A Distiller’s Nightmare

Do Tequila Drinkers Need to Worry about an Agave Shortage?

We investigate this issue to find out if it’s really a problem for tequila distillers.

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Blue agave is a big, spiky plant that grows in the volcanic highlands and clay lowlands around Guadalajara, Mexico. Tequila production is centered here in the state of Jalisco, and the only kind of agave that can go into spirit labeled “tequila” is blue agave.

Traditionally, the ripe agave piña (the pineapple-shaped heart of the plant), ranging in size from a soccer ball to behemoths the size of a suitcases, is trimmed, split, and roasted in an oven before the sweet juices are pressed out of it. The liquid is then fermented and distilled in order to become tequila.

There’s currently a shortage of agave. Prices have spiked from a combination of short supply and increased demand as more drinkers are reaching for the higher-priced 100-percent agave tequila over so-called mixto, the cheaper version that only has to be 51-percent blue agave. (The rest is essentially a rum-like alcohol.) There is still tequila on the shelves, but the price will be surely going up.

Sounds like bad news for Margaritaville, right? The thing is... The first time I wrote that story was 20 years ago for the Chicago Tribune. Tequila is made from agave, agave is in short supply, blah blah blah. I went to Guadalajara last month as a guest of El Tesoro Tequila and the whole thing is supposedly happening again, same old song and dance. Yet there’s more tequila on store shelves than ever before. What’s really going on?

Carlos Camarena, master distiller for El Tesoro, says that there’s been an agave shortage every 16 years or so, as far back as anyone started keeping records, in 1902. The reasons are pretty simple: long maturity, and farmers who just want to make some money for their work.

“Right now,” he tells me, tapping the table to emphasize the point, “agave sells for 25 pesos a kilo. Ten years ago, it sold for less than 1 peso a kilo. So, when agave is selling for 25 pesos a kilo, everyone plants agave, thinking they’re going to be rich! When all that agave reaches maturity, it’s all on the market at once, and the price goes down. Then the farmers think, ‘Ha, I’m not going to plant more of this! I’m going to plant corn, or beans!’ And then there’s a shortage.”

The shortage I remember from 20 years ago was an exceptionally bad one, according to Chantal Martineau, author of How the Gringos Stole Tequila. “The one 20 years ago?” she says. “There were five years of bad winters, disease issues, and the demand was going up.”

How about now? “This shortage is expected to end in a couple years, and then another one is expected in about seven years.

“As an industry,” she continues, “it’s something people are only starting to acknowledge. When I started researching the industry, in 2009 or so, no one would admit there was a problem.”

“There are three things that are going to make the shortages worse,” Martineau warns. “Extreme weather, the effects of climate change, that’s changing how the agave grows. Second, the way that agave has been planted relies on cloning. You take a cutting, plant it, it grows more shoots, and you can propagate them. The genetic diversity has declined, and it’s like any monoculture. Any pest or disease that affects one plant will kill all the plants the same way.”

But part of it’s our fault. “It’s the incredibly increased demand for tequila in the last 20 years, and the demand for 100-percent agave tequila in the past 10 years,” she notes. (Tequila sales in America, according to the Distilled Spirits Council of the United States, overall have gone up by nearly 140-percent since 2002. To put that in perspective, more tequila is sold in America now than Scotch and Irish whiskey combined.) “That’s a double-edged sword. One hundred percent agave is what tequila is, but that’s increased the pressure on the agave itself.”

What are tequila producers doing to deal with the shortages? Most of them aren’t really talking about it.

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Mariana Esquinca, the global PR manager for tequilas at Brown-Forman, where Herradura is the big seller, is a bit more forthcoming on the brand’s actions to brace against price spikes. “We own part of the agave plants used to produce our tequila brands,” she explains. “We enter into longer-term agreements with other growers at agreed-upon prices, and we have built our own storage tanks for finished tequila as back-up reserves.”

Camarena oversees large fields of agave for El Tesoro. Buying or leasing enough land is expensive, as is keeping a staff of farmers and jimadores (harvesters) employed year-round. But growing agave is how Camarena beats the price spikes. He compared guessing when to buy on the open market to playing the lottery. “My father told me, ‘I have a way you can win the lottery every time.’ What, father, what’s the secret? ‘Buy every ticket,’ he said.” Grow your own agave, and own the game.

“Right now,” Camarena points out, “the demand for tequila is high, and the price [of agave] is high. We need even more agave than I have grown, but I can buy from my cousin. When the price is low, I make blanco, maybe more than the market needs, so I put it in tanks, and sell it when the demand catches up.”

Martineau sees this kind of plan as the best way to get to a more stable agave market. “You own your agave fields,” she says, “and you have more control over how they grow. You may choose to grow them without pesticide, wait until they actually reach full maturity. This would be the responsible tequila producer.”

As tequila grows in sales, the industry may become more immune to spikes. “You’ll get sustainable growing prices,” Martineau muses, “and the market regulates itself in a sense.” That’s why some 100 percent agave tequila brands come and go; they’re sustaining themselves on unsustainably low agave prices.

But if a tequilero wants to win that game, they’ll have to buy every ticket.

A previous version of this story stated that tequila can only be made in Jalisco. The liquor can actually be made in a handful of Mexican states.