Tequila's Happy Hour
Mexico's national drink has become the liquor connoisseur's beverage du jour--which is also making it as pricey as anything else on the top shelf
BY SANDY FERNANDEZ

Did you spend last December stockpiling champagne? Sucker!

Instead of getting ready for a bubbly crisis that never came, you should have been stashing away the harder stuff, tequila. 

Since last year, farmers in and around the tequila-producing Mexican state of Jalisco have been facing shortages of agave, the spiky-leafed member of the lily family from which the spirit is distilled. Agave's price has leaped from about $40 a ton a year ago to $560 a ton last week.

If the shortage continues--and the agave plant's grandfatherly maturation time of eight to 12 years almost guarantees it will--Mexico's leading liquor export, which brought in $296 million in 1998, is sure to get a lot more expensive.

Weber blue agave, the only species authorized for tequila making, has suffered from a 1997 freeze and a recent spate of crop diseases. Even so, these are heady days for the tequila industry. Since 1995, drinkers the world over have turned tequila into a best seller. 

Global consumption has doubled, making Mexico's national drink the fastest growing liquor category in the world--another reason for the agave shortage. A major factor in the beverage's popularity has been the burgeoning demand for premium tequilas, like the Porfidio distillery's Tres Quatro Cinco, or
La Gonzalena's Chinaco,
made of 100% blue agave. These use nearly twice the fermented agave juice necessary to mix cheaper brands. "What is happening today is a product of what happened in 1991 and 1992," says Javier Arroyo Chavez, president of Mexico's Tequila Regulatory Commission. "No one then ever imagined that the tequila industry would go on to its present success."

 Before the boom, when the current agave crop was being planted, the international market for tequila was decidedly downscale. "People knew tequila as what they drank in college to get drunk," says Alex Alejandro, co-owner of New York City's oldest Mexican restaurant, El Parador. The restaurant has stocked premium tequilas for all of its 40 years, but they haven't always found a ready buyer. "Ten years ago, the average consumer wasn't willing to pay more than about $4 a shot," says Alejandro.

 Nowadays drinkers at trendy bars from Manhattan to Mayfair pay up to $40 for a tall shot, or caballito, of Porfidio Barrique, and buyers snap up Herradura's $230-a-bottle Seleccion Suprema.

(Available in Las Vegas)

Even mass-market leader Jose Cuervo now offers a $1,000 bottle of limited edition 1800 Coleccion.

(Don't you DARE spend that for Cuervo.
 I will hunt you down.)

It's all part of the trend toward boutique liquors that began in Europe and the U.S. in the late 1980s, says Chris Morris, national marketing director for American distiller Brown-Forman's two tequila brands, Pepe Lopez and the newly introduced Don Eduardo. 

"When single-malt whiskeys burst onto the market, we saw consumers become fascinated with niche products," says Morris. "People were willing to pay $25 or $30 a bottle if you gave them a good product or a reason to try it." Soon it was tequila's turn, both straight and in America's reigning cocktail, the margarita. "When I opened, customers just wanted to down their tequila in one go," says Fernando Martinez, who started the Going Loco bar in London in mid-1998. 

"Now many regular customers experiment and taste different tequilas just like a whiskey connoisseur would."

 The boom encouraged smaller distilleries and exporters to the U.S., which consumes 80% of Mexico's tequila shipments abroad. "A few people who regularly went to Mexico for these small specialty tequilas started importing them for sale," says Christopher Palmer, publisher of the online magazine Tequila Fancy.

(There is no "online Tequila Fancy" site.)

International customers were soon savoring formerly inaccessible brands like Patron, Lapiz and El Tesoro. A string of new multinational players in the market also helped. Over the past five years, giants like Brown-Forman and Seagram (Tequila Don Julio) and powerhouses Diageo (Cuervo's distributor) and Allied Domecq (Sauza) have bought tequila distilleries in Mexico or gone into partnerships there in order to create new products. Tequila's cachet has also attracted smaller spiritmakers like Pernod Ricard, which bought Mexico's boutique Tequila Viuda de Romero last month. 

 Click Here for Part Two