Mexico’s tequila industry confronts mounting inventories and potential US tariffs as demand cools following years of explosive growth, industry data shows.
Inventories have reached 525 million liters, approaching the industry’s annual production of 599 million liters, according to figures shared with the Financial Times by the Tequila Regulatory Council. US consumption declined 1.1% in early 2023, contrasting with 17% growth in 2021.
The industry, which exported two-thirds of its production in 2023 with 80% destined for the US market, faces a possible 25% tariff threatened by incoming President Donald Trump. Spain and Germany, the next largest export markets, each account for just 2% of exports.
Sponsored · Antimony Resources
Major brands including Patron and Casamigos have reduced prices as consumer demand softens. Agave prices have also dropped from 30 pesos per kilo to between six and eight pesos for contracted suppliers, reaching as low as two pesos in the spot market.
The inventory buildup presents specific challenges due to Mexico’s warm climate, where tequila typically cannot age beyond three years due to rapid evaporation.
Information for this story was found via the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
