Why Is Mexican Beer Such a Hit With US Consumers?

Margaritas to Mezcal

Americans are not drinking alcohol as frequently as they used to. But when it comes from south of the border, they’re drinking it more than ever.

Sales of tequila, mezcal, and Mexican beer have surged in recent years. In fact, these agave-based spirits outpaced American whiskey last year, and became the second-fastest growing spirit category in the nation.

Spirit Sales

The U.S. is already the single biggest market for Mexican alcohol.

In 2022, sales of tequila and mezcal exceeded $6 billion, more than double the round $3 billion sold in 2018. And these skyrocketing sales aren’t just limited to liquor. Mexican beer sales are also rising.

Imports of Mexican beer are already up more than 10% from last year. Modelo Especial (STZ) recently became America’s best-selling beer, pushing Bud Light (BUD) to second place after more than two decades at the top.

Major Players

The alcohol industry is highly consolidated, with just a few conglomerates owning dozens of popular brands. Popular Mexican brands include:

•   Constellation Brands, which owns Pacifico and Corona’s U.S. operations, in addition to Modelo’s U.S. assets.

•   Diageo Brands (DEO) is the parent company of Don Julio Tequila, as well as Casamigos, the high-end tequila brand co-founded by George Clooney.

However, investors interested in this space should be warned that not all Mexican beers are thriving equally. For example, while Modelo and Corona are both on the rise, sales of Heineken-owned (HEINY) Dos Equis have declined in recent years.

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