Executive Briefings

Soaring Agave Prices Give Mexican Tequila Makers a Headache

In the heartland of the tequila industry, in Mexico’s western state of Jalisco, a worsening shortage of agave caused by mounting demand for the liquor from New York to Tokyo has many producers worried.

The price of Agave tequilana, the blue-tinged, spikey-leaved succulent used to make the alcoholic drink, has risen six-fold in the past two years, squeezing smaller distillers’ margins and leading to concerns that shortages could hit even the larger players.

In front of a huge metal oven that cooks agave for tequila, one farmer near the town of Amatitan said he had been forced to use young plants to compensate for the shortage of fully grown agave, which take seven to eight years to reach maturity.

He asked not to be identified because he did not want his clients to know he was using immature plants.

The younger plants produce less tequila, meaning more plants have to be pulled up early from a limited supply — creating a downward spiral.

“They are using four-year-old plants because there aren’t any others. I can guarantee it because I have sold them,” said Marco Polo Magdaleno, a worried grower in Guanajuato, one of the states allowed to produce tequila according to strict denomination of origin rules.

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The price of Agave tequilana, the blue-tinged, spikey-leaved succulent used to make the alcoholic drink, has risen six-fold in the past two years, squeezing smaller distillers’ margins and leading to concerns that shortages could hit even the larger players.

In front of a huge metal oven that cooks agave for tequila, one farmer near the town of Amatitan said he had been forced to use young plants to compensate for the shortage of fully grown agave, which take seven to eight years to reach maturity.

He asked not to be identified because he did not want his clients to know he was using immature plants.

The younger plants produce less tequila, meaning more plants have to be pulled up early from a limited supply — creating a downward spiral.

“They are using four-year-old plants because there aren’t any others. I can guarantee it because I have sold them,” said Marco Polo Magdaleno, a worried grower in Guanajuato, one of the states allowed to produce tequila according to strict denomination of origin rules.

Read full article