Goodbye, margaritas? The world is headed toward a tequila shortage

There has been a spate of headlines over the past week heralding something pretty awful -- potentially less tequila on the liquor shelves.

"A Tequila Shortage Could Be on the Horizon," a Fortune article announced on Feb. 1. Stories from other news outlets quickly followed, and they all have a similar doom-filled message.

Essentially, tequila producers can't keep up with demand. That's led to the skyrocketing cost for agave -- the Mexican plant from which tequila is distilled -- which has shot up six-fold in the past two years. That price squeezes the margins for smaller distillers and causes worry that even the bigger companies will be affected, according to Reuters.

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Since the plant takes seven to eight years to reach full maturity, the ideal point at which agave farmers harvest them for tequila, some farmers have resorted to pulling their plants early, before the agave is fully mature. The young agave doesn't yield as much tequila, producing a cascading problem of supply.

The shortages are expected to be much worse this year, and they might not get better until 2021, "as improved planting strategies take years to bear fruit," according to Reuters. In that time, small producers might not have the capital to stay in business.

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“Already, the 17.7 million blue agaves planted in 2011 in Mexico for use this year fall far short of the 42 million the industry needs to supply 140 registered companies,” the Reuters story said.

Finding sustainability in the tequila industry has been an ongoing issue. Though tequila was once that cheap liquor we took shots of in college with some lime and salt, in recent years, it has been recognized globally as an artisanal spirit made from a particular species of Mexican plant. With that recognition has come greater demand for tequila — and thus, a greater strain on the Agave tequilana plant.

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Mezcal and sotol have similarly found popularity, primarily in the U.S. because of our proximity to the Mexican border. But the demand isn't nearly as high for them, and mezcal can be made from a wider range of agave plants. Tequila, which is technically a type of mezcal, comes specifically from blue agave.

What does all that mean for us? Well, we’ll probably still be able to order a margarita from our neighborhood bar in the coming year. But the price of our drinks and our bottles at the liquor store might depend upon whether the large producers, like Patron, experience the pinch that smaller tequila makers are already enduring.

Industry insiders forecast that they will and that the problem isn’t about to let up soon.

"We are sure this will have a strong impact on the big firms such as Cuervo or Sauza," Raul Garcia, president of the National Committee for Agave Production in Tequila, told Reuters, which noted those firms haven't yet had problems paying for agave.

An Austin-based brand, Dulce Vida Tequila, has also managed to stay afloat in the turbulent industry.

Credit: Thao Nguyen/Austin American-Statesman

Credit: Thao Nguyen/Austin American-Statesman

“Dulce Vida is mindful of its consumers when developing products and pricing,” according to a PR representative. “Amidst this initial shift, the brand has opted to remain consistent with their current pricing and premium-quality product.”

In 2016, Dulce Vida sold to Milestone Brands, a beverage development company formed by two former Deep Eddy Vodka executives. Other tequila brands have been consolidating as of late: Patron, from Austin billionaire John Paul DeJoria, recently sold to Bacardi, while George Clooney's Casamigos was acquired by Diageo last year for $1 billion.

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