global market review of tequila – forecasts to 2014€¦ · global market review of tequila –...

Global market review of Tequila – forecasts to 2014

2010 edition

Page i

© 2010 All content copyright Aroq Ltd and The IWSR. All rights reserved.

Global market review of Tequila –

forecasts to 2014

2010 edition

January 2010

By The IWSR’s Alex Smith and Laura Tovey

Contributors: Jose Hermoso, Alastair Smith, Piotr Poznański, Agata

Andrzejczak, Thalia Fourie, Humphrey Serjeantson and Helen Windle

Published by

Aroq Limited

Seneca House

Buntsford Park Road

Bromsgrove

Worcestershire

B60 3DX

United Kingdom

Tel: +44 (0)1527 573 600

Fax: +44 (0)1527 577 423

Web: www.just-drinks.com

Registered in England no: 4307068

Page ii


Single-user licence edition

This report is provided for individual use only. If you would like to share this

report with your colleagues, please order additional copies or sign up for a

multi-user licence by contacting:

Liz Hague

Research manager, just-drinks.com

Tel: +44 (0)1527 573 604

Email: [email protected]

Copyright statement

© 2010 All content copyright Aroq Limited and The IWSR. All rights reserved.

This publication, or any part of it, may not be copied, reproduced, stored in a

retrieval system, or be transmitted in any form by any means electronic,

mechanical, photocopying, recording or otherwise without the prior written

permission of Aroq Limited. This report is the product of extensive research

work. It is protected by copyright under the Copyright, Designs and Patents Act

1988. The authors of Aroq Limited’s research reports are drawn from a wide

range of professional and academic disciplines. The facts within this report are

believed to be correct at the time of publication but cannot be guaranteed. All

information within this study has been reasonably verified to the author’s and

publisher’s ability, but neither accept responsibility for loss arising from

decisions based on this report.

Incredible ROI for your budget – single and multi-user licences

We understand the pressure your research budget is under and price our

reports realistically. You won’t find our reports with four, or even five-figure

price tags, but you will find that they make some of the competition look

expensive. Each title is available to you on a single-user basis, supplied on the

strict understanding that each title is not to be copied or shared. Alternatively,

titles can be shared within departments or entire corporations via a cost-

effective multi-user licence. Multi-user licences can also save you money by

avoiding unnecessary order duplication. To further add value, all multi-user

mailto:[email protected]

Page iii


copies are hosted on a password protected extranet for your department or

company – saving you time, resources and effort when sharing research with

your colleagues. To find out more about multi-user pricing, please contact Liz

Hague.

just-drinks.com membership

From just GBP99/US$170/EUR115* a year you will gain access to a growing

portfolio of exclusive management briefing reports, and also receive all new

briefings for each year you are a member. As well as this impressive list of

members’ only reports, you also gain one year’s access to a constantly

updated stream of news, feature articles and analysis. Established in 1999,

just-drinks has rapidly evolved into the premier source of global news, analysis

and data for busy senior executives. For details of the current special joining

offer visit: www.just-drinks.com/offer.aspx

*Prices correct at time of publication.

http://www.just-drinks.com/offer.aspx

Page iv Table of contents


Table of contents

Single-user licence edition .......................................................................................................... ii

Copyright statement ............................................................................................................... ii Incredible ROI for your budget – single and multi-user licences ............................................. ii

just-drinks.com membership .................................................................................................. iii

Table of contents ........................................................................................................................ iv

List of tables ............................................................................................................................... vi

Notes about the data .................................................................................................................. ix

Terminology .......................................................................................................................... ix

Chapter 1 Executive summary .................................................................................................... 1

Chapter 2 Scope of the market ................................................................................................... 4

Narrow market ....................................................................................................................... 7

Premium potential outside of the US ...................................................................................... 7 Industry structure ................................................................................................................... 8 Market issues ....................................................................................................................... 10

Tequila usage becoming more diverse ........................................................................ 10 Contraction of on-trade and RTD innovation ................................................................ 11

Supply and demand ..................................................................................................... 12

Chapter 3 The markets .............................................................................................................. 15

United States ....................................................................................................................... 15 Price fighting ................................................................................................................ 17 Market polarises .......................................................................................................... 18 Important Mexican demographic .................................................................................. 22

Mexico ................................................................................................................................. 23 Canada ................................................................................................................................ 27 Brazil ................................................................................................................................... 29 Colombia ............................................................................................................................. 30 Germany .............................................................................................................................. 31

Russian Federation .............................................................................................................. 33 France ................................................................................................................................. 34 Greece ................................................................................................................................. 36

Italy ...................................................................................................................................... 39 Czech Republic .................................................................................................................... 41 Spain ................................................................................................................................... 43 Japan ................................................................................................................................... 45

Australia ............................................................................................................................... 46 South Africa ......................................................................................................................... 48 Travel retail .......................................................................................................................... 49 Other markets ...................................................................................................................... 52

Page v Table of contents


Chapter 4 The companies ......................................................................................................... 55

Cuervo ................................................................................................................................. 55 Diageo ................................................................................................................................. 56

Beam Global (Sauza) ........................................................................................................... 56 Patrón .................................................................................................................................. 58 Brown-Forman (Herradura) .................................................................................................. 60 Bacardi ................................................................................................................................ 62

Appendix: History and product characteristics ....................................................................... 64

Mezcal exports are rising ..................................................................................................... 66 Tequila regulations ............................................................................................................... 67 Bottling controversy ............................................................................................................. 68

Page vi List of tables


List of tables

Table 1: World Tequila sales by total volume consumption – world total and by major market,

2004-2014 (‘000s nine-litre cases) ........................................................................... 5

Table 2: Top ten Tequila brands in United States by total sales volume, 2003-2008 (‘000s nine-litre

cases) .................................................................................................................... 15

Table 3: Top five Tequila brand owners in United States by total sales volume, 2003-2008 (‘000s

nine-litre cases) ..................................................................................................... 19

Table 4: Top ten Tequila brands in Mexico by total sales volume, 2003-2008 (‘000s nine-litre

cases) .................................................................................................................... 24

Table 5: Top five Tequila brand owners in Mexico by total sales volume, 2003-2008 (‘000s nine-

litre cases) ............................................................................................................. 26

Table 6: Top ten Tequila brands in Canada by total sales volume, 2003-2008 (‘000s nine-litre

cases) .................................................................................................................... 28

Table 7: Top five Tequila brand owners in Canada by total sales volume, 2003-2008 (‘000s nine-

litre cases) ............................................................................................................. 28

Table 8: Top eight Tequila brands in Brazil by total sales volume, 2003-2008 (‘000s nine-litre

cases) .................................................................................................................... 29

Table 9: Top five Tequila brand owners in Brazil by total sales volume, 2003-2008 (‘000s nine-litre

cases) .................................................................................................................... 30

Table 10: Top eight Tequila brands in Colombia by total sales volume, 2003-2008 (‘000s nine-litre

cases) .................................................................................................................... 31

Table 11: Top eight Tequila brands in Germany by total sales volume, 2003-2008 (‘000s nine-litre

cases) .................................................................................................................... 32

Table 12: Top five Tequila brand owners in Germany by total sales volume, 2003-2008 (‘000s

nine-litre cases) ..................................................................................................... 32

Table 13: Top ten Tequila brands in Russia by total sales volume, 2003-2008 (‘000s nine-litre

cases) .................................................................................................................... 33

Table 14: Top five Tequila brand owners in Russia by total sales volume, 2003-2008 (‘000s nine-

litre cases) ............................................................................................................. 34

Table 15: Top ten Tequila brands in France by total sales volume, 2003-2008 (‘000s nine-litre

cases) .................................................................................................................... 35

Page vii List of tables


Table 16: Top five Tequila brand owners in France by total sales volume, 2003-2008 (‘000s nine-

litre cases) ............................................................................................................. 36

Table 17: Top ten Tequila brands in Greece by total sales volume, 2003-2008 (‘000s nine-litre

cases) .................................................................................................................... 36

Table 18: Top five Tequila brand owners in Greece by total sales volume, 2003-2008 (‘000s nine-

litre cases) ............................................................................................................. 37

Table 19: Top five Tequila brands in the United Kingdom by total sales volume, 2003-2008 (‘000s

nine-litre cases) ..................................................................................................... 38

Table 20: Top five Tequila brand owners in the United Kingdom by total sales volume, 2003-2008

(‘000s nine-litre cases) ........................................................................................... 39

Table 21: Top ten Tequila brands in Italy by total sales volume, 2003-2008 (‘000s nine-litre cases)

.............................................................................................................................. 40

Table 22: Top six Tequila brand owners in Italy by total sales volume, 2003-2008 (‘000s nine-litre

cases) .................................................................................................................... 41

Table 23: Top ten Tequila brands in Czech Republic by total sales volume, 2003-2008 (‘000s nine-

litre cases) ............................................................................................................. 42

Table 24: Top five Tequila brand owners in Czech Republic by total sales volume, 2003-2008

(‘000s nine-litre cases) ........................................................................................... 43

Table 25: Top ten Tequila brands in Spain by total sales volume, 2003-2008 (‘000s nine-litre

cases) .................................................................................................................... 43

Table 26: Top five Tequila brand owners in Spain by total sales volume, 2003-2008 (‘000s nine-

litre cases) ............................................................................................................. 44

Table 27: Top ten Tequila brands in Japan by total sales volume, 2003-2008 (‘000s nine-litre

cases) .................................................................................................................... 45

Table 28: Top five Tequila brand owners in Japan by total sales volume, 2003-2008 (‘000s nine-

litre cases) ............................................................................................................. 46

Table 29: Top ten Tequila brands in Australia by total sales volume, 2003-2008 (‘000s nine-litre

cases) .................................................................................................................... 46

Table 30: Top five Tequila brand owners in Australia by total sales volume, 2003-2008 (‘000s nine-

litre cases) ............................................................................................................. 47

Table 31: Top five Tequila brands in South Africa by total sales volume, 2003-2008 (‘000s nine-

litre cases) ............................................................................................................. 48

Table 32: Top five Tequila brand owners in South Africa by total sales volume, 2003-2008 (‘000s

nine-litre cases) ..................................................................................................... 48

Page viii List of tables


Table 33: Top ten Tequila brands in travel retail by total sales volume, 2003-2008 (‘000s nine-litre

cases) .................................................................................................................... 49

Table 34: Top five Tequila brand owners in travel retail by total sales volume, 2003-2008 (‘000s

nine-litre cases) ..................................................................................................... 51

Table 35: Top seven Tequila brands in Austria by total sales volume, 2003-2008 (‘000s nine-litre

cases) .................................................................................................................... 52

Table 36: Top five Tequila brand owners in Austria by total sales volume, 2003-2008 (‘000s nine-

litre cases) ............................................................................................................. 52

Table 37: Top eight Tequila brands in Chile by total sales volume, 2003-2008 (‘000s nine-litre

cases) .................................................................................................................... 53

Table 38: Top six Tequila brand owners in Chile by total sales volume, 2003-2008 (‘000s nine-litre

cases) .................................................................................................................... 53

Table 39: Top eight Tequila brands in South Korea by total sales volume, 2003-2008 (‘000s nine-

litre cases) ............................................................................................................. 54

Table 40: Top five Tequila brand owners in South Korea by total sales volume, 2003-2008 (‘000s

nine-litre cases) ..................................................................................................... 54

Table 41: Top five Tequila brand owners in Turkey by total sales volume, 2003-2008 (‘000s nine-

litre cases) ............................................................................................................. 54

Page ix Notes about the data


Notes about the data

Where ‘-’ or a blank table cell appears in The IWSR data tables, this indicates

no sales recorded by The IWSR. When ‘0.0’ precedes ‘-’ in previous years, this

indicates that the brand had not yet been launched in the year(s). There may

be some cases where low sales are registered as ‘0.0’ due to rounding. Low

sales may also be recorded as ‘Min’ to signify minimum sales.

Unless otherwise specified, all data quoted in this report refers to 2008 market

data.

When ‘cases’ are quoted, these refer to nine-litre cases unless otherwise

specified

Data in tables does not include figures for travel retail. Data may not sum due

to rounding.

Unless otherwise stated, figures include mezcal. Recorded sales are almost

entirely in Mexico, and reach 618,500 cases or 7.8% of the total Mexican

Tequila market.

Terminology

CAGR: compound annual growth rate

A&P: advertising and promotions

NPD: new product development

Chapter 2 Scope of the market


Chapter 2 Scope of the market

Tequila has been displaying high volume growth across a broad spectrum of

international markets. Between 2003 and 2008, Tequila displayed a compound

annual growth rate (CAGR) of xxx% to reach xxxxxm nine -litre cases,

according to The IW SR. This represents an increase of around xxxxm cases

over the period.

Preliminary indications are that this growth slowed in 2009 due to the global

economic crisis.

That growth has been im pressively broad -based. Som e xx out of the top xx

global Tequila markets (including travel retail) posted CAGR gains over the

2004-2008 period.

While the potential for international development is vast, the volume will

remain centred in the US and Mexico for the foreseeable future. Those two

m ark ets today account for xxxx% of global Tequila volum e. The gulf between

the US and Mexican m ark ets (at around xxxxxm and xxxxm cases

respectively), and the third -largest m ark et – Germ any at xxxxxxx cases – is

vast.

Nevertheless, there are green shoots of growth in many markets, even in the

midst of recession. Russia, Greece, Canada, Japan, South Africa and Brazil

are all experiencing strong growth in percentage terms, albeit from small

bases.

Chapter 3 The markets


Chapter 3 The markets

United States

The US Tequila m ark et grew in 2008 by an estim ated xxx% to reach xxxxm

nine-litre cases, a rise of xxxxxxx cases. This was below the previous five - year

trend, which had seen cons istent annual rises equivalent to x% per year.

Table 2: Top ten Tequila brands in United States by total sales volume, 2003-2008 (‘000s

nine-litre cases)

Brand vol2003 vol2004 vol2005 vol2006 vol2007 vol2008

Cuervo Tequila xxxxxxx xxxxxxx xxxxxxx xxxxxx xxxxxxx xxxxxxx

Patron xxxxx xxxxx xxxxx xxxxxxx xxxxxx xxxxxxx

Sauza xxxxxxx xxxxxxx xxxxxxx xxxxxx xxxxxx xxxxxxx

Montezuma Tequila

xxxxx xxxxx xxxxx xxxxx xxxxx xxxxxx

Juarez xxxxx xxxxx xxxxx xxxxx xxxxx xxxxx

1800 Tequila xxxxx xxxxx xxxxx xxxxx xxxxx xxxxxxxxxxxx

Don Julio Tequila

xxxx xxxx xxxx xxxxx xxxxx xxxxx

Cazadores Tequila

xxxxx xxxxx xxxxx xxxxxx xxxx xxxxx

El Jimador xxxx xxxxx xxxxx xxxxx xxxxx xxxxx

Margaritaville Tequila

xxxx xxxxx xxxxx1 xxxx xxxxx xxxx

Source: The IWSR

The category has undoubtedly been affected by the economic downturn in the

US. Despite this, Tequila remains one of the most rapidly growing categories

in the US spirits market. By volume, the category was the third-fastest growth

sector in spirits behind vodka and rum.

Jose Cuervo managing director Gerry Reid says: “The US Tequila market has

been growing at a very dynamic rate for the past three to five years. It has

been increasing faster than the average for total spirits and continues to do so.

The US market is going to grow more slowly this year because of the

economy, but fundamentally it is still fairly good. Tequila got a couple of

percentage points‟ growth in a business that not too many people did in the

last year.”

Chapter 4 The companies


Chapter 4 The companies

Cuervo

Casa Cuervo is the world’s leading Tequila house with a xx% volume share of

the global market in 2008; more than double that of its nearest competitor

Sauza, according to The IWSR’s data. Most of that volume is derived from its

flagship Cuervo Tequila brand, but the c om pany also owns xxxx and Gran

Centenario as well as Maestro Tequilero and Tenampa, sold primarily in

Mexico. Total group Tequila sales am ounted to xxxm nine-litre cases in 2008,

following a CAGR rise of xxx% between 2003 and 2008. However, sales

slowed to just under x% between 2007 and 2008.

Diageo, the worldwide distributor for Jose Cuervo outside Mexico, reported

that Jose Cuervo brand global volum e increased b y x% in volum e term s and

x% in value terms (net sales) in the fiscal year to 31 July 2008.

Diageo holds the distribution rights for the Cuervo brand in the US until 2013.

In the US market, Cuervo, which dominates the standard sector, has been

under some pressure in recent years from the growth of the premium-and-

above Tequilas. That pressure has eased somewhat since the onset of the

economic crisis. Jose Cuervo performed well in its key US market as

consumers traded down from the ultra- and super-premium segments and the

standard spirits segment proved to be the most resilient. Diageo’s innovation

capability also contributed to the performance with the successful launch of

Jose Cuervo Especial Silver, to replace Jose Cuervo Clasico as the white-

Tequila counterpart to gold Jose Cuervo Especial. Reid says: “It [Jose Cuervo

Silver] was only launched at the beginning of 2009, but it is off to a very good

start. We launched it under the Cuervo Especial platform to give it a clearer

brand identity and make it more consistent with the rest of our brands. It is

working to that end.” Jose Cuervo Especial Gold gained market share, driven

by an increase in distribution points and the launch of Jose Cuervo Silver. This

more than offset any weakness in the on-trade. In North America, the brand

rose by x% in volum e terms and x% in value terms.

In recent years, the company has tried several approaches to rejuvenate the

brand – introducing Cuervo Black to appeal to more men, and several Cuervo

flavoured brand line extensions.

global market review of tequila – forecasts to 2014€¦ · global market review of tequila –...

Documents