Tequila Overtakes Whiskey as America’s Second Most Valuable Spirit

Tequila is quickly on its way to becoming America’s most valuable spirit category, but that trajectory may not be sustainable. (Photo: Shutterstock/Alexey Andr Tkachenko}

No spirit is safe from the tequila boom.

According to the IWSR Drinks Market Analysis, tequila has just surpassed American whiskey to become the second most valuable spirits category in the United States.

This achievement is only the latest in a series of benchmarks that tequila has set in the past few years as agave spirits have taken the world by storm.

In 2021, tequila overtook bourbon and rum to become the third-largest spirits category in the US. Now, market analysis is predicting that tequila will overtake vodka in 2023 to become the single biggest spirits category by volume.

Tequila’s rise to the top has been facilitated by several factors, chief among them the popularity of celebrity-owned brands and a market-wide trend toward “premiumization”; $100 plus bottles marketed towards the club and the collector rather than the college dorm.

It also helps that tequila is neck-and-neck with vodka as the most popular spirit choice for alcoholic ready-to-drink (RTD) beverages, an exploding category that is projected to overtake hard seltzers by 2026.

Tequila’s recent “triumph” over whiskey represents shifting trends among American consumers, trends which speak less to changing tastes than they do to tequila’s flexibility as a highly malleable spirit.

Historically, America has been a nation of whiskey and bourbon drinkers, accustomed to dark, aged flavors of oak, butterscotch, cherry and caramel. Tequila has been able to successfully capitalize on those preferences with aged expressions like reposados and añejos, expressions which themselves are often aged in ex-bourbon and whiskey casks.

Still, whiskey and tequila boast remarkably different production processes. In fact, some are saying that tequila’s newfound popularity may not withstand the pressure of ever-growing demand.

On average, blue weber agave is left to grow for seven years before it is harvested and distilled into tequila. As Americans hunger for barrel-aged spirits, more and more tequila is now being locked away into barrels, where it can be left to rest for months, years or even decades.

Those numbers add up. Since Mexico’s current agave supply doesn’t meet the demands of the exploding market (and may even be decades away from closing in), some experts have begun to predict a looming tequila shortage.

As tequila inches closer to becoming the nation’s favorite spirit, time will tell how it adapts to its new-found stardom.

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