The Tequila Boom Creates Excessive Agave Planting : Planet Money : The Indicator from Planet Money The demand for tequila is booming, but it wasn't always the case. We speak with a fifth generation tequila distiller and a tequila scholar on the history of tequila and what will happen with this current boom.

The Tequila Boom And Agave Bust

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SYLVIE DOUGLIS, BYLINE: NPR.

(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")

STACEY VANEK SMITH, HOST:

Back in the 1980s, tequila did not have a great reputation in the U.S.

CARLOS CAMARENA: A lot of people remember that they had a bad experience with tequila.

VANEK SMITH: Carlos Camarena owns La Altena Distillery, which makes Tesoro Tequila, among others.

CAMARENA: Coming into Mexico on a spring break and drinking and then feeling terrible the next day.

VANEK SMITH: Carlos is a fifth generation tequila distiller. His great-great-grandfather started making it back in the 1800s. Carlos grew up around agave and tequila. It was in his blood. But when he tried to sell his family's tequila in the U.S., he kept running into the spring break problem. People thought of tequila as cheap, as a mixer. Forty years later, things could not be more different. Tequila is dominating the spirits market in the U.S., and celebrities like George Clooney, Rita Ora and Dwayne "The Rock" Johnson have been launching their own tequilas like crazy.

This is THE INDICATOR FROM PLANET MONEY. I'm Stacey Vanek Smith. Tequila sales are booming. Money is pouring into the industry. But inside the seeds of that boom is a bust - a very slow-growing bust.

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VANEK SMITH: Back in the '80s, Carlos Camarena was a man on a mission to change tequila's reputation in the U.S. To do this, he and a handful of distillers developed a plan to create a market for high-end tequilas one sip at a time. They would meet with bartenders and restaurant owners across the U.S. and tell them a story. Carlos would talk about his family, about the Jalisco region of Mexico, where the agave plants used in tequila are grown.

CAMARENA: You will see rows of blue agave growing under the sunlight.

VANEK SMITH: Those plants grow under the sunlight until they are ready to harvest, and then they are slowly cooked to bring out the sugars.

CAMARENA: A very slow cooking process in order to gently convert the starch into sugar - then we use stone to strike the juice of the agave.

VANEK SMITH: And then that precious agave juice is distilled in these little copper pots. Carlos reckons he's told this story thousands of times over the last 40 years, always ending in the same way - with him pouring a glass of his best tequila and asking them to take a sip.

CAMARENA: The initial reactions were usually, oh, this is not tequila. And my answer was, well, this is real tequila, not what you consumed in that spring break.

VANEK SMITH: Slowly but surely, tequila gained a stronger and stronger foothold in the U.S. market.

MARIE SARITA GAYTAN: Right now I think a lot of folks are like, wow, there's just like - tequila's everywhere. I'm like, well, actually, tequila has been the fastest-growing distilled spirits category in the North American segment for something like 15, 20 years.

VANEK SMITH: This is Marie Sarita Gaytan, a professor at the University of Utah and author of "Tequila: Distilling The Spirit Of Mexico." Sarita says efforts from distillers like Carlos and others helped change the image of tequila from body shots and bad hangovers to a more refined, high-end drink associated with tradition and great care, kind of like bourbon or scotch. Sarita says she realized just how much the market had changed back in 2017, when George Clooney and Randy Gerber sold their tequila brand Casamigos for $1 billion.

GAYTAN: It was just like, poof (ph), what the what? Like, wow, these white dudes commanded that much money in the tequila market. What does this mean?

VANEK SMITH: Probably not coincidentally, suddenly, tons and tons of American celebrities were jumping into the tequila market.

GAYTAN: Dwayne "The Rock" Johnson, Nick Jonas, oh, Adam Levine, AC/DC, Puff Daddy - P. Diddy - apparently, the Backstreet Boys...

VANEK SMITH: Demand for tequila has gone crazy, and that is creating problems because the supply of tequila has these natural limits. For one thing, says Sarita, real tequila has to come from agave plants grown in the Jalisco region of Mexico. Tequila has a terroir, kind of like champagne, so the tequila boom has a lot of Mexican and American tequila producers scrambling to lock down as much acreage as possible in official tequila territory.

GAYTAN: They started just buying land, buying land, buying land.

VANEK SMITH: That, of course, is driving up land prices, which is pushing locals and other industries out of the area. Sarita says some producers are also harvesting plants before they're ready, making bad tequila.

GAYTAN: There is pressure - right? - to get the agave out as fast as possible. You know, so folks have been using, like, pesticides and chemical fertilizers to try to get everything to kind of move quicker.

VANEK SMITH: Finally, Sarita says, there is a labor constraint. Harvesting an agave plant is dangerous, takes great skill. The people who do it even have a special title - jimadores. But there are only so many jimadores, and there are millions more plants going into the ground every year, so producers are hiring unskilled laborers who don't always know what they're doing. Sarita now worries that the massive popularity of tequila is destroying the tradition of tequila, that the land is being irreversibly damaged and the local economy is becoming totally distorted. I asked Carlos Camarena about this. And he says, yes, there are definite drawbacks to tequila's boom, but mostly, he says, it has really helped his region.

CAMARENA: We have full employment in the area, and it has provided a decent way of living for everyone involved, including the farmer, all of the people who works in the fields, for the people that is working in distilleries, in designing labels, in producing bottles, in everything that is part of that supply chain.

VANEK SMITH: Also, Carlos says, he knows that inside the seeds of this huge tequila boom is a bust. It's just a question of math. Carlos says the tequila market needs about 80 million agave plants a year to meet demand. All of the money going into tequila and the frenzy of planting have created an oversupply. There are about 200 million agave plants in the ground right now, almost triple what the industry needs. And all of them are going to reach maturity around the same time in about 2026.

CAMARENA: In five years, the agave will be rottening (ph) in the fields, and the price will come crashing down.

VANEK SMITH: Carlos says dealing with the boom and bust cycle is part of the tequila business, and you learn to plan for it.

CAMARENA: I can tell you right now that in 17 years from now, there comes another agave shortage, another crisis.

VANEK SMITH: Carlos says he will take the benefits of the boom and try to prepare for the bust. Mostly, he says, he will keep telling the story of tequila, the tradition and the history of it, and keep getting people to try good tequila that's done right - to order it neat - not in a margarita - and sip it slowly.

CAMARENA: A nice tequila, you don't slam it down. It's like a nice boyfriend. You kiss it slowly. You give your love to tequila, and tequila will give you back love.

VANEK SMITH: We took Carlos' mission really seriously here at THE INDICATOR. Producer Jamila Huxtable and I met at a tequila bar to try some sipping tequila.

Jamila Huxtable.

JAMILA HUXTABLE, BYLINE: Hey, Stacey.

VANEK SMITH: We are here in La Loba Cantina.

HUXTABLE: Yeah, this cute little shop from Brooklyn. How did you find out about this place?

VANEK SMITH: Google.

We ordered two good tequilas neat, just like Carlos said. And that is when I realized that Jamila is some kind of tequila tasting prodigy.

Tell me your impressions.

HUXTABLE: I'm tasting some spices, some pepper, a little oakiness maybe from the cask that it was in. It was in a wooden cask, she said.

VANEK SMITH: Wow, you taste the oak from the cask.

HUXTABLE: Yeah. And then definitely, like, some lime or lemon, like, a citrus.

VANEK SMITH: Yes, I get lemony.

HUXTABLE: Yeah. What else are you getting, Stace (ph)?

VANEK SMITH: I don't think I'm as good at this as you are.

HUXTABLE: (Laughter).

VANEK SMITH: Like, it's sharp.

You know, some palettes just take a little bit longer to evolve than others.

HUXTABLE: This episode of THE INDICATOR was produced by me, Jamila Huxtable, with help from Gilly Moon. It was fact-checked by Michael He. Kate Concannon is our editor, and THE INDICATOR is a production of NPR.

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