China Set to Become World's Second-Highest Tequila Market

Image: China Set to Become World's Second-Highest Tequila Market A container with bottles of tequila being exported from Mexico to China is parked outside the Tequila Regulatory Council in Guadalajara.

Thursday, 10 Apr 2014 12:53 PM

By Sandy Fitzgerald

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China could become one of the world's leading tequila markets within the next four years, experts say, with the Chinese downing more tequila than Mexican consumers and just less than those in the United States, industry experts say.

Pure tequila was banned in China, which is already the largest-growing alcohol market in the world, until June, when China President Xi Jinping and Mexican President Enrique Pena Nieto signed a deal to end tensions between their countries, reports The Texas Tribune.

The presidents not only signed deals to open up the tequila market, but also on energy, trade, mining, and intellectual property.

The Regulatory Tequila Council in Mexico believes that opening up the tequila market to the Chinese means that in four years, tequila exports from Mexico will go from below $5 million in 2013 to $100 million in 2013. The Council projects Chinese tequila consumption levels will reach 84.4 billion liters by 2016, for annual growth of nearly 6 percent.

“We’ve got a great business opportunity ahead of us,” said Cristobal Mariscal, executive vice president of operations at the Regulatory Tequila Council. “We’re talking about a market with 300 million customers with great purchasing power.”

And Mexico's good news could have implications for United States markets and Texas tequila makers. The North American Free Trade Agreement made Mexico the United States' largest trading partner, with $500 billion worth of imports and exports combined in 2011, the latest year surveyed, according to the Office of the U.S. Trade Representative.

After the tequila ban was lifted, drinkers in westernized cities like Hong Kong, Beijing, and Hong Kong started making the spirits more popular, and manufacturers are convinced that China will become the second-largest market for tequila in the world.

The new market will also benefit American companies like Dulce Vida Spirits in Austin, which has launched a marketing campaign in China and set up import distributors in its major cities.

“It’s truly a greenfield opportunity over there,” said Dulce Vida Spirits co-founder and CEO Richard Sorenson, who opened the company just six years ago.

Traditionally, Chinese drinkers have preferred a grain-based alcohol, baijiu, not the agave-based tequila. But other spirits and drinks have caught up and in 2012, red wine and beer became the drink of choice, but tequila is not far behind.

In addition to trade bans with Mexico. the Chinese government for years prohibited tequila for sanitary reasons, saying that its high levels of methanol were risky and only allowing mixed tequila, made from sugar cane, to be sold.

Sorenson said his product has been well received, with the first large shipment for its debut to arrive next month. Later this year, the company plans to market a five-year aged Añejo, a “pet project” that Sorenson anticipates will be a success in China, where barrel-aged spirits are popular.

Mexicans are already getting ready for the boom market. In Tequila, the Mexican town named for the drink, farmers are cultivating thousands of new acres of agave to prepare for the Chinese demand.

Further, the Mexican government and the tequila industry are also launching a rare joint campaign to introduce Tequila to China.

Related stories:
China Now the World's Top Beer-Drinking Nation
http://www.newsmax.com/TheWire/China-BeerDrinkers/2011/04/23/id/393858/

Getting Drunk Is Part of the Job for Chinese Officials
http://www.newsmax.com/InsideCover/drunk-chinese-officials/2009/07/20/id/331681


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