Tequila has become an increasingly popular spirit worldwide in recent years, gaining popularity beyond its native Mexico. As the global Tequila market continues to grow rapidly, some investors are beginning to explore Tequila as an alternative investment asset. There are several ways investors can capitalize on the rising Tequila trend and potentially generate attractive returns. This article will examine different Tequila investment strategies and evaluate their profit potential.
Investing in Tequila stocks and producers
One of the most direct ways to invest in Tequila is to buy stock in major Tequila producers and distributors. Some of the largest publicly traded Tequila companies include Diageo, Becle SAB, Pernod Ricard, and Brown-Forman. These multinational corporations own famous Tequila brands like Don Julio, Jose Cuervo, and Herradura. As global Tequila consumption increases, revenues and profits of these companies stand to benefit. Investors can buy shares of Tequila producers on major stock exchanges. However, risks include reliance on Tequila as a single spirit category and currency fluctuations for multinationals. Small-cap stocks of up-and-coming craft Tequila makers also present opportunities, albeit with higher volatility.
Investing in collectible vintage Tequilas
Some investors have made handsome returns buying rare and collectible Tequilas, especially older vintages from renowned distilleries. As with other alternative assets like fine wines, values of vintage Tequilas tend to appreciate over decades. For example, a bottle of 1973 Don Julio Tequila sold for over $35,000 at auction in 2019. However, collecting investment-grade Tequilas requires extensive expertise. Storage conditions must be carefully controlled to preserve quality. Moreover, the high-end collectible Tequila market is still relatively small and illiquid compared to wines.
Flipping or renting Tequila barrels
Used bourbon barrels are popular investments that can be resold at a premium for aging spirits like Tequila. Some companies sell Tequila barrels directly to individual investors. Options include buying the barrel to mature and bottle your own Tequila, or renting it out to a distiller and earning rental income. However, barrels require proper maintenance. Prices also depend on Tequila demand, which fluctuates. Overall, barrel investments involve effort and carry risks but can offer good returns.
Investing in Tequila-focused startups and brands
Some investors provide startup capital to emerging Tequila brands in exchange for equity. These entities aim to capitalize on the growing premium Tequila market. Investors can also put money into startups offering innovative Tequila-related services and technologies. For instance, apps that deliver crafted Tequila experiences directly to consumers. However, investing in startups is very high-risk. Only a small fraction succeed, and many fail within a few years. Extensive due diligence is essential before investing in this space.
While still a niche investment area, Tequila offers opportunities to profit from rising global demand. Stocks of major producers provide exposure, albeit with risks. Collecting rare vintage Tequilas can generate high returns but requires expertise. Flipping Tequila barrels also offers potential gains. Startup investments are an option but very risky. Overall, Tequila investments should be researched carefully and approached prudently within a diversified portfolio.