South Africa: Tequila's New Competitor

Agaves - particularly the Mexican blue agave -  were introduced into South Africa within he last century and a half. One story claims it was Portuguese sailors who brought them in the mid-19th century. A second relates that agave plants were distributed throughout South Africa in the early 1900s for both erosion control and as a fodder crop in droughts, and thousands of plants were planted by many families in the Graaf-Reinet area.  A third story says a young girl brought three imported agave plants from Grahamstown in 1938, and planted them on a farm outside Graaff-Reinet. Still another theory goes that the agave plant was introduced by a traveller riding from Grahamstown to Cape Town between 1820 and 1830.

 

Regardless of which tales is the truth, the agave in South Africa flourished in the Karoo, and now number in the millions. They have been used to make an agave-based spirit (now called Agava) since 2003.

 

When  the agave shortage hit Mexico, causing havoc in the tequila industry, local South African businessmen formed Reinet Distillers to produce their own, home-grown version of tequila. However, while the owners struggled to unlock Mexico’s tequila-making traditions, they experienced technical problems in their factory. Reinet Distillers closed without making a single shot of alcohol.

One of the investors, Keith McLachlan, decided not to give up. He went into partnership with Swiss-based alcohol distilling and distribution firm Rockwood & Hines to form Agave Distillers. The factory was revived, and received an injection of R10-million to continue production.
 

Because of the international denomination of origin, no one outside Mexico can make an agave spirit and call it tequila. However, it does make the claim to be a "100% blue agave" spirit and producers say it is identical to tequila aside from the name.

 

Agava is triple distilled. Original reports said the gold - the equivalent of reposado - is aged in a tank with oak staves for three months. Apparently it was not aged in barrels. However, on SouthAfrica.info, a story said Agava Gold was matured in oak barrels in Namibia. The barrels were soon going to be brought to the Graaff-Reinet factory to house the whole operation under one roof.

There is no equivalent to an aņejo. Yet.

 

That distillery produces 1,200 litres a day, but capacity is about 10,000 litres/day. The distillery is also becoming a tourist destination in South Africa.

 

Most of the company's exports have been sold as bulk shipments to the United States, United Kingdom, Australia and France. McLachlan said he hoped to increase production so he could send more than 60 000 litres a month to importers.

Agava is also available in bottled form. Agave Distillers is now moving between 12,000 and 15,000 cases a month. It has been sold in the LCBO, in Canada.
 

Agava's producers claim their product is as good as, if not better than, tequila. Whether or not this is true, Agava and other agave spirits made outside Mexico - generally selling at a lower price point than premium tequilas - might confuse the consumer and challenge tequila makers in the marketplace for shelf space.

 

Another potential market for the South African agave is agave syrup, or nectar. This is fast becoming a hot item in both the health food industry and as a possible replacement for sugar in commercial food production. So far this market remains untapped by Mexican agave growers, except as a peripheral or cottage industry.

 

Tequila makers and the CRT were well aware of South Africa's pending move into the agave spirits market. A trade news story from 1997 reads:

 

Mexican tequila distillers facing South Africa competition The Mexican tequila industry, facing possible competition from South Africa, is pushing for a global recognition of tequila and mezcal as uniquely Mexican products.

According to the Consejo Regulador del Tequila (CRT), the 15-nation European Union (EU) has agreed to recognize the property rights of Mexican tequila manufacturers, but other major consumer nations, such as Taiwan and Japan, have yet to take the same step.
 

The EU offered the designation earlier this year in exchange for a Mexican agreement to accept the same recognition for other European spirits (see SourceMex, 02/12/97). The EU designation in effect eliminated competition from "tequila vasco," a spirit distilled in Spain. The EU is the only major tequila-consuming region that has offered strong protection for Mexican tequila. According to the CRT, lack of protection elsewhere could allow countries such as South Africa to begin a "tequila war" with Mexico.

The CRT said South Africa, with climactic conditions that are similar to Mexico, has vast reserves of the blue agave plant used to produce tequila. According to some estimates, South Africa has a 39-year supply of the plant, known there as garingboom.

In contrast, Mexico is expected to face a shortage of agave in the coming years, which could have a major impact on small and medium-sized tequila distillers in Mexico. The shortage is caused by overexploitation of agave plants, which has resulted in excess production of tequila.

"We see the possibility that supplies normally available to small companies will tighten by 20% to 30%," said CRT director Ramon Gonzalez.

According to Gonzalez, the period of tight agave supplies could last about three years, or until the next generation of plants is ready for use.

Meanwhile, the South African company Tequila and Mezcal Distillers Ltd. has already announced plans to construct an agave distillery in the Graaff-Reinet district near the Cape of Good Hope. Company sources said the plant--which is scheduled to begin production in the year 2000--will manufacture 240,000 liters of alcohol per month. However, most of the production will be an industrial byproduct, with one-tenth of the output devoted to tequila.

Mexico, facing the possibility of losing global market sales of tequila to South Africa, has announced plans to challenge the South African venture before the proper trade authorities in Johannesburg and Geneva. David Ivarra, a spokesperson for the Mexican Embassy in Johannesburg, said the first step in the process is for President Ernesto Zedillo's administration to appeal to the South African government to recognize its responsibilities under global trade rules.

"Under rules of the World Trade Organization, it would be illegal to produce a beverage in South Africa and call it tequila," Ivarra told the Reuter news service.
 

Porfidio, a producer with a colourful history and not a few confrontations with Mexican authorities, has apparently changed from making tequila to making agave spirits, which are allegedly distilled from South African agaves.

 

South Africa itself may face competition in the agave spirits market in the next few years. Indian entrepreneurs may soon produce their own agave spirits, most likely to serve the national rather than export market (see notes on

world culture).

 

 

Sources

• Agave Distillers in Graff-Reinet
• Agave Distillers in South African Business Times
• Agave - Gems in the Karoo
• Mexico in South Africa
• Sun rises on Karoo tequila
• Graaff Reinet tourism
• Agava - distiller's home site

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