Diageo is on a mission to redefine consumers’ perceptions of tequila from being the spirit of shots and nightclubs to seeing it as a “premium drinks experience” that can play a diverse role in different occasions.

The drinks maker is seeking the grow the tequila category globally, having already seen particular success in the North American market. In Diageo’s interim results for the period ended 31 December 2024, the business reported its tequila business grew net sales by 21% in the half, with North America being the biggest growth driver.

Sophie Kelly is the business’s global senior vice-president for its tequila and mezcal categories and is leading its charge to take tequila’s success worldwide. In markets like the US and Mexico, tequila’s success has followed food and nightlife culture, where the spirit is now closely associated with broader occasions and serves, she says.

“There is this real shift: from tequila is about shots, to tequila is a premium experience,” she tells Marketing Week.

The key to that, is it’s not one size fits all, right, so not just taking what’s happening in North America and dump it somewhere else.

Sophie Kelly, Diageo

That challenge of moving perceptions of tequila to build understanding among consumers of its versatility is something that Diageo would like to replicate globally. However, it also recognises that a copy-and-paste approach to the strategy will not cut it

“The key to that, is it’s not one size fits all, so not just taking what’s happening in North America and dumping it somewhere else,” Kelly says.

Catering to specific tastes as well as cultures in each market is absolutely crucial to the success of tequila globally, she says, describing “cultural relevance” as a central pillar to growing the category.

Despite its reputation among some consumers as being a spirit reserved for the very specific occasion of taking shots, tequila actually has a lot of versatility as a liquid, notes Kelly, making it relevant for lots of different serves suited to different tastes.

Differentiating brands

The global growth of tequila for Diageo is not being driven by just one brand. The business has a portfolio of several tequila brands, led by its two global brands: Don Julio and Casamigos.

As with any portfolio business, it is crucial for brands playing in the same category to play distinct roles in order to grow the company’s total market, rather than cannibalise each other’s share.

Don Julio, founded in 1942, is described by Kelly as one of the “ultimate OGs of nightlife celebration”, and has also had a focus on being a “refined” liquid. The brand has luxury and high-premium variations, including its 1942 products.

Casamigos, on the other hand, is much more “relaxed”. The brand was created by actor George Clooney and his friends, Rande Gerber and Mike Meldman. Kelly says it is “made by friends, for friends”, and describes the liquid as “easy” and “accessible”.

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“It’s about understanding the DNA of your brand,” says Kelly, adding that she and her team deeply understand the role that each brand plays with consumers.

This comes through in how it communicates to consumers and how the brands show up, she says.

“When you look at both of the brands and how they turn up and who they collaborate with, they’re very distinct,” she says.

Diageo is also using AI to match consumers with the right tequila for the right occasion, through its ‘What’s your tequila?’ tool, which asks users about their “vibes”, from “party” to “casual conversation”, and their tastes. This helps to ensure they find the right product to meet their needs, says Kelly.

Education is key

Artificial intelligence is aiding Diageo’s mission to grow tequila through other tools, for example, by helping it with the key role of “education”.

With many misconceptions about the role of tequila and its taste profile still existing among consumers, one of the main jobs for the category is to “educate”, says Kelly. In particular, by illustrating the versatility of the liquid, from its role as a sipping beverage, to cocktails ranging from margaritas to espresso martinis made with tequila.

Using AI, Diageo created a bartender AI tool, which suggests serve, can answer consumers’ questions and “educate people at a scale and pace that [it] could never do with traditional assets”, says Kelly.

We also have to understand the multiple audiences on the way to the consumer.

Sophie Kelly, Diageo

While she is excited about the role technology like AI has to play in scaling Diageo’s mission to educate people and, ultimately, drive tequila consumption, Kelly is a firm believer that there is no replacement for trying the product.

“I think real-life experiences and getting people to actually taste and experience the quality of our products is a number one priority for growth,” she says.

Therefore, engaging with the on-trade, where many consumers discover and enjoy brands like Don Julio and Casamigos for the first time, is vital.

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“Everyone talks about consumers. But, how are we going to get to consumers in our business? We also have to understand the multiple audiences on the way to the consumer,” Kelly says.

That means engaging with bartenders who will ultimately be the ones serving consumers. In the US, the growth of tequila has been driven by the on-trade, something that is transferable globally, she says.

Therefore, bartender engagement with Diageo’s tequila brands is “critical”.

“The reason it’s critical is it fuels the cultural relevance in the brand, and it fuels the on-premise behaviour and what people do in bars, clubs and restaurants, but also it fuels what they do at home, which is a massive occasion for the brand,” she says.

Collaborating to drive success

The way people drink and consume spirits is deeply cultural, and so for both Don Julio and Casamigos, being embedded in culture is essential for growth.

Kelly gives the example of a recent collaboration Don Julio did with DJ Peggy Gou, launching a limited-edition bottle with the artist. This was “one programme, scaled globally” with a local spin put on it in different markets.

For example, Don Julio created a souvenir shop in New York, a theatre in Milan, and a hot pot shop in Hong Kong, all to celebrate the collaboration. Kelly describes it as a campaign that brought together Gou’s fans and Don Julio’s fans to drive forward the brand as a cultural force.

Diageo is also set to be the 2026 FIFA World Cup official spirits supporter in North, Central and South America. Kelly gives this as another example of where the company’s tequila portfolio will be able to drive cultural resonance.

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“Playing in culture, 100% we need to do that,” she says. “That doesn’t mean that you can’t scale those globally to get real momentum behind it.”

Another key lever for the future growth of Diageo’s tequila portfolio is innovation, notes Kelly. That could be towards the more premium end of spirits, with ultra-premium contributing to a lot of growth in the category over the last five years.

While there are lots of fans of tequila willing to buy into premium products, Diageo wants to expand this high-end appeal.

“On Don Julio, it’s thinking about, like we do in Scotch whiskey, how can we start to play with our liquid profiles, our blends, and release special casts, new variations on the blends of all these aged liquids,” Kelly says.