It used to be that luxury and tequila did not mix. Tequila shots and bad hangovers were a more likely pairing. But today, tequila is surging thanks to a burgeoning interest in high-end brands that have overturned the spirit’s image as a cheap booze only meant for shots and margaritas.

“The category and the consumption of tequila itself is skyrocketing. People are finally figuring out that tequila is worth sipping and it’s worth putting in a really good cocktail,” said Emily Pennington, managing editor of Wine & Spirits Daily.

As a result, pioneering and dominant luxury tequila brand Patron is facing a flood of competition from liquor giants and tequila start-ups that are pouring money into marketing and expanded production. “Right now it’s a gold rush,” said Ken Austin, founder of six-year-old Avion tequila. “Everybody wants to be in it. And then, like every other industry, there will be a shakeout and there will only be a few that actually win.”