PremiumThe Great Agave Bust Unfolds As Tequila Oversupply Worsens
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Tequila inventories in Mexico have surged past half a billion liters, approaching the country's annual production levels, as demand slows in key markets like the US. The oversupply crisis has translated into the second bust cycle for agave prices since the Dot Com crash 25 years ago.
Mexico's Tequila Regulatory Council shared data with Financial Times that showed the industry had 525 million liters of tequila in inventory, either aging in barrels or about to be bottled, by the end of 2023. Of the 599 million liters of tequila produced in 2023, about one-sixth remained in inventory.
"Much more new spirit is being distilled than is being sold, and inventories are starting to accumulate," Bernstein analyst Trevor Stirling wrote in a note. He said rising inventory levels were due to sliding demand and new distillery capacity coming online.