It’s The End of the Tequila World As We Know It…and I Feel Fine Part II

Originally written by Chris Zarus for TequilaRack.

The Economic Fall of the Medium Sized Producer

As the dooms day clock ticks down, all but the biggest distilleries, short on cash and heavy in liquid inventory, will soon be courting anyone with a US dollar. But that market is rather small, and unless the CRT (Consejo Regulador del Tequila, Tequila’s governing body) changes the law and allows 100% Agave Tequila to be bottled outside of the appellation area, the price of a “pipe” of 100% Agave Tequila will begin to drop faster and farther than that of its half brother mixto. Too much 100% Agave Tequila chasing too few in-zone buyers and/or bottlers will cause another price collapse, except this one will be a price collapse on the finished product.

As this scenario starts to unfold, a few things will begin to happen simultaneously:

1) The largest producers (top 5) will buy out the top 20 as their values will be diminished. Larger or well-financed producers will be able to buy out their smaller rival producers with little cash and mostly their own corporate stock. These bigger players will do this not just to shut down a competitor, but to get their hands on their vast value depressed inventory of 100% Agave Tequila for their own use, and perhaps get some under marketed brands of promise as a bonus to develop or sell.

2). The next tier of 25-75 producers will die out.

3) The smaller producers, like micro-distillers, will survive by remaining small and being content just making incredible craft Tequila.

Tic Toc…

The Mayan calendar ends on Sunday, December 23, 2012.

“Both the Hopi and Mayans recognize that we are approaching the end of a World Age… In both cases, however, the Hopi and Mayan elders do not prophesize that everything will come to an end. Rather, this is a time of transition from one World Age into another. The message they give concerns our making a choice of how we enter the future ahead. Our moving through with either resistance or acceptance will determine whether the transition will happen with cataclysmic changes or gradual peace and tranquility...” — Joseph Robert Jochmans

First, let me start out by saying that I’m not the Nostradamus of Tequila, or “Z-Doctor-of-Death-&-Despair” that I was referred to as most recently.

However, as far as I’m concerned, the Mayan’s have it right regarding the current business economy of Tequila and its transition from one World Age into another. In my opinion, the Mayan’s prophesy that the end of the world is rapidly approaching for many in the Tequila system, is spot on.

2012 The Mayan Curse of the US Bonded Warehouse

Many have already made their containers of US tequila brands and now they reside in bonded warehouses across the US, mostly in the Southwestern Border States (Arizona, California, New Mexico, and Texas). Few ever thought they needed to know that the US federal spirit taxes are due either prior to withdrawal or when the clock strikes five years, then the Tequila will be considered as invulnerably abandoned and shall be transferred into General Order Warehouse for liquidation.

Page 1 of 3 | Next page

Lisa Pietsch is the Chief Operations Officer of Tequila Aficionado Media, a USAF veteran, a multi-published novelist and freelance writer, a social media marketing consultant, and the mother of two boys. She has a passion for good tequila, foreign languages, and travel in all forms. Lisa currently makes her home in San Antonio, Texas.