Is Tequila Taking Over? Tito’s Seems to Thinks So

Vodka and tequila can be a great pairing—and not just for a Long Island iced tea. On September 23, Fifth Generation, Inc., the parent company of Tito’s Handmade Vodka, announced it is set to acquire a majority stake in fellow Austin-based brand Lalo Tequila, per a press statement, marking the vodka company’s first strategic acquisition.

The acquisition comes at a time where the premium agave-based spirit industry continues to surge, even as overall drinking is declining. The global tequila market is expected to grow from about $12 billion this year, to around $18.5 billion by 2032, per Fortune Business Insights.

Known for its premium three-ingredient additive-free blanco tequila, Lalo has rapidly surged in demand, growing from 10,000 cases sold in 2021 to 250,000 cases sold over the past year. The brand’s physical presence has also rapidly grown, with the premium tequila now available at over 50,000 retail locations nationwide, versus just 15,000 last year.

“I’ve known the Lalo founders for a long time. They care about the juice. They keep it simple. They do things the right way, not the flashy way. That felt like home to us,” said Tito’s founder Tito Beveridge in a press statement.

The agreement, which is set to close in the near future, will provide the tequila brand with Fifth Generation’s distribution network and strategic sales support to accelerate Lalo’s reach.

“We couldn’t be more excited for this natural evolution in our journey. This move is about making sure more people can experience what makes Lalo special without ever changing who we are,” Jim McDermott, Co-Founder and CEO of Lalo Tequila, told Inc.

In addition to sharing the same home base in Austin, both brands have similar origin stories, slowly started by their founders until evolving to national brands.

Lalo was founded as a venture among friends—Eduardo “Lalo” Gonzalez, the grandson of Don Julio, David “R” Carballido, and Jim McDermott— bringing Lalo’s knowledge from his upbringing into distilled bottles. According to Cultured, those initial bottles were first shared as gifts at friends’ weddings.

“When we created the first bottle of Lalo, it was meant to be shared with family and friends so they could experience a tequila that truly honored agave,” Lalo said on social media.

Both brands relied on word-of-mouth for organic growth in their early Austin days until reaching bartenders across the country.

A “different type of partnership”

Lalo and Tito’s new relationship is the latest in a decade-long series of tequila brand acquisitions. Of the top ten best selling tequila brands in the U.S., only three are still owned by Mexicans.

Still, as Tito’s first acquisition, the brand intends on setting a “different type of spirits partnership,” the company said in a press statement, structuring the relationship around “mutual respect.”

“Tito has been a close friend in Austin for years and has deeply influenced the way we approach what we do,” McDermott said in a statement. “We’re excited to continue this journey with the full support of a company that understands what it means to grow with a singular focus,” said Jim McDermott.

While financial details are still to be disclosed, the brand is reassuring its consumers of their commitment to authentic and pure tequila.

“We’ll continue to use the same quality ingredients, honor the same approach, and protect the integrity that’s been with us from the very start,” Lalo said on a social media post. “With Tito’s, we’ve found a partner who shares that belief, and together we can scale in a way that keeps authenticity at the heart of everything we do.”