Sarah Jarosz spotlights exploration and letting go of inhibitions in her song “Mezcal and Lime” when she sings, “You go to my head/Like a summer night/Intoxicate me/Like mezcal and lime.” Based on market performance, consumers are showing their interest in exploring Mexican-based spirits like mezcal and tequila.

Earlier this year, the Distilled Spirits Council (DISCUS) released its Annual Economic Briefing, which showed that in 2024 tequila/mezcal sales were up 2.9% totaling $6.7 billion.

Brian Sudano, CEO at S&D Insights LLC, Norwalk, Conn., notes that the overall spirits category declined in 2024 in terms of dollar sales, but volume was up slightly, crediting ready-to-drink (RTD) spirit options.

“Within this context, tequila/mezcal volume declined slightly while dollars advanced at low single digits,” he says.

Although volume for the tequila and mezcal segment receded, the uptick in dollar sales could be attributed to consumers interest in premium spirits.

“Tequila/mezcal is a premium category in the U.S. with average price points above other categories,” Sudano says. “As a result, the premium movement has supported the overall category growth. Within the segment, the high end continues to drive performance; however, the performance gap has moderated recently.”

Abe Lichy, co-founder and CEO of Mezcalum, New York, also calls attention to the impact premiumization is having on the tequila and mezcal market.

“Premiumization is driving tequila and mezcal to new heights,” he says. “Consumers want authenticity, craftsmanship, and unique flavor profiles — especially in the ultra-premium tier.”

Lichy notes that tequila, particularly in the premium and ultra-premium space, continues to show dominance, but also highlights the growing impact of mezcal.

“Mezcal is surging, with double-digit growth as more consumers discover its depth and complexity,” he says.

Also playing a role in mezcal and tequila’s popularity is their appeal to multi-cultural consumers.

“Tequila and mezcal aren’t just spirits — they’re cultural touchpoints,” Lichy says. “Younger, multi-cultural consumers are shaping the market, pushing demand for more authentic, high-quality agave spirits.”

S&D Insights’ Sudano adds that although tequila and mezcal appeal to multi-cultural consumers, they have resonated in general with legal drinking age consumers.

“Tequila/mezcal over index to Hispanics, but at the same time has made tremendous inroads into the general market, which has supported much of its out performance in spirits over the past 10 years,” he says.

The interest in mezcal and tequila also has impacted the on-premise channel.

“Twists on popular cocktails using tequila/mezcal versus other spirit types are becoming more readily available,” Sudano says. “This includes Old Fashions and Negroni’s [and] other new cocktails such as Disco Picante (it includes mezcal, blue cuacao, lime juice, agave syrup and spice liquor).”

Mezcalum’s Lichy also highlights the elevation that cocktails with tequila and mezcal have experienced in recent years.

“Tequila and mezcal aren’t just for Margaritas anymore,” he says. “Bartenders are using them in

bold, creative cocktails, making them menu staples from dive bars to Michelin-starred restaurants.”

Given the popularity of these spirits, the market also is seeing more entrants in the conversation.

“With more entrants in the market, differentiation is key,” Lichy says. “For tequila, that means standing out in a crowded space. For mezcal, it’s about protecting authenticity while scaling smartly. Mezcalum is well positioned in its appeal to both the male and female demographic.”

S&D Insights’ Sudano, meanwhile, notes that the innovation is helping to expand the category, but adds that consumers can become perplexed as options expand.

“Tequila/mezcal is approaching vodka to be the largest segment within U.S. spirits,” he says. “Innovation will continue to play a role in the category as long as it continues to gain market share. However, too many new entrants clutter the shelves and will create consumer confusion. As new entrants have expanded, it has put pressure on the overall category.”

Next steps

As tequila and mezcal has showcased their appeal to the U.S. market, concerns remain following President Donald J. Trump planned implementation of tariffs on goods from Canada and Mexico under the International Emergency Economic Powers Act (IEEPA). As of press time, the 25% import duty had been delayed until April on imports from Mexico and Canada that comply with the U.S.-Canada-Mexico Agreement (USMCA). Spirits produced in Canada, Mexico and the United States are all covered under USMCA.

“The American consumer is already feeling the pinch from a slowing economy and rising prices over the past several years,” S&D Insights’ Sudano says. “The tariffs will have an impact on pricing if it is maintained for a sustained period of time. As tequila/mezcal is a high-priced segment to start, the impact will likely be a little more moderate than it will be on Canadian whisky, but it will likely moderate demand in the short term.”

Mezcalum’s Lichy further details that brands in the premium tiers could be better positioned than value brands to navigate the tariffs.

“Tariffs on Mexican imports could mean higher prices for tequila and mezcal,” he says. “Premium brands may weather it, but value and mid-tier segments will feel the squeeze. Given Mezcalum’s nimble positioning and proactive steps taken to mitigate margin hits, tariffs could give Mezcalum a competitive advantage compared to the larger players in agave.”

If tariffs remain in place for an extended period, S&D Insights’ Sudano anticipates it will have an impact on 2025 performance for tequila and mezcal.

“Spirits overall continue to be under pressure especially from RTD alternatives,” Sudano says. “If the economy slips into a recession and tariffs remain in place from awhile, it is likely that tequila/mezcal will likely decline in 2025. Regardless of the length of any tariffs, we see tequila/mezcal being flat to down slightly in dollars and volume down in the low single digits in 2025.”

Despite this variable, there’s no denying that consumers have a thirst for Mexican-based spirits.

“Mezcal’s moment is here,” Mezcalum’s Lichy says. “More awareness, more cocktails, and more growth — especially in high-end bars and retail. The key? Keeping the category authentic while expanding its reach.”