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Tequila boosts US spirits sales in 2021

Sales of Tequila soared in the US last year, accounting for nearly one third of total spirits revenue, according to new data.

US consumers snapped up bottles of super-premium Tequila last year

Trade body the Distilled Spirits Council of the US (Discus) revealed 2021 data for the industry as part of its annual economic briefing yesterday (3 February).

Spirits continued to gain market share of the total beverage alcohol market in the States, increasing by 1.7% to 41.3% last year. It marked the 12th year that the industry gained share from beer and wine.

“Last year, enthusiasm for spirits continued as consumers spent more to elevate their cocktail experiences with super-premium brands,” said Chris Swonger, CEO and president of Discus.

“Consumers savouring spirits at home and trading up to higher-end brands, combined with the gradual reopening of bars and restaurants, resulted in record sales for the spirits sector.

“We’re also seeing strong growth for spirit-based ready-to-drink products, and that’s adding to our sector’s gains as well.”

Tequila was a key driver of growth for spirits sales in 2021, accounting for 30.1% of revenue for spirits.

“From sipping fine Tequilas, to enjoying classic cocktails like the Margarita and Paloma, consumers’ tastes for super-premium Tequila took off in 2021,” said Christine LoCascio, Discus’ chief of public policy.

Vodka remained the biggest spirit category in both volume and value, up by 4.9% to US$7.3 billion. It was followed by Tequila and American whiskey, the latter of which increased by 6.7% to US$4.6bn.

Brandy and Cognac together recorded a 13.1% rise to US$3.5bn, while cordials increased by 15.2% to US$2.9bn.

Spirit-based cocktails and ready-to-drink (RTD) products were the fastest-growing spirit category by volume in 2021, growing by 36.3% to 13.1m nine-litre cases.

Supplier sales in the US also increased by 12% to US$35.8bn last year, while volumes grew by 9.3% to 291.1 million nine-litre cases.

The US hospitality industry continued to be impacted by the pandemic, with sales stalling in the second half of 2021 as a result of Covid-19 cases, staff shortages and supply chain disruptions, said Swonger.

Sales in the on-trade, which represents about 20% of the US market, jumped by 53% in 2021 following venue closures and restrictions in the previous year. However, off-trade sales were flat (up 1%) in 2021 after ‘sharp gains’ in 2020.

2021 priorities

Discus said its priorities for the year ahead include ensuring a fair tax treatment for spirit-based RTDs to bring it in line with malt and wine-based RTDs.

The trade group is also working on the expansion of cocktails to-go measures, direct-to-consumer (DTC) spirits shipping across the US and the removal of Sunday alcohol bans in certain states.

Swonger said that 23 states have decided to reduce taxes on spirit-based RTDs, with many others considering a similar move. The trade group highlighted Arizona as a state where consumers pay 18 times more for a spirit-based RTD than its malt or wine-based counterparts.

Currently, 11 states permit DTC shipping for spirits, the trade group noted. Last month, California passed a bill to permanently allow DTC spirits shipping, which is now being considered by the Assembly.

On a federal level, the trade body said it is ‘cautiously optimistic’ about the removal of the UK’s 25% tariff on American whiskey. The US and UK governments began talks to resolve the dispute last month.

Discus will also continue to support the Restaurant Revitalization Act to help on-trade venues and is backing legislation to permit the US Postal Service to ship alcohol in states where it is allowed.

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