Tequila sunrise: a new era for Mexico’s signature spirit

This Thursday is Cinco de Mayo – an annual celebration of Mexican culture, heritage and cuisine across the globe. It’s also a chance world-over to have a drink, and for me to dedicate a Weekend Edition to my tipple of choice: tequila.

Over the last few years, the tequila market has exploded. Much like with gin a decade ago, we’re seeing a resurgence for the category as new brands emerge to cater to new customer demographics and new ways of drinking. When once tequila was associated with dusty bottles and macho masculinity, today the drink is appealing to health-conscious customers attuned to the provenance of what they consume. How we drink tequila is also evolving: no longer limited to shot glasses in sticky nightclubs, modern tequila brands are designed to be drunk neat, or else savoured with a mixer as a long drink.

Like many trends in consumer goods, this shift began in the US.

Throughout the 2010s, we saw dozens of brands emerge to popularise tequila and challenge its historic reputation. Casamigos – co-founded by George Clooney in 2013 – is one of many artisanal, ultra-premium labels promising a smooth flavoured drink made from the best ingredients. As with most new brands, Casamigos’ growing and distilling process sits at the heart of its marketing efforts.

Interestingly, many of these brands have been founded, endorsed or backed by high-profile celebrities. In addition to Clooney’s Casamigos, there is Dwayne Johnson’s Teremana and P Diddy’s DeLeón. Musicians from AC/DC to Justin Timberlake have launched brands, and in 2021 celebrity supermodel Kendall Jenner brought 818 to market, hoping to “inspire other women to become founders or work in the spirits industry”. By my estimations, there are at least a dozen celebrity-backed tequila brands operating today – speaking not only to the popularity of the category but also to tequila’s position as a lifestyle choice, as well as being seen as a drink for those concerned with their physical health. Now, largely because of this new generation of challenger brands, tequila has overtaken rum as the third-largest spirits category in the US after vodka and whiskey.

“Now, largely because of this new generation of challenger brands, tequila has overtaken rum as the third-largest spirits category in the US after vodka and whiskey.”

Today, we are beginning to feel this shift in the UK. Ten years ago, you’d have been hard pushed to hear much about Cinco de Mayo in London, but this week bars across the city are putting on dedicated nights to showcase their tequila offerings. Companies like El Rayo and Vivir have disrupted the market, targeting a new crowd of drinkers and offering fresh ways to enjoy the product.

I caught up with Jack Vereker, co-founder of El Rayo earlier this week. Launched in 2019, with its art deco-inspired label and ‘tequila and tonic’ serving suggestion, El Rayo is in many ways symbolic of a new era of tequila. You won’t find the brand on the top shelf of a dusty liquor store – but in lifestyle destinations like Selfridges, John Lewis and the Conran Shop.

I asked Jack to share the inspiration behind launching El Rayo.

“The idea for El Rayo was born in our Peckham flat, after Tom [co-founder at El Rayo] and I tried a bottle of tequila gifted by my brother after a trip to Mexico that had been sat on a shelf for six months. Its taste – smooth, soft, delicious – completely took us aback.

“We realised there were two opportunities for the category. Firstly, from a brand perspective, the UK landscape was dominated by traditional companies whose branding leant heavily on cliches of Mexican culture or references to the 1800s. This was at a time when craft beer was exploding and Beavertown and Camden Brewery were marketing beer in a modern, fun, colourful way – we wanted to do the same for tequila.

“Secondly, from a serve perspective. At that time, tequila was either drunk cheaply as a shot in a nightclub or bought for hundreds of pounds a bottle by those from an older generation – there was no in-between. We wanted to create a product that could be enjoyed by people like us, in their twenties, in a casual environment.”

“Tequila was either drunk cheaply as a shot in a nightclub or bought for hundreds of pounds a bottle by those from an older generation – there was no in-between.”

It is, we agree, an exciting time to be in the category – in no small part because of how many people turned to homemade cocktails during the pandemic.

In both the US and the UK, spirits sales jumped by nearly a fifth during the first lockdown, and cocktail making kits and virtual tutorials became commonplace. So while some made sourdough, many others – myself included – made margaritas! Pernod Ricard saw a 60% rise in tequila sales in 2020; Diageo recorded an 80% surge in the category; and Waitrose announced that sales of the spirit had soared by 175% during the first lockdown.

It’s no surprise that blue-chip businesses are now placing long-term bets on the category. In 2020, William Grant bought a distillery in Mexico to support the growth of its Milagro brand and drive innovation. In 2021, Diageo committed $500m to the category. In a recent earnings call, Diageo CEO Ivan Menezes reflected on the evolution of the market, commenting that: “its appeal across demographics is significant […] it cuts across age segments, it cuts across gender, it cuts across dayparts, the occasion and the nature of drinks. It’s not just shots and margaritas as it used to be many years ago.” Consolidation is picking up pace: just this year, we’ve seen Diageo buy flavoured tequila brand 21 Seeds and Lucas Bols acquire the ultra-premium label Tequila Partida.

Looking ahead, we can expect to see further premiumisation. Late last year, for example, Bacardi announced that it was discontinuing its tequila-based coffee liqueur to focus on high-end pure tequila products. While the move was a loss to all who loved Patron XO Café (“Sorry to be the bearer of bad news but something truly terrible has happened”, opened one article in Cosmopolitan UK), it was representative of the direction of travel for the market.

The future certainly looks bright for the category. “Every bar and restaurant wants a tequila cocktail on the menu now,” reflected Jack, “and once it becomes habitual in the on-trade, we’ll see even more people drinking tequila at home. It feels like we’ve only just scratched the surface of what’s possible for market.”

Will tequila endure? While the promise that sticking to tequila guarantees a clear head in the morning can be (pardon the pun) taken with a pinch of salt, we are certainly seeing a new generation of category drinkers who are happy to spend on high-quality products. The drinks market has often been full of flash-in-pan fads – but my bet is this one is here to stay. Salud!

Scarlett.Mayne@thembsgroup.co.uk | @TheMBSGroup