Sunrise, Margarita, Paloma – bartender Shubham Walavalker can’t mix the tequila cocktails as fast as they can be drunk.

“We don’t have enough tequila every weekend,” says the 24-year-old, who works in a London bar.

In Europe, the liquor is on the rise: According to the Mexican tequila regulator CRT, the export volume to Spain increased by 90 percent in 2022 and by 68 percent to the United Kingdom.

1.59 Euro per Kilo Agave

But there’s a problem — agaves, the prickly plants used to make tequila, are becoming scarce. “There is a massive shortage of agave in the tequila industry,” said Trevor Stirling, an analyst at Bernstein.

The prices for the crop have skyrocketed in recent years and reached the mark of 31 pesos (1.59 euros) per kilogram at the end of 2022. Over the past two decades, the price has been around five to seven pesos.

“It’s a supply and demand issue,” he adds. Demand is growing faster than the plant, which takes about seven years to mature.

European customers are clearly feeling the price jump. According to market researchers at NielsenIQ, tequila cost 16 percent more in December last year than a year earlier.

US market more mature

True, tequila is far from breaking the popularity of vodka, whisky, rum and gin in Europe. However, it has taken root and is the fastest-growing spirit in the region, according to US liquor retailer Proximo Spirits, which sells the world’s top-selling tequila brand, Jose Cuervo.

There are far fewer tequila brands in Europe than in the US, where the market is more mature and competitive, with new brands popping up every week, says Michael Merrolli, head of the tequila business at French liquor group Pernod Ricard.

The manufacturers therefore pursued a strategy of “premiumisation” in which they emphasized the quality and exclusivity of their brands. This also drives up the prices.

Robyn Evans, who runs a bar specializing in tequila in London, makes a similar observation. “I’ve noticed that there’s a lot more marketing going on,” says the 31-year-old.

Demand exceeds supply

Some industry representatives see medium-term respite from the shortage of agave, which takes about seven years to mature before it can be harvested. The agaves planted a few years ago will eventually be ready to harvest, says Luis Fernando Felix, manager at Proximo Spirits.

Demand currently far exceeds supply. But for the foreseeable future, Feix, like some of his industry colleagues, sees hope: “In about two years, the price for agaves will fall because the supply will be greater than the demand”.