Mexico's tequila glut sends agave prices crashing
A planting boom meant to fix a 2022 shortage has matured all at once, pushing agave prices to a fraction of their peak and certified tequila output down 24% since then.
Mexico's tequila industry has swung from a feared agave shortage to an oversupply glut, and agave prices have collapsed as a result. Blue agave that traded near 32 pesos a kilo at the 2022 peak has sold for as little as 0.8 pesos in 2025 and into 2026, according to an analysis by trade outlet Vinetur, with most reported deals landing between 0.8 and 8 pesos a kilo.
Certified tequila production has fallen with the market. Output peaked at 651.5 million litres in 2022, dropped to 495.8 million litres in 2024, and held roughly flat at around 496 million litres in 2025, per Vinetur's reading of industry figures. The first five months of 2026 produced 248.7 million litres, an early pace that is too thin to call a trend either way.
Inventories tell the rest of the story. Stocks stood at around 525 million litres at the end of 2023, close to a full year's production, some of it aging in barrel and some simply unsold.
A six-year-old agave plant does not care that demand cooled last quarter.
Why a shortage turns into a glut
Agave takes six to eight years to mature before it can be harvested for tequila. When prices spiked in the early 2020s, growers responded the only way they could: they planted more. Mexico's area under tequila agave grew 167% between 2014 and 2023, to 214,621 hectares spread across 231 municipalities in 12 states, Vinetur reports.
That wave of planting is now reaching the fields at the same time US demand has cooled, which is what turned a shortage into a surplus almost overnight. The lag is built into the plant: nothing in the agave cycle can speed up or slow down to match a market that moves quarter to quarter.
Who gains when agave gets cheap
Cheaper agave helps the margins of large distillers, who buy at scale, more than it helps the growers now selling at depressed spot prices. The United States still takes the bulk of Mexican tequila — more than 331 million litres in 2025, about 81% of exports — but analytics firm IWSR describes 2024 and 2025 as a period of stagnation for US tequila volumes.
The slowdown is not falling evenly. Reported 2024 US case sales showed José Cuervo down 6.4% and Casamigos down 20.7%, while Don Julio rose 28.2% and Espolòn 14.6%, a split that tracks a broader shift toward ultra-premium bottles, now 17% of US volume against 6% in 2019.
Tequila's smoky cousin has had an easier run: Mexico City's Mundo Mezcal fair drew more than 250 brands this year, even as the bigger tequila category corrects.
Vinetur's own forecasts see the market stabilising around 621 million litres by 2028 in a moderate scenario — a recovery that depends on demand catching up to the agave that is already in the ground.
