Sun, Feb 04, 2018 - Page 15 News List

Soaring agave prices leave tequila makers with success hangover

By Lizbeth Diaz and Sharay Angulo  /  Reuters, AMATITAN, Mexico

The question posed by many distillers is how to keep pace with tequila’s success.

“The growth has overtaken us. It’s a crisis of success of the industry,” said Francisco Soltero, director of strategic planning at Patron, which buys agave under various contracts.

“We thought that we were going to grow a certain amount, and we’re growing double,” he said.

Large sellers, such as Patron and Sauza Tequila Import Co, have said they have not experienced problems paying for agave, and forecast that their inventories will keep growing.

“If you sell value, the costs don’t worry you,” Soltero said.

Sauza, which mostly grows its own agave, does not foresee supply problems, CEO Servando Calderon said.

However, some think it is simply a matter of time before the higher production costs and scarcity pressures bigger players.

“We are sure this will have a strong impact on the big firms, such as Cuervo or Sauza,” said Raul Garcia, president of the National Committee for Agave Production in Tequila, a group that includes most agave producers in the country. “We don’t see that the problem will be resolved soon, and that’s what worries us.”

Demand is also being driven by other, fashionable agave-derived products, including agave syrup and health supplement inulin, which use the equivalent of 20 percent of the plants needed this year, the council said.

Rising prices are also leading to growing theft, driving out smaller producers, Tepatitlan-based blue agave producer Jose de Jesus said.

Criminals enter the area with large trucks in the middle of the night to steal agave, he said.

Last year, 15,000 plants were reported stolen, more than triple the number in 2016, the council said.

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