Tequila production in Mexico fell to 495.8 million liters after a 2022 peak

Tequila enters 2026 as a global spirits category that is still growing in value, but no longer in a straight line by volume. The broad picture is clear across industry and market reports: retail sales continue to rise, helped by premium products, wider demand for 100% agave tequila and expansion beyond its traditional strongholds. At the same time, physical growth has slowed as the U.S. market matures, alcohol consumption moderates and producers work through inventories built up after the pandemic boom.

A conservative market series places global tequila sales at about $12.18 billion in 2026, up from $9.11 billion in 2021, equal to a compound annual growth rate of 6.0%. Other research firms put this year’s market higher, between $13.1 billion and $13.7 billion. The gap reflects different methods for measuring retail sales, shipments and on-premise consumption, but not a disagreement about direction. Tequila is still expanding in value. What has changed is the pace and the balance between price and volume.

That distinction matters because tequila’s industrial base remains entirely tied to Mexico. Under the Tequila Denomination of Origin, the spirit can be made only from blue Weber agave in 181 municipalities across five states. Jalisco remains the center of production, while Guanajuato has become the second major agricultural hub for tequila agave. The denomination continues to protect authenticity and pricing power, but it also concentrates risk in a limited geography and makes the category more exposed to swings in planting cycles, weather and local costs.

After reaching a visible production peak in 2022, supply corrected sharply. Certified tequila production in Mexico rose to 651.5 million liters that year, then fell to 598.7 million liters in 2023 and 495.8 million liters in 2024. Industry references place 2025 output at roughly 496 million liters. From January through May of this year, production reached 248.7 million liters and exports totaled 174.7 million liters, suggesting some stabilization if that pace holds, though it is too early to treat that as a final annual figure.

The agricultural cycle explains much of the volatility now shaping the market. Mexico’s agriculture ministry said planted area for tequila agave increased 167% between 2014 and 2023. By the end of 2023, there were more than 214,000 hectares planted across 231 municipalities in 12 states, though only agave grown within denomination territory can legally become tequila. That mismatch between broad planting expansion and strict regulatory limits helped push the sector from shortage to oversupply in a short period.

The result has been a collapse in agave prices. Industry data cited by IWSR showed prices falling from highs near MXN32 per kilogram to MXN5 per kilogram by early 2024. In many transactions during 2025 and into 2026, sector sources have placed prices between MXN0.8 and MXN8 per kilogram, often near the low end of that range. For large producers, cheaper agave has improved margins. Becle, owner of Jose Cuervo and other tequila brands, has said lower input costs tied to agave supported gross margin gains. For farmers and smaller operators, however, the same shift has created severe financial pressure.

Inventories remain another sign that the market’s problem is not lack of tequila but how to sell existing stock profitably. At the end of 2023, Mexico’s Tequila Regulatory Council told the Financial Times that inventories stood at around 525 million liters, nearly equal to annual production at the time. That overhang continues to shape pricing decisions in 2026 and helps explain why value growth looks healthier than volume growth.

Exports remain central to the business model. In 2024, Mexico exported 400.3 million liters out of total production of 495.8 million liters. Open industry references point to exports of about 407.98 million liters in 2025. The domestic market remains important, but tequila depends heavily on foreign demand, especially from the United States.

The U.S. still dominates by a wide margin. It accounts for more than two-thirds of global tequila volume and more than four-fifths of Mexican export shipments by volume. Open trade references place U.S.-bound exports above 331 million liters in 2025. Yet this is also where momentum has cooled most clearly. IWSR has described 2024 and 2025 as a period of stagnation for tequila volumes in the United States and expects a slight decline in volume in 2026.

That does not mean American consumers have turned away from tequila altogether. It means they are buying differently. In the United States, ultra-premium tequila continued to grow in 2024 and 2025, rising 7% and reaching about 17% of category volume, up from just 6% in 2019 according to IWSR data cited by industry publications. At the same time, super-premium products declined by 6%. The shift suggests consumers are still willing to pay for quality but are becoming more selective about how far up the price ladder they will go.

Outside the United States, several markets are gaining weight. Mexico remains the second-largest market and posted a modest rebound after years of slower growth. In Europe, Spain and Germany stand out as leading destinations by volume, with Canada also remaining significant in North America outside the U.S. Colombia has emerged as one of the fastest-growing buyers, while Japan leads among open Asian destination data and India is increasingly watched as an expansion market after strong recent gains from a small base.

Open export figures for 2025 show Spain importing about 7.07 million liters of tequila from Mexico, Germany about 6.66 million liters, Canada about 6.15 million liters, Colombia about 4.48 million liters, France about 4.38 million liters, Japan about 3.98 million liters and Italy about 3.76 million liters. Industry analysts also point to growth pockets across Asia, Africa and Latin America even where public volume data remain limited.

The mix of what is being exported also matters as much as where it goes. In 2025, exports of 100% agave tequila reached about 278.62 million liters compared with roughly 129.37 million liters for standard tequila categories, meaning around 68.3% of exports came from the higher-end segment tied more closely to premium positioning and stronger pricing.

That trend helps explain why value can keep rising even when total liters flatten out. It also shapes competition among brands and producers at a time when not every premium label is performing equally well.

Jose Cuervo remains the largest tequila brand by volume globally among leading labels tracked by The Spirits Business, with about 8.9 million nine-liter cases sold in 2024 despite a decline of 6.4%. Don Julio posted one of the strongest gains among major brands at about 4.4 million cases, up 28.2%. Patrón fell 11.8% to around 2.8 million cases and Casamigos dropped even more sharply, down 20.7% to roughly 2.4 million cases as several celebrity-linked or high-priced premium brands normalized after earlier surges.

At the corporate level, Becle remains the dominant platform in tequila through Jose Cuervo, 1800, Gran Centenario and Maestro Dobel among others. The company sold more than 24 million nine-liter cases across its portfolio in 2025 and continues to rely on tequila as its core business while shifting toward a more profitable mix beyond its flagship value brand lines.

Diageo presents a more polarized picture inside tequila: Don Julio has been one of its strongest performers while Casamigos has weakened materially after years of rapid expansion. Brown-Forman reported a 6% organic decline in its tequila portfolio in fiscal year 2026 with pressure on Herradura and el Jimador. Campari’s Espolòn has held up better than some rivals thanks to what analysts describe as an accessible premium position.

That middle ground may be where much of tequila’s next phase is decided. As inflation pressures linger and consumers become more careful with discretionary spending, brands priced above mass-market offerings but below luxury labels appear better placed than those trying to defend very high premiums without clear differentiation.

Innovation is moving accordingly toward ready-to-drink products based on tequila, flavored extensions and launches aimed at mid-to-upper price points that feel attainable rather than aspirational only for special occasions. In U.S. ready-to-drink beverages, spirit-based products have gained share quickly over recent years, creating room for canned margaritas and spritz-style drinks tied to established tequila names such as Jose Cuervo, Casamigos and el Jimador.

Channel dynamics also show how broad tequila’s appeal has become even as growth slows from earlier highs. Some commercial research firms estimate off-trade still accounts for most sales volume globally because consumers continue buying bottles for home use through retail stores and chains. Other estimates give on-trade a larger share when measured differently or focused on value rather than volume. Taken together, those readings suggest less a contradiction than a split role: retail drives scale while bars and restaurants remain crucial for premiumization, cocktails and brand visibility.

On-premise data cited by NIQ have shown tequila as one of the few spirits categories still posting global value growth over the past year in several markets including Canada, the United Kingdom and the United States, though Germany has been weaker.

E-commerce has also settled into a structural role rather than a temporary pandemic habit. Online alcohol sales remain relatively small compared with total off-trade volume but are increasingly important for discovery, premium purchases and long-tail assortments that may not be available widely on shelves.

Demographic shifts support this more selective pattern of consumption rather than simple abstention among younger adults. IWSR research indicates legal-age Gen Z consumers are participating in beverage alcohol at high rates across major markets but choosing fewer categories per occasion than before. For tequila producers that means origin stories, cocktail versatility and credible quality may matter more than pushing ever-higher luxury cues alone.

Still, demand trends are only part of what defines tequila’s outlook this year. Regulation and reputation have become more central risks than they were during the previous upswing.

One flashpoint has been labeling around “additive free” claims. Mexico’s Tequila Regulatory Council and consumer authorities have argued that such language can mislead buyers if it is used commercially without formal verification under recognized standards. The issue escalated after Patrón exports were temporarily blocked during a dispute linked to marketing claims in the United States and after Mexican authorities challenged private groups that had been certifying or promoting additive-free status outside official channels.

The direct financial impact so far appears limited compared with broader supply-demand forces, but the reputational stakes are larger because they touch on authenticity at a moment when consumers are paying closer attention to ingredients and production methods.

Trade policy remains another concern even if immediate damage has been contained so far this year. In early 2025 there was serious concern over possible new U.S tariffs on Mexican goods including tequila at rates as high as25%. By mid-2026 Reuters reported that newer U.S measures did not alter effective treatment for Mexican goods compliant with USMCA rules, easing fears of direct disruption for now. Even so, producers remain sensitive to tariff risk because their dependence on the U.S market leaves little room for complacency.

Sustainability pressures are also becoming harder to separate from profitability questions across the supply chain. The Tequila Regulatory Council has framed its sustainability strategy around goals including decarbonization, water efficiency and better agricultural practices. Academic work cited by industry sources estimates that one bottle of reposado tequila can generate roughly 2.27 kilograms of carbon dioxide equivalent emissions when accounting for farming, cooking, distillation and bottling stages.

Water use and energy exposure are especially relevant because production remains concentrated geographically while climate stress grows more visible across parts of western Mexico. Social sustainability is just as pressing: when agave prices collapse this sharply, profits shift toward bottlers while growers absorb much of the pain.

Some mitigation efforts are emerging through circular uses for agave bagasse in packaging materials and through biodiversity programs that preserve flowering agave plants important for bat pollination and genetic diversity within agave populations.

For now, most analysts see a base case through 2028 built on flat or slightly negative U.S volumes offset by gradual gains in Mexico and selected emerging markets such as Colombia, Japan and India; continued strength for100% agave exports; slower price increases; and ongoing premiumization led less by luxury extremes than by accessible premium products.

Under that view, global market value would continue rising at roughly the same pace seen since 2021 even if physical volumes recover only modestly from current levels.

The main uncertainty is whether inventories can be worked down without triggering an extended price war across brands already facing softer demand growth in their largest market. A second question is whether American drinkers continue trading within premium tiers rather than stepping out of them altogether as moderation trends spread further through spirits consumption.

A third issue lies back at origin: whether growers, distillers and regulators can improve planning enough to avoid repeating another sharp cycle of shortage followed by oversupply once prices eventually recover again.

In that sense, tequila’s story in 2026 is no longer simply one of relentless boom driven by celebrity labels and rising bar tabs in American cities. It is now a more mature global business shaped by inventory discipline, agricultural economics, regulatory credibility and selective consumer spending — with Mexico still firmly at its center and with growth still intact mainly where authenticity can be defended and price can still be justified.