July 24, 2000
Web posted at: 9:02 AM EDT (1302 GMT)
MEXICO CITY (AP) -- After a five-year bash that saw global tequila
consumption nearly double, liquor producers are waking up with pounding
heads -- unable to keep up with tequila demand even as prices soar.
Squeezed by a severe shortage of the blue agave used to make the potent
spirit, prices are skyrocketing for the cactus-like plant as well as for
your
favorite tequila, if you can still find it at the liquor store.
Relief could be years away.
(Sob!)
"Nobody ever imagined demand would reach these levels," said Ramon Gonzalez,
head of Mexico's Tequila Regulatory Council, which oversees the industry.
Tequila's star began to rise in the early 1990s, with Mexican production
nearly
doubling to top 50 million gallons in the five years through 1999. About
half was
exported -- 80 percent of that to the United States, where tequila
is now an established party drink.
Driving the shortage even more than the boom in
tequila consumption is the re-education of the global palate.
All tequila must be made with at least 51 percent blue agave
(like that donkey urine Jose Cuervo)
grown in specified areas of Mexico.
Used to be, almost all tequila merely met the minimum,
and was completed with cheaper distilled sugar cane.
Brands like Sauza and Jose Cuervo posted strong sales with such brews,
which often are used to make margaritas.
But over the last half decade, many consumers have demanded the finer
and more expensive 100 percent agave "sipping" tequilas.
(pant pant)
Between 1995 and 1999, overall production of pure agave tequilas
rose 300 percent, while exports shot up 600 percent.
Add in agave plants destroyed by a 1997 fungus plague,
and you explain today's supply crisis and its price rises.
The number of blue agave plants in Mexico dropped by nearly half to 107
million
this year from 1997, according to the National Tequila Chamber. That pushed
down tequila production growth to 9 percent from an average 16.5 percent
the
last five years.
"Before, we made spoken arrangements to buy from the agave growers, but
now even a written contract can mean nothing, as there is always someone
willing to offer more money," said Jaime Orendain, who owns a pure tequila
distillery called Azteca de Jalisco.
Orendain said he now pays up to 10,000 pesos ($1,050) for a ton of agave.
That's nearly 20 times more than he paid last August.
The consumer is feeling the pinch.
Orendain estimates the agave shortage already has pushed up tequila prices
by
about a third. He confesses to a similar price hike in his own Arette brand
-- to
around 170 pesos ($18) a liter in Mexico and $40 in the United States.
The shortage of agave is far from obvious when you look out over the misty
blue plantations covering Mexico's tequila-producing region, centered in
the
eastern state of Jalisco.
But agave needs seven to 10 years to mature, and the spiky tufts you see
are too young to produce the sugary juice that is extracted from the plant's
huge
pineapple-shaped core, fermented and then distilled twice to become tequila.
"It didn't occur to anyone to invest in planting agave seven years ago,
when there was overproduction and prices were rock-bottom," Gonzalez said.
Last year, Orendain's mid-sized distillery produced 5 million liters (1.3
million
gallons) of 100 percent agave tequila for sale in Mexico, the United States,
Central America and Hong Kong. This year, he expects the agave crunch to
force him to cut production by 20 percent.
He said his company isn't at risk of going under,
but that many small-scale producers are in trouble because
they can't pay the raw material prices in this seller's market.
"The boom came without anybody thinking it through properly, and now what?
We are all left crying," said Jorge Ruiz, owner of the small La Escondida
distillery founded by his grandfather in 1920.
The disgruntled tequila veteran has his survival strategy.
He will do everything possible to satisfy one regular European order,
and sell anything left to the major tequila players who are busily buying
from
smaller producers to keep open their thirsty new markets.
Fuck Europe.
We need that tequila right here!
Most of the top tequila companies are linked to major beverage multinationals.
Jose Cuervo, producer of the best known donkey urine outside Mexico, is
45 percent
owned by United Distillers of Britain, which also sells Johnnie Walker
whiskey
and Smirnoff vodka. Another British concern, Allied Domecq, owns Sauza,
while the U.S. firm Brown-Forman owns 33 percent of Orendain Tequila,
another top-selling name. Don Julio, considered one of Mexico's finest
tequilas,
(It's OK, but heavy on "needles.")
is part-owned by Seagram.
Companies of this size are able to ride the crisis in part by increasing
promotion
of their mixed-sugar tequilas. Even Herradura, a major brand of pure tequila,
intends to introduce a mixed variety.
"The liters must be kept up, so the categories are being reshuffled.
The industry is not going to die, but it is going to change,"
said Gonzalez, the Regulatory Council chief.
He said the future of tequila is safe as long as agave growers and
liquor
producers plan ahead to break the oversupply-undersupply cycle.
It would be a major mistake, to even temporarily relax the rule that tequilas
contain at least 51 percent agave, he added.
No, let those faux tequilas drop to 5 percent - nobody cares.
Let Jose Cuervo drop to 0 percent. It's crap anyway.
Save the agave for the luxury brands, like Chinaco Anejo!
Behind his desk, Gonzalez keeps a collection of foul-smelling fake tequilas
with
very little, or zero, agave content that he vows will never legally bear
the name of
tequila. He shows off his favorite, a bottle adorned with a vulture in
dark glasses
and a Mexican hat.
"It rots your gut and gives you the message, 'Let's go crazy,"' he said.