Excessive agave costs aren’t the one issue driving up the prices of creating tequila. Producers are pointing to quite a lot of principally pandemic-related points which can be making every thing from sourcing bottles, printing labels, and delivery merchandise harder and expensive.
“Covid restrictions prevented many corporations from working for a time frame, after which many had been granted (permission) to function below sure restrictions, corresponding to decreased employees and social distancing,” says Steffin Oghene, Vice President of Enterprise Growth at Tequila El Tequileño.
This has had a knock-on impact, and lots of tequila producers have needed to supply new suppliers resulting from a scarcity of availability, he provides.
Glass bottles are simply one of many mandatory provides which can be more durable to return by, resulting from pandemic shutdowns and excessive climate in Texas, which stopped the gasoline provide to Mexico for a time frame, forcing some glass makers to stop operations. These elements led to a reported 40% lower in glass manufacturing this yr.
The price of glass bottles has elevated resulting from extreme climate and COVID-19.
One other problem dealing with nearly each trade is the discount in delivery routes and lack of cardboard bins and containers to ship merchandise in.
“Cardboard costs have doubled and we can not discover wood pallets to ship our tequila. We had to purchase plastic pallets,” says Felipe Camarena, Proprietor and Grasp Distiller on the El Pandillo distillery in Jesús María, Jalisco.
The cardboard scarcity is being pinned not less than partially on the abundance of on-line orders that had been made throughout Covid lockdowns around the globe, consuming up current provide.
As for pallets, lumber costs have elevated in lots of nations as demand for brand spanking new housing and remodels within the U.S. and elsewhere have soared.
Development within the tequila area has additionally led to a scarcity of distillery employees, in keeping with Camarena, as agave producers, flush with money due to sustained excessive agave costs, have moved to speculate their positive aspects in new houses and companies.
One other unwelcome shock for producers: the rising value of copper, which is important for making artisanal pot stills.
“Copper costs have gone up 85%, which makes rising capability amid excessive demand very costly,” Camarena says.
He, like many different tequila producers, noticed a surge in gross sales final yr as shoppers shifted from shopping for photographs in bars to purchasing bottles for dwelling. And the recognition of tequila nonetheless hasn’t abated. To make sure future capability Camarena not too long ago invested in a brand new 5,000 liter copper pot nonetheless, regardless of the hovering prices.
With elevated copper costs, increasing capability will be costly. This 5,000 liter pot nonetheless on the El Pandillo distillery has greater than doubled in value prior to now yr.
Confronted with these across-the-board value pressures it’s not stunning that some producers have raised their costs to compensate for his or her greater manufacturing prices. On the El Buho tequila retailer in Tlaquepaque, salespeople say that many manufacturers have raised costs not too long ago, some by as a lot as 20%.
In the meantime, different manufacturers like El Tequileño and Tapatio, have maintained their pre-pandemic costs, hoping life will likely be again to regular once more.
However whilst provide chains get straightened out, producers’ largest expense continues to be sourcing agave, which nonetheless stands at 27 pesos/ kilo.
“Our primary value continues to be agave,” says Guillermo Erickson Sauza, proprietor of Tequila Fortaleza. “Ten years in the past it value us about US$1,875 to fill our small (15 ton) oven. Now, it prices us round US$22,500,” he provides.
Whereas one would possibly suppose that agave costs would come down in the course of the pandemic, when shops had been closed, the unexpected explosion in demand saved costs excessive.
Fortaleza’s different provide prices, corresponding to for bottles and cardboard, haven’t risen but as a result of they’re below contracts, Sauza added, however that might change quickly.
Loading this oven with agave on the Tequila Fortaleza distillery continues to be the only costliest a part of the method because the value of agave stays close to historic highs.
Additionally ticking up some producers’ prices is a scarcity of mature agave (7+ years), which permits tequila makers to get the next yield as a result of mature agaves comprise extra sugar that may be transformed into alcohol. Actually candy agave could make a considerable distinction to producers’ backside strains, permitting them to extend their yields by round 30%, says Sauza.
Nonetheless, agaves aged 5 and 6 years are all that the majority distilleries have entry to proper now. These previous few years are when the plant produces probably the most sugar.
Throughout a latest go to to El Pandillo, we noticed Camarena inspecting cooked agave that not too long ago got here out of his oven. It was from his final subject of absolutely mature agave. The piñas had been darkish with caramelization, and candy agave juices dripped off the leaves as we tore off items to style.
“That is actually candy. I ought to get a reasonably good yield,” Camarena mentioned. In these pricey occasions, each bit helps.
