"The Great Agave Shortage Squeezes Tequila"

From Barron's, April 29:

As U.S. tequila demand has jumped in the past four years, agave prices have more than quintupled.

Americans have a sudden thirst for tequila, and Mexican exporters are struggling to keep up. Booming tequila demand is causing a huge spike in an obscure Mexican commodity—agave.

Agave, a spiky blue plant that grows in Mexico, is the principal ingredient in tequila as well as mezcal, another liquor that’s grown more popular. As U.S. tequila demand has jumped—and 80% of Mexican tequila exports go to the U.S.—agave prices have risen too. The price has more than quintupled in the past four years, from 1.7 Mexican pesos ($0.089) per kilo in 2013 to 10 pesos at the end of 2016, according to data analyzed by RBC Capital Markets.

It’s tempting to blame all this on young party animals, tequila’s traditional U.S. base. But surveys suggest baby boomers are also boosting sales. In all, the Distilled Spirits Council of the U.S. says tequila shipments more than doubled between 2002 and 2016, to nearly 16 million cases. Sales of super-premium tequila have been especially strong....MORE

Another possible cause, beyond soaring demand is a Reuters story we noted back in 2007:

Mexicans torch tequila fields for ethanol boom corn

Mexican farmers are setting ablaze fields of blue agave, the cactus-like plant used to make the fiery spirit tequila, and resowing the land with corn as soaring U.S. ethanol demand pushes up prices.

The switch to corn will contribute to an expected scarcity of agave in coming years, with officials predicting that farmers will plant between 25 percent and 35 percent less agave this year to turn the land over to corn.

"Those growers are going after what pays best now,"...