“If you want to drink tequila, prepare salt and lemon …”. The ritual of unsheathing the salt shaker, slicing the citrus fruit and raising the elbow to see the bottom of the shot seems to be something out of movies and television series, but it has its reason for being. Several decades ago, when the drink made from agave was not so popular, you had to put something in your mouth that would distract the taste buds before ingesting it. “It was a very strong one, with a difficult passage through the mouth,” says Víctor Martínez, an expert at Casa Sauza, one of the great producers in Mexico. Over the years, the elixir has gained versatility, quality and international fame (mainly in the United States). Today he is delighted.
“The industry is going through a historic moment,” says Ramón González, general director of the Tequila Regulatory Council (CRT). Production reached 374 million liters in 2020 (6.3% more than in 2019). While exports accumulated their eleventh consecutive year on the rise with 286 million liters, with a value of 2,000 million dollars (about 1,700 million euros) that entered through the Mexican borders during last year, in the midst of the health crisis. The elixir, which in its country of origin is usually taken alone, in small sips and sometimes accompanied with a bloody (an aperitif made with tomato, some citrus and spices), it is sold to more than 120 countries around the world. But it is in the first economy in the world where it has made a dent.
The United States absorbs nine liters of every 10 that are exported, 61 times more than Germany, the second most important destination abroad, and 90 times more than Spain, the third largest market. It has become one of the most popular alcoholic beverages in the US in the last 20 years, highlights an analysis by the English bank Barclays. “The country is a large consumer and continues to experience accelerated growth,” says Luis Félix Fernández, president of the National Chamber of the Tequila Industry (CNIT). “There is a great dependence on the American economy and it is a great challenge to be solved…, we must diversify”, highlights González. Currently, tequila producers (whose denomination of origin dates back to 1974 and covers the entire State of Jalisco and 56 municipalities in Michoacán, Nayarit, Tamaulipas and Guanajuato) are exploring countries such as Russia, China, Japan or Turkey, where they make their way incipiently.
“The boom seems unstoppable,” Salvador Rosales, Tequila Cascahuin production manager, underlines with some concern. This small manufacturer emphasizes the price of the raw material: the Tequila Weber Azul agave, whose cost has multiplied by five since 2015, according to figures from the Agricultural Market Consultant Group (GCMA). High demand in the last decade —Which brought the world’s largest producer, José Cuervo, to the stock market in 2017— has been interspersed with a decrease in the sown area, caused by the accelerated process of jima (cut and roast the leaves of the plant to create the distillate). Currently, the kilo of the plant (which needs between six and eight years to mature) ranges between 24 and 26 pesos (less than a euro cent). It even came to be above 31 pesos, a figure never seen before.
The decline in the area planted, however, will be short-lived. Many farmers, attracted by the success in the demand for the drink, have already left corn plantations and other crops aside to dedicate themselves to agave, explains Juan Carlos Anaya, director of GCMA. The number of farmers has jumped from 5,500 to 19,000 in just four years, says the Jalisco State Agave Council. Far from being an incentive, This fact could generate an overproduction when its plants reach maturity, which in the future would trigger a drop in prices and a crisis for the Mexican countryside. “We do not see that scenario,” argues the representative of the CRT. “The industry has the capacity and the need to bring the entire product to market.” The forecast is that the growth rate of the sector (with an average annual rate of 6.5%) will continue in the next decade. The hopes of tequila producers are that consumers demand more 100% agave products (whose sole ingredient is the juice extracted from the caramelised agave pineapple that goes through a fermentation and distillation process), compared to others that require a lower percentage. and they are mixed with other sugars.
They also believe that the global economic recovery will give them new impetus. “Due to the health crisis scenario, many important markets were affected,” says Fernández, from the CNIT. “Restaurants and bars were closed, and these are consumption centers where brands have more presence and, therefore, register higher sales,” he adds. To this is added to a good reputation that the industry has forged. “Tequila is increasingly perceived as a glamorous drink with increasing exposure to wealthy individuals,” highlights the Barclays analysis. It is not trivial that many celebrities have opted for their own brand. From former basketball player Michael Jordan (with Cincoro) to George Clooney (with Casamigos, who would later sell to the multinational Diageo for 1,000 million dollars) they have tasted the honeys of the Mexican elixir.
Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.