As tequila continues to gain global popularity, Mexico’s agave producers are grappling with an unexpected crisis. What seemed like a golden opportunity has turned into a financial strain, as an oversupply of agave has caused prices to plummet, leaving traditional farmers struggling to stay afloat.
Tequila exports from Mexico skyrocketed from 224 million liters in 2018 to a record 402 million last year, fueled by demand in markets such as the United States, Germany, Spain, and Canada. The initial surge in consumption led to a shortage of agave, pushing prices up to 35 pesos per kilo. The high profits lured in more growers, with fields of the spiky succulent spreading across Mexico’s Jalisco region. Many individuals sold their businesses, hotels, and land to invest in agave farming, expecting continued prosperity.
The industry attracted major celebrity investments, with brands backed by high-profile figures fetching massive deals. One of the most notable was the 2017 sale of a tequila brand to a British beverage company in a deal worth up to $1 billion. Other famous names in sports and tech also jumped into the market, further increasing the spirit’s prestige.
However, the expansion quickly led to an overproduction crisis. The number of registered agave producers surged from 3,180 in 2014 to 42,200 in 2024, with cultivation areas more than doubling between 2018 and 2023. As supply outpaced demand, prices collapsed to an average of just 8 pesos per kilo—far below the costs needed for farmers to break even. Some buyers, known as “coyotes,” exploited desperate producers, purchasing agave for as little as 2 pesos per kilo.
Traditional farmers are now pushing for a base price of 12 pesos per kilo to cover their expenses, but economic pressures make it difficult to enforce. In an effort to protect small-scale producers, the industry’s regulatory body launched a digital platform aimed at connecting growers directly with tequila companies to secure fairer prices.
Further uncertainty looms over the industry, with proposed U.S. tariffs on Mexican imports adding another layer of concern. With the United States consuming about 85 percent of tequila bearing the denomination of origin label, any disruption in trade policies could worsen the situation.
Despite the crash in agave prices, consumers haven’t seen much relief at the bar. Many establishments report rising costs, with bar owners forced to absorb the impact to keep customers. As demand for tequila remains high, the farmers behind the spirit continue to bear the brunt of an industry that has grown too fast, too soon.
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