In 1997, the Mexican state of Jalisco faced unnaturally cold temperatures of -17° Celsius. It was so cold that that it froze the shallow roots of the young Agave plants that dotted the Jalisco countryside. Apart from being an ecological disaster, it also affected the production of an Agave-based liquor named after the small city of Tequila.
This unexpected extermination of acres of Agave plants had a predictable effect. By 2002, there was a major shortage of the plant which skyrocketed the price of each pīna of Agave to upto $100 for famous distillers such as Jose Cuervo and Sauza. A pīna is the sugary heart of the Agave plant that is used to produce Tequila.
On March 10, 2016, residents of the Jalisco state woke up to snow-covered fields of Agave.
Cycles of Death
While freak weather patterns obviously play a role in Agave farming, the larger problem lies with a lack of planning and regulation. With no strict government regulations protecting small plantation owners, the Agave farmers are left to face the boom and bust cycles of excessive supply followed by excessive prices.
This cycle is exacerbated by the life cycle of the Tequila-producing Agave plant. The preferred Blue Weber strain takes around 8 years to fully mature, at which point the plant is destroyed to get the pīna from which Tequila is distilled. Thus, long-term planning is needed.
The larger distilleries have combatted this problem by largely producing their own Agave plants. According to a report by Vice, larger Tequila producers own 80%-90% of the plants they need for distillation. Unsurprisingly, this has put a lot of smaller farmers out of business as they can’t weather 8-year long cycles for demand. The Vice article estimates that between 2010-2015, the number of Agave producers dropped from 15,000 to just 6,000.
High Tequila Demand Has Not Translated to High Agave Demand
This drop in Agave suppliers has been worsened by the constantly increasing demand for Tequila. Between 1995 and 2008, the production of the popular Mexican liquor increased threefold. According to the president of the National Committee for Agave Production in Tequila, to match the 300 million plant-per-year demand, 35 million would need to be planted a year.
According to the Tequila Registry Council and the National Tequila Industry Chamber, only 17.7 million Blue Agaves were planted in 2011. That doesn’t even match the necessary 42 million plants for Tequila production in 2018, let alone other popular Agave-based liquors such as Mezcal and Pulque.
This shortage has led to an inevitable skyrocketing of prices. As of January 2018, Agave plants cost $1.18 per kilo (22 pesos) – up from 3.85 pesos in 2016. While these numbers are not as bad as in 2002 when it hit $1.76 per kilo, they are far too high for independent contract-based Agave farmers.
As Luis Velasco, owner of the 107-year old Madrileña distillery, told Financial Times, the 17 peso per kilo price during the early 2000s crisis nearly killed even his old firm. “It almost destroyed some companies, including ours. They [Agave farmers] were harvesting anything they could to get at that high price, even if it [the plant] was too young or sick.”
Freak weather patterns, a lack of government protection, increasingly integrated Agave farming and Tequila production, the disappearance of independent Agave farmers, and high prices have all led to one inevitable conclusion for 2018 – a serious shortage of Mexican Tequila. Can the newly emerging Indian Agave industry fill the gap in the market?
Is There Enough Agave in India?
In a word? No. Scattered across the Deccan Plateau are 10-15 million indigenous Agave plants, whose existence dates back 200-300 years. However, according to Desmond Nazareth of India’s first Agave distillery Agave India, makers of DesmondJi, only about 1 million of these plants are mature enough for distillation.
This number goes down further when you realise that the farms DesmondJi has access to only hold around 1 million plants – of which, only around 100,000 are mature enough for distillation a year. However, Nazareth did say that he was hoping to secure government and villager support for a plan to harvest unused semi-arid lands. If his plans are successful, this would add another few thousand acres of plants near his current distillery in Andhra Pradesh.
Additionally, Nazareth mentioned that they had started to export their craft liquor to North American and European markets. They have exported 800 cases in the last twelve months – around 9000 litres – and expect new orders soon.
Considering the Mexican production of 100% Agave Tequila was 150.8 million litres in 2017, Desmondji is still a blip on the radar. However, considering DesmondJi are selling around 10,000 cases a year in total as of March end 2018, this is a reasonable proportion of their own sales.
Nevertheless, Nazareth maintains that DesmondJi exports have been an incidental form of revenue, and that the distillery remains focussed on Indian markets.
“Indian Agave Spirits”
At the height of the last Agave crisis around the turn of the millennium, a South African distillery tried to fill the demand gap in the global Tequila market. Using Blue Weber plants in the Karoo region that were presumably brought over by Portuguese or Spanish colonists, Agave Distillers became the first company outside Mexico to produce Tequila in 2003.
However, they were immediately hit by a Mexican-South African trade agreement that forced them to recognise that ‘Tequila’ could only be made in the Jalisco region of Mexico. Despite some commercial success, Agave Distillers finally had to shut shop in 2008.
These naming restrictions also apply to DesmondJi’s distillery, but Nazareth is very upbeat about the distinction. He makes it clear that they don’t make Tequila or Mezcal, but rather they distill “Indian Agave Spirits.” This is despite the fact their exported alcohol is mainly 100% Agave alcohol, whereas a lot of famous Mexican ‘Tequila’ brands often export 51% Agave alcohol.
This naming distinction is important to consumers, and played a part in the downfall of Agave Distillers. However, there has since been a resurgence in the growth of Agave alcohol production in South Africa, just as DesmondJi has seen serious sales in India. In the Bangalore and Karnataka markets alone, the Indian Agave Spirit has managed to capture a 30%-40% market share of all Agave liquors.
With the current Mexican Tequila crisis predicted to last until 2021, the Indian (and other international) companies will not be able to fill the gap. However, if the market continues to appreciate alternate Agave spirits and international distillers continue to grow at their current pace, there is no reason to think that India can’t help fill the demand for Agave liquor during Mexico’s next bust cycle in 10-15 years.