Casamigos-Owner Diageo Sets Sights on Europe; Believes Paloma Cocktail Will Be Key To Cracking Tequila Market
(Photo: Diageo)
Diageo — the British spirits giant behind Don Julio, Casamigos, DeLeon and more — is looking to expand America’s love for tequila across the pond.
At a recent investor’s meeting, executives weighed to pros and cons of celebrity-owned spirits and cocktail trends, explaining that tried-and-true approaches may require tinkering for the lucrative European market.
“People in Southern Europe are drinking less but better and super-premium spirits are outgrowing total spirits,” explained Diageo’s president of Latin America and Caribbean Alvaro Cardenas.
“Luxury Tequila has doubled in size in Southern Europe over the last year but some consumers still perceived Tequila as a drink for low-quality shots. We had to overcome the barrier with a new serve that would position our Tequilas as a premium, trendy option, simplifying their choice and creating demand by really educating them on our brands.”
Within the US — where tequila is currently on track to overtake vodka as the nation’s most valuable spirits category — it’s easy to overestimate the international appeal of agave spirits.
While America imports over 300 million liters of tequila per year, runner-up markets like Germany, Spain and France import somewhere between 5-10 million. To put the math in perspective, the US consumes more tequila than every other nation in the world combined, including Mexico.
(Photo: Statista)
Different markets require different approaches. Case in point: mixology.
The popularization of the margarita in the 1970s was a hail mary for the US tequila industry, introducing an endlessly adaptable trend that has held steady for decades. In Europe, however, Diageo is finding runaway success with the Paloma, Mexico’s most consumed cocktail.
Accommodating Europe’s preference for highball drinks, Diageo is launching a Paloma campaign focused on heavy hitters like Don Julio and Casamigos. In a few year’s time, it may prove the grapefruit-flavored key to success.
“Our Paloma activations have generated high conversion rates and increased our share of Tequila,” Cardenas explained. “In Spain, we saw a 60% conversion rate from trial to purchase. Tequila was one of the largest drivers of growth in Southern Europe in fiscal 2023, contributing to 20% of net sales growth.”
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