Blue Agave Fell 66 Per Cent and the Boom Didn't Notice

Three series describe the agave spirits category in 2025, and all three point in different directions.

Tequila produced a record 583.5 million litres, up 17.7 per cent on 495.8 million. US supplier revenue for tequila and mezcal fell 4.1 per cent to USD 6.4 billion on volume flat at 32.1 million cases. And blue agave fell 66 per cent at the Jalisco farm gate — from MXN 22.21 a kilogram in 2024 to MXN 7.62, about a third of where it stood at the MXN 24.09 peak in 2023.

Production up by a sixth. Revenue down. Input down by two thirds. That is not a category in equilibrium, and it is not a category in trouble either. It is a category where the supply side has completely outrun the price, and the price is being defended by brand rather than by cost.

The mirror image of gin

Put this next to gin and the structural difference becomes obvious. Gin sells at USD 14.27 a litre — among the cheapest liquid in premium-plus spirits — and its low price is what drives its growth. Agave spirits sell at USD 22.15 a litre at US supplier level and the input cost behind that litre just collapsed by two thirds.

In gin, cheap is the engine: a low price brings in buyers and the category grows in volume, roughly flat in price. In agave, cheap is a margin gift: the raw material got dramatically cheaper and the consumer price did not follow it down by anything like as much. One category converts low price into demand. The other converts low cost into margin — until it doesn’t.

That difference is what makes the two categories behave nothing alike under stress. Gin has a demand problem disguised as a price advantage. Agave has a supply problem disguised as a boom.

What the 66 per cent actually means

Distilleries milled 2.19 million tonnes of agave in 2025. That is a lot of plant, bought at a price that would have been unthinkable two years earlier, and processed into a record volume of spirit while the revenue it earned at the US supplier level fell.

The arithmetic of that is unforgiving for anyone holding agave. The value that left the farm gate did not appear as value at the shelf. It was competed away somewhere between the two — in promotional spend, in depletions support, in the discount needed to move a record production year into a market whose cases were flat.

So the record production is not evidence of a healthy category. It is evidence of a category with a great deal of capacity and a fixed number of drinkers, clearing its output through price it does not report as price.

The trap in a two-year price collapse

Agave is a multi-year crop. The plant takes years to reach harvest weight, which means the decision to plant is made against a price that will not be tested until long after the decision. A farm-gate price that has fallen 66 per cent in a year is precisely the signal that produces a planting collapse — and a planting collapse is not visible in supply for years, then arrives all at once.

That is the cycle this category has run before and it is the one the 2023 peak at MXN 24.09 set up. The high price of 2023 told every grower in Jalisco to plant; the low price of 2025 tells them not to. The consequence lands around the end of the decade, which is precisely the window the forecast covers.

Which produces an awkward internal tension in any forward view of agave spirits. The category is sized at USD 13.67 billion by 2033 — 3.00 per cent a year on volume growing 1.50 per cent — and the value rate is twice the volume rate, exactly as you would expect from a category whose product is trading up. But a forecast built on steadily rising value per litre is a forecast that assumes input costs stay benign or that price holds regardless of them. Both cannot be reliably true across a full planting cycle.

Three things a buyer or an investor should hold on to

A collapse in the input price is a leading indicator of a future supply shock, not a permanent margin improvement. Anyone underwriting agave spirits on today’s cost structure is underwriting the bottom of a cycle. The relevant question is not what agave costs now, it is what it will cost in the years when the 2025 plantings would have matured and did not.

Vertical ownership of agave is the whole defensive position. In a category where the raw material moves by two thirds in a year and the shelf price barely moves at all, the value accrues to whoever controls the plant — either through ownership or through long-dated contracts. Everyone else is renting the cycle.

Record production is not the metric to celebrate. Records in litres alongside declines in revenue mean the category is buying volume with margin. That works while input costs are falling. It reverses the moment they are not, and the reversal will show up in margin before it shows up in shipments — which means the shipments table will still look fine for a year after the damage is done.

The one-line version: agave spirits just had their best production year ever and their worst pricing year in recent memory, and both of those facts come from the same collapse in the price of a plant that takes years to grow.

Companion analysis: Global Agave Spirits (Tequila & Mezcal) Market Report, Size & Forecast 2026–2033.