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Tequila has new potential to rival Scotch in China

High-end Tequila has the potential to gain the same recognition as Scotch due to its “enormous potential” in China, according to the CEO of Fraternity Spirits.

Raffaele-Beradi-Tequila-China
For Raffaele Berardi, CEO of Fraternity Spirits, 100% agave Tequila brands have “huge potential” in China

Raffaele Berardi, chief of the Mexican spirits company, told The Spirits Business that Tequila will gradually be able to shake off its shot-slamming image and be appreciated in the same way as Scotch or Cognac, particularly in light of the potential for 100% blue agave brands in China.

The country is now able to import and sell these products after the Mexican president Enrique Pena Nieto and Chinese president Xi Jinping signed the so-called “Tequila pact”, ending a five-year ban of 100% agave brands.

“We expect to see increased growth in Russia and surrounding countries like Ukriane and Kazakhstan,” said Berardi, “but the next big thing everyone is working on, is China.

“The potential there is enormous. The Cantina Agave restaurants in Shanghai and Beijing do a container of Corralejo a year.”

Since the ban was lifted, sales of Tequila – all mixto – had quadrupled to around 400,000 litres, making China the 23rd largest market for the spirit.

However, according to the Tequila Regulatory Council (TRC), this figure could jump to 10m litres in five years, consequently making China the second largest Tequila market in the world.

But, according to Berardi: “It’s just knowing how to market and sell the product. The Chinese want to understand what they are drinking, but once they catch onto a trend you’d probably get those numbers.

“Though I can’t see it happening in the short-term.”

Consumer market research company Euromonitor, also noted the potential for Tequila in China in its recent trends forecast for 2014.

According to Spiros Malandrakis, senior alcoholic drinks analyst at the company: “With the gates of China now finally open following legislative amendments that allow 100% blue agave varietals to be legally sold in the country, super premium tequilas will extend their seemingly unstoppable march beyond Western metropolitan centres.”

He added that Patrón could perform particularly well in the market and “lead the race” due to its established position in the luxury Tequila segment.

Diageo’s recently acquired DeLeón and Don Julio Tequilas were also identified by Malandrakis as brands that hold great potential in the region.

For Berardi’s full interview, see the February issue of The Spirits Business.

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