What’s Next After Tequila’s On Premise Triumph?

Tequila in the US On-Premise

By Matthew Crompton, Vice President – BevAl On-Premise | Originally published in Bar & Restaurant News

It’s no industry secret that beverage alcohol sales have faced significant headwinds in recent years. In a market where contraction often outweighs growth, both operators and suppliers are constantly scanning for green shoots of recovery. Naturally, investment and innovation tend to flow into categories that show resilience, and few have proven more robust than tequila.

Tequila has emerged as the standout success story in the On-Premise spirits landscape. Once relegated to the “shot” occasion, it has evolved into a versatile category embraced across a wide range of drinking moments by the average American consumer. From premium sipping experiences to craft cocktails, tequila’s transformation has been nothing short of remarkable.

But what’s next for the category? As with any meteoric rise, a plateau is inevitable. Growth will slow, and not every brand will win. The question now is: How much bigger can tequila get in U.S. bars and restaurants? Will it continue to expand its footprint, or are we approaching saturation?

Still The Category to Watch

Let’s start with the hard numbers. Tequila is now the top-performing spirits category in the U.S. On-Premise by dollar sales, outpacing both whiskey and vodka. And it’s not just holding steady; it’s still growing. In a market where total spirits sales are down 1.6% year-over-year, tequila stands out with a 1.9% increase. That makes it not only the largest category, but also the fastest-growing.

Interestingly, cordials are the only other category showing growth, a trend that may be partially attributed to their role in the ever-popular margarita. As one of the most ordered cocktails in the On-Premise, the margarita continues to serve as a gateway for tequila and its adjacent categories, reinforcing its dominance and cultural relevance.

Tequila Reposado Continues to Rise

One of the most significant shifts over the past year has been the growing consumer understanding of the tequila category. Education around production styles, aging processes, and quality cues has improved dramatically. In fact, tequila knowledge among consumers is now arguably comparable to that of whiskey enthusiasts.

This deeper awareness is influencing demand. Blanco remains the leading varietal in both volume and value, but it is beginning to show signs of decline, with sales down -1.0% compared to last year. Gold epecial brands are also losing ground, trending down -5.1% over the same period.

What is driving the category’s overall growth today are the more premium expressions, particularly extra añejo and, most notably, reposado. With its smooth character, aged complexity, and versatility in cocktails, reposado has become a standout choice for both casual drinkers and aficionados, helping to push the category forward.

Cocktail Domination

Tequila is taking center stage in the mixed drink scene thanks to its remarkable flexibility. Recent consumer data shows that 43% of cocktail drinkers choose tequila as their favorite spirit base, placing it well ahead of flavored vodka, which comes in at 34%.

Among individual cocktails, the margarita stands out as the clear leader in bars and restaurants across the country. Its broad appeal, spanning both premium and mainstream versions, drives a rate of sale more than four times higher than the mojito, which ranks second. This commanding performance highlights the margarita’s unique ability to connect with a wide range of consumers and occasions.

To Finish

Tequila’s transformation from a niche shot to a dominant force in the On-Premise spirits landscape is one of the industry’s most compelling success stories. Its continued growth, led by premium expressions like reposado and anchored by the enduring popularity of the margarita, signals strong consumer engagement and evolving tastes. Yet, as the category matures, the path forward becomes more complex.

With more brands entering the space and consumer attention increasingly fragmented, operators and suppliers must navigate a crowded field. Sustained success will depend not just on riding the wave, but on smart differentiation, thoughtful portfolio management, and a clear understanding of where tequila fits in a shifting cocktail culture.

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