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The Mexican Fiesta - An AlcoBev Party The World Needs To Join In

Updated: Mar 2

Celebrations are an important aspect of Mexican culture and alcoholic beverages play a crucial part in those celebrations. Likewise, the Alcobev industry plays a very important part in the country’s economy.

Mexico has long been a significant market for the manufacturing and sale of alcoholic beverages. It is also a significant source of income for many local businesses. Mexico's AlcoBev market is expected to develop at a CAGR of 7.3% between 2022 - 2025. This expansion is being driven by the country's expanding demand for alcoholic drinks as well as the country's expanding middle class. The growing agave spirit sector in Mexico is proof of this. With the boost that the sales of agave-based spirits, dominantly tequila have seen in the past 5 years, new agave spirits are seeing growing interest. Even though products like mezcal, sotol, raicilla, and bacanora are still in their infancy, still the demand and supply for Mezcal are growing rapidly following the tequila trend.

The Mexican AlcoBev market is predicted to expand at a healthy rate in the coming years. This expansion is mostly due to increased market prospects. Some of the important reasons fueling the expansion of the Mexican Alcobev market are the country's robust economy and growing disposable income level among the populace. As important trends arise in the Mexican AlcoBev market, and some of the key business entities working in the sector, the market is also experiencing a transition from local to imported spirits. Brand reputation and representation is the most important factor in the average upper-income consumer’s purchase decision, along with the quality of the product. Price, on the contrary, attracts purchases from lower-income consumers, while enticing packaging also drives the consumer interest

Despite the economic setback caused by the COVID-19 epidemic, the alcoholic beverages business is rebounding rapidly, thanks to a wider, more cost-effective, and less affected retail channel. Volume sales in the off-trade increased over time, and as the unemployment rate fell and disposable incomes went up gradually, alcoholic beverage performance is seeming to regularise gradually. Furthermore, small formats of spirits are expected to gain popularity among consumers throughout the coming period since they are perceived as more economical choices than well-positioned brands. Middle and upper income usually opt for premium spirits, especially Whiskey, Ultra-Premium Tequila and Cognac, Mezcal, Gin, which are status symbols in the society. While millennials incline toward RTDs.

Expanding middle class, leading to corresponding changes in patterns of consumption. As we expect the entrance of young brands to explore the market, we also see a great rise in the demand for locally produced spirits in the Mexican market.

As bars and restaurants reopened, on-trade sales are heading to grow at a steady pace. The gain in the momentum of tourism, also adds a factor of higher demand for a broader profile of drinks to choose from, for the final consumer. The mid-priced segment will be the ones to offer opportunities to the market, as the currency exchange rate is going in favour of the Peso. In this regard, since the Mexican peso is appreciating against the US dollar, several brands such as Tecate, Modelo, and Victoria are witnessing growth in terms of price-competitiveness over domestic beers.

These factors supplement the overall development of the Mexican alcoholic beverage market. Mexico is a new but developing AlcoBev market that has supported market expansion by supplying a broader priced portfolio of products to all consumer segments. The premium and super-premium segments are great for emerging brands, and the need for imported spirits encourages the development of new brands in Mexico. While almost half of the market remains unserved, in the Mexican market, growth will continue to boost demand for AlcoBev's goods.

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