Worldwide Tequila Culture

Euromonitor International reported that tequila was the only category to make sales gains worldwide, climbing from $5.4 billion in 1997 to $6.6 billion in 2001 with an increase of 22.9%. Whisky was the hardest hit category of the spirits, losing 5.1% in sales, dropping from $51.1 billion to $48.4 billion between 1997 and 2001. Vodka, gin, and rum all posted smaller losses, with gin losing 3.5% during 1997 and 2001, falling from $36 billion to $35.7 billion; rum, with a 1.4% loss from $15.1 billion to $14.9 billion; and vodka slipping only 0.7% from $35.9 billion to $35.7 billion.

In 2002, a nephew of then-president Vicente Fox announced plans to launch both tequila and wine bearing the family name. Xavier Fox Padilla, planned to launch sales of Mi Mexico Fox tequila and Gran Pasion de Fox wine in the United States and Europe. The company was registered with the CRT, but this author has not been able to determine if any products have been released as of June, 2007.

Tequila's star is still high in the international sky. And the new products - extra añejo and flavoured tequilas - promise to open new horizontal markets for tequila. While the former appeals to the aficionado of premium spirits, the latter is aimed at a younger market and attracting new drinkers.

Thanks to the Internet, online communities such as our Blue Agave forum allow consumers to share ideas, comments and information, and encourage an appreciation of the subtleties of tequila. There is a growing awareness among online users of the distinctions between Highland and Lowland tequilas, between horno - and autoclave-baked tequilas, between milled agaves and those crushed with the tahona. The exuberant but crude tequila rituals of the past - slammers, body shots and poppers - are giving way to a sophisticated class of drinkers.

In 1999, tequila had become the fastest growing distilled spirit, and companies increasingly produced new and unique tequila varieties in an effort to attract consumers and exploit the market.

In April, 2005, Japanese tariff of 25.2 yen per liter on tequila was removed under a Mexico-Japan free-trade pact. Eduardo Orendain, president of the National Chamber of the Tequila Industry, said he expected exports of tequila to Japan to increase 30% immediately, and double in three years. That would make Japan one of the world’s five largest importers of tequila. Japan is currently No. 7, after the United States, Germany, Greece, England, Canada and Italy.

According to the Foreign Ministry, Japan imported some 680 million yen worth of tequila in 2003, compared with 380 million yen worth in 2002.

Since the CRT was established in 1994, only two cases of imitation tequila were reported in Japan. However, last year, some 2.5 million liters of imitation tequila were found worldwide.

In return for protecting genuine tequila, Japan asked Mexico to accept imports of three Japanese liquors only from regions that have been government designated, including sake.

Herradura exported 45,000 liters to Japan in 2003, and about 72,000 liters in 2004.

"The Japanese market is a very interesting one for us. They prefer better quality," said Ruben Aceves, Herradura's international sales director.

Tequila's potential international market remains underexploited, as most producers concentrate on the lucrative US market. As Tom Estes wrote on Tequila World, in 2006:

As tequila’s popularity is relatively recent, especially in the sipping/savouring class, the market remains underdeveloped. This is true domestically within Mexico, as well as in Europe (including Eastern) and Asia, both markets which are now being targeted. The U.S. market, the largest, is the most mature and has even shown some decline in sales in recent years. This may be a result of rising tequila prices due to the rise in raw material costs (i.e., agave) and higher taxes in Mexico on tequila.

All the producers I spoke with were keen to promote their own well-being through their own brands, yet beyond that they showed a strong solidarity. Within this, each was focusing on working together within the structure of the CRT to keep norms and standards enforced in an effort to keep quality and image high around the world. This is heartening to see both for the good of tequila and to see that “competitors” can become partners.

Finally, tequila would seem to have a large advantage based on its image. Tequila in not only a drink, it is an image, making it much more. Just what is that image? To each person it is somewhat different, but taken as a generality, a distinct profile emerges. Tequila is a drink associated with merriment, fun, adventure, and even a slight side of danger is attached for some. It is a drink that can be linked to non-conformity, wildness and sex. All alcoholic beverages have some association to sexuality, ever since Greek times. But tequila would seem to have it more than the others. Positive, if handled responsibly. Across my many interviews and readings, I consistently found the reminder that drinking alcohol (tequila) has many, many positive attributes if used responsibly. There are many reasons not to drink to excess. Concerning sex and alcohol, look what Shakespeare says: “…provokes desire but it takes away the performance” (Macbeth, act II, scene 3, verse 34).

What is the flip side of tequila, its disadvantages? It has been mentioned that the U.S. market is “over” developed, making competition fierce. The agave shortage and Mexican taxes have raised tequila shelf prices so that it is harder to compete with other spirits, such as rum, which is less expensive.

The UK has also seen a decline in the majority of spirit sales, according to The Publican in April, 2007. But tequila seems to be bucking the trend there, too:

The recent decline of spirits continues to be big news, yet there are some categories that have bucked the trend. It seems that, where vodka, gin and whisky have lost, tequila and sambuca have been two of the few categories that have gained.

When Nielsen took the pulse of the spirits market in January, it found that the volume of tequila sold in the on and off-trade in the year up to that point was four% higher than that sold in the previous 12 months.

More and more product and initiative launches are coming to bear on tequila and sambuca.

The buzz around tequila has been sufficient to persuade Inspirit to launch its own “high quality sipping tequila”. Mike says that Partida “is currently en route to us from Mexico” and is set for a May launch.

Worldwide, the UK market is sluggish but rising slowly, Spain is a rising market, as are Japan and the Philippines.

Premium tequila went crazy in 2006, when a bottle of Tequila Ley sold for $225,000, according to a story in Beverage Daily:

24/07/2006 - A private collector has shelled out $225,000 for a bottle of 'ultra-premium' Tequila, making it the most expensive in the world - but not for long.

It is a fair way from the sort of Tequila downed by people in bars all over the world with the traditional salt and lemon slice.

But Tequila Ley.925, the producer of the $225,000 liquor, says it wants to open a new avenue for expensive, high quality Tequila targeted at connoisseurs and society's elites.

Its $225,000 (€178,000) bottle of Pasion Azteca Tequila is a measure of how much some will pay.

Tequila Ley also announced it planned to auction off a bottle of Pasion Azteca, plated with gold, platinum and diamonds, valued at $1m in London, on 21 March 2007.

During the agave shortage, Jose Cuervo pull out of developing markets and concentrate on core markets like the US which is its biggest -- it consumes 3.5 million of the Jose Cuervo's five million case production. But since then Cuervo has cited India as potentially maturing market for its reposado tequila.

The market for tequila in India is growing at 25 % a year, and is projected to grow by at least ten times over the next ten years. This means a lucrative market for the companies that get there first and develop a loyal customer base ahead of the others.

In its first 18 months marketing in India, Cuervo saw sales jump from 1,500 cases to 10,000. It is now setting itself to sell 50,000 cases by 2010. Cuervo's sales to India are above those to the Middle East, but Australia (32,000) and New Zealand (15,000).

Always in the forefront of trends, Voodoo Tiki Tequila made its own foray into the Indian market in January, 2007, with the launch of two of its flavoured tequila - Desert Rose (Prickly Pear) and Blue Dragon (Blue Kiwi). Donna Taddeo, President, Voodoo Tiki Tequila, said, "For the first time, a premium Tequila brand is being introduced in India. Our flavored Tequila brands are already a rave in the West. Here in India, we are aiming to capitalize on the fledgling market for premium spirits, and are already seeing a great response."

Voodoo Tiki Tequila - blanco Mumbai-based Sultania Trade Private Limited will distribute Voodoo Tiki's products in India. According to Sultania's A. M. David, "The estimated demand for premium Tequila in India is about 250,000 cases. Needless to say, we already see ourselves a dominant player in this segment." David added that Voodoo Tiki Tequila is targeting not only the connoisseurs, but also those who are keen to experiment and look beyond the whiskies and vodkas."

Indian entrepreneurs may follow the South African model and produce their own agave spirits, most likely to serve the national rather than export market. In early June, 2007, the author received an email from an Indian businessman in Hyderabad, looking for advice on obtaining and growing his own blue agave in India. Indian importers are actively seeking tequila to import on at least one website.

China - a new market for tequila since China entered the WTO in 2001, China's sales of spirits has be disappointing to date. The Chinese spirits market is large, but it is declining rapidly because consumers are more aware of health issues concerned with consumption of strong spirits, so they have shifted allegiance to beer and wine. However, industry analysts say the market still supports some large companies, competing for an increasingly high-end market.

As a report from Gaosheng, an international consulting company notes,

...high-quality spirits are turning on an increasing tendency and the sales of imported distilled spirits are expected to be continuously increasing as much as 15%. Out of every 100 bottles of spirits around world, 58 bottles would be tasted by Asians. Compared with low increasing in the developed countries, China/Asian has been the fastest market globally. Whisky has been increased up to 20% in the recent years in China. According to the statistics from Shanghai Vintage Association, the imported alcoholic drinks in Shanghai reached to US＄152 million in 2004, a 70% increase compared to year 2003, which accounts for 77% of the total imported alcoholic drinks in China.

And another Chinese media report noted,

Although Vinexpo is in name a wine and spirits trade fair, spirits take up only about 12 percent of exhibitor space. However, the survey contained good news for vodka, tequila, cognac and whisky producers, indicating these were the leading growth categories. Gin is the only category in decline.

In the Chinese market, 985 traditional Chinese spirit producers compete for an increasingly sophisticated consumer. The traditional Chinese market for "white spirits" - domestic, often low-quality products - is dwindling. Chinese consumer economy has remained buoyant, and consumer spending continues to grow, and with the rising affluence, consumers are looking for higher-quality products which appeal to increasingly sophisticated tastes. Exports of whiskey to Asia were up 24% in 2005, with China importing 86% more Scotch whisky over 2004, for a value of GBP46 million.

Recent media stories of ancient Chinese "tequila" production suggest the Chinese may be paving the way for a challenge of homemade pseudo-tequila based on historical precedent. One story from late 2006 had this to say:

People found an unusual round object at the Qing Dynasty site; at first glance it looked something like a well. Eventually, archeologists concluded that it was used to produce tequila in China. Back then, a large 'tian guo' was supported on the pedestal, and it had two layers. Cold water was put in the upper layer and the yeast was put on the lower layer. When the yeast was steamed, the gas containing alcohol cooled to a liquid and flowed out from a pipe. This liquid was a form of tequila.

Experts deduced that in the Qing Dynasty, tequila was produced at the site, and that the old technology is very similar to the new. The experts examined the animalcules in the cellars, separating red yeast and rhizopus. Archaeological studies show that China had developed mature tequila distilling technology in the late Yuan Dynasty or early Ming Dynasty. There are three types of Chinese tequila -- one is very fragrant, the other is only mildly scented and the third is soy-flavored. The liquor brewed in Shui Jing Fang was the very fragrant variety, which is widespread spread in China. The most unique characteristic of the Chinese distilling method is that the liquor is brewed in earthen cellars. This type of liquor originated in the Chengdu Plain and Sichuan Basin.

A major wine and spirits trade show will be held in China, in June, 2007. Interwine China 2007 at the China Foreign Trade Center (Liuhua Complex, Guangzhou) was organized by Canton Universal Fair Group Ltd to present international companies with an opportunity to expose their products to the growing Chinese market.

China passed Mexico as the second- largest U.S. trading partner in the first 10 months of 2006. China was the fourth-largest U.S. trading partner when it joined the WTO in 2001, behind Canada, Mexico and Japan. Canada still has the most trade with the U.S.

One Chinese website already offers tequilas to the national market, from 100% agave tequilas to "Cheap Tequila with premium taste. $2.20 USD 1 Liter bottled size." On theat site the Jinchuang Suntime Winery Co.,Ltd. apparently offers tequila - but with no indication of source (including whether it is actually Mexican), claiming their company "only provides quality products by using the traditional technology with rich nutrition and high clarity." That same site also has Indian importers searching for bulk tequila.

Another Chinese importer boasts of a joint venture with Mexico:

Thanks for the great promotion of Mexico government as well as to welcome the second hot-wave of imported liquors in China/Asia, Shanghai Mengye Wine Ltd., Co and Tequilera El Trianglo, S.A. de C.V. established the joint venture of Tequila de Zunni S.A de C.A Mexico China. Base on the biggest and the most advanced sales model in imported liquors, the joint venture is mainly selling Tequila of Mexico Triangle Company and Zunni Wine of Shanghai MengYe company. We are aiming to become the leader of Tequila in the South Asia within 3 years.

Meanwhile, in Athens, Greece, authorities broke up a ring distributing alcohol, include pseudo-tequilas, according to an AP story in the New York Times, 27 July, 2005.

While still an uncommon drink in Russia, a growing number of Russian tourists are visiting Mexico and getting to know tequila, and bring back their appreciation to the former Soviet Union. Although most tequila in Russia still appears to be mixto, that hasn't stopped aficionados from forming their own tequila club and promoting the spirit's better types. But Russia's darker side has been pseudo-tequila. In 1999, the World Trade Organization destroyed thousands of bottles of Russian-made fake tequila.

Various articles in the media have appeared over the last decade touting one or another spirit as "the new tequila" - a product allegedly poised to make a grand splash in the market with escalating sales and newfound consumer demand. In the Globe and Mail, June, 2003, the Brazilian spirit Cachaca was positioned as the up-and-coming new spirit. To date, none of these newcomers have lived up to the hype.

While for most producers, tequila continues its uphill success, there are dangers in taking the continued growth of the tequila market for granted. Several distributors, multi-nationals and resellers are already putting marketing resources in to other products, assuming tequila will take care of itself. This could weaken tequila's growth by taking it out of the limelight.

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