Top vodkas and tequilas 

Category                            Total category in cases

                                          Percent market share

Rank  Brand                                 1999      1998

 Vodkas                                         36.0        35.3

   1  Smirnoff[*]                           17.1%    17.2%

   2  Absolut                                 10.7        10.3

   3  Popov                                   5.8          6.3

Tequilas                                      7.3          6.5

   1  Jose Cuervo                         44.9%    45.3%

   2  Sauza                                   15.3       14.6

   3  Montezuma                          10.0       9.9

Measured advertising

                                              In 11 media   Per 1999

                                                                                                                                                         share

Rank  Brand                                 1999      1998     point

Vodkas                                        $62.9     $68.6      $0.6

   1  Smirnoff[*]                            11.4      15.8       0.7

   2  Absolut                                   32.2      29.4       3.0

   3  Popov                                      0.0        0.0       0.0

Tequilas                                         5.9      13.8       0.1

   1  Jose Cuervo                             2.7       1.7       0.1

   2  Sauza                                       1.3       4.8       0.1

   3  Montezuma                             0.0       0.0       0.0

Notes: Dollars and cases in millions. Share from Impact's 2000
edition, U.S. distilled spirits study, and include flavors.

[*] Excludes Black. Media from CMR. Categories measured by
nine-liter case depletions.



Agave Shortage Leads To Tequila Shutdowns, Fines
Sep. 25, 2000

MEXICO CITY,  (Reforma/Infolatina)-- A shortage of agave has forced 30 percent of Mexico's tequila producers to shut down operations, the Tequila Regulation Council said. 

According to the council, 22 out of the country's 72 tequila companies have halted production due to an ongoing shortage of agave, the main raw material used to make tequila. 

There are approximately 137 million agave plants in the so-called Denomination of Origin zone in the state of Jalisco, it said, which is not enough to satisfy current levels of demand. The council said that this year it had fined four companies for importing agave from other states for use in the production of 100-percent agave tequila. 


Case Noble Tequilas Dominate First U.S. Spirits Competition
Winning Double Gold, Gold and Silver Awards
September 21, 2000

Los Angeles, Calif. – Casa Noble, producers of boutique tequila imported by Los Angeles-based Vamonos Rapido, established itself among the world’s finest tequila distilleries at The San Francisco World Spirits Competition, the first comprehensive, international spirits judging ever in the United States, held in San Francisco, September 15-17.

Casa Noble received a total of three medals, more than any other competitor in its category and one of the few brands entered in the competition so honored. 

In the Silver/Gold Tequila category, Casa Noble Crystal Tequila ($40) received Double Gold, the highest medal awarded by the competition and one reserved for those spirits that received a unanimous vote for a Gold Award by a particular panel of judges. 

In the same category, Casa Noble Gold Tequila 2 Months ($45) received a Silver Award, presented to spirits that received a consensus vote for that award.

In the Anejo Tequila category, Casa Noble Anejo Tequila 5 Years ($85) received a Gold Award also presented to spirits that received a consensus vote. 

An off-shoot of the highly-regarded San Francisco International Wine Competition, the World Spirits Competition attracted more than 1,000 spirit brands from around the world entered in 43 categories and evaluated by a distinguished panel of 30 judges. Executive Director Anthony Dias Blue is Wine and Spirits Editor of Bon Appétit magazine and director of the San Francisco International Wine Competition, now in its 20th year.

Tequila Production Down 3.6 Percent
Sep. 20, 2000 

MEXICO CITY, (Reforma/Infolatina)-- Tequila production during the January-August period was down 3.6 percent from the year-ago period, the Tequila Regulation Council said. 

According to the council, whose main mission is to enforce quality standards in the tequila industry, total output during the first eight months of the year was 121 million liters, as against 126 million liters produced in the same period last year. 

Tequila fields under heavy guard Skyrocketing popularity of Mexico's traditional drink makes the agave plant attractive to thieves
August 13,2000

Kevin Sullivan
Detroit News

TEQUILA, Mexico TEQUILA, Mexico -- Men in black SWAT suits, with pistols on their hips and combat knives sheathed to their thighs, stand guard over vast fields of blue agave plants, prized for their juice that produces tequila. Around the clock they patrol the dirt paths that crisscross endless acres of the cactus-like plants, five-foot-tall starbursts that tint the valley floor smoky-blue in the namesake capital of Mexico's national drink.

Until four months ago, the only security in these hot, sleepy fields 300 miles northwest of Mexico City was Roberto Castaneda Flores, an old mustachioed cowboy nudging his ancient horse along with jangling spurs. But as global demand for suddenly chic tequila booms, and 
as farmers seek to make up for the ravages of a disease that killed millions of plants a couple of years ago, the supply of blue agave plants is dwindling. That has made them increasingly expensive -- their market price has gone up by more than 10 times in a year -- and increasingly targeted by thieves. 

In response, the wealthy distillers in this valley where almost all tequila is produced have deployed a private army to protect their agave plants, which are as important to Mexican identity, and suddenly almost as valuable, as the masterpieces of Diego Rivera or Frida Kahlo. 

"When a person steals agave, he offends the people of Mexico," said Fernando Flores Zuniga, head of security for Jose Cuervo, the world's leading tequila producer. "They are stealing our history, part of our cultural identity." 

Cuervo has sent 125 security guards into its agave fields since April, when it created a security department for the first time in its 205-year history. Even with the new guard force, thieves this week hacked down 120 agaves and stole their juice -- rich cores, which weigh up to 150 pounds each and look like monstrous pineapples. 

That stolen load was worth more than $8,000 at the distillery, a sum that exceeds what most laborers in the region earn in a year. 
Thefts since the tequila boom began, ranging from two agaves to 70 tons of cores worth nearly $70,000, have unsettled Tequila, where most of the streets are cobblestone and most of the buildings belong to Cuervo or Sauza, Mexico's other major tequila producer. 

Overwhelmed local police have happily accepted assistance from the rich tequila companies. Flores said Cuervo has supplied the Tequila police force with two pickups, radios, flashlights, tents, raincoats, food and other supplies to help keep an eye on the agave fields. 

Tequila is more than a drink in Mexico. It is a national passion shared by rich and poor, Indians and those of European ancestry, and which traces its origins to Aztec priests who discovered the agave's potent qualities. 

And like Bordeaux or Champagne, Tequila is more than a name. It is the pride of a distinct region. In Mexico's case, that region locates its center in this flush company town of 35,000 people, which announces itself to visitors with a billboard: "Welcome to Tequila, 
Population: 100 Percent Agave." 

The unusual rise in crime here, where almost everyone depends on tequila for his livelihood, is a direct result of the phenomenal global success of tequila. In the past five years, tequila's image has undergone a remarkable makeover, evolving from frat-party booze to a chic sipping drink selling for top-shelf prices in fancy bars from San Francisco to London. 

"People are more interested in tequila now; they don't want to just do shooters," said Dan Mesches, a partner in the Red Sage restaurant in Washington, which carries a selection of 46 tequilas with prices ranging up to $16 a shot for a Porfidio Anejo Cactus with its "smooth, 
peppery finish." 

"Just five years ago, tequila companies were begging us to carry their product," Mesches said in a telephone interview. "But now, as people become more affluent, they are seeing tequila not just as a rot-gut liquor, but as something you can use as an after-dinner drink 
in a snifter." 

In the Tequila valley, Jose Luis Gama, 53, is delighted to hear that customers at trendy American restaurants enjoy the fruits of fields where he now works with his son, and where his grandfather and father worked before him. For most of his life he has been out here, 
hacking the long, spiky leaves off agave plants with a coa, which resembles the long-handled paddles used to remove pizzas from hot ovens, except that the coa is sharp as a razor. Gama said the only thing new is the armed guards watching him. But, he said, smiling under 
his sweat-stained straw hat, "I'm glad they're here." 

Tequila crisis
August 1, 2000

Simeon Tegel

Could a shortage of agave endanger Mexico's beloved national drink? 
Mexicans might like to wait before breathing a sigh of relief at the smooth run ning of the presidential elections in July and the lack of any signs that there will be the traditional, accompanying economic meltdown. 

Arguably, another far more important calamity is about to hit their country, one that would strike at the heart of Mexicans' sense of national identity and then leave them without even the consolation of their favorite drink. 

The so-called "Tequila Crisis" has been looming for several years but is finally about to take on alarming proportions as the shortage of agave, the plant from which the drink is distilled, begins to bite. 

Both domestic and foreign demand for tequila has been rising steadily over the last decade, forcing manufacturers to plunder agave plantations at an ever greater rate to keep up with the sales boom. 

In 1994, Mexico produced 66.5 million liters of tequila. Last year, the number had shot up to nearly 191 million liters. The harvesting of agave over the same period rocketed from 235,000 tons to 780,000 tons. The dramatic jump is due to many factors. The peso crash in 1994 suddenly forced many Mexicans to stop buying high-priced foreign spirits, boosting a rediscovery of tequila, now regarded as an important part of the national heritage. 

At the same time, the fiery drink became cheaper to export and the fashion for tequila shots and margaritas swept across much of Europe and the United States. Exports totalled 47 million liters in 1994 but rocketed to 97 million liters in 1999. 

And yet European demand for Mexican tequila is still a long way from being sated. Under a trade deal signed in May 1997, the European Union recognized tequila's denomination of origin for the first time. 

As the treaty only now comes into effect, European demand for Mexican tequila will rise dramatically as the phony brands previously consumed across the old continent, often from Spain, are outlawed. 

Europe's new thirst for real tequila has taken the industry almost completely by surprise. "None of this was predicted. It was impossible to do so because we had spent 20 years fighting with Europe for this (denomination of origin) recognition," explains Ram6n 
Gonzalez, general director of the Tequila Regulatory Council. 

Other factors have also contributed to the shortage of blue agave. About S percent of the crop is lost to bacteria and fungus, although it should be stressed that this is within the expected margins for most types of agriculture. In 1996, a sharp frost also killed many of 
the plants. 

As a result, the tequila industry bosses now have a serious headache working out how to bridge the growing gap between supply and demand. Over the last 12 months, prices for many brands have already increased by 20 percent, and, in some cases, significantly more. About 
40 smaller manufacturers have gone out of business and, if the Worst-case scenario unfolds, overall production could halve in the next year.

LIMITED EDITION Tequila is distilled from the Agave Tequilana Weber, or blue agave, which indigenous people have used for food, cloth, 
medicine, and paper for centuries. The tequila-making process is thought to have changed little since the juice from the heart of the agave was first distilled during the early colonial period. 

The process is strictly regulated under the recently won and highly coveted denomination of origin, a similar legal recognition to the one the French government and the European Union gave to champagne. 

Under that law, only the state of Jalisco and small parts of Tamaulipas, Guanajuato, Michoacan, and Nayarit, where growing conditions are deemed optimum, are allowed to label their product tequila. 

Both domestic and foreign demand for tequila has been rising steadily over the last decade,forcing manufacturers to plunder agave plantations at an ever greater rate to keep up with the sales boom. 

With spikes and steely-blue leaves, the blue agave is commonly mistaken for a cactus but is in fact related to the lily. Usually harvested between eight and 12 years, the pineapple-like core grows to the size of a basketball and can weigh up to 60 kilograms. 

A standard 75 centiliter bottle of pure tequila, made from 100 percent blue agave, uses about seven kilograms of the plant. Blended tequila, which must still be made from a minimum of 51 percent blue agave, uses about 3.5 kilograms.

Workers known as jimadores dig the plant from the ground and then trim off the leaves with a hoe-like instrument, leaving just the core. An experienced jimador can complete the process in a couple of minutes. 

The heart or "pina" of the agave is then chopped up and cooked in ovens for up to 72 hours to produce a sweet, honey-like juice called aguamiel from which the tequila is distilled. Yeast and sugar cane are added to the blended variety to help fermentation. 

AGAVE BLUES 

According to the Jalisco Secretariat of Rural Development, the number of healthy agave plants under cultivation has almost halved in the last three years due to high demand, falling from 203 million in 1997 to 107 million now. 

To counter that shortage, manufacturers plan to plant 30 million agave plants this year, 32 million in 2001 and 38 million in 2002, although there will still be a lag of several years before they are ready to be harvested. 

The current crisis is just the latest downturn in what is a cyclical business. Under the original l9th-- century law, all tequila had to be made from 100-percent blue agave. That law was amended during an earlier shortage in 1964 to allow tequilas to be made from only 70 percent blue agave. It was changed a second time in 1994 to allow tequilas to be made from just 51 percent. 

Some tequila manufacturers talk, usually privately, of rewriting the legislation again to allow tequilas made From as little as 20-percent blue agave, with the remainder of the drink's sugar coming from other sources such as cane. 

"If you already have tequilas that are not 100 percent agave then why must they be 51 percent?" asks Rodrigo Penafiel, a spokesman from Jose Cuervo, one of the industry's giants which, like most of the big players, makes much of its sales from blended tequila. 

However, such a move could have grave long-lasting implications for tequila's image among consumers in Mexico and around the world, and entail the loss of the denomination of origin. 

Indeed, in June, Peter H. Cressy, president of the Distilled Spirits Council of the United States, wrote to Carmen Quintanilla Madero, general director of the Commerce Secretariat's regulation department, to urge against any reduction in the agave content. 

"Although we recognize the enormous pressure caused by the current scarcity of agave, we believe that the crisis is temporary and we are against any reduction in the minimum content of agave," wrote Cressy. 

In any event, the hardest-hit are the smaller brands specializing in pure tequila such as Don Julio and Cazadores. The latter has already said it will not reduce its agave content from 100 percent. 

"We are not going to reduce the quality of our tequila," says Manuel Vazquez, Cazadores' sales director. "The price doesn't matter as much as the customer always knowing he is getting the same, quality product." 

Nevertheless, Vazquez echoed the concerns of many in the industry that as tequila prices rise, consumers, particularly in Mexico, may turn to foreign spirits. Why should a Mexican buy tequila when he can have the prestige of Johnnie Walker whiskey for the same price?
 
To counter the problems, the distillers have embarked on research to develop faster-growing plants, with the aim of reducing the growing cycle by up to a third. 

They are also trying to strengthen troubled links with agave growers. Agave prices have gone through the roof since the shortage first began. As a result, one kilogram of agave costing 79 centavos in January 1998 now costs around 14 pesos. 

"The increase in the price of agave has already gone beyond what is acceptable," says Vazquez. "Tequila is now getting so expensive that many customers cannot afford it. That is what we are really worried about, that they might switch to another drink." 

But despite this agave price rise of almost 1,800 percent, many small growers are reluctant to continue growing agave and then endure a one-sided haggling process with the distillers. That reluctance only increased in early July when the Tequila Industry National Chamber 
announced its members would refuse to buy agave until prices returned to a more realistic level. 

"You cannot have an industry which isn't integrated with the farming community. We have to break this vicious cycle and create a system where people work together," says the chamber's Gonzalez. 

The industry is also lobbying the government for a reduction in taxes, which can make up as much as twothirds of the retail price for pure tequilas, a major handicap when tequila competes with other Mexican spirits such as aguardiente and mezcal, whose taxes are levied 
at much lower levels. 

With spikes and steely-blue leaves, the blue agave is commonly mistaken for a cactus but is in fact related to the lily. 

Other measures include making a smaller proportion of pure tequila, thus using less agave for the same volume of spirit. Last year, 34 percent of all tequila was the pure blue agave version. That will fall to 10 percent this year. 

Although for the next two or three years, consumers will have to put up with a far more expensive product, these moves should, in the medium and long term, resolve the tequila crisis. 

Hopefully, Mexico's next president elect will not have to suffer the burden of Vicente Fox, who, on being obliged to toast his election victory on July 2 with champagne, complained: "I would rather have tequila." 

Mexico To Celebrate, Toast Openly
TRACI CARL, Associated Press Writer
Friday, September 15, 2000 

MEXICO CITY (AP) -- Mexicans aren't just free to celebrate their independence from Spain on Friday -- they are free to publicly toast the event with a glass of tequila for the first time in 70 years. 

Since President Pascual Ortiz Rubio was wounded in an assassination attempt the day he took office in 1930, the sale and public display of alcoholic beverages have been banned during patriotic Mexican events. 

While it was unclear whether Ortiz Rubio's would-be assassin had been drinking, the measure was apparently aimed at quelling a twin evil: the celebratory gunplay that had become customary at public festivities in Mexico. 

In 1930, Mexico was coming off nearly two decades of almost constant armed conflict, and drinking -- accompanied by shooting off pistols -- was one of the favored ways of whooping it up. 

The battle against the latter custom is still being fought in small towns like Tepotzotlan, just north of Mexico City, where town authorities hang out signs every year on Independence Day banning pistols and collect weapons from would-be revelers. 

It's still against the law to buy a drink on election day -- or during the hours the president gives his state of the nation address. 

And until this year, it had been illegal to even bring a bottle of Mexico's famous drink, tequila, to the huge Independence Day celebration in Mexico City's main plaza, where thousands of masquerading partygoers gather to mark the country's break from Spain. 

Days before Friday's celebrations, officials in several Mexican cities -- including the capital -- announced they would remove the ban on alcoholic beverages as a test to see if Mexico can do without its so-called ``Ley Seca,'' or Dry Law. 

Mario Ramirez, manager of a bar near Mexico City's Independence monument, applauded the decision. ``We are free, so we should be free to drink,'' Ramirez said. ``We are just enjoying the day.'' 

Like other bar managers in Mexico City, Ramirez has stocked up on extra tequila and other liquor for popular drinks, anticipating a big crowd Friday. 

In the town of Puebla, 65 miles southeast of Mexico City, officials lifted the alcohol ban, but also beefed up security in anticipation of festivities. 

The ``Ley Seca'' has generally been taken seriously in Mexico. For those who didn't plan ahead, it was virtually impossible to buy alcohol from stores unwilling to risk a large fine. 

Most Mexicans who wanted to enjoy a drink during the holiday stocked up on liquor before Sept. 15-16, the traditional dry days of the country's Independence Day celebrations. 

The festivities recall events leading up to the day on Sept. 16, 1810, when a priest named Miguel Hildalgo made his famous revolutionary call, marking the beginning of the armed struggle for Mexico's independence from Spain. 

Wearing an oversized sombrero decorated with a Mexican flag, Juan Silva, 37, celebrated Friday with one of many tequila drinks being sold at stands set up around Mexico's Independence monument. 

Silva, who was watching crowds gather around the monument, said he supported lifting ``La Ley Seca,'' as long as people didn't get out of control. 

Besides, he asked, what's a Mexican holiday without the country's favorite drink? ``Tequila is 100 percent Mexican,'' he said smiling and raising his glass in a toast. 

Yet tamales seemed to be more popular than tequila at many stands. Virginia Gonzalez, overseeing one table selling beer and tequila, said sales were slow. ``They are tasting, nothing more.'' 

Still, Marina Resendiz, 28, decided to be safe and spend the day in her Mexico City home, away from the crowds that fill the city's center and far from any possible rowdiness. ``There will be more parties, and more people who don't know their limit,'' she said. 

Agave Price Climbs Again

MEXICO CITY, Sep. 14 (Reforma/Infolatina)-- Although many agave growers in August pledged to abide by a price of reference of 9 pesos per kilogram, the market has established its own price of around 13 pesos per kilogram, and the price of tequila's main input is still rising. Tequila industry representative Joaquin Romero Soria said the agreement between producers and growers had failed because many growers had refused to sign it. A Jalisco agave-growers representative described the August agreement as "an imposition" and "unilateral." "Time has proved us right, and prices remains the same or higher than before the agreement," he said. 

Tequila Producers Turn To Genetically Modified Agave

MEXICO CITY, Sep. 13 (El Financiero/Infolatina)-- The Yucatan Research Center (CICY, as a Spanish acronym) by the end of the year will have supplied 100,000 genetically modified agave plants to tequila producers in the state of Jalisco, CICY Director Alfonso Larque Saavedra said. Larque said the plants would be used to replenish the Jalisco growers' stocks. He said that in view of the agave-shortage-induced crisis faced by the tequila industry in Jalisco and other Mexican states, CICY had pledged to supply companies with 4 million genetically modified agave plants over the next two years. 

1500 Crates of Tequila on the Auction Block

MEXICO CITY, Sep. 12 (Reforma/Infolatina)-- Mexican bank bailout agency IPAB said procedures for auctioning off 67 lots comprising more than 17,000 new and used items owned by government-rescued banks had begun. The goods, said IPAB, are stored in 11 warehouses located in the Federal District, Puebla and Guadalajara, and are the property of Banca Cremi, Banco Union, Banco Obrero and Banco de Oriente. The lots include office equipment and furnishings, computer equipment, industrial machinery, electrical and communications supplies, and 1,500 crates of tequila, among other items, IPAB said. It said auction days had been scheduled for Sept. 22 through Oct. 3. 

Mexico City Suspends 70-Year-Old Dry Law

Mexico City, Sep 12, 2000 (EFE via COMTEX) -- For the first time in 70 years, Mexicans living in their nation's capital will be able to freely enjoy alcoholic beverages on civic holidays, following the city government's decision to suspend the "dry law." 

The Mexico City administration announced Tuesday that the dry law will be suspended for the September 15-16 celebrations marking 190 years of Mexican independence as a "pilot program" to test the public reaction. 

If the inhabitants of the Mexican capital rise to the occasion, the "dry law" that has been in effect on certain civic holidays could disappear altogether. 

The law, which bans sales of alcoholic beverages exceeding the two proof mark on selected holidays, was imposed in Mexico City after Pascual Ortiz was attacked during his inauguration as president on Feb. 5, 1930. 

On September 1, when President Ernesto Zedillo was giving his final state of the union address to the Mexican Congress, the city government applied the dry law for only four hours instead of the usual 24. 

According to official statistics, the change did not lead to any increase in crime or to any major incidents. 

Shopkeepers and distributors say that sales of alcoholic drinks - above all tequila - rise considerably on the nights preceding application of the dry law, which prohibits the purchase and sale of alcohol in public places. 

The approach of the independence observance, Mexico's most important holiday, coupled with the fear that the restrictions will be re-imposed, have led to sky-rocketing alcohol sales in department stores, which are taking advantage of the situation by raising their prices.

Michoacan Could Become Mexico's Main Agave-Growing State: Official

MEXICO CITY, Sep. 12 (El Financiero/Infolatina)-- Agave growers in the state of Michoacan could emerge as the principal suppliers of tequila producers in the state of Jalisco, which would benefit agave production and marketing in Michoacan, the Michoacan state Agriculture and Livestock Development Ministry said. The ministry said conditions were appropriate this year for Michoacan growers to begin selling agave to Jalisco tequila producers. Large-scale agave planting began in the state two years ago, mainly in the municipalities of Castellanos, Jiquipan, Villamar, Cojumatlan, Pajacuaran and Venustiano Carranza, with the backing of the Tequila Regulation Council. Over the past two years, the area of land devoted to agave cultivation in Michoacan increased from 20 hectares to 46.26 hectares. 

Diageo Cheered Up by Drive to Drink

LONDON (Reuters) - Britain's Diageo Plc reported a meager 2.7 percent rise in annual profits on Thursday which appeared to vindicate its decision to focus on alcoholic drinks and jettison troublesome Burger King and Pillsbury. 

Solid performances from its old UDV wines and spirits and Guinness beer divisions came in contrast to Pillsbury, beset by cut-throat competition in the U.S. food industry, and fast food chain Burger King, suffering from falling U.S. franchise sales. 

The drinks giant, which markets Smirnoff vodka, Johnnie Walker whisky and Guinness beer, said its combined drinks business should be able to top the six percent sales growth seen in the year and be the ``engine for growth'' in the future. 

``The performance of UDV and Guinness gives us a very strong platform for growth for the future, while across the whole group the new year has started well,'' said new Chief Executive Paul Walsh in an interview as he seeks profitable top-line growth. 

He said the top-line sales growth of six percent for the combined UDV/Guinness was a good target number going forward and would achieve the group's aspiration of double-digit growth for operating income and earnings per share. 

The combined beer and spirits business was the fastest growing area of the business with profits 15 percent ahead in the year compared with a mere one percent growth at Pillsbury and some six percent at Burger King. 

Group annual pre-tax profits before goodwill amortization and exceptional items rose to 1.815 billion pounds ($2.63 billion) in the year to June 30, and although it came at the bottom of analysts' forecasts of 1.813-1.855 billion pounds, the underlying picture was largely in line with their expectations. 

Annual sales across the group were up four percent to 11.87 billion pounds, while the year dividend payout to shareholders was raised eight percent to 21p a share. 

SHARES MOVE UP 

``Overall, underlying trading was as good as we expected and the headline shortfall in the pre-tax level came from lower than expected contributions from associates, largely Moet Hennessy, and a slightly higher interest charge,'' said one drinks analyst. 

Diageo shares moved ahead 13-1/2 pence to 582p in a mixed UK stock market by 1335 GMT as operators focused on the underlying organic picture which showed operating profits up 11 percent, against the previous year which showed an eight percent rise. 

``They are moving in the right direction to focus on the higher margin parts of the business, and it is one of the better old economy stocks,'' said Nigel Popham at Teather & Greenwood. 

But short-term, the shares are not expected to sparkle until the Pillsbury deal is complete, the Seagram auction resolved and Burger King well on the way to being floated, analysts said. 

The shares have been a poor performer since the group was formed by the Guinness-GrandMet merger in December 1997. They have underperformed the UK market by 20 percent since then, and by 14 percent over the last 12 months. 

Walsh added that the group did not need acquisitions to achieve its double-digit aspirations and would continue to attack the premium lager market with spirit mixes such as Smirnoff Ice, but said it did not need to buy a premium lager. 

He has guided the company through a frenetic summer, moving to float off Burger King, sell Pillsbury and merge its two remaining divisions UDV and Guinness, while at the same time planning a joint bid with France's Pernod Ricard for Seagram's spirits unit in a $7 billion-plus auction. 

Finance Director Nick Rose told a news conference UDV had been driven by a five percent rise in volumes of its eight priority brands, such as J&B whisky and Jose Cuervo tequila, and saw future volume growth of 3-5 percent as sustainable. 

Guinness beer saw sales up three percent as it suffered from destocking in the U.S. and tough conditions in its biggest market, Ireland. There, overall beer volumes were off one percent and Guinness stout down four percent as the national draught beer market and pub drinking showed a decline. 

Tequila Industry Soldiers On Despite Price Hikes

MEXICO CITY, Sep. 7 (El Financiero/Infolatina)-- Despite an up-to-70-percent rise in domestic prices of tequila, the tequila industry is soldiering on: the industry consumed 376 million kilograms of "tequilana Weber azul" agave during the first half of the current year. During the period, the industry produced 106 million liters of tequila, down 3.6 percent from the first six months of 1999, and the downward tendency in production volume is expected to continue throughout the remaining months of the year. First-half output of 100-percent agave tequila was 19 million liters, down 52 percent from 51.2 million liters in the year-earlier period. 

Experts Warn International Business Of Pitfalls in Chinese Spirits Market Despite WTO Hope

LONDON, Sep 7, 2000 /PRNewswire via COMTEX/ -- just-drinks.com, the leading drinks industry information website, has released the latest of its reports on the Chinese drinks industry, this time concentrating on the controversial spirits and hard liquor market. 

As Robin Lynam reports at http://just-drinks.com, China's entry into the WTO has raised hopes among foreign investors of increased access to the biggest market in the world. But he warns: "The world's major distillers of branded spirits are watching China carefully to see what will happen after its WTO accession. Many, however, have past experiences of the market which may predispose them to a cautious approach." 

Talking to members of the Chinese trade, just-drinks.com discovers a dying Cognac category but hope for fashionable white spirits. "One result of this is that interest is growing in other imported spirits suitable for mixed drinks such as gin, white rum, vodka and in particular Tequila." 

However trade sources go on to warn those international concerns tempted by the potential rewards of taking a share in this enormous market. 

"I would say that China is not at all interested in having the big international spirits companies dominating the domestic market after WTO. The Indians haven't let it happen -- they've been very clever at keeping the ulti-nationals out -- and I suspect China will attempt to go the same route." 

Las Trancas Tequila Takes Gold Medal At London Competition

MEXICO CITY, Sep. 5 (El Financiero/Infolatina)-- Tequila maker Hacienda Tequilera Las Trancas said it had been awarded a gold medal at the International Wine and Spirit Competition recently held in London. The company, which sells tequila under the Las Tranca, 30-30 and Rey de Copas brand names, said its 100-percent-agave Tequila Azul Weber had won the gold medal for 6-12 month-barrel-aged products. The company sold 10,000 cartons of tequila in domestic and export markets during 1999. 


Tequila Industry Prepares To Go Up Market

MEXICO CITY, Sep. 4 (Reforma/Infolatina)-- The Margarita's days are numbered. Throughout the world -- and, above all, in the United States -- within two years tequila will consumed neat -- as if it were a fine liquor like cognac or whisky. The tequila industry is preparing to make a 180-degree turn, in order to offer a higher-quality product that will be targeted at highly profitable markets. "We have to take advantage of opportunities to reorient many situations," National Tequila Industry Chamber (CNIT, as a Spanish acronym) President Alberto Curis said. Curis said that by 2002, the industry likely would be bottling 100 percent of output in its place of origin -- principally the state of Jalisco. The step represents a response to an industry crisis that arose from a shortage of agave, tequila's main input. "It is an important decision, considering that 50 percent of tequila is exported and, of these sales, 80 percent goes to the United States, where the great majority is used for Margaritas and is exported in bulk (unbottled)," Curis said. 

Banrural To Back Agave Planting

MEXICO CITY, Sep. 4 (Reforma/Infolatina)-- Mexican state-run development bank Banrural has agreed to provide preferential- rate loans to agave growers to finance next year's planting, National Tequila Industry Chamber (CNIT, as a Spanish acronym) President Alberto Curis said. One month after the signing of an agreement between tequila makers and agave growers, which aims to put an end to the most-severe tequila-production crisis ever, the commitments made by both parties are beginning to be met. Agave growers are abiding by the 9-peso-per-kilogram price of reference, which will allow tequila makers to keep tequila prices stable throughout the remainder of the year, Curis said. Curis said agave growers shortly would submit detailed loan applications to Banrural. 

Groupe Pernod Ricard and Diageo to Co-bid for Seagram Wines & Spirits

PARIS, Aug 18, 2000 (BUSINESS WIRE) -- Groupe Pernod Ricard and Diageo PLC announce that they have agreed to work together to make an offer for Seagram's wine and spirit business in the forthcoming disposal process. 

A further announcement will be made when this process is complete. 

Pernod Ricard is the No.1 wines and spirits company in the Euro zone and UK and world leader in fruit preparations, with annual sales of 3.59bn(Euros). Pernod Ricard now carries out two thirds of its activities outside of France. The Group has 14,000 employees. 

Pernod Ricard in Europe -- No. 1 producer of wines and spirits and of fruit preparations -- No. 1 producer in France, Ireland, Spain, Armenia, Georgia -- No. 1 exporter of Polish vodkas 

Pernod Ricard in Americas -- Fruit preparations: No. 1 -- Cuban rum: No. 1 -- Bourbon premium: No. 1 -- Chocolate based drink: No. 1 in the USA -- Producer of Tequila in Mexico -- ... one of the leading producers of spirits, wines and non-alcoholic drinks in Argentina

Pernod Ricard in Australasia -- Wines No. 1 Australian brand -- Wine producer in China -- Dita: the best level of growth of imported wines and spirits in Japan


Tequila Herradura Not For Sale, Chairman Says

MEXICO CITY, Aug. 14 (El Financiero/Infolatina)-- Mexican tequila maker Tequila Herradura will not be sold off, despite the increasing participation of foreign firms in the ownership of the industry, Tequila Herradura Chairman Guillermo Romo de la Pena said. Romo said that while foreign companies were attempting to invest heavily in the tequila industry, Tequila Herradura would continue to defend the principle of Mexican ownership. He also said tequila makers were asking the Congress to pass laws aimed at preventing the sale of adulterated tequila and forcing bar and restaurant owners to destroy empty tequila bottles. 

Agave in Vitro
Wednesday, August 16, 2000

The CIATEJ (Center for Studies and Assistance in Technology and Design of Jalisco) has begun reproducing large quantities of agave plants in their laboratories. Benjamin Rodriques Garay, who heads this project, states that they have been very successful in this production and that the same characteristics found in the fields are being reproduced in the laboratory. Currently, most agaves are reproduced by taking the "hijuelos" (offspring of the agaves) and replanting them. With these new techniques, part of the plant is taken and analyzed genetically for quality. Then from this piece, reproduction and growth is controlled in the lab and planted in the fields after approximately one year. This process guarantees a superior plant with no infections, insects or fungus.

Currently, the CIATEJ has agreements with several tequila companies and agave growers for the cultivation of these plants. This government institution can produce about ten million plants per year to facilitate the agave growing process and prevent any future shortage crises. Their intention is by no means to take away business from the agave growers.
CR

Tequila sales drop 20%
Wednesday, August 16, 2000

The president of the CNIT (Regional Chamber of Tequila), Alberto Curis Garcia, recognized the drop in tequila sales by 20% due to the speculation in the rise of agave prices and the increase of prices to the public.

The agreement signed earlier this month will help this situation. Currently agave prices are at 9 pesos or lower per kilo. Curis is asking other agave associations that did not participate in the original agreement to join them in agreeing on a similar price on agave to benefit the industry and the tequila market.

Recently, the industry as a whole has been under investigation by the CFC (Federal Commission on Competition) due to allegations of monopolizing agave. Both Curis, representing the tequila producers, and Angel Gonzalez, president of the largest agave association, denied these allegations. Curis stated they "are very calm and all they have done has been transparent". He is confident the investigation will discover no illegal practices taking place within the industry.
CR


Tequila Crisis 2000 Over 
Tuesday, August 8, 2000

Finally, after days of meetings and discussions over the price of agave, an agreement was signed between the "Camara Nacional de la Industria Tequilera" (CNIT) and the largest agave group "Union Agricola Regional de Productores de Mezcal Tequilero del Estado de Jalisco" (UARPMTEJ) on August 2nd. This document provides a guarantee that the production of tequila will continue. 

The final agreed upon reference price would start at 9 pesos per kilogram, which is a significant reduction from the previous market price of approximately 14 pesos per kilo of blue agave.
According to the CNIT and UARPMTEJ this agreement will establish the basis for new agreements for the following years. Tequila production for 2000 is estimated to have a growth of about 5% from last year, and there is no indication that there will be a problem meeting these future projections.
This document also establishes that in 2003 there will be a reference price of 5 pesos per kilogram. Both parties welcome this since by then there should be enough agave for tequila production. 
C R 

Agreement finally reached for tequila
Friday, August 4, 2000

After a 30-day standoff, an agreement has been reached by all 72 tequila distilleries and The Unión Agrícola Regional, the largest group of agave farmers with 80 percent of the blue agave cultivated in the region.

This agreement brings to an end to one of the roughest crises seen in the region for years. It provides better planning for future growth and puts in place safeguards so this situation does not recur. 

The signing of this agreement will bring the price of agave down from 14 to 9 pesos per kilo and includes benefits for the blue agave farmers. In exchange for lower pricing, the tequila producers agree to extend the following benefits among others to the farmers: 1) social security; 2) a guaranteed profit for their product; and 3) technological support to better their crops and bring costs down. Angel González, president of the union, intends for this agreement to benefit 12,000 to 15,000 farmers and their families. The CNIT (Regional chamber of the Tequila Industry) also promised to purchase all existing ripe agave and strategically plan to avoid a surplus or shortage in the future.

Not all farmers were happy with this agreement. Four other organizations representing many more blue agave farmers rejected this proposal stating it did not promote a real bond between farmers and producers for true strategic planning needed to break the vicious agave cycle of surplus and shortage. Joaquín Romero Soria, who heads one of these groups, stated that it did not make sense to agree on pricing when no true relations exist between producers and farmers. Albert Curis, president of the CNIT, stated they were willing to negotiate with these organizations but warned they would not pay more than 9 pesos a kilo for the agave.

With this new plan in place, the price point for agave will be 9 pesos per kilo until 2002. In 2003 the pricing will drop down to 5 pesos per kilo and will be adjusted accordingly depending on production costs. The drop to 5 pesos will be due to the amount of agave that should be available by 2003, therefore stabilizing prices.

The government of Jalisco gave its blessing to the new agreement between the two parties. It was very pleased that future planning has taken place to cover the production cycle for the next few years. Agave purchasing immediately resumed once this agreement was signed.
AP

The waiting game continues
Friday, July 28, 2000

After three weeks of boycotting, tequila producers have yet to reach an agreement with agave farmers. 

Agave farmers are looking for more than just a fair price for their agave -- they are also seeking financial security and binding contracts to continue cultivating this precious succulent.

The largest farming organization in Jalisco has agreed to lower their prices from 14 to 10 pesos per kilo, but according to Charles Royston (our Guadalajara correspondent) the tequila companies are unwilling to meet them halfway, and are determined to continue the boycott 
until the farmers give in to 8 pesos per kilo. 

Agave shortage news reaches Wall Street
Thursday, July 27, 2000

Reports of problems surrounding the tequila industry blue agave shortage have raised eyebrows on Wall Street.

Yesterday, Fitch, one of the largest international credit rating companies, reported on the consequences Cuervo, the largest tequila company in Mexico, will have due to the shortage of the raw material needed for the production of tequila.

Fitch reported, that even though Cuervo will  remain financially sound, the lack of agave will have an adverse effect on all tequila companies.

Unlike other companies who did not foresee the explosive growth of the industry and the shortage, Cuervo started preparing itself for this shortage five years ago by buying the harvesting rights from several farmers. They even have a large reserve on hand if prices continue to rise.

Even with these precautions in place, Fitch stated that Cuervo would not have enough agave to keep up with their production demands for the next two years.

The major tequila companies including Cuervo have been holding their ground in refusing to purchase agave at the current prices, claiming the farmers are not being fair with their pricing. Prices have skyrocketed from 85 cents per kilo a year ago to the current price of 14 pesos. It has now been 23 days since Cuervo and others have boycotted the agave farmers by not purchasing their products with the hope that the farmers will be pressured into lowering their prices. The farmers feel justified for what they are asking for and are not backing down. 

Proposals being considered today 
Wednesday, July 19, 2000

As of today, agave farmers have not been able to agree upon a price to present to the tequileros. There are a couple of proposals currently being considered by the CNIT (National Chamber of the Tequila Industry). 

The first proposal is being made by the Union de Mezcal y Tequila ("MVZ"), one of the largest agave groups in Jalisco, which is comprised of 384 associations. The president of the Union, Angel González Aldana, stated that they control 75 to 80 percent of the agave and are willing to establish a base price of 10 pesos per kilogram for agave with a yearly review for adjustments. 

González also said that the price of 4.50 pesos per kilo is not possible because the cost of cultivating this plant is 3 to 4 pesos per kilogram. If prices continue at this level, "we could kill the goose with the golden eggs." 

Jima de Agave, also considered a large agavero group, stated that they will lower their agave prices to stop the rising prices of tequila.

Brígido Alvarado Jáuregui, a large agavero out of Arenal, Jalisco, stated that the problem of overpricing would not be resolved by dropping agave prices. The major problem stems from not having unity within the industry - these two groups need to come together and arrive at a consensus. The government needs to step in and help resolve this problem or all parties will lose in the end.

In reviewing the CNIT agave figures, the issue is not so much that there is not enough agave, but that there was a false impression that caused prices to rise initially. The study shows there is 108 million registered agaves plus another 30 million that have been planted since last year. The objective on both ends is to reach a price that will allow the industry to provide tequila at a reasonable price to the marketplace.
CR

Tequilero and Agavero Agreement?
Tuesday, July 18, 2000

Agavero groups met late into the night and are expected to announce their price proposal today. Agaveros and Tequileros will reconvene on Wednesday and if the price is acceptable to the tequileros, will make it official.

Producers insist that the price should be approximately 4.50 pesos per Kilo while farmers will not charge under 7 pesos per kilo.
CR

NOM standards modified
Tuesday, July 18, 2000
Charles Royston: Reporter/Guadalajara correspondent
TequilaAficionado.com

Herminio Blanco Mendoza head of SECOFI (Department of Commerce and Industrial Development) announced yesterday the new NOM (Mexican Government Standards) to control and regulate the production of tequila. The NOM has been modified to establish a definite solution to the agave and tequila situation.

This new NOM will not affect in any way the content of sugars derived from blue agave. The minimum percentage will remain at 51%. Producers will also continue producing 100% agave tequila with all of their sugars provided by blue agave.

The NOM has added standards which will encourage better relationships between Agaveros and Tequileros. The new policy will require tequila companies to have at least 80 percent of their agave requirements guaranteed by agreements with farmers or plantations of their own.

All sectors involved in the tequila production will review new policies which will be published in August of this year.

Blanco also mentioned that the agave problem is in great measure due to over pricing. An investigation is underway by the CFC (Comision Federal de Competencia) to determine if these practices are a monopoly.

SECOFI guaranteed the supply of agave for tequila nationally and internationally if all comply with new measures.
CR

Agave from Zacatecas being looted by Tequileros
Tuesday, July 18, 2000

Zacatecas' hills, bordering Jalisco, also produces a large amount of blue agave which has become very attractive to tequila factories since the shortage. Zacatecas' officials intend to put a stop to the looting of this unregistered agave which is used to produce their own spirits.
CR

Still negotiating
Monday, July 17, 2000

Agave farmers stated today they would be willing to bring the price of agave down between 7 and 8 pesos per kilogram. They feel this is a fair price for agave. In addition, they stated how they where being hurt by the boycott of agave by the tequila producers. Some have taken to the streets in front of some producers to protest this measure.  No official offers have been made from either side to settle issues.

Still no compromises
Saturday, July 15, 2000

Agave farmers and tequila producers have yet to agree on the fair price of agave. Currently 30 of the 72 distilleries have suspended buying agave until prices come down.

Aberto Curis, president of the Cámara Nacional de la Industria del Tequila (The National Chamber of the Tequila Industry; CNIT) says different studies have shown that the high prices are due to commercialization and not necessarily a shortage. This should place the production of agave at 2 pesos per kilo not 14 pesos. In order to produce one liter of 100% agave, 6 kilograms of agave are needed.

According to Bob Emmons, author of The Book of Tequila, if no compromise is met and agave pricing is not lowered, production costs will continue to shoot up and we could see 100% agave tequila selling for $75.00-$100.00 per bottle in the US by the end of the year. 

Tequila represents almost 2 percent of the world's wine and spirit market. The US is tequila's biggest importer and would be hardest hit if prices continue to rise. 

According to sources, the CRT (The Tequila Regulatory Council) and the CNIT will continue to meet with producers and farmers on Monday in hopes a resolution is reached.
AP

No deals 
Tuesday, July 11, 2000 

Agave farmers say no to lowering the price of agave, the precious plant used for the making of tequila. They claim the producers are now reaping what they sowed. Lack of planning and collaboration by producers and farmers has created animosity within the industry. Just a few years ago, when agave farmers were in need, they claimed the tequila industry had turned their back on them. Now, with tequila in demand and the shortage of agaves, farmers are demanding higher prices for their harvest. They are holding their prices above 12.50 pesos per kilo while the tequila producers are not willing to pay more than 4.50 pesos per kilo. Farmers are not willing to negotiate and are holding out knowing they will be able to sell the agave to the highest bidder when the time comes.

The following companies are willing to wait for the agave prices to drop: 

Compañía Tequilera de Arandas     Orendáin 
Cuervo                                          Parreñita 
Destilería 501                                  Productos Finos de Agave 
Destilería González                          Santa Fe 
Destilerías Unidas                            Sauza 
Don Julio                                       Tequilera Del Salto 
Don Roberto                                  Tequilera la Cofradía 
Madrileña                                       Tequilera Newton 
AP

Mexican government guarantees continued production of tequila and no changes official Norma
Sunday, July 9, 2000

Herminio Blanco Mendoza from Secofi, the Mexican government agency that oversees the tequila industry, proposed to put in place permanent and obligatory policies, which will guarantee enough agave to supply at least 80 percent to the tequila industry.

Mendoza said the new policies would make sure the tequila producers have enough agave to continue producing. Part of the policy would include cutting back on exports to other countries.

The government agency feels confident that agave growers and tequila producers will soon come to a resolution in order to stabilize the price of agave. This will be very dependant on the sanctions placed on those having monopolies on both sides of the industry. The agency will penalize and prosecute those heading monopolies affecting the industry. It is anticipated that producers will not pay more than 4.50 pesos per kilo when purchasing agave.

On the same note, Secofi made it clear that there will be no changes in the Norma (NOM), which guarantees that any tequila have at least 51 percent agave. This will maintain the credibility of the name tequila. Earlier this year the lowering of this Norma had been considered in order to conserve agave. 
AP

Tequila production likely to fall
July 4, 2000
After the big increase in the popularity of tequila in the U. S. and abroad, there might not be enough to supply the demand; at least not 100 percent agave tequila. Due to the shortage of agave, pricing has skyrocketed by 1000 percent in only a few months which means an increase in tequila by as much as 200 percent. The shortage is more serious than first thought. With the current situation production of tequila is expected to fall in the next few years by as much as 50 percent by the year 2002.
AP

Protected tequila zone extended for more agave planting
Tuesday, June 27, 2000
The IMPI authorized the expansion of another 450 square kilometers by Including the municipality of Romita, Guanajuato in the geographic
region (full story)

Tequila crisis; almost 50% of agave exhausted in 3 years
Público accessed an internal study conducted by Sauza Tequila, which reveals consumption of almost half of all the blue agave plantations, tequilas raw material, within the last three years. This has placed the industry in one of its worst crossroads. (full story)

Mezcal & Tequila distillers in Agave war
Mexico City, April 24 -- Tension has increased in the last few months in Jalisco and Oaxaca. The shortage of Agave for making Tequila is at an all time low and has prompted distilleries in Jalisco and other Tequila regions to scramble for raw product because of shortage and skyrocketing prices. Since December of last year there have been reports of illegal exportation of agave from Oaxaca to Jalisco for the purpose of making Tequila. This is illegal due to the violation of the rules of origin or Appellation de Origin controllee of 1977 and 1996. There are reports of confrontation between Mezcal distillers from Oaxaca and convoys of trucks full of agave bound to Jalisco. Sources say that since December at least 15 thousand trucks filled with agave have been "stolen" and taken to Jalisco.
AP

Mezcal Exports on the Rise
Mexico City, Apr. 03 - This could be the year for Mezcal. In 1999 1.5 Million liters of Mezcal was exported showing an increase of 25% more than the previous year. Exports could double this year thanks to trade agreements with the European Union and the lowering of duties on Mezcal. 
AP

Quality Control for Tequila
Quality control program for Tequila exports to Europe
Mexico, Jan 21, 2000 - The Mexican Institute of Industrial Property's Tequila Regulatory Council along with other Tequila producers will be instituting a quality control program. (Full Story)

Tequila Viuda de Romero purchased by French company 
Paris, Jan. 17, 2000 - Pernod Ricard Americas a French spirits company has purchased Tequila Viuda de Romero and all of its holdings. This includes the brands Viuda de Romero, Real Hacienda, and Sangrita which has an annual production of approximately 1 million bottles and is distributed in the US, México, Chile and the Dominican Republic.

According to Pernod Ricard Americas president Michel Bord, "This acquisition permits us to reinforce our distribution structure in the Mexican market which has already experimented strong growth for many years."

This type of acquisition comes to no surprise when Tequila is having an average annual growth rate of 16% in the worldwide market.
AP

Agave Shortage
Does a shortage of agave loom in the near future for tequila distillers? It looks like it. According to a report in the LA Times, Dec. 24, 1999, tequila prices will jump due to the shortage.  (Full Story)

top of page ^

Features

• Tequila in Canada
• The Tequila lover's guide & a visit with Lance Cutler
• Eye on tequila Casa Noble
• Tequila for health
• Tequila at the Museum
• Aspen Food & Wine show
• Did you know...

Take our weekly poll Aficionado Vote