Mexican tequila and beers Don Julio, Modelo boom in the U.S.

Packages of Modelo Especial beer are displayed for sale in a grocery store on June 14, 2023 in Los Angeles, California. 

Mario Tama | Getty Images

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.

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.

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“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…

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