| AMATITAN, Mexico
AMATITAN, Mexico Feb 11 An expected surge in
Chinese demand should boost Mexico's tequila exports by 20
percent within a decade, according to the regulator of the
country's signature cactus-based liquor, and producers are
gearing up for a boom.
On a visit to Mexico last August, Chinese President Xi
Jinping lifted a ban on imports of premium blue agave tequila.
China had objected to the relatively high levels of methanol in
blue agave tequila, produced from fibers in the cactus' leaves.
Since the ban was lifted, Mexico has exported nearly 520,000
liters of mostly premium tequila to China, said Ramon Gonzalez,
director of the national tequila regulator.
"I expect ... 30 million liters within the next 10 years,"
said Gonzalez, estimating that each of Mexico's 16 major tequila
producers had invested up to $3 million to enter the Chinese
Foreign diplomats and trade officials also expect strong
growth in the sector thanks to China.
Mexico currently exports about 170 million liters a year
with just under 120 million liters heading to the United States.
The expected Chinese demand would expand the industry by nearly
20 percent from current export levels.
Much like French Champagne or Italian Parmesan cheese, blue
agave tequila has a protected designation of origin and can only
come from five Mexican states: Jalisco, Guanajuato, Michoacan,
Nayarit and Tamaulipas.
LOCAL HACIENDAS, GLOBAL BRANDS
Most of Mexico's oldest and largest tequila-producing
haciendas are now controlled by foreign owners, many of whom
already have a presence in China.
The Hacienda San Jose del Refugio, sandwiched between the
rolling hills speckled with blue agave plants that encircle the
small town of Amatitan near the western Mexican city of
Guadalajara, is owned by Brown-Forman Corp., the U.S.
maker of Jack Daniel's whiskey.
The leafy, sun-dappled estate is home to Mexico's
second-largest tequila producer, Herradura. The hacienda, which
also produces the El Jimador brand of tequila, is already
gearing up for the China push.
Hector Quirarte, Herradura's head of institutional
relations, said the company, which already exports a small
amount of the low-end Pepe Lopez tequila to China, had invested
$8 million in the plant in the last six years to give it a
potential output of 100,000 liters a day.
"We're getting ready to go full throttle into China," he
said, noting that Herradura is helped by the fact that
Brown-Forman already has a toehold in China thanks to Jack
"We already have the capacity, that's not a problem. If we
need to make more investments to support the growth, which we
expect to be so strong, we're ready to do it."
There are signs big distillers are eyeing tequila companies
with renewed interest, banking on the expected Chinese boom and
growing U.S. demand.
Last month, Britain's Diageo, the world's biggest
spirits maker, bought the high-end tequila brand Peligroso,
giving the firm a foothold in super premium $20-$40 tequila, the
fastest growing tequila segment in the United States, according
That came after Diageo pulled out of talks to buy a stake in
top-selling tequila brand Jose Cuervo in 2012, forcing Mexico's
No. 1 producer to use its own family-owned U.S. distributor to
sell the spirit in the United States and Canada.
The expected growth in China follows two decades of
increasingly global growth in the tequila industry.
According to Gonzalez there were 300 tequila brands about
two decades ago and the drink was exported to 30 countries.
Today, he said, there are 1,600 certified brands and exports
reach nearly 120 countries.
But obstacles remain before the Mexican tequila industry can
reach its expected Chinese goal. Because it takes seven to 10
years for an agave cactus to reach maturity, forecasting future
demand becomes a challenging task.
"If demand is so heavy, where are we going to get the agave
to deliver that high capacity?" he asked. "We do have it, but
only for the market as it is right now."