AGAVE SPIRITS: THE ART OF AGAVE

The art of agave

As agave spirits continue on an upward trajectory, Molly Nicholas explores the difficulties facing the category and the opportunities for retailers to overcome them.

Tequila and mezcal have enjoyed high levels of consumer demand in recent years, making agave spirits one of the fastest growing spirits categories, not only in Australia but around the world. According to the IWSR, the agave spirits category is expected to grow at seven per cent volume CAGR between 2022 and 2027, with lesserknown agave spirits also tipped for success.

“Agave spirits are in a unique position,” says Alex Godfrey, Patrón Tequila Brand Ambassador. “This is due to intrigue about what it is, the beauty of Mexico and the deliciousness of the liquid itself. It is something you can discover, and this means it is a growing category in hard times.”

There’s a massive opportunity for Australian agave spirits. We have long held the view that –like wine – the time has come for agave to flourish beyond its traditional home and be shared with the world. We’ve got the climate, expertise and ambition, and a market that’s always hungry for something new,

-Trent Fraser, CEO, Top Shelf International

While the category is booming, Trent Fraser, CEO, Top Shelf International, says that the demand for agave spirits is more than a trend.

“It’s an evolution that shows no sign of slowing. While still clearly dominated by tequila, we are seeing the first green shoots of a new era, with new regions, producers and innovation and combining to deliver category-redefining spirits.”

The agave spectrum

Not only is tequila the key engine of growth in the agave spirits category, but also in the wider spirits category. One of the fastest growing spirits in the premium spirit category, the IWSR predicts that tequila will hold a 55 per cent share of global category value by 2026.

“Off the back of three years of doubledigit growth, tequila is still in nine per cent growth (RSV), ahead of any other spirit category,” says Steve Carr, Trade Marketing Manager, Fever-Tree.

“While tequila has traditionally been heavily skewed towards on-premise consumers, the growth in tequila is now predominantly coming from the offpremise. This has been driven by Aussies increasingly choosing to drink at home and host cocktail parties as a more economical, convenient option to the on-premise.”

Beyond tequila, alternative agave spirits are now getting their fair share of space in the retail environment. When agave spirits first began trending, mezcal joined tequila as a prominent spirit of choice, and in more recent years that has extended to lesserknown agave spirits.

Curious consumers looking for a healthier option and higher quality are driving the mezcal boom in Australia, as Adam Pepper, Australian Ambassador for The Lost Explorer Mezcal, explains.

“Mezcal is a relatively new category in Australia, and we have seen steady growth in mezcal consumption over the last five years due to the growth in product choice for the consumer, […] with mezcal now holding over 4.1 per cent of the agave spirits market in Australia.

“What has been driving the popularity in mezcal is, over the past two to three years, a 7.5 per cent growth year on year in the premium, super-premium and ultrapremium agave spirits market in Australia. We don’t expect this to slow down at all over the coming years.

“Australia sits in the top five consumers of tequila in the world outside of Mexico, and as consumers start to live curiously and sip curiously, we are seeing some of not only your traditional tequila drinkers, but also whiskey drinkers, start to explore the amazing world of mezcal.

“Mezcal is gluten free, has no net carbs and zero fat, much the same as tequila. Mezcal is steeped in tradition in the way it is produced and has an air of romance around it. I believe it is the education of the consumers and retailers alike that can give mezcal the opportunity to explode in Australia.”

Justin Kosmina, Owner of Estancia Raicilla and Co-Founder of Agave Lux, also spoke about emerging spirits within the category.

“Similar to wine, there are multiple different varieties that fall within the agave category, tequila being the biggest, mezcal the emerging, and a number of other trends starting to come through, raicilla being one of them.

Australia sits in the top five consumers of tequila in the world outside of Mexico, and as consumers start to live curiously and sip curiously, we are seeing some of not only your traditional tequila drinkers, but also whiskey drinkers, start to explore the amazing world of mezcal,

-Adam Pepper, Australian Ambassador for The Lost Explorer Mezcal

While agave spirits continue to outperform other alcoholic drinks, and Australians get a taste for the distinct agave flavour, Fraser sees an opportunity for Australian producers to claim a stake in the market.

“There’s a massive opportunity for Australian agave spirits. We have long held the view that – like wine – the time has come for agave to flourish beyond its traditional home and be shared with the world. We’ve got the climate, expertise and ambition, and a market that’s always hungry for something new.

“As tequila faces potential supply issues and corresponding price rises, we’re seeing a growth in alternative agave styles like mezcal, and to a lesser extent, sotol. As that discovery grows, Australian agave spirits crafted from locally grown and distilled agave plants is ideally positioned to create its own identity and show the world what Australian agave is truly capable of.

“At Top Shelf, we have learnt from centuries of tequila production but have been constrained by itself. Instead, through our Act of Treason brand, we are giving agave a distinctly Australian accent. We have an incredible terroir, agronomy, technology, sustainability, and distilling story to tell at our Australian agave spirit farm in the Whitsundays, and we think consumers are going to love the bold ambition we have set for ourselves and Australian agave.”

A spirit of tradition

In recent years, the Australian market for agave spirits has evolved to a place of sophistication. Fuelled by better consumer understanding, and an appreciation for the traditional codes of the spirit, quality is an important consideration for consumers of agave spirits.

“We all have bad stories from the past, but when you look into premium products the category becomes worlds apart from our memory and that’s exciting,” said Godfrey. “That’s why we’ve recently launched Patrón El Cielo, the world’s first quadruple-distilled prestige tequila.

“The understanding and education of additive free tequila [poses a challenge for the category]. This is hard due to brands being so successful, and of course delicious, but it’s important to know what you’re putting in your body.”

With consumers being better educated now than they ever have been, sustainability has become a prominent issue across most spirits categories. The rapid growth of agave spirits has not come without its share of challenges, especially pertaining to quality and craftmanship.

The ability to sustain the right production processes and agricultural processes is an issue that resonates deeply with ecoconscious consumers, especially as we see the adverse effects of increased agave cultivation. While premium varieties of tequila and mezcal gain traction, and consumers become interested in artisanal options, they also dig deeper into brands to understand their authenticity and production process.

“The level of sustainability and transparency are becoming more important to consumers, which enables them to choose better on shelf,” said Kosmina. “When you dig into the detail, agave is a beautifully made product, and the quality of what you get in the bottle Is a direct correlation to the production processes.

“When a category is growing at such a rapid rate, there are shortcuts that can be taken throughout the production process for a better commercial outcome for brands. With agave, from an agricultural perspective, the plant should be grown for a minimum number of years in the ground, four to six years from a blue weber agave perspective, it’s then meant to be cooked, crushed, fermented and distilled in the right way.

“Within that process, there are ways to cut corners, and that generally involves additives, it’s called an acid hydrolysis process. This adds impurities to the product and therefore it doesn’t have as nice of a flavour profile or outcome on your body.”

A spirit of tradition

In recent years, the Australian market for agave spirits has evolved to a place of sophistication. Fuelled by better consumer understanding, and an appreciation for the traditional codes of the spirit, quality is an important consideration for consumers of agave spirits.

“We all have bad stories from the past, but when you look into premium products the category becomes worlds apart from our memory and that’s exciting,” said Godfrey. “That’s why we’ve recently launched Patrón El Cielo, the world’s first quadruple-distilled prestige tequila.

“The understanding and education of additive free tequila [poses a challenge for the category]. This is hard due to brands being so successful, and of course delicious, but it’s important to know what you’re putting in your body.”

With consumers being better educated now than they ever have been, sustainability has become a prominent issue across most spirits categories. The rapid growth of agave spirits has not come without its share of challenges, especially pertaining to quality and craftmanship.

The ability to sustain the right production processes and agricultural processes is an issue that resonates deeply with ecoconscious consumers, especially as we see the adverse effects of increased agave cultivation. While premium varieties of tequila and mezcal gain traction, and consumers become interested in artisanal options, they also dig deeper into brands to understand their authenticity and production process.

“The level of sustainability and transparency are becoming more important to consumers, which enables them to choose better on shelf,” said Kosmina. “When you dig into the detail, agave is a beautifully made product, and the quality of what you get in the bottle Is a direct correlation to the production processes.

“When a category is growing at such a rapid rate, there are shortcuts that can be taken throughout the production process for a better commercial outcome for brands. With agave, from an agricultural perspective, the plant should be grown for a minimum number of years in the ground, four to six years from a blue weber agave perspective, it’s then meant to be cooked, crushed, fermented and distilled in the right way.

“Within that process, there are ways to cut corners, and that generally involves additives, it’s called an acid hydrolysis process. This adds impurities to the product and therefore it doesn’t have as nice of a flavour profile or outcome on your body.”

Retail resurgence

With growth of the agave spirits category forecast to continue, many retailers are investing heavily and broadening their offering. In a category that encompasses so many varieties, Proximo recommends starting with a strong foundation of tequila to recruit agave enthusiasts.

While tequila has traditionally been heavily skewed towards on-premise consumers, the growth in tequila is now predominantly coming from the off-premise,

-Steve Carr, Trade Marketing Manager, Fever-Tree

“Tequila drinkers really are coming from every demographic so it’s important to have a wide offering that covers all your bases –whether that is Jose Cuervo Sparkling Margarita for younger drinkers coming into the category through premix and RTD, to those in the 30-plus age group looking to drink something that sets them apart.

“These are the consumers who are willing to spend a little more for a good looking and great tasting tequila like 1800 Cristalino. It’s all about style and substance – they want great quality, and they want something their friends haven’t seen because they’re the trendsetters in their social circles.”

As consumers become better educated on the category, developing your own understanding allows you to confidently sell it and assist consumers in navigating the evolving category of agave spirits.

“It’s all about education,” says Kosmina. “A beautiful part of most agave spirits is that there is a lot of information on the label regarding production processes and quality of product. With a bit of self-education, you can understand the authenticity behind a brand, and how sustainability and social responsibility plays a part. This will allow you to sell within the space of agave, and generally make more money as a return.”

While education will support the sales of premium products, particularly for eco-conscious consumers, a representative for Proximo explained that sampling plays a big part in recruiting new customers to the category.

“Sampling is always important for getting liquid on lips, especially for new and premium SKUs – chat with your Proximo representative about getting some done in-store. Otherwise, path-to-purchase POS to pull people through the store and direct them to your tequila offering, as well as off-location placements like placing a quality pink grapefruit soda with your premium tequilas to encourage that additional purchase.”

At a time when at-home cocktail consumption is at a high, placement of mixers in the retail environment can help to drive sales in the agave spirits category. Giving consumers convenient ways to consume their favourite agave spirit and create Instagrammable drinks is key, explains Carr.

“Consumers can drastically change the flavour and colour profile of their drink utilising soda ranges such as bloody orange, lime and yuzu, or pink grapefruit.

“Aussies are also seeking simple, convenient options for creating great tasting margaritas and tequila cocktails at home. This is fuelling an explosion of growth in the cocktail mixers category, with margarita mixers being the number one selling cocktail flavour in Australia.”