothold around the world.

“The popularity of Mexican beers can in part be tied to the Hispanic population growth and influence on culture,” the spokesperson said. “Younger generations are increasingly bicultural and Latin culture has had a huge impact on the mainstream.”

Constellation on Thursday reported quarterly results that topped Wall Street estimates, driven by the surge in demand for its Mexican beer brands.

The companies behind the lagers’ growth also attributed their success to a simple factor: taste. Mexican beers are “very easy to drink,” said Jonnie Cahill, chief marketing officer at Heineken USA, which distributes the Mexican beers Dos Equis and Tecate.

Cahill said that not only are Mexican beers riding on the tailwinds of changing consumer preferences toward lighter-tasting, more expensive imported lagers, but also the category has been lifted by “authentic” marketing, such as the pairing of lime and beer, which is played up in advertisements, at bars and for holidays such as Cinco de Mayo.

“We focus on authentic Mexican flavors whenever we innovate and we avoid randomness, because that’s the opportunism that people often reject,” Cahill said of Heineken’s Dos Equis brand, which peaked in the mid-2000s with its iconic The Most Interesting Man in the World campaign.

It’s a competitive space, admitted Cahill. Sales for Dos Equis have declined in recent years. In the week ending Sept. 9, Dos Equis retail sales off premise were down 1.7%, while Modelo and Corona were up 10.6% and 3.3% respectively, according to Bump Williams Consulting.

Cahill said the brand is trying to ramp up distribution across the U.S. in hopes of competing with rivals.

Eduardo “Lalo” González grew up in the agave fields where his grandfather Don Julio began a tequila empire that would reach all parts of the world.

“I always had this dream and this idea of continuing this legacy of my family,” said González. “Believe it or not, there’s a lack of Mexican ownership in tequila brands.”

Diageo acquired Don Julio in 2015. In 2020, González launched LALO Tequila, a blanco tequila free of flavors or additives and made with 100% agave distilled in González’s home region of Jalisco, just one of five Mexican states where tequila can be legally produced.

“It’s all about embracing family and embracing legacy and embracing traditions,” González said, as the brand begins to find its footing in the U.S. “We’re building our own story by honoring our ancestors, and also by bringing people into our culture.”

Tequila and mezcal prices may increase as American demand continues to surge and the agave plant suffers some shortages, said González. Agave takes about seven years to grow and can only be planted in certain Mexican regions.

González said more farmers have begun harvesting the succulent as the industry plants the seeds for similar growth in overseas markets.


09 October, 2023