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Can Tequila lead Canada’s on-trade?
Tequila has become the fastest-growing spirit in Canada’s on-trade, with the category taking share from vodka.
Tequila has grown its volume sales by 1.1% versus a year ago with rum being the only other spirits category to see slight growth in Canada’s on-trade.
Tequila has had an explosion in the US over the past few years and this has started to leak into Canada now, Mitch Stefani, CGA by NIQ’s client solutions director – Americas, noted, speaking to The Spirits Business.
“I think it’s growing even more just because the premiumness of Tequila is really a big factor for what’s driving it. Vodka and whisky are down as well, so that’s really allowed it to grow share, whereas around this time last year, it was sitting at around 14.5% or so – now at 15% of total spirits sales, it’s gained a full half point of share just in the past year.”
He adds that some of the trends coming from the US, such as the prevalence of more premium options, led by younger consumers, has helped prop Tequila up.
Tequila’s prominence within cocktails is another factor pushing the category. Stefani explains that “the Margarita is obviously the big one within cocktails, but it’s not even necessarily spirit-based that’s driving it.
“Tequila has grown compared with non-flavoured vodka or even gin, which is a popular one from a Canada perspective. Tequila is being integrated into cocktails, with its ability to play [into] classics like a Margarita, but also be thrown into signature serves at bars.”
Flavour the “big trend”
Flavour is what Stefani dubs the “big trend” in Canada’s on-trade right now. He explains that “consumers are enjoying flavour twists of classic cocktails such as a Strawberry Margarita”.
“A big thing we talk about is that experience goes a long way at the moment for consumers. Obviously, prices are up and people aren’t going out as much, but when they’re going out, they’re willing to part way with their money – and just getting something they can’t replicate at home, something that’s different and unique, allows them to really cater to that experience. That flavour twist is a perfect example of that.”
In a global study conducted by CGA earlier this year, of which Canada was part, two-thirds of consumers were shown to prefer one super-premium drink or two high-quality drinks, compared with the 35% who might go for three medium-quality drinks, or four value-based drinks.
Stefani says there is a “huge skew towards consumers having a ‘bang for my buck’ mentality, of getting something of better quality.”
With premiumisation trending, this is advantageous for spirits on the whole, Stefani says. “The whole premium drink does skew for your cocktail drinkers in particular, but also even those venues that are popular for those drinks – so your cocktail bars, your premium bars, your fine-dining visits, where premium spend tends to lend itself well.”
Vodka and whisky still lead
Although Tequila is growing at the highest rate, there is still a gap behind its nearest competitors, vodka (21%) and whisky (16%), for spirits share in Canada’s on-trade. Stefani observes there is still some “headroom” between Tequila and these categories.
For vodka, he says “it does live more in the ‘well’ of a bar” and that’s where you see “how much volume, or how much bigger it really is nationally compared with Tequila”.
For whisky, he considers that premiumisation is “changing the dynamic of the category”. The category is split into four subsectors: Canadian, Irish, American and Scotch. Canadian whisky is the leading subcategory, with a 34% share of all whisky sold in the on-trade, but Stefani notes that it is down by 4% in volume from last year.
In turn, American whiskey and Bourbon is “almost flat to 1% down” in volume compared with 2023. Referencing American whiskey, Stefani says: “The dollar trend is up significantly more than Canadian whisky, whereas now, they’re close in volume.
He explains: “American whiskey and Bourbon is 32.5% of whisky share, so they’re within a full percentage point, but American whiskey and Bourbon has gained a 0.7% share, while Canadian whisky has lost 0.6% share.
“There has been somewhat of a flip there and I think the premiumisation trend has done that, or helps cater to that, because Canadian whisky volume is traditionally done in the ‘well’ or through value-based drinks, whereas Bourbon and American whiskey have that higher price point – people are drinking it neat, or the pour is used in premium cocktails.
“That dynamic within whisky is quite an interesting one. But whisky is still not losing as much share as vodka is at the expense of Tequila.”
While CGA doesn’t do much forecasting, Stefani doesn’t see too much change in the environment in 2025 compared with what has happened this year, or in 2023.
“Think about Covid and how things dropped off, they came back and they kind of came back down. Things have normalised a bit. I think that a lot of those spikes have removed themselves from just the natural way people are going out and spending.
“This is probably the first year we’ve seen stable trading for the first time since Covid.”
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