The Agave Panic of 2018: Bloodshed on the Streets of Tequila

Bloodshed

The Agave Panic of 2018: Bloodshed on the Streets of Tequila https://wp.me/p3u1xi-5mAOn Jan. 22, 2018, a particularly savvy tequila brand owner announced in a private message to this office:

“Agave prices out of control.  $22/kilo.  Industry getting destroyed!”

Coincidentally, earlier that same day, another brand owner/ambassador admitted to us that the current cost had blown up to $24/kilo.

That savvy brand owner then added to his message–

“…but Cuervo started it.  Bought up a ton of [agave] before their IPO.  Increase balance sheet.  That’s, at least, the word on the street.”

But, shit got REAL for Jose Cuervo when…

Cuervo Cries Wolf

In this El Financiero article dated December 21, 2017, Francisco Beckmann Vidal, owner of Tierra de Agaves and Jose Cuervo, warned of a looming agave shortage.  He…

“…urged agave producers to increase plantings because whether in tons or in number of agaves, the industry requires more of your prime material.  Planting must begin now.  Eyes have to be opened and decisions need to be made.  Only the industry can provoke the necessary changes.”

[“…instó a los productores agaveros a que incrementen los plantíos porque tanto en toneladas o en número de agaves la industria cada vez requiere de más de sus materia prima, “hay que empezar a plantar desde ahorita. Hay que abrir los ojos y tomar decisiones. Solamente la industria es la que va a provocar estos cambios que se necesitan hacer.”]

Like Shaggy said–

It wasn’t me!

 Here’s Your Sign

All the signs of an impending shortage were there.  Major spirits distributors, tequila and even mezcal brands jockeyed for position in the Agave Triple Crown race.

In 2015, Diageo, the world’s largest producer of spirits, swapped its Bushmills Irish The Agave Panic of 2018: Bloodshed on the Streets of Tequila https://wp.me/p3u1xi-5mAwhiskey brand for Don Julio, previously owned by José Cuervo.

After Cuervo’s early February 2017 initial public offering, Davos Brands acquired a controlling interest in Master Sommelier Richard Betts’ Sombra Mezcal and Astral Tequila brands, in March.

Then, in early June 2017, spirits and wine behemoth, Pernod Ricard, purchased a significant stake in founder Ron Cooper’s beloved Del Maguey Single Village Mezcals amid uproar from long time fans claiming “sell out.”

Later that June, in a surprising move, Diageo bought Casamigos tequila, co-founded by celebs George Clooney and Rande Gerber, for up to $1 billion.

All this time, Bacardi, lurking like a shark in the water, in January 2018, bared its jaws and swallowed up Patron for a reported $5.1 billion.

The Agave Panic of 2018: Bloodshed on the Streets of Tequila https://wp.me/p3u1xi-5mA

Pernod Ricard, in an attempt to get the last word in January 2018, shelled out the big bucks to purchase the remaining 16% of Ken Austin’s Avion tequila that it had invested $100 million in back in 2014.

M & A was the name of the game in the spirits distribution sector, too.

Late November 2017 brought the news that distributor Breakthru Beverage was set to combine with Texas based Republic National Distribution Company to match 2016’s mega-merger of Southern Wine and Spirits with Glazer’s, Inc.

Real, or Fake?

Some skeptics still don’t believe that an agave shortage exists.

Unlike the more seasoned, and–dare I say–older sippers, this may be the first time Millennials and Gen Xers have ever experienced a truly severe Agave Crisis.

Others completely ignore the fact declaring an upcoming tequila boom, instead, instigated by the Big Three named above.

Even in this article in the Spirits Business, Vinexpo, the leading wine and spirits trade show, and IWSR (International Wine & Spirits Research) predict that:

“The fastest-growing spirit category in terms of volume will be Tequila, which is predicted to increase by 118% between 2016 and 2021 to 35m cases.”

Seriously?

 Thank You, Captain Obvious

We told you last year this was coming.The Agave Panic of 2018: Bloodshed on the Streets of Tequila https://wp.me/p3u1xi-5mA

Weren’t you paying attention?

In the article The Agave Shortage of 2017 Is Worse Than We Thought we outlined the reasons for the then looming crisis.

Still, you bought ALL the tequila and mezcal you could drink, didn’t you?

The Numbers Don’t Lie

According to DISCUS, 17.2 million cases of tequila were sold in 2017.  3.2 million of those cases were in the pricey Super Premium category, alone.

Must have been a good year for some of you.

On the Mexico side of the border, things aren’t so rosy.

Freak Out

According to these articles in Joe  , Telam , and Reuters

“This year [2018], a total of 42 million agave plants were projected to supply 140 registered companies.  However, only 17.7 million of those planted in 2011 are ready to be harvested, the Tequila Regulatory Council and National Tequila Industry Chamber have said.”

That’s assuming producers are using full grown agave.  As explained in the above articles–including our own–2 to 4 year old immature agaves are being sold, as well.

With the use of diffusers by the large producers like Sauza and Bacardi (Cazadores), the age of agave plants used to make tequila is irrelevant.

The Agave Panic of 2018: Bloodshed on the Streets of Tequila https://wp.me/p3u1xi-5mA

About Those Stolen Agave

For several years, now, growers in Oaxaca had reported that truckloads of stolen (or purchased) espadin used to make mezcal were headed for tequila distilleries in Jalisco.

Now, a reported 15,000 blue agave plants have been hijacked from blue agave growers supplying the Big Boys.  That’s triple the amount reported in 2016.

It is presumed that these pilfered plants were going to los mieleros (Big Pharma) since they pay bigger bucks for blue weber agave.

So, there is some poetic justice during this Agave Crisis.

 The Blame Game

As much as major metropolitan areas would like to believe that they carry this much clout, cities like New York are NOT to blame.

On the other hand, brands like Houston based Pura Vida blames the Big Guys, too.

Austin based Dulce Vida tequila agrees.

And, one more for good measure from this small brand owner via LinkedIn on February 5, 2018:

[“The sad reality for small producers that depend on purchasing ripe agave that results in extraordinary 100% blue agave tequila is that the Large Makers are the ones who have stockpiled huge quantities of premature agave.  But the 4 year old plants don’t yield good tequila.  Moreover, it requires double the amount of prime material [agave] for the production of tequila.  In short, the very same Large Producers have aggravated the problem and devastated the cultivation of blue agave.”]

While we’re pointing fingers, let’s accuse the real culprit of this economic and agricultural mess, shall we?

Greed

In October 2017, we spoke to Master Distiller of G4, Terralta, and Pasote–and agave grower–Felipe Camarena.

Minutes before the VIP Hour of El Cholo’s yearly Tequila Tour began, he briefly outlined to me in simple mathematical terms, how much per kilo he’d require to make a nice, honest living growing agave.

The amount was not unreasonable.  In fact, it was in the single digit range.

By waiting at the last minute, and selling to the highest bidder, Camarena blamed the greed of amateur agave growers for the skyrocketing maguey prices.

How Long?

How long will this agave crisis last?

In January 29, 2018, Master Distiller of Tapatio and Tequila Villa Lobos, Carlos Camarena, gave this gloomy prediction:

What… Me Worry?

The Agave Panic of 2018: Bloodshed on the Streets of Tequila https://wp.me/p3u1xi-5mA

Not everyone is worried, however.  Pernod isn’t

And neither are George and Rande.  Having pocketed their nearly $1 billion, they’re venturing into mezcal, now.

The Agave Panic of 2018: Bloodshed on the Streets of Tequila https://wp.me/p3u1xi-5mA

Be afraid–

Be VERY afraid!

The Montelobos Mezcal Project

[After The San Antonio Cocktail Conference held in January, 2015, Tequila Aficionado Media caught up with Dr. Iván Saldaña, producer of the upstart mezcal, Montelobos, a partnership project with the makers of Milagro tequila.  A featured speaker during the conference, here’s our in-depth discussion held at the bar of the lavish Westin Riverwalk Hotel.]

La Anatomia del Mezcal

Iván Saldaña (Photo courtesy of David Suro)
Iván Saldaña (Photo courtesy of David Suro)

In Dr. Iván Saldaña’s nifty little primer, The Anatomy Of Mezcal–which, by the way, belongs in every serious agave students’ reference library–he goes to great lengths to demystify maguey (agave) and mezcal in a concise and easy-to-understand fashion. As an introduction into the fundamentals of mezcal, the book covers it all, from what it is to how it’s processed.  Saldaña also defines the differences of artisanal mezcals distilled in palenques and haciendas from those using industrial methods. The latter is a situation currently being hotly contested inside the Mezcal Industry as it tries to cope with its alarming expansion without repeating the mistakes made by the Tequila Industry while still in its infancy.

A Double PhD.

Montelobos_ABVFrom his research, Saldaña asserts that the maguey plant efficiently evolves when affected by environmental stress.  It is precisely the plant’s adaptability to extreme conditions that makes it not only a versatile prime material for tequila and mezcal production, but also gives it its unique flavors and aromas that set it apart from other spirits. The same could be said about Iván’s versatility as a passionate scientist, researcher, environmentalist and mezcal developer who prefers to be challenged to come up with unique solutions. Here, Dr. Saldaña elaborates on his academic background leading to his PhD. In this segment, Iván recounts how his wine and spirits experience working for global distiller, Pernod Ricard, led to a craving to create something more intrinsically fulfilling.

My Way

Montelobos_derecho

Taking a lesson from Frank Sinatra, Iván explains what it was like to compose a mezcal like Montelobos without following any commercial guidelines.

Montelobos Explained

Iván has been quoted as insisting that “Mezcal is too often dominated by either an excessive smokiness or inopportune proportions.”  In his quest for the perfectly balanced mezcal, he concentrated on bringing forth Montelobos’ sweeter notes, along with citrus and smoke using cultivated espadin. 006The successful result garnered Montelobos a double gold medal at the San Francisco World Spirits Competition in 2013. Not wanting to create a single faceted mezcal, or replicating an old family recipe, Dr. Saldaña further breaks down Montelobos’ complexities.

The Value of Innovation

Dr. Saldaña produced his mezcal under the guidance of fifth generation Maestro Mezcalero, Don Abel López Mateos, but still believed in exploration and experimentation when designing its unique flavor profile.  Coupled with innovation, Iván contends that Montelobos is not about science, but about passion.

43.2 ABV

Montelobos_label   Iván explains how he arrived at the perfect 43.2% (86.4 proof) alcohol by volume to achieve the flavors and aromas unique to Montelobos.    

Sustainability

Agave_MontelobosNot only vigilant on creating Montelobos his way, Dr. Saldaña was also concerned about its environmental footprint on Oaxaca where it is distilled. Montelobos uses only organic, commercially grown espadin, certified so by certifying agency, Certimex.  Iván also makes sure that the wood used in roasting the espadin comes from a sustainable source.

The Universe Within the Universe

Dr. Iván Saldaña’s expedition into the anatomy of mezcal is by no means over. He confessed to having an urge to distill other variations of Montelobos that would emphasize additional flavors and aromas often hidden in traditional mezcal flavor profiles. For the time being, he prefers to continue to examine and discover the world within the world of mezcal.