Mexican tequila supply may dip

GUADALAJARA, MEXICO, AUGUST 1: Mexican tequila may soon flow less "freely due to a shortage of agave", a plant whose juices form the basic ingredient of the drink. The National Tequila Industry Association, which on July 4 halted the purchase of agave due to high prices, said on Monday it had not reached an agreement on prices with agave growers.

The industry has 510,000 tonnes of agave in inventory, enough to ensure the supply for the year 2000. But production could slacken beginning in 2001, warned Ramon Gonzalez of the Tequila Regulatory Council. The industry grew 3.22 percent during the first half of the year, but worldwide demand has grown at an annual rate of about 16.5 percent in the last four years, Gonzalez said.

Meanwhile, the price of a tonne of agave has grown from 400 pesos (40 dollars) in December 1998 to its current price range from 6,000 to 12,000 pesos (600 to 1,200 dollars).

Growers say they are willing to settle on a reference price of 10 pesos per kilogram but that the price demanded by the tequila industry – four pesos (40 cents) per kilogram – is unsustainable.

The Mexican tequila industry exported 97.3 million liters (25.7 million gallons) of the drink last year, of which 80 percent went to North America, 12 percent to the European Union and 8 percent to other destinations.