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Mexico Tequila Crisis 2025

Tequila Crisis in Mexico: Overproduction and US Tariffs Threaten Industry

Mexico Tequila Crisis
Mexico Tequila Crisis

Mexico is grappling with an overwhelming surplus of tequila, with stocks exceeding 500 million liters nearly matching the country’s yearly output. This oversupply stems from several key factors:

Declining Demand in the US: 

As Mexico’s largest tequila market, the US has seen a 1.1% dip in consumption during the first seven months of 2024, following a spike during the pandemic. This slowdown is linked to post-pandemic market adjustments and higher prices.

Threat of US Tariffs: 

The potential imposition of a 25% tariff on Mexican goods, including tequila, by the incoming Trump administration adds to the challenge. If enacted, this tariff could severely affect the tequila industry and drive up costs for US buyers.

Plummeting Agave Prices: The oversupply has led to a sharp drop in the price of agave, the essential ingredient in tequila. Falling from 30 pesos/kg in 2020 to a range of 2-8 pesos/kg in 2024, this decline is hurting agave farmers and destabilizing the tequila market.