Codigo 1530 discovered that it was not only growing in line with the category, but also surpassing the industry norm, with a year-over-year growth rate of 94 percent.
Camarena reported a 30 percent increase, while Casa Don Ramon reported a 12 percent increase year over year, with November having the greatest sales. Tequila-based cocktail sales have increased at Cask and Kettle, a developer of Keurig pod drinks.
To a considerable extent, e-commerce is to blame. “While tequila’s portion of the e-commerce booze behemoth Drizly remained at 6.52 percent from January to July 2020, when looking at the summer particularly, the share of the tequila category climbed to 7.13 percent on Drizly,” says Liz Paquette, head of consumer insights at Drizly. “This movement indicates that people are continuing to gravitate toward tequilas when they make drinks at home, especially in the warmer months.”
However, each brand’s success was unique. “Right at the start,” recalls Coira of multi-brand producer Casa Maestri, “everything came to a halt for approximately a week.” Then it took off like a rocket. The super-small brands are holding their ground; they’re ordering the same amount as before, if not a bit more. The medium and larger size brands have seen a massive increase in volume.”
“We anticipated the closures at bars and restaurants would damage us in 2020,” says Sylvester Palacios Jr., managing partner of Dos Cuernos Tequila. “It was actually beneficial to us because it allowed us to concentrate on mom and pop liquor stores.” As a result of the shutdown, we’ve seen other well-known firms cut back on events, marketing, and branding. We kept pushing forward with our marketing at the same time. Other businesses’ ease on the airwaves allowed us to garner more attention.”
The pandemic positioned 21Seeds perfectly. Kat Hantas, the brand’s co-founder, focused her efforts on the internet space when it first started in 2019. “We were already online” when Covid-19 arrived. We were already online when other firms were racing to engage with their customers. That dramatically boosted our saleswe’ve seen a tenfold increase year over year.”
With bars and restaurants closing and customers shopping online, the digital space was vital this year. “However, direct-to-consumer is difficult to manage,” explains Micah McFarlane, creator of Revel Avila. “It’s for this reason that we formed a partnership with ReserveBar.” Revel’s sales increased by 13% as a result of this strategic adjustment, a figure that seemed impossible just months before.”
“We shifted our focus to our e-commerce choices like Reserve Bar, Sip Tequila, and Drizly,” explains Taylor Steele, Solento Tequila’s founder. Despite the fact that it was the brand’s first year on the market, all launch activations and pivot tactics had to be scrapped. “With guests like Kelly Slater, Tony Hawk, Taryn Toomey, Rob Machado, and Sheree Commerford, we started hosting Instagram Live happy hours.”
Lauth of Partida remarked that Instagram had reigned supreme. Drinkers are turning to internet influencers for guidance in the absence of bartenders. ” “What tequila do you recommend for my margarita?” we asked our friendly local bartender last year. Mixologists are now using social media to communicate with customers, recommend brands, and share recipes that they can order online and prepare at home.”
New consumer behavior
Why has tequila become so popular? Consumer preferences have shifted, according to experts. “Mike Dolan, co-founder and CEO of Mijenta Tequila, adds, “The tequila category is going through what the whiskey sector went through a decade ago.” “Consumers seeking more refined versions with a smoother flavor that are based on true stories.”
New purchasing channels are to blame for a lot of this. Lauth says, “When it comes to internet purchases, customers have demonstrated a distinct buying habit. Blanco, for example, is typically the most popular tequila in the category, owing to the fact that the margarita is the most popular cocktail in the United States. Blanco is the most popular choice for a margarita since it has the lowest cost-per-pour. Consumers are buying more reposado, anejo, and extra anejo through e-commerce and off-premise transactions, though.”
“This is due to the fact that the liquor is served neat or over ice rather than in a margarita. Because of this tendency, we’ve seen some of the biggest companies run out of aged tequila inventory this year.”
Agave shortages
As businesses scramble to acquire more liquid resting, this change has resulted in agave shortages across the country.
“We’re battling with agave shortages,” says Codigo 1530 co-founder Federico “Fede” Vaughan. “It’s only a short-term problem that should be resolved in the next several years.” However, there is a severe shortage: agave prices are at an all-time high due to a lack of inventory and poorly planned agave cultivation.”
“We have three- to four-year contracts with agave producers, and we establish a fair price for them,” he explains. I had my guy locked up for four years, but you can imagine how much a 5% or 10% price change matters to them.”
“We have agave fields, so we get about half of our consumption from them and the remainder from the open market,” Coira explains. “However, we have contracts and scenarios in place to deal with this type of rise.” We had a terrible time with anejos because we had to leave them in our barrels for a year. Many customers began to purchase more aged spirits (premium/ultra premium), and we needed to buy a lot more barrels to meet demand by late 2021. But, happily, we’ve always had a sufficient stock to ride the wave.”
Tanteo is a collectively held company, but CEO and master blender Neil Grosscup says, “Even as an agave grower cooperative, we are not immune to the effects of the agave crisis.” High agave prices attract our members to sell their crops on the open market, and while our members want to sell their agave to the distillery, we need to ensure that the price the distillery pays is competitive. Looking at total plantings from the CRT, their expansion has exceeded even tequila’s remarkable growth in recent years. This summer, we began to see a little price reduction on market rate agave, but there is still a veil of uncertainty about Covid-19.”
The mega-brand is being swept off shelves “at record speed,” according to Patron’s Parker.
However, Patron’s time-consuming procedure makes it difficult to keep up with demand. “We now have an adequate supply of tequila at our Hacienda, but because each bottle requires more than 60 hands to craft, we are experiencing a slower bottling cadence.” Because the 2,000 people who create Patron had to socially remove themselves when Covid-19 hit, our output decreased by more than 50%. When this was combined with significant volume increase (up 52 percent across our tequilas), Patron’s dedication to handcraft became a barrier to getting bottles to shelves versus automated rivals. It’s producing an inventory deficit across the United States, which is starting to show up on store shelves.”
Vaughan also observes that social distance slows production. “We take health precautions seriously: no one is closer than six feet apart.”
Overall, these are minor issues for a market poised for massive growth in 2020. “It’s encouraging to see, especially as the agave spirits market grows, that there’s a blossoming connoisseurship among customers trying to extend their palates,” says McFarlane of Revel. “As we’ve seen in other categories, customers are paying more attention to not only labels and design, but also the quality of the components in the spirit, as well as where it’s created and the procedures involved.” Tequila, avila, mezcal, sotol, racilla, and bacanora are all gaining popularity as a result of this.”
Is there still an agave shortage?
This latest agave crisis comes as tequila continues to eat into the market share of more traditional spirits like vodka and rum. According to current projections, 88 million matured agave plants will be harvested in 2020, 126 million in 2021, and up to 150 million in 2022.
Why is there a tequila shortage 2021?
A lack of agave (the key ingredient in tequila) is affecting Mexico, as tequila consumption has grown globally. The plant’s price has increased sixfold in the last two years, according to Reuters. Tequila producers would prefer to employ mature plants that have been growing for more than six years, but they have been forced to use younger plants. This causes them to process more agave and, as a result, produce less tequila.
Theft of plants is also on the rise as a result of the lack. Because of the huge demand, thieveries in the middle of the night are becoming more common. Even well-known tequila brands have been affected.
What caused agave prices to go up?
Tequila is flowing in establishments all around the world. Mexican tequila, manufactured from the blue agave plant, is now the world’s second-fastest-growing spirit category in terms of sales. The demand for mescal, its smokier cousin, is also soaring. Volumes of agave-based spirits increased 11.4 percent globally between 2016 and 2018, according to beverages market research agency the IWSR.
Mexico has reaped enormous benefits as a result of this. Last year, the North American country set new marks for tequila production and exports. “In November, we produced 330 million litres of tequila, setting a new record,” stated Miguel ngel Domnguez Morales, President of the Tequila Regulatory Council, in a statement.
However, as demand for Mexico’s national drink grows, producers and distillers are experiencing supply issues. In 2019, 51 million agave plants were harvested, down from 79.6 million in 2017, according to Mexico’s National Chamber of the Tequila Industry. With consumer demand increasing, agave shortages are likely to recur.
Farmers and distillers have struggled to harvest agave swiftly enough as demand for tequila has increased.
Tequila isn’t the most refined of spirits or so many of us believe, given to its reputation as a’shot-only’ drink, more typically linked with American frat parties and hangovers than classy gatherings. “Clayton Szczech, founder and tour leader of tequila tourism business Experience Agave, told European CEO that “tequila appreciation has expanded by leaps and bounds internationally in the last 20 years.” “Most people, however, are still exposed to additive-laden, industrial brands with fancy labeling rather than natural tequilas made in traditional methods.”
Consumers have become more eager to try the drink’s more refined side in recent years, according to Nielsen, a worldwide measurement and data analytics business. The ultra-premium category currently accounts for 38 percent of the overall tequila market. “The demand for agave spirits has risen this year, with premium products and smaller, more niche companies gaining market share, according to Dawn Davies, Head Buyer at the Whisky Exchange. Indeed, within the last year, the Whisky Exchange has added 50 tequilas and 60 mescals to its repertoire, according to Davies.
Casa Noble, Tequila Herradura, and Patrón the latter of which was purchased by global spirits giant Bacardi for $5.1 billion (4.64 billion) in 2018 have all contributed to the rise of the premium tequila sector. Patrón sells the world’s most expensive tequila, which costs $7,500 (6,828) a bottle, in addition to its 10-year-old extra aejo version a strong indication the spirit has entered the luxury fold. Celebrity endorsements have also helped tequila’s profile: actors George Clooney and Dwayne Johnson are among those who have created premium tequila brands, with Clooney’s Casamigos brand selling for $1 billion (913.1 million) in 2017.
As Davies explained, the success of cocktails like the margarita and paloma contributes to customers’ perceptions of bourbon as a high-end product: “Consumers get more interested in products when bars start to get behind categories and utilize them more in drinks. They’re more conscious of them, and they’ve been exposed to a wider range of styles and tastes.” As a result, numerous firms are creating experimental tequilas that are perfect for mixing cocktails. Patrón teamed up with Fever-Tree to release a citrus tonic water in 2018, hoping to encourage more tequila and tonic pairings.
The quantity of blue agave and the production method are what separate premium tequila from its lower-grade equivalents. “Premium tequilas are manufactured with 100 percent blue agave and are more polished, according to Daniel Ruffo, a tequila specialist at Macho: Tequila Events. “Lower-quality tequilas, on the other hand, only require 51 percent blue agave and are produced in a vast industrial operation.”
However, making tequila from 100 percent blue agave is costly. The plant’s price swings rapidly, and farming it is labor-intensive and time-consuming. Furthermore, blue agave is very susceptible to scarcity.
Tequila, like champagne, has a denomination of origin, which means it can only be made in five states in Mexico: Jalisco, Guanajuato, Tamaulipas, Michoacán, and Nayarit. This, along with the blue agave plant’s extended development cycle, limits supplies to some extent. “According to Szczech, blue agave takes six to ten years to mature, depending on genetic and environmental conditions. Due to the length of the development cycle, meticulous planning is required to ensure that distilleries can satisfy demand.
Such meticulous planning is all too frequently thrown out the window in a competitive industry. Farmers and distillers have struggled to harvest agave quickly enough as demand has risen not just for tequila, but also for items like agave syrup and the health supplement inulin. As a result, many people speed through the procedure. Agave producers acknowledged needing to pick four-year-old plants to compensate for the scarcity in a 2018 Reuters article. Because these plants yield less tequila, more must be picked, exacerbating the shortage.
Agave prices have risen dramatically in recent years as a result of this. According to Carlos Riggen of the Monterrey Institute of Technology and Higher Education, the price of a kilogram of agave increased from MXN 3 (0.15) to MXN 26 (1.27) between 2014 and 2019. Low-purity tequila makers are being priced out of the market as agave plants become increasingly expensive. The cost of an average bottle of tequila increased by 23% between 2015 and 2019, according to ISCAM, a Mexican group that studies consumer prices. As costs grow, buyers must decide if they are willing to pay more for higher-quality tequila.
Low-purity tequila makers are being priced out of the market as agave plants become increasingly expensive.
According to several industry analysts, an end to the present agave crisis is already in sight: According to Fortune, Casa Noble founder Jose ‘Pepe’ Hermosillo believes yields will return to normal in the next 11 to 18 months. Meanwhile, Campari CEO Robert Kunze-Concewitz predicts a drop in agave prices in 2021.
Nonetheless, during the next ten years, another shortage is anticipated to occur. In some ways, this is simply the nature of agriculture: it’s impossible for agave producers to prioritize quality and wait for plants to develop when a competitor might easily step in and sell their agave ahead of schedule. Analysts have suggested that more contracts between farmers and companies be introduced to make the industry more viable. While some tequila brands own farms and have direct control over supply, others, such as Brown-Forman, have long-term arrangements with farmers that ensure they are paid on time.
Tequila has a long way to go. Despite its popularity, the drink only accounts for a minor portion of the spirits market. In 2017, agave-based drinks sold 302 million litres, whereas whisky sold 3.31 billion. Despite its tremendous expansion in Europe, tequila is still primarily sold in the United States; according to the IWSR, the United States consumes more tequila than any other country. However, there are hints that tequila is starting to gain traction in hard-to-reach regions like China, where imports increased 38 percent last year compared to 2017. The producers’ ability to keep up with the spirit’s success remains an open question.
Why is there a 1942 shortage?
You can’t seem to find a good bottle of tequila, Champagne, or a fine New Zealand sauvignon blanc?
Due to COVID-19’s disastrous impact on supplies as well as hot waves and frosts that devastated crops liquor stores, bars, and restaurants are all having problems stocking their shelves with adequate wines, beers, and spirits.
“The booze shortage is caused by a combination of factors,” said Joe Ringwood, manager of Super Cellars, a luxury wine and spirits business in Ridgewood. “It’s a combination of factors.”
It’s a paucity of truck drivers, a scarcity of metal, factory closures, a scarcity of containers, bad weather, tariffs (or the lack thereof), and even the increased demand for premium liquor by customers.
How many agave plants are in a acre?
Agaves, like wine grapes, are affected by soil, altitude, and climate, and are planted in rows of 1,000 to 2,000 plants per acre. The jimador (harvester) cuts the root with his sharp coa (similar to a hoe) and then trims away all the leaves until only the heart remains, which resembles a large pineapple, hence the name pina (Spanish for pineapple). At harvest, pinas can weigh anything from 80 to over 300 pounds. A liter of tequila requires approximately 15 pounds of agave heart.
Tequila, like all of the world’s best distilled spirits, is regulated by a complicated web of custom and legislation. Tequila can only be made from Agave Tequilana Weber Azul, or blue agave, according to the Tequila Regulatory Council. It can only be made in the states of Jalisco (where Tequila is located), Nayarit, Michoacan, Guanajuato, and Tamaulipas. There are 200 distilleries in Mexico that produce 700 different tequila labels, all of which are regulated by Mexican law.
Producers are divided: some utilize traditional processes, while others use more efficient modern procedures.
“Some manufacturers make a great thing about their traditional ways, while others take a scientific approach,” Chadwick explains. Chadwick has tried both types in his ten years of investigation. “What matters most is a genuine desire to create exceptional tequila.”
The pinas are boiled at the distillery to convert starches into fermentable sugars. They can be baked in traditional ovens (called hornos) or autoclaves, which are a type of pressure cooker that greatly reduces the cooking time. The cooked hearts are next crushed, either in sophisticated milling machines or with tahonas, to extract their juices (huge grindstones driven by donkeys, which crush the pinas in cobblestoned pits).
Fermentation might take anywhere from six to twelve days. A minimum of 51 percent agave must be present in tequila. Premium products claim to be made entirely of blue agave. However, sugar can be added to so-called mixto tequilas. Yeast is another key option. Some distillers have been using the same yeast strain for 50 years or more, and have carefully maintained it between batches. Others are more interested in commercial cultures.
Tequila oozes from the still-as-clear-as-water bottle. This can be bottled as plata (silver) or blanco (white) tequila after being diluted to final proof. For tequila connoisseurs, platas represent the purest form of the spirit.
Tequilas made from 100 percent blue agave must be distilled and bottled in Mexico by law. Tanker trucks or ships are frequently used to transport Mixto tequilas in bulk. Tequila is sold to approximately 150 countries, with the United States being the most important market.
Many mixtos are referred to as “young abocado” or “young abocado.” “Caramel coloring is used in “gold” tequilas to give them that golden tint. The term “reposado” refers to a wine that has been aged “Tequilas are aged when they are “rested.” They stay in wood for at least two months and up to a year, generally in enormous redwood tanks. Anejo (Spanish for “anejo”) is a “Tequilas that have been “aged” receive the entire treatment. They are matured for at least a year and up to four years in tiny barrels. Fine anejos are in the same category as Cognac, Scotch, and Bourbon because to their extensive oak age.
Experts disagree on which type is the best. “Silver tequilas have a cleaner, purer flavor, according to Sean Herrick, manager of Atlanta’s Agave restaurant. “However, I find that anejos have greater personality.”
Agave offers 87 different agave-based beverages, which should satisfy even the most discerning palate. “We advocate serving excellent tequilas straight up in a snifter,” Herrick explains. Will his consumers pay $20 for a shot of anejo? “They undoubtedly will. It all comes down to education.”
Mezcal, another agave-based beverage, is gaining popularity among connoisseurs. In the United States, only cheap mezcals were accessible until recentlyoften with the telltale worm in the bottle. A few artisan-crafted mezcals have made their way to the United States in recent years. These high-quality spirits are made using traditional methods, and fans compare them to the best tequilas. The problem is that even people who are familiar with great tequilas are unfamiliar with mezcal. Mezcal is not related to the psychedelic mescaline or the peyote cactus (agave isn’t even a cactus), contrary to popular belief. Not all mezcals are tequilas, and not all tequilas are mezcals.
Mezcal is manufactured in the same way as tequila, but with a few key changes. Tequila can only be made in specific places, much like Cognac can only be made in the Cognac region of France. The states of Oaxaca, Guerrero, San Luis Potosi, and Zacatecas produce some of the best mezcals.
Mezcal is made from about ten different agave species. Mezcal is available in three different ages: blanco, reposado, and anejo. It’s always made entirely with agave nectar, with no additional sugar.
The way the pinas are cooked makes a big difference in mezcal manufacture. Instead of steaming, the agave hearts are baked for three days or more in a stone-lined pit with hot coals. This imparts a smokey flavor to mezcal. In contrast to tequila, which is distilled twice, the spirit is traditionally distilled only once.
Some experts predict a spike in interest in mezcal, while others argue that it is a high-end niche product that will never catch up to tequila’s appeal. When tequila became fashionable in the mid-1990s, several distillers bet on 100 percent blue agave tequila. Overproduction quickly resulted in a scarcity of prime blue agave plants. It will take time for supply to catch up with demand because agave plants take years to grow. Meanwhile, a few producers secretly migrated to mixtos for some of their labels.
Where does agave grow?
Agave (genus Agave) is a genus of over 200 species in the Asparagaceae (previously Agavaceae) family, which is endemic to dry and semiarid regions of the Americas, including Mexico and the Caribbean. The genus has a variety of economically important species, particularly those needed for the manufacturing of mescal liquors, such as tequila’s blue agave (Agave tequilana). Sisal (A. sisalana), henequen (A. fourcroydes), and cantala (A. cantala) are all high-fiber plants that could be used as bioenergy crops. Agave nectar is produced mostly by the century plant, also known as maguey (A. americana), and blue agave. A variety of species are also used as ornamentals in desert landscaping.
Is there a Casamigos shortage?
Due to COVID-19 shortages, some liquors, such as Casamigos, are difficult to keep in supply. Restaurants and booze outlets have been particularly heavily struck by supply shortages. Demand continues to rise as more Americans spend money, but supply remains constrained due to the pandemic’s impacts.
Are we running out of tequila?
Tequila is one of the most popular liquors right now. Mexico will face a tequila shortage until 2021 due to rising demand and escalating agave prices. Start putting money aside now, because margarita happy hour is about to get a lot more expensive.