Amidst Declining Booze Consumption, Tequila Continues to Rise

As other spirits wane, why is tequila climbing the liquor ladder?

Gen Z’s disinclination to drink as much as their millennial and Gen X predecessors is beginning to affect liquor companies’ bottom lines. Recent industry data show substantial drops in the consumption of many of the most common liquors: vodka, gin, whiskey. There’s an emerging exception to the lay-off-the-liquor trend, though: tequila.

Chaz Smith, the beverage director at FS Food Group, thinks he knows why. Tequila—an agave-derived spirit, like the less common but increasingly popular mezcal—is a versatile liquor: Like vodka, it lends itself to an assortment of varieties, styles, and flavors that distillers are just beginning to explore. Tequila brands are also embracing environmental and social concerns important to young people, and they’re catering to Gen Z’s growing distaste for additives.

“Of all the spirit options, agave tends to be the healthier choice,” Smith says. “There’s been a huge additive-free movement in tequila. Agave is a natural sweetener without the added process of putting more artificial ingredients into it.” 

Dark liquors like whiskey and rum also have a reputation for worse hangovers. “There is a little bit of truth to that,” Smith says. “Darker-based liquors means it’s barrel-aged. But if you don’t have a lot of time to let it mature in the barrel and you want to just get it out on the market, you put additives in it to give it that color, and those added things are going to give you that next-day, brown-bottle flu.”

It could explain why whiskey is falling out of favor with the younger demographic. “The boom spirit in the late ’90s and early 2000s is starting to show its decline,” Smith says. “We’re in the South, so there will always be a bourbon community, but you’re seeing tequila take a step at the throne.” It was the only liquor category in a March report from the Wine & Spirits Wholesalers of America that experienced a rise in sales volume, 1.3%, over the previous year. Vodka, gin, and American whiskey all dropped by about 5%.

Smith points to Casamigos and Don Julio as the “tried-and-true brands” that will always have a place at Paco’s Tacos and Tequila. But, he says, “celebrity tequilas” from stars like Dwayne Johnson and Matthew McConaughey that were popular in the early 2010s are fading out. Now he displays additive-free brands like Lalo and Tapatio front and center: “A majority of additive-free tequilas are a bit cheaper than bigger brands, too.”

He’s also started to carry zero-waste brands like Cazadores and Siesta Leguas and followed their lead with community outreach. “Gen Z is more thoughtful about which brands they spend their money with,” he says. “People want to know the why behind the brand.” In April, he highlighted Astral Tequila, which takes leftover agave fibers and turns them into adobe bricks to build homes. Paco’s Taco’s and Tequila participated in Astral’s “Drink Margs Do Good” initiative; Astral donated more than $50,000 to Habitat for Humanity affiliates across the country, including Habitat for Humanity of the Charlotte Region.

For sober—or sober-curious—customers, Smith uses alcohol-free brands like Cut Above Zero-Proof spirits in non-alcoholic margaritas and palomas. He’s also rolled out interactive presentations (“You get to be your own Tom Cruise at the table”) and hosts monthly cocktail making classes at Calle Sol. He continues to expand his tequila collection, too. By the time you read this, he expects Paco’s to have 260 brands.

“More bars should, and you will see, start to embrace the tequila moment,” Smith says. “It’s forecasted to climb and climb.”