He can’t pour the tequila fast enough. Premium Shots. Margaritas. Palomas. Sunrise sometimes.
“We definitely run out every weekend,” says 24-year-old bartender Shubham Walwalkar, who is struggling to keep pace with the thirst of customers at a packed Revolution bar in southwest London.
Tequila, the king of Mexican liquors, is making a splash in Europe. According to Mexico’s Tequila Regulatory Council, export volumes in Spain rose 90% last year, 73% in France, 68% in Britain and 60% in Germany, outpacing global growth of 23%.
The Challenger – a favorite in North America – has come a long way from making a dent in the historical European dominance of vodka, whiskey, rum and gin. However, it has gained a following, and is the fastest-growing spirit in the region, according to José Cuervo’s seller Proximo Spirits.
However there is a thorny snag.
European demand is deepening a shortage of agave, the thorny plant native to Mexico’s Jalisco region that is used to make tequila.
The cost of agave – about 5-7 Mexican pesos ($0.27-$0.37) per kilogram over the past two decades – has been rising in recent years and is set to reach 31 pesos by the end of 2022, according to research firm Bernstein.
The current forecast for the end of 2023 is 28 pesos, although Bernstein analyst Trevor Sterling cautioned that demand “remains surprising on the upside”.
“It’s a supply and demand issue,” he said. “Agave is sorely lacking in the tequila industry.”
Tequila prices have skyrocketed.
People in Europe paid nearly 16% more for alcohol in stores in December than a year earlier, according to data from NielsenIQ, while whiskey prices rose 6% and vodka prices rose 5%. Gin prices were flat.
Compounding matters, the flow of high-quality 100% agave tequila to Europe — which has to be bottled in Mexico — is also constrained by supply-chain chaos from COVID-19.