Patrón: agave shortage ‘good’ for Tequila

The agave shortage that has intermittently blighted the Tequila category in recent years could have a positive impact by “forcing short-term players out of the market,” the CMO of Patrón has argued.

Patrón Tequila’s CMO Lee Applbaum believes the agave shortage could “weed out” uncommitted producers

Speaking to The Spirits Business, Lee Applbaum, chief marketing officer at Patrón Spirits International, said he believes the recent influx of new entrants in the Tequila category will most likely put further stress on agave supplies.

“We work with a collective of agave growers and we are very proud of this partnership,” he said. “We are insulated not only in terns of absolute supply but also in quality. But agave has a seven-year growth cycle and the category is growing much faster than that. So it looks like supply will become tighter and more problematic for many brands.

“But I think it’s good because it will force the short-term players out of the market. Those dedicated to hand-crafted production will either grow their own agave or have contracts in place. It will weed the guys out who are not in it for the long-term.”

In an interview with SB earlier this year, Applbaum said he had concern over the impact of “inferior” Tequila products as the category continues its rapid growth.

The executive has reiterated his apprehension, claiming: “[I] think there will be brands that try to harvest profits while the category is hot and not play the long game. This could hurt the category.

“The think that keeps me up at night is – the category still has a lot of room to grow, but if producers don’t make sure standards are maintained and that consumers understand what they are buying, then the whole category could be jeopardised.”

In the US – the largest market for Tequila – ultra-premium Tequila recorded a 15.5% sales increase in the 52 weeks to June 2016, growing “significantly faster” than total Tequila sales, which were up 9.1% in the time period, according to Nielsen.

For an in-depth look at the Tequila category, see the October 2016 issue of The Spirits Business magazine, out now.