Will Small Tequila Producers Be Able To Compete With Agave Price Hikes?

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The increasing demand for Tequila from all around the world has caused a massive shortage of the plant it is made from— Blue Agave.

That’s right! Agave. The same type of plant Mezcals are made from except this species, in particular, can only be produced from the state of Jalisco in Mexico to be considered Tequila.

The biggest indicator that Tequila is in high demand?

Simple. Prices have hiked.

The succulent plant used to make the iconic Mexican liquor has sextupled in price in the past two years.

Smaller distillers have already experienced a hit big enough to resource to risky measures— like using immature agave plants as young as four years old, according to “Reuters.”

“The younger plants produce less tequila, meaning more plants have to be pulled up early from a limited supply - creating a downward spiral,” as reported by “Reuters.”

Agave plants are considered mature at age seven.

This could mean a worse shortage for this year and the years to follow until possibly 2021.

It is not clear how long it will take until the shortage begins to hit larger distiller players, but what’s for sure is that the price hikes will make it much more difficult for smaller tequila producers to compete.

“Reuters” estimated Agave prices from 2017 were 17.5 percent higher at 22 pesos per kilo ($1.18 per 2.2 lbs) than in 2016, which were at 3.85 pesos per kilo.

To learn more read, “Reuters.”