Interest in tequila and mezcal is growing and sales are surging, but the category’s small size means there’s still plenty of room for growth, says Clinton Cawood

Tequila is a rare ray of sunshine for spirits in the UK at the moment. 

It’s one of just three main spirits categories in growth, alongside rum and liqueurs, according to the Wine & Spirit Trade Association’s April 2022 Market Report. 

NielsenIQ reports an increase in value of 3.5% in the 12 months to March 26, on top of an 85.8% increase the previous year. Yet tequila still only accounts for 0.6% of all sales in a spirits market which dropped 7.5% overall in the past year. 

Agave spirits have been thriving for some time, and even more so in the last couple of years. 

The Whisky Exchange, for example, reports an increase of 41% and 38% in volume and value between 2019 and 2021 – helped by a spike in 2020 when sales of everything were “through the roof”, according to buying director Dawn Davies MW. 

WSTA chief executive Miles Beale notes the recent increase, too. “Looking back at tequila sales in our shops and supermarkets over the last three years, we can see a surge in sales during the pandemic,” he says.

Pernod Ricard’s focus for the off-trade is on Olmeca Altos, which NielsenIQ counts among the eight fastest-growing brands in the past year, a list that also includes Sierra, 1800 and El Sueño. 

Pernod Ricard UK off-trade channel director Chris Shead acknowledges the effects of the pandemic. 

“Historically, the on-trade has owned tequila in the UK, but Covid restrictions changed that.” 

Consumers trying their hands at cocktail creation during lockdown undoubtedly played a part. As Cazcabel tequila marketing manager Lucy Cottrell puts it: “Tequila boomed throughout lockdown. Consumers fell in love with the Margarita.” 

If there’s one brand that can testify to this fact, it’s Mirror Margarita, created by the team behind London agave bars Hacha. 

Sales of this ready-to-drink cocktail proved to be a lifeline for the bars through the pandemic, and it’s now a standalone brand. 

“Having launched three years ago now, Hacha and Mirror Margarita were at the forefront of the UK agave boom, and we’ve definitely seen how that has unfolded and been reflected in sales,” says co-founder and managing director Emma Murphy. 

“In particular we have seen a steady increase in sales of the mezcal Mirror Margarita, as the agave spirits trend has taken hold and people are more inquisitive.” 

That growing interest is benefiting the premium end of the market. At Hedonism Wines, shop manager Julien Le Doaré reports that “top end products are very popular indeed, and it seems that we can’t ever have enough of Don Julio 1942, Clase Azul and the like”. Brands such as Cazcabel, meanwhile, are seizing the opportunity to combine tequila with another growing category – liqueurs. 

“Both are in double-digit growth in the off-trade, and Cazcabel hits the sweet spot between both,” says Cottrell, soon after the brand’s recent Sainsbury’s listing for its Coffee tequila. 

Tequila may account for the majority of the agave spirit category, but mezcal is showing promise, too. 

Davies says that “customers are much more discerning and curious about mezcal, and are more aware of the differences between tequila and mezcal”. 

Master of Malt’s head of brand Giovana Petry believes this is part of a broader trend. 

“Drinkers are becoming more adventurous with bolder flavours, giving mezcal its time in the limelight,” she says. 

To harness this, and the growth of the agave category in general, Master of Malt is focusing on cocktails. “As with many spirits, cocktails are a brilliant gateway for introducing or reintroducing people to the brilliance of tequila and mezcal,” says Petry. 

EDUCATING ON FLAVOUR 

For The Whisky Exchange, it’s about education regarding flavour. 

“To help customers navigate the category better and to try new things, we’re working on breaking down agave products into flavour camps, much like we’ve created for whisky and rum,” says Davies. 

At Hedonism, the growth of the category prompted a resiting of the section for more visibility a few years ago, while training sessions “ensure that the team is up to date with recent releases and the complexity of mezcal”, says Le Doaré. 

With agave spirits accounting for such a small percentage of overall spirits, there’s a significant opportunity for retailers and a number of ways to seize it. 

For Elwyn Gladstone, founder of Biggar & Leith, which recently launched The Butterfly Cannon tequila in the UK, smaller bottle sizes such as 50cl “make an attractive impulse purchase”. 

Gladstone is also among those that see the benefit in stocking mixers with tequila, encouraging long serves. 

Cottrell at Cazcabel agrees, adding that tequila “pairs well with tonic, fruit juices and sparkling mixers such as grapefruit”. 

Along similar lines, Pernod Ricard’s Shead sees the benefit in educating consumers about cocktails and longer serves, “with Margarita or Paloma serve inspiration on POS, or merchandising a trade-up tequila next to a triple sec”, he says. 

For Cottrell, it’s important that a broader selection of price points are offered. “There is headroom to grow basket spend in tequila, but consumers must believe the positioning and be able to justify it,” she says. 

With so much interest, and growing sales, the future looks bright for the agave spirits category in general.