How the Tequila Boom Could Go Bust

Volatile prices, high expenses and the agave plant’s seven-year growth cycle are driving farmers out of business.
The world just can’t seem to get enough tequila.

It takes about seven years to grow a blue agave plant, the spirit’s prized ingredient. Once mature, tequila makers have to extract the “pina,” or heart, so it can be heated, crushed, fermented, distilled and finally bottled and sold by your local mixologist as part of a trendy cocktail.

But over the last two years, volatile agave prices have soared, thanks in part to high tequila demand. According to an industry survey by Taste Tequila, the plant can cost as much as 25 pesos ($1.31) per kilogram, up from 2 pesos (10 cents) in 2012.

In Jalisco, Mexico, ground zero for growing agave, farmers are struggling to keep up. As these producers pull up premature plants in an effort to cash in while prices are high, quality is beginning to fall. At the same time, the skyrocketing value of the agave has given rise to security concerns as the plants become valuable theft targets. This can add expenses for farmers already gambling with an unpredictably priced crop.

more on