Tequila: A Dark Horse in China’s Spirits Market

Mexican distillers have been eyeing China as the next big market for tequila, banking on the high purchasing power of the millions of consumers and their love for high-quality products. Since the Chinese government lifted the ban for imports on premium tequila in 2008, trade volume between the two countries has continued to soar.

The Mexican Multimillion-Dollar Business

Tequila is as inherent to Mexican tradition as Bordeaux wine is to the French. Its roots date back to the 17th century and have since been hailed as Mexico’s national spirit. At present, tequila is one of the most popular liquors consumed around the world.

Tequila is actually a type of mezcal, another distilled alcoholic beverage from Mexico. Both are made from agave, but tequila is exclusively from the blue variant growing in the west-central state of Jalisco. Annually, Mexico exports about US$ 1.2 billion worth of the spirit to around 100 different markets worldwide.

Global consumption of tequila has increased over the years. It is forecasted to reach 34.7 million nine-liter cases by 2021, a growth of 3.2 percent second only to whisky. In 2017, 31 million cases were consumed by the drink’s devotees worldwide. Mexico’s biggest markets for tequila are the United States, Europe and South America.

Tequila’s Growing Popularity in China

For many tequila producers, China is a dynamic new market brimming with opportunities. Imports totaled around 682,000 liters in 2017 and anticipated to increase in the next years. The surge in demand is expected to boost Mexico’s tequila exports by 20 percent in the next decade.

In the past, China objected to the relatively high levels of methanol in blue agave tequila. When the ban on imports was lifted, different brands have found their way to supermarkets and bars of major Chinese cities. Tequila JG and Corralejo, two of the biggest brands in Mexico, have already established their presence in the market.

Challenges for Businesses

Despite the warm reception of the Chinese for tequilas, distillers still have their work cut out for them. Compared to other imported spirits, the cactus-based liquor is still relatively unknown in some parts of the region. Most Chinese continue to prefer their local firewater, baijiu, as their number one potent spirit. To appeal to the consumers, some tequila producers labor to make sure that their products will cater to the existing preference.

Tequila JG, for instance, offers soft, citrus flavors in its tequila. Others bank on the oaky, caramel flavor of the liquor that is quite similar to cognac, hoping to replicate the brandy variety’s success in the China market. Many distillers, however, are hoping that tequila’s own identity is enough to accrue loyal followers.

Tequila is a versatile spirit. It can be downed in a shot glass like baijiu or can be mixed with other drinks. Some mixologists reckon that it will go well with green tea. The premium liquor fits the adventurous soul of the younger generation and even China’s status-conscious group of drinkers.

Conclusion

By 2020, China is expected to surpass the United States as Mexico’s number one tequila consumer. Moreover, consumption has significant room to grow due to the region’s huge population. For businesses planning to sell the spirit in China, there is no better time than now to try their luck in this dynamic market.

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