Tequila is giving agave farmers a real headache, and it's not because they're hungover. Americans have an unquenchable thirst for tequila -- and big tequila makers are struggling to keep up.
Due to mounting demand for tequila, many producers are worried about a severe shortage of agave, which has worsened over the years. Current average market price for Agave tequilana, the spiky blue succulent used to make tequila, skyrocketed six-fold in the past two years, according to Reuters. This increase will mean higher markups on tequila and other agave-based spirits such as mezcal and cocuy.
Francisco Soltero, director of strategic planning at Patron, explained to Reuters what the real issue is facing tequila distillers.
"The growth has overtaken us," he said. "It's a crisis of success of the industry."
Large tequila companies such as Patron and Tequila Sauza are having no trouble staying afloat amid the drought, even with soaring agave prices.
"If you sell value, the costs don't worry you," Soltero said.
Although big players in the tequila industry aren't feeling the pressure, the shortage has some smaller producers left at the wayside.
One farmer was reported harvesting young agave plants to compensate for the shortage. Younger agave plants produce less tequila, meaning more plants must be pulled from an already limited supply. This will only make shortages worse, as agave plants take up to eight years to fully mature. Picking immature agave plants also produces low-quality tequila.
Salvador Rosales, manager of Tequila Cascahuin, said, "If we continue like this a lot of companies will disappear."
The shortage is also driven by other agave-based products, including agave syrup. Rising prices have also caused theft among agave producers. Producers have seen criminals driving up with large trucks in the middle of the night to pillage rival farms. The ever-increasing demand and crop theft mean some tequila distilleries will be forced to go out of business.
Reuters reported that shortages will likely climb until 2021.
Although small and large tequila producers are doing everything they can to stay competitive as the shortage worsens, you can expect your tequila rounds to get a lot pricier.