Drink Better, Not More

A funny thing happened to tequila on its way from the shot glass to the tasting room: it grew up. Millennials and Gen Z didn’t abandon the category; they leveled it up—seeking bottles with provenance, additive-free credibility, and flavor that holds its own neat or in a crafted cocktail. In industry speak, that’s premiumization—and despite a broader “slowdown” in trade-up across bev-alc, tequila’s upper tiers keep flexing. In the U.S., super-premium and prestige price points continue to be where the action is, fueled by a “drink-less-but-better” mindset and a cocktail culture that won’t quit.

The Big Picture (aka “numbers, but make them nice”)

Globally, tequila remains one of the healthiest spirits categories. Independent market trackers estimate the market near $11–12B in 2024, on course for roughly $19–20B by 2030—a steady ~9–10% CAGR powered by consumers trading up to 100% agave and artisanal expressions. In the U.S., tequila’s growth outpaces total spirits, with blanco still the volume workhorse and premium-plus tiers expanding the value pie.

And this isn’t just a bottle-shop story. On-premise, spirits now command 52% of out-of-home drink occasions in the U.S., one in three guests orders a cocktail, and tequila is chosen by 22% of visitors—rising with younger, more diverse drinkers who are happy to pay more for higher quality. That’s rocket fuel for premium margaritas, palomas, and agave-forward signatures.

Why Premiumization Works So Well for Tequila

1) The “Less-But-Better” Upgrade. Even as premiumization cools in some categories, a counter-trend keeps super-premium spirits resilient. Younger, cocktail-oriented consumers—more gender-balanced than old stereotypes—are driving the growth at $30+ RSP in the U.S., with tequila a headline beneficiary. Translation: fewer drinks, nicer drinks.

2) Cocktail Culture = Trading-Up Culture. Bartenders are the new sommeliers. When one in three consumers orders a mixed serve and staff recommendations are a key upsell lever, well-made blancos and reposados become the default “premium house pour.” Instagrammable builds, better glassware, and bar-led education nudge tabs upward without feeling spendy.

3) Innovation With Substance (not sprinkles). Tequila’s evolution is real: cristalino styles, selective cask finishes (think ex-bourbon, red wine, even Mizunara oak), and high-proof, terroir-first releases give aficionados novelty and authenticity. Unlike flavor-of-the-month vodka, innovation here is expanding the category’s repertoire without cheapening it.

4) Status Signaling—But Smarter. The $100+ “status spirits” tier keeps outgrowing the broader market. Consumers aren’t just buying a label; they’re buying transparent production, NAMED distilleries, tahona vs. roller mill debates, and NOM-hunting cred. That’s premiumization rooted in story + substance.

5) E-Commerce Puts Top-Shelf Within Thumb’s Reach. Alcohol e-commerce keeps compounding at double digits, with platforms like Drizly reporting sustained interest in premium tequila even as tastes fragment. Discovery has gone algorithmic—single-click access to $60–$150 bottles normalizes higher baselines.

“But Wait—Wasn’t There an Agave Rollercoaster?”

There was—and is. Agave prices spiked to ~MXN 32/kg, then crashed to ~MXN 5–11/kg through 2024 as plantings surged and demand cooled from 2021 highs. Short term, that’s created discounting skirmishes among big brands and scary headlines about a “tequila lake.” Long term? It’s a reset, not a requiem. Premium demand has proven stickier than value tiers during downturns, and cost relief on raw agave actually gives producers room to invest in quality, transparency, and bar programs without pushing price points skyward.

Crucially, aged tequila still has built-in scarcity drivers. Reposado (2–12 months), añejo (1–3 years), and extra añejo (3+ years) tie up capital and barrels—so the most coveted, oak-influenced releases don’t expand overnight, even if agave is plentiful today. Time, not hype, makes those margins.

The Premium Tequila Playbook (For Brands & Bars)

• Lead with transparency. Consumers and media are calling out undisclosed additives; brands that show their process, NOM, water source, and barrel program win trust and trade-up. (Apps and media coverage are pushing education—another tailwind for sipping culture.)

• Own the cocktail gateway. The Margarita stays queen, but Gen Z is open to alternative, visually iconic serves. Design signature builds that highlight agave character, not just sugar and citrus.

• Segment your price ladder. Keep clear “good-better-best-prestige” architectures to prevent cannibalization during price promotions and to protect halo SKUs when value tiers run hot. The super-premium band is still the value engine.

• Invest in bartender advocacy. Trained staff are the difference between “house tequila” and a $5-$10 higher ring with a premium blanco recommendation. Make their job easy with education, specs, and story.

• Go where discovery happens (online). Content + convenience = conversion. Embrace e-commerce bundles, distillery-story videos, and limited drops to keep your premium set top-of-feed and top-of-cart.

What This Means for Investors & Operators

Even after a 2024–25 “reset,” tequila remains one of the best long-term spirits bets: trade-up behavior is structurally aligned with how people actually drink today (fewer occasions, nicer pours), on-premise keeps teaching guests to spend smart, and innovation is adding real depth without eroding authenticity. In the U.S., agave spirits have already leapfrogged whiskey on value—and the gap to vodka narrows as premium tiers keep compounding. If you’re building a brand or curating a back bar, this is the moment to double-down on quality cues, cocktail-first education, and transparent production.

Sources & further reading (selected)

• IWSR on premiumization’s “counter-trend” & super-premium resilience; and tequila’s consumer profile shift. IWSR

• Grand View Research on global market size & ~9.5% CAGR (2024–2030). Grand View Research+1

• CGA by NIQ on 2025 U.S. on-premise behavior (spirits share, cocktail frequency, tequila penetration). CGA

• IWSR on innovation (cristalino, non-traditional finishes). IWSR

• IWSR on “status spirits” ($100+) outpacing the market. IWSR

• IWSR & trade press on the agave price crash and inventory overhang (context for short-term price moves). IWSRFinancial Times

• Park Street (citing DISCUS) on tequila’s U.S. value leadership vs. whiskey. Park Street Imports

• Alcohol e-commerce growth & Drizly premium-tequila demand signals. The Business Research CompanyConvenience Store News