ARANDAS, Mexico, Sept. 1, 2015 /PRNewswire/ -- Tequila continues to gain interest among consumers across the world with the global demand rising significantly each year. Exports of tequila from Mexico increased at a compounded annual growth rate of 4.5 percent over the past five years.1 On the other hand, agave, the raw material used to manufacture tequila, is expected to face a severe shortage in the near future and increase in price by more than 100 percent by 2018.1 Distilleries must equip themselves to mitigate the anticipated risk resulting from this rising cost of raw materials.
Unable to withstand the rising production cost, a significant number of small and medium-sized distilleries may possibly shut down or be forced sell their facilities between 2015 and 2018. Large distilleries could capitalize on the situation and expand their manufacturing capabilities by leasing, renting or buying these facilities. This is what Licor Zone will accomplish by grouping several small and medium distilleries under one roof.
Demand for the drink is projected to rise with China removing the ban on Mexican 100 percent tequila in 2013. The ban was originally imposed because of tequila's high methanol content. The United States was the largest importer of tequila until 2012, accounting for approximately 75 percent of the export market for Mexico.5 China is expected to grow as the second largest importer by the end of 2018, importing more than 10 million liters.5 Thus, rising demand for the drink will likely keep the distilleries running at almost 100 percent utilization rates. However, the rising price of the raw material poses a severe threat to the industry.
Only opportunities for large liquors buying groups like Licor Zone.
Although the raw material costs are expected to increase moderately for the larger distilleries, certain opportunities exist for these distilleries to explore. Larger distilleries could have the opportunity to buy, rent or lease these small and medium-sized facilities over a period of time. On the other hand, these large companies could engage in a third-party production agreement for their brands in these facilities.
"I am proud to be part of Licor Zone expansion. The idea of regrouping several small and medium distilleries under one roof is brilliant, this will allow Licor Zone to become a heavy weight in the tequila business by reducing cost and increasing profitability" said Alfredo Zapata, General Manager.
SOURCE Licor Zone SA de CV