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House of Tequila urges industry to work together to stabilise prices

Published:  10 December, 2018

With another two years to go before the current agave shortage – which has caused huge price spikes – is expected to come to an end, House of Tequila has urged the industry to “work together” to avoid such volatile market conditions in the future.

“We need to work hand in hand with the suppliers to fix the agave problems because we know already there is going to be an over-supply after the two-year period. Because there wasn’t enough, too much has now been planted, which means for the following five years prices will go down so much that it is not going to be very profitable for the agave producers,” said Christophe Prat, global marketing director, House of Tequila - Pernod Ricard’s Tequila arm.

“We need to negotiate a contract and ultimately be responsible in the industry and fix a price that doesn’t go through the roof when there is a shortage,” he said, adding that Pernod Ricard is working with its industry partners as well as growers and the Consejo Regulador del Tequila (CRT) to establish a sustainable model to secure stability in coming years.

“We have built long-term partnerships with agave farms to ensure our agave demand is supplied, and we will continue to harvest only once we reach full maturity to ensure that this will not affect the taste and quality of our Tequila.”

On the back of the current agave shortage, prices have leapt in the past 12 months, with agave on the open market five times more expensive than a year ago.

The UK is the seventh largest market in the world for Tequila, according to the Consejo Regulador del Tequila, with exports in 2017 totalling 1.45 million litres.

From January to September 2018, exports to the UK rose to 1.9 million litres, demonstrating the thirst for tequila among UK drinkers, where the category has been growing at a compound annual growth rate (CAGR) of 10% in the five years to 2017, according to the IWSR Global Trends Report 2017.

House of Tequila sold around 400,000 litres in 2017 in the UK, with a CAGR of 38% in the same period. The UK is the fifth largest market for House of Tequila.