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Blame increased demand and soaring agave prices.

Jess McHugh
February 07, 2018

Increased demand and soaring agave prices have put Mexican tequila producers in a bind, leading to a potential shortage.

The price of agave rose six-fold in the past two years, affecting even large-scale producers in Mexico, Reuters reported.

“At more than 20 pesos per kilo, it’s impossible to compete with other spirits like vodka and whisky,” Salvador Rosales, manager of smaller producer Tequila Cascahuin, told Reuters. 

“If we continue like this a lot of companies will disappear,” he said.

Tequila has emerged as a globally popular drink in the past decade, effectively building a reputation that appeals both to luxury consumers and hard partying college students.

Brands at the top end of the price scale have seen dramatic revenue growth, with Don Julio's sales spiking by as much as 25 percent in recent years, Fortune reported in 2015.

“There’s a much greater recognition that tequila can be a sipper, not just a shooter or dropped in a margarita,” Bill Norris, the beverage director for the Alamo Drafthouse Cinema chain, which stocks dozens of premium tequilas, told Fortune. “People see it alongside single-malt Scotch.”

The U.S. in particular has become a large consumer of tequila, thanks in part to its close proximity to Mexico. The U.S. consumes some 80 percent of Mexico's tequila exports, The Atlantic reported.

With U.S. consumers standing to lose the most, residents might want to start stockpiling their favorite bottles now.

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