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For years, tequila was the darling of the spirits world. It was no longer just for margaritas or bad decisions in a college bar (I plead the fifth, your honor) — it was sipping neat, lounging in crystal glasses, and sporting triple-digit price tags. Brands like Patrón, Don Julio, and Casamigos led the charge, convincing consumers that tequila deserved a spot next to single malt scotch and top-shelf bourbon. And guess what? It worked. Tequila officially overtook whiskey in U.S. sales in 2023, raking in $6.5 billion to whiskey’s $5.3 billion. Not bad for a spirit once relegated to spring break shots.
But here’s the thing about meteoric rises — they tend to be followed by equally dramatic corrections. And that’s exactly what’s happening now.
The Tequila Surplus Nobody Ordered
According to the Tequila Regulatory Council (CRT), Mexico is sitting on 525 million liters of unsold tequila. That’s nearly an entire year’s worth of production gathering dust in barrels and warehouses, waiting for consumers who suddenly aren’t biting.
Why? A few reasons. First, U.S. demand has cooled. After years of trading up to ultra-premium bottles (thank you, lockdown-induced luxury drinking habits), consumers are shifting toward mid-tier tequilas priced between $22.50 and $44.99. That’s bad news for brands that built their business on exclusivity. Second, agave prices have crashed. What once cost distillers $30 per kilogram now hovers around $2. That’s a windfall for big brands but a gut punch for independent agave farmers. And third, there’s the looming tariff threat. Trump’s proposed 25% tax on Mexican imports — currently on hold as of this writing — could spike prices overnight and make that growing tequila glut even harder to move.
The Celebrity Tequila Bubble Is Popping
If tequila’s success was a plane ride, celebrities were sitting in first class, sipping their own brands and making millions off the hype. But now, that plane is hitting turbulence. George Clooney’s Casamigos, once the gold standard of celebrity-backed spirits, has slashed prices to stay competitive. Diageo, the brand’s parent company, admitted Casamigos had “got out of whack” on pricing post-COVID. Meanwhile, Matthew McConaughey’s Pantalones Tequila is out here trying to sell booze with the tagline “Pants are optional,” and Danny McBride’s Don Gato Tequila is banking on its irreverence to stand out. Will they succeed? Maybe. But the days of slapping a famous face on a bottle and watching sales skyrocket are over.
Meanwhile, Mezcal is Having a Moment
While tequila is dealing with a surplus and pricing wars, mezcal is quietly gaining traction. The smoky, artisanal cousin of tequila is finding favor with consumers looking for something more unique, craft-driven, and rooted in tradition. (Mezcal isn't immune to celebrity crushes; Dos Hombres is was founded by Bryan Cranston and Aaron Paul, 818 Tequila was launched by Kendall Jenner, Cincoro by Michael Jordan, Teremana by "The Rock," and even Villa One by Nick Jonas (he's a sucker for it).
Mezcal’s lower production scale and strict regulations keep it from facing the same oversupply issues as tequila. Plus, its versatility in cocktails and premium sipping appeal make it a favorite among bartenders and adventurous drinkers. As tequila recalibrates, mezcal could carve out an even bigger piece of the agave spirits market.
What Happens Next?
Tequila isn’t going anywhere — it’s still projected to grow 9% annually through 2027 — but the game has changed. Brands will need to rethink pricing, differentiate beyond hype, and, dare I say it, actually build a brand that stands for something. The smartest players will lean into sustainability (since agave cultivation has long-term ecological concerns), push into new global markets beyond the U.S., and innovate with formats like ready-to-drink cocktails. The rest? They’ll either adapt or fade into the sea of forgotten celebrity endorsements.
So is tequila dead? Hardly. It’s just sobering up. And for an industry that built itself on good times, that’s a reality check worth taking seriously.
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