Tequila's Sourcing Hangover: What the Industry Can Do to Better Match Supply and Demand

Tequila has enjoyed solid global demand growth, driven by premiumisation, which bodes well for the future of the industry. The main challenge for the industry moving forward will be to secure sufficient supply to continue fuelling that growth.

Acquiring agave plantations is one way to secure supply, but ultimately dilutes return on capital. Long-term contracts with growers that offer price ceilings and floors are needed, but for these to work effectively, greater transparency in pricing is required.

In this context, we see attractive opportunities for large, professional growers to enter the market, who can offer more secure contracts and greater security of supply, and we believe this will begin to happen in the near term.