As Mezcal Booms In The U.S., Supply Issues Could Create A Pricing Squeeze

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SHANKEN: While mezcal is surging in the U.S. market, agave pricing and supply issues in Mexico are poised to make a deep impact on the burgeoning category. Mezcal can be made in several Mexican states, but the vast majority comes from Oaxaca and is made using the Espadín agave variety. Pricing of Espadín agave was as low as 1 peso a kilogram in 2012 (about 7 cents in 2012 dollars) and about 3 pesos a kilogram in 2014. It rose to 6 pesos a kilogram in 2016, and this year producers are paying as much as 11-12 pesos (about 60 cents in 2018 dollars) a kilogram. By comparison, Blue Weber agave, the type used in making Tequila, is more than 20 pesos a kilogram.

“I wouldn’t be surprised to see Espadín agave at 15-16 pesos a kilogram this year,” says John Rexer, founder of Ilegal Mezcal. Bacardi bought a minority stake in Ilegal last year and helped the brand expand to nationwide distribution, led by its Joven expression ($47 a 750-ml.). “The cultivated Espadín supply is tight in Oaxaca and I believe that will continue through 2021 or 2022,” Rexer says. “But Oaxaca is big, and there are many growers. Some brands will have ample supply, while others will suffer a squeeze.”

Some labels, like Davos Brands’ Sombra ($35), mitigate supply issues by signing long-term contracts with agave growers. Davos vice president of marketing Joen Choe says 2018 is shaping up to be a challenging year for agave supply, but he adds that established brands should have a solid supply chain that can withstand this type of pressure.


Similarly, Montelobos, imported by William Grant & Sons, controls its supply to shield itself from pricing problems. Still, “There are concerns that the agave supply may not be sufficient if the growth of mezcal continues at 40% a year,” says Shem Blum, Montelobos’ brand manager. “There are also serious concerns surrounding the deforestation of wild agave and the long-term impact of exploitation.” Montelobos uses organic cultivated agave, not wild agave, and its Joven offering is at $40 a 750-ml.


The use of wild agave versus farmed agave is a point of contention within the mezcal community. Some brands tout the terroir of their mezcals and emphasize the importance of wild agave in creating unique spirits. But wild agave is expensive and increasingly hard to find. Mezcales de Leyenda founding partner Danny Mena believes true wild agaves will slowly disappear and be replaced by semi-wild agaves that start in a nursery and are replanted in the wild.

Bozal mezcal from 3 Badge Beverage Corp. uses both wild and farmed agave. The Espadín is farmed, while other varieties, including Arroqueño, Sierra Negra, Cincoañero, Sierrudo, and Barril, are propagated and replanted in wild and rural areas (Bozal’s line starts with Ensamble at $50 a 750-ml.). “The nature of mezcal is to bring a diverse range of agaves to consumers,” says 3 Badge president August Sebastiani. “That’s how we approach potential supply challenges. And we encourage wild agave replantings, providing resources and funding for our mezcal partners and palenque maestros.”

Del Maguey Single Village mezcal ($37 a 750-ml. for the popular Vida expression), which was acquired by Pernod Ricard last year, also puts a big emphasis on environmental responsibility. The brand, which bottles more than 20 mezcals highlighting different agave varietals, takes part in reforestation efforts and is committed to biodiversity in Mexico. Del Maguey rose 36% to 35,000 cases in the U.S. last year, according to Impact Databank.