Tequila has been climbing the ranks of the liquor category for over five years, now ranking just six percentage points behind vodka at 16 percent of liquor share on Drizly. The category’s ascent has been fueled by a convergence of many factors—and boosted during the pandemic.

“A shift in consumer perception over the category has been a key driver of growth for tequila over the past few years,” says Liz Paquette, Drizly head of consumer insights. “Once seen as an occasion-based drink — for Cinco De Mayo, for instance — today tequila has grown to an everyday staple alongside vodka and whiskey.” 

Restaurant and bar closures amidst the pandemic also served to fuel tequila’s growth as consumers made their favorite on-premise cocktails, like margaritas and palomas, at home.

Brandy Rand, COO of the Americas at IWSR Drinks Market Analysis, notes two other contributors to tequila’s recent success: the rise of celebrity-endorsed tequilas (like George Clooney’s Casamigos and Dwayne “The Rock” Johnson’s Teremana, both of which are among Drizly’s top-sellers) and its correspondence with wellness trends. “Because tequila is plant-based and more visibly so, a lot of consumers believe it’s better for them and is less adulterated, which is perceived to reduce hangovers,” says Rand. “Tequila has become much more associated with the ‘better-for-me’ movement than many other categories.”

We looked at Drizly data from the past 12 months to predict the future of tequila and what it means for retailers. 

Drizly’s Top-Selling Tequilas, March 2020 through March 2021

  1. Casamigos Blanco 
  2. Espolòn Tequila Blanco
  3. Patrón Silver Tequila
  4. Clase Azul Reposado Tequila
  5. Don Julio 1942
  6. Don Julio Blanco
  7. Casamigos Reposado
  8. Jose Cuervo Especial Silver Tequila
  9. 1800 Silver Tequila
  10. Jose Cuervo Especial Gold
  11. Espolòn Tequila Reposado
  12. Casamigos Anejo
  13. Hornitos Reposado Tequila
  14. Milagro Silver Tequila
  15. Teremana Blanco Tequila
  16. Hornitos Plata Tequila
  17. El Jimador Silver Tequila
  18. Don Julio Anejo
  19. Tequila Casa Dragones Blanco
  20. Camarena Silver

Silver/Blanco Tequila Dominates—But Reposado Grows

Silver/blanco tequila has long been the top-selling style of tequila on Drizly, and the last year’s top-selling tequilas reflect this: Silver/blanco tequila accounted for 57 percent share of the tequila category over the past 12 months, and the subcategory held 12 of the top 20 tequila SKU spots—a consistent number over the year prior.

Several silver/blanco tequilas did move up the top 20 list in the past 12 months, including Espolòn Tequila Blanco, Patrón Silver Tequila, 1800 Silver Tequila, and Tequila Casa Dragones Blanco. Launched in 2020, Teremana Blanco Tequila was a new entrant to the list at the number 15 spot. “The success of Teremana is really due to both our magnetic founder Dwayne ‘The Rock’ Johnson, who is deeply involved in the business on a daily basis and also the quality of our small batch tequila that is crafted by hand with incredible attention to the details,” says Jenna Fagnan, co-founder of Teremana.

However, reposado is making gains. Reposado share of tequila sales gained three percentage points in the last year to comprise 23 percent of share, while añejo lost three percentage points to hold 16 percent of share. Each maintained a consistent number of top 20 SKUs over the prior year: four for reposado, and three for añejo.

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Increasing Category Diversity

At the same time that tequila subcategories diversify, the SKUs themselves are diversifying as well. Retailers should keep an eye on tequila’s presence in other categories, like RTDs, in addition to new styles breaking into the fold, like flavored and spicy tequilas, which hold just one percent of category share. 

“In a lot of ways, interest in spicy cuisine is a factor of globalization,” says Chris Moran, the CEO and founder of Ghost Tequila. “People are increasingly more exposed to spicy flavors from Asia, from Latin America, and other regions, and of course, interest in spicy foods also extends to spicy cocktails.”

“Over the past four years, spicy flavors have been the fastest-growing innovation in margaritas, with jalapeno margaritas, spicy margaritas, and chipotle margaritas all doubling their mentions on cocktail menus,” says Neil Grosscup, the CEO and master blender of Tanteo Tequila, which has jalapeno and habanero tequilas.

Trading Up in Tequila

Over the past 12 months, premiumization has continued to take hold in the tequila category. The price per unit for reposado tequila has increased $3.60, silver/blanco tequila by $2.50, flavored by $3.78, and gold by $2.50. 

“Not many other categories have as many existing trade-up alternatives as tequila,” explains Rand, “so consumer engagement levels are incredibly high.” Not only can consumers trade up within each subcategory, but they can also trade up to other subcategories that have higher average price points; on Drizly, the average price per unit over the past 12 months was $36 for silver/blanco tequila, $49 for reposado tequila, and $87 for añejo tequila.

“This is akin to the early boom of U.S. whiskey, where flavored variants were an entry point to the category for a lot of people,” adds Rand, “and once they got used to the taste profile, they wanted to try other expressions — often stronger, more pronounced, unflavored bourbons.”

Paquette points to pandemic restrictions as a big driver in premiumization in the past 12 months. “Many consumers are putting more towards their at-home alcohol purchases, as they are spending less eating out or traveling” she says. However, she also doesn’t see the category taking a major hit as the country reopens. 

“Tequila’s rise began long before the pandemic and even more consumers were introduced to the category amidst the pandemic, so we expect its position to continue to grow, even as we move out the pandemic restrictions.”