The cost of agave continues to rise, Campari Group's chief financial officer has flagged, as Tequila's popularity increases.
The price of agave, which is used in the Tequila production process, has risen rapidly in recent years
Speaking after the company's full-year 2017 results announcement yesterday, CFO Paolo Marchesini said agave prices have leapt from MXN6 (US$0.3) per kilo to reach MXN22 per kilo. "This is probably causing about EUR10m-to-EUR12m of negative impact on our gross margin," he said.
Marchesini is expecting that the price of agave "will come down at the back end of next year" as the balance is restored between agave shortages and demand for Tequila. "It's a very cyclical situation, which is not driven by Mexican local inflation," he said. "It is primarily driven by the shortage of agave."
Meanwhile, Campari CEO Bob Kunze-Concewitz described the Tequila category "on fire in the US".
The company owns the Espolòn and Cabo Wabo brands, which were both credited with helping drive US performance in the 12 months of last year.
"We are performing particularly well ... and we expect that performance to continue in the years to come," Kunze-Concewitz said. "With regards to agave sourcing strategy, clearly this is an area of utmost importance to us and this is something we are studying."
"Money has never burnt a hole in our pocket" - Click here for just-drinks' interview with Campari CEO Bob Kunze-Concewitz
Sectors: Company results, Spirits
Companies: Gruppo Campari
