The New Gold Rush: Cost of Tequila-Making Agave is on the Rise

Mar 05, 2018

Blue Gold is what some people in the tequila business are calling agave these days.

The Blue Weber Agave plant is what’s used to make tequila and we are at the beginning of a shortage. Tequila, especially premium tequila is on fire right now and demand is high.

I remember around the year 2000, there was a shortage and all the growers panicked. Distillers and farmers planted so much agave that eight years later there was a surplus. Once there was a plentiful amount of inexpensive agave on hand, all kinds of new brands started popping up. The surplus didn’t last and neither did the brands. Remember Don Viejo and Buscadores? Yeah, I don’t either.

Agave prices are on the rise and a lot of brands are feeling pinched just like in the early 2000’s. Agave prices are at 22 pesos ($1.50) per kilo — up from 3.85 pesos in 2016. Already, the 17.7 million Blue Agaves planted in 2011 for use this year have fallen short of the 42 million the industry needs to supply 140 registered companies, according to figures from the Tequila Regulatory Council (CRT) and the National Tequila Industry Chamber (CNIT). The experts are predicting that the shortage could last until as late as the year 2024! Whenever something becomes more valuable, it becomes more of a candidate for theft. The number of stolen agave plants in 2017 rose threefold from 2016, with 15,000 plants reported stolen, according to the CRT.

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Why does this matter?

It matters because a shortage of agave means a jump in the price of Tequila. Not all Tequilas will go up in price right away but most will eventually. Those brands that own their own agave will have much more control regarding pricing than the brands that have to buy agave from contracted growers.

Quality of product is also an issue. Some agave is being harvested at four years instead of the average eight, it’s been reported. That four year-old agave will produce less juice and harvesting early will also help to continue the shortage.

So this is the part of the article where I would usually mention a few of the amazing premium tequilas Wine Warehouse has in its portfolio like Fortaleza, Arette, Pasote, or Don Felix and Don Pilar. Maybe I’d bring up one of the cool new tequilas that’s doing amazing, like La Gritona which is bottled using recycled Coke bottles, has no label, and uses a swing-top closure.

But, you know what? I’m not going to do any of that! I just wanted to give you a little insight as to why the next time you grab a bottle of tequila off the shelf or order a margarita at your favorite watering hole, it might cost a few more pesos.

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