Part 2: The boom-and-bust cycle of tequila

Erin Smith

With the long lead times that it takes to grow agave plants to boost mezcal and tequila production it may not be surprising that the category overall has gone through a couple of boom-and-bust cycles in its nearly 500-year history.

“There have been a number of shortages over the past century or so. The most recent shortage was in 2000. That had to do with an inelastic supply and a higher than expected demand,” says Jesse Estes of El Nivel.

According to Estes when a supply shortage occurs, prices spike and lure farmers that normally grew other crops to plant agave instead. “Fifteen years ago there was a spike in the price and tequila got as high as 20 pesos per kilo, which was very high. When the growers see the price spikes, farmers then switch crops and ten years later you have an over-supply. Then people stop planting because prices fall.”

According to Estes supply and demand are currently in balance. But there may be a shortage in the not too distant future, particularly for mezcals.

“I think the boom to some extent is already happening. With mezcal there is big dilemma. We want the category to do well, but it is becoming clear that the increase in demand creates a big strain on local producers.”

Wild agave varieties used in mezcal production may be particularly vulnerable to supply shortages because they tend to take significantly longer to mature before they are ready to be harvested. “Wild varieties like Tobola, for example take a long time to grow and it has a really low yield in terms of the sugar content and the volume of mezcal that it produces. Even if we plant more now we have to wait 12 to15 years, sometimes longer.”



Related Articles

Have your say

These comments have not been moderated.

You are encouraged to participate with comments that are relevant to our news stories. You should not post comments that are abusive, threatening, defamatory, misleading or invasive of privacy. For the full terms and conditions for commenting see clause 7 of our Terms and Conditions ‘Participating in Online Communities’. These terms may be updated from time to time, so please read them before posting a comment.

Any comment that violates these terms may be removed in its entirety as we do not edit comments.

If you wish to complain about a comment please use the “report this comment” facility

What are the 3rd and 7th letters of this word?: INVENTOR

Text size

Desktop Site | Mobile Site
Close message