COO at GT Spirits Inc (Ghost Tequila)
- Tequila consumer demand dynamics and sustainability of spirits category outperformance
- Agave supply dynamics and pricing outlook
- Innovation scope across serve occasions, formats and price points
- Competitive landscape – potential market share winners and losers across brands and key producers
What are some US spirits market trends and dynamics? What are the structural drivers in the tequila category, one of the highest growth areas within the market?
What drivers do consumers consider when choosing spirit categories, aside from premium spirits driving growth at mainstream’s expense? We used to hear about brown spirits growing more than white, but I don’t know where tequila fits in that.
How has tequila growth in the US evolved over the last few years? Have different ages or classifications driven that?
Why does tequila resonate with consumers? It’s appropriate for an at-home cocktail occasion, but why would a consumer choose it over other spirits?
Are the demographics driving tequila’s growth fairly broad or does the spirit resonate more with millennials and their trend towards embracing flavour?
Is there a male-female skew within tequila consumers?
You mentioned the pandemic brought tequila category growth through the cocktail-at-home boom, but is there anything else? What impact did the on-trade closure have and how will that trend longer term? What might be the pandemic’s longer-lasting impacts?
Did the pandemic accelerate off-premise premiumisation?
How does premiumisation acceleration relate to the cocktail-at-home boom? Margaritas seem to be heavily consumed, but would consumers use super-premium tequila? Has Cuervo benefited from the pandemic?
You mentioned celebrity-driven brands. Does tequila lend itself to celebrity endorsement more than other categories?
Could you give an update on supply issues or agave costs? What might these mean for near-term tequila pricing?
Is tequila inflation driven more by costs around packaging, logistics and distribution than the raw material itself?
Could inflation alter consumer behaviour around tequila? Could it prompt switching from one brand to another?
How does supply work for tequila? What industry supply issues do investors need to understand?
How easily can a big corporate company expand agave supply? Are there regulatory issues around land usage? How long does the plant take to mature?
How much of a competitive advantage is it for bigger corporations to own their own agave? Is higher gross margin a genuine competitive benefit?
You said there’s enough agave in the ground to meet demand even with tequila growing and potentially overtaking vodka, and alluded to prices coming down in the next two years. What’s your 5-10-year pricing outlook? Can supply match demand?
How much of the finished product’s quality is down to the agave or distillation and ageing?
How would agave reducing to MXN 10 per kilo impact end-market pricing? Is it just a gross margin benefit?
How should we assess tequila’s unit economics vs that of other big categories such as vodka or American whisky?
Will tequila’s growth drivers be any different in the future? You seem optimistic about the category’s prospects.
Who would be best-positioned to capitalise on agave-based RTD [ready-to-drink] cocktails if they took off? Would it be big spirits, big beers, independent, smaller players or even food companies?
What is the tequila category’s biggest risk? What could cause it to suddenly fizzle out? You described it as being hot, so how confident are you that it’s not just a fad?
Where are tequila’s US volume growth opportunities? Are they demographic- or consumption-related? Could tequila possibly be consumed with food?
Might there be more opportunities for a consumer to chose tequila over vodka or American whisky? Is there anything around pairing tequila with food?
You said tequila is fairly close to overtaking vodka and becoming the US’s number one spirits category. Where do you think it will max out?
Will the top end of tequila’s price points continue to expand? Presumably there will be an ongoing premiumisation trend, but how much of a pricing opportunity is there for this category? You seem very positive about volume dynamics.
Can tequila compete with other categories’ higher prices for new, higher-perceived-quality products? Spirits such as Scotch and cognac have much higher price points than USD 140-150.
Is it a matter of time before we start thinking about consuming tequilas as a super-premium spirit?
How do tequila and mezcal interact? Should we consider them one category or do they have different consumers?
Could mezcal eat into tequila’s market share if it takes off or would both of them gain share from vodka?
Are tequila consumers notably brand loyal? Could this vary further up the price point ladder?
What are tequila’s barriers to entry? What does it take to establish a tequila brand other than celebrity endorsement?
Do you think new entrants’ proliferation has peaked in the tequila category?
Could big corporates such as Diageo and Pernod benefit from buying more tequila brands? They were quite slow to the party but have made select acquisitions now and built a portfolio.
Which US large spirit companies are best-placed to win back market share within tequila organically?
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