Mexico’s Tequila Regulatory Council says European demand exceeds production

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European bartenders just can’t pour tequila fast enough. Premium shots. Margaritas. Palomas. The occasional sunrise.

“We definitely run out every weekend,” says Shubham Walavalker, a 24-year-old bartender, who’s struggling to keep pace with customers’ thirst for the spirit at a packed Revolution bar in southwest London.

Tequila, the king of Mexican liquors, is taking off in Europe. Export volumes to Spain jumped 90% last year, to France 73%, Britain 68% and Germany 60%, according to Mexico’s Tequila Regulatory Council, outpacing global growth of 23%.

The challenger – a favorite in North America – is a long way from making a dent in the historic European dominance of vodka, whisky, rum, and gin. It’s gained a foothold, though, and is the fastest-growing spirit in the region, according to Jose Cuervo seller Proximo Spirits.

There’s a spiky snag, though.

European demand is deepening a shortage of agave, the prickly plant native to Mexico’s Jalisco region that’s used to make tequila.

The cost of agave – about 5-7 Mexican pesos ($0.27-$0.37) per kilogram for much of the past two decades – has been edging up in recent years and hit 31 pesos at the end of 2022, according to research firm Bernstein.

The current forecast for the end of 2023 is 28 pesos, though Bernstein analyst Trevor Stirling cautioned that demand had “kept surprising on the upside”.

“It’s a supply-and-demand issue,” he said. “There is a massive shortage of agave in the tequila industry.”

Tequila prices have leapt.

People in Europe paid nearly 16% more for the spirit in stores in December compared with a year before, while prices for whisky rose 6% and vodka increased 5%, according to data from NielsenIQ. Gin prices were flat.

Compounding matters, the flow to Europe of high-quality 100% agave tequila – which has to be bottled in Mexico – has also been constrained by the supply-chain chaos from COVID-19.

Source: Tequila Regulating Council

The Guadalajara Post