Although the alcoholic drinks market as a whole is growing strongly in Mexico, the country's consumption of spirits continued to decline in 2002, according to research released by industry analyst Canadean.

The report estimates that consumption fell to a little over 190 million litres as Mexican tastes turn increasingly to beer and wine. Whilst the spirits market has dropped by 12% since 1998, consumption of beer and wine has increased by 13% and 16% respectively.

But, although this makes for worrying reading for those involved in the market, the short term future offers some cause for optimism.

Fuelled by significant new brand activity and the rejuvenated Bacardi Breezer, sales of flavoured alcoholic beverages are expected to rise by around 8% in 2003. Driven by brands such as Absolut, vodka is enjoying an increasingly fashionable profile. Combined with the recent high profile launches of Gotland and Skyy, and the growing popularity of vodka/energy drink combinations, Canadean believes that the vodka category will exceed 1 million cases in 2003, an increase of 10%. Furthermore, sales of Tequila are expected to rise as the recovering agave production drives down prices, encouraging the return of disenchanted drinkers.

High quality and increasingly aggressive sales and marketing initiatives employed by the top seven distributors, which include Pedro Domecq, Bacardi and Casa Cuervo, will further support the future performance of spirits.

However, It is worth noting, says Canadean, that the Mexican economy is highly reliant on its neighbour, the US, which attracts around 90% of all Mexican exports. The US continued "war on terror" and the associated hostilities could well lead to prolonged uncertainty in Mexico.

Despite sales of the three leading categories declining in 2002, Tequila and mezcal has regained the market-leading position it briefly relinquished to "rum and cane spirit" in 2001. The report predicts Tequila and mezcal sales of 5.9 million cases in 2002, some 29% of the total spirits market. El Jimador is still by far the most important Tequila brand with a healthy 21% share of the market.

Sales of brandy also dropped to 5.3million cases, but these three largest categories (Tequila and mezcal, rum and cane spirit and brandy) totally dominate the Mexican spirits scene, accounting for almost 85% of total sales.

Allied Domecq's "Presidente", a Mexican brandy, is still the clear overall best selling brand. Sales are an impressive 45% higher than its nearest rival - the white rum "Bacardi Carta Blanca". Of the top ten brands, six declined in 2002. However, "Jose Cuervo Tradicional", "100 Anos Reposado" and "Cozadores Reposado", all Tequilas, grew strongly.