Americans Love Their Tequila Shots Even as Trump Bashes Mexico
(Bloomberg) -- While Republican presidential nominee Donald Trump’s supporters chant “build the wall,” more Americans are drinking beer and tequila imported from what would be on the other side.
The largest alcohol producers are stressing the need to appeal to consumers -- Hispanic and otherwise -- who increasingly want products with Mexican heritage. U.S. beer shipments from Mexico grew 18 percent this year through June, outpacing the 1.3 percent gain for all beer shipments, according to data from the Beer Institute. From 2010 to 2015, tequila rose 30 percent by volume in the U.S., more than any other alcohol category except cognac, according to data from Euromonitor International.
Constellation Brands Inc.’s 24 percent compound annual growth from 2010 to 2015 was driven by the popularity of its Mexican imports, including Corona and Modelo beer, according to Kenneth Shea, a Bloomberg Intelligence analyst. Heineken NV’s Tecate franchise has grown 7.2 percent so far this year, led by Tecate Light, which is up 31 percent. Heineken also imports Dos Equis.
“Millennials and Hispanics for us are very critical,” said Ronald den Elzen, chief executive officer of Heineken USA, in an interview. “The trends coming out of Latin America over here and the attractiveness for all the American population in general in what’s happening in food, in clothing, in style -- in everything -- is just helping to drive that fuel.”
Constellation and Heineken aren’t alone. Other companies have taken notice of the power of Hispanic consumers: On Sept. 1, MillerCoors Inc. will introduce Zumbida, an alcoholic take on a traditional Mexican beverage called agua fresca. Diageo Plc, the world’s largest distiller, has bolstered its tequila portfolio and invested in Mexico’s newest popular spirit: mezcal. The tequila and mezcal industry in the U.S. is expected to grow 17 percent between 2015 and 2020, according to data from Euromonitor.
Alcohol companies are caught in the crosshairs of two cultural movements: the rise of Trump and his nativist bombast, and the so-called Mexicanization of U.S. culture as seen in the food and beverage industries.
“Trump has tapped into the frustration with illegal immigrants; it’s kind of mind-boggling,” said Stephen Rannekleiv, a New York-based global beverage strategist at Rabobank International. “But at the same time, you see the growing interest in brands with Mexican heritage, in all categories. It’s not just tequila now.”
Trump’s pledge to build a wall along the southern border, deport 11 million immigrants and renegotiate the North American Free Trade Agreement carry risks for companies like Constellation, the largest importer of Mexican beer to the U.S. Based in upstate New York, Constellation relies on Mexican imports for 55 percent of its $6.5 billion in annual revenue, and Hispanic consumers account for a third of Corona’s sales.
While Trump trails Democrat Hillary Clinton in national polls and those in key battleground states, his anti-Mexico rhetoric continues to stir up his base, some of whom shout anti-immigrant slurs at his rallies. That’s raised concern that the movement Trump unleashed could threaten brands and products connected to Mexico, even if he loses on Nov. 8.
“If you have these very divisive policies being generated, what does that mean for Brand Mexico?” said Pablo Zuanic, an analyst at Susquehanna International Group. “There is a significant impact on Constellation Brands that people have not factored.”
Constellation declined to comment. Trump spokeswoman Hope Hicks didn’t respond to a request for comment.
Hispanics made up 17.6 percent of the U.S. population in 2015, up from 3.5 percent in 1960, according to U.S. Census data. That percentage is expected to reach about 29 percent by 2060. The group’s increasing influence proves that there’s room for tequila and other Mexican spirits to grow, said Alex Tomlin, a Diageo North America senior vice president who oversees tequila.
“It’s not just happening in Manhattan,” said Tomlin. “You go to any town in America now and you can see the Mexican influence.”
Trump, a billionaire real estate developer and TV personality, kicked off his campaign in June 2015 with a vow to build a wall along the southern border to keep out Mexican “rapists” and other criminals. His comments about Hispanics since then have ranged from adoring -- or patronizing, depending on your view -- to disdain.
He tweeted about his appreciation of Hispanic culture on May 5: “Happy #CincoDeMayo! The best taco bowls are made in Trump Tower Grill. I love Hispanics!” On June 3, he said U.S. District Judge Gonzalo Curiel, who was born in the U.S., shouldn’t preside over a legal case against Trump University because of his Mexican parents.
According to a New York Times/CBS poll released last month, about three-quarters of Trump’s supporters favor building a wall along the Mexican border. Only 13 percent of Clinton’s backers approve of such a plan.
Whether Trump’s movement will translate into an electoral victory in November remains to be seen. In the meantime, consumer-products analysts will be watching.
“If he gets in, you can certainly change the mood and turn the tide against Mexican imports,” said Philip Gorham, an analyst at Morningstar Inc. who follows distillers and beer companies. “It’s easier said than done.”