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How NAFTA renegotiations could threaten America’s love affair with tequila

Jana Kasperkevic Jul 24, 2017
Patron is the go-to brand of tequila for 15 percent of millennials.  Andreas Rentz/Getty Images

How NAFTA renegotiations could threaten America’s love affair with tequila

Jana Kasperkevic Jul 24, 2017
Patron is the go-to brand of tequila for 15 percent of millennials.  Andreas Rentz/Getty Images

The trade relationship between the U.S. and Mexico might be a little rocky at the moment, but one thing is for sure: Americans drink a lot of tequila. And not just any tequila — we drink the good stuff.

From 2002 to 2016, “super premium tequila” grew in popularity so fast that its import increased by 706 percent. In 2016, 2.9 million 9-liter cases of super premium tequila made their way into the U.S., according to the Distilled Spirits Council. Overall, in 2016, suppliers of U.S. tequila imports had revenues of $2.5 billion.

Demand for tequila in the U.S.

The demand for high quality tequila has been enough to convince the Patrón Spirits Co. to add a new line of tequila for the first time in 25 years. Its other additions have all been limited-release offerings. The new type of tequila, Extra Añejo — which is to be aged in oak barrels for more than three years and will come with a suggested price-tag of $89.99 — was announced earlier this month. According to Fortune, the new line of tequila has notes of banana, honey, and vanilla.

Patrón is a go-to tequila brand for about 15 percent of millennials, according to Neustar, an analytics firm that tracks real-time online and offline purchases.

Another brand to capitalize on the demand for premium tequila is Clase Azul, whose bottles of tequila sell for $100 to $300,000 each. They all come in “hand-sculpted, hand-painted ceramic decanters,” according to CNN Money. Last year, the company sold 234,000 bottles.

There is one thing, however, that could impede the flow of tequila into the U.S. — uncertainty in Washington. The promise of renegotiating NAFTA and the possibility of a 20 percent tariff on Mexican imports, which was previously floated by former White House press secretary Sean Spicer, has some importers putting on the breaks.

“I’m slowing down,” Javier Martinez, president and CEO of Martinez Brands, an importer of tequila and spirits, told Marketplace earlier this year. “I need more clarity.”

In January of this year, John Paul DeJoria, co-founder of Patrón, warned that the American people would be the ones to pick up the tab for any tariffs if they were to be implemented.  

“If the tax comes across, we have to raise our prices,” he told CNN. “So it’s passed on to our distributors, onto the retailer, which will pass it on to the consumer.”

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