Australia is tackling the Mexican tipple (just don’t call it Tequila)
For a fresh perspective on the stories that matter to Australian business and politics, Subscribe to our weekly newsletter.
If you’re looking for a symbol of tequila’s meteoric rise in recent years, a large-scale agave farm just inland of Australia’s Great Barrier Reef – nearly 8,000 miles from Mexico – could be a good starting point.
The plantation belongs to Top Shelf International Holdings Ltd., a Melbourne-based spirits company that was listed on the Australian Stock Exchange in December and is already launching vodka and whiskey in the domestic market. Then he plans to go international with agave spirits, one of the fastest growing strong liquors in the world.
But don’t call the product tequila. Just as champagne can only be made in part of France, “tequila” is exclusive to specific regions of Mexico. “Mezcal” and “raicilla” are also prohibited.
The Top Shelf Farm is a long-term bet on the waxy, blue-tinged plant, which grows in moonlight and takes about six years to mature. Spirit cereals such as wheat, barley and rye have a 12 month cycle.
Managing Director Drew Fairchild Aims A $ 100 Million ($ 77.7 Million) A Year turnover of the still-unknown agave spirit of Top Shelf when it hits shelves overseas. It could reach some outlets in Los Angeles as soon as the end of the year, he said.
“On the agave side, we would like to launch this not only in Australia but also in the United States from the start,” Fairchild said. “It’s going to be a $ 9 billion market when we market our spirit in the United States alone.”
Top Shelf hopes to create drinks with a unique Australian flavor, influenced by the characteristics of the country’s soil. Drinkers can expect notes of honey, lime zest and cut grass, the company says.
China is another potential market on the track. Australia became the top wine exporter to the world’s second-largest economy in 2019, selling A $ 1.2 billion worth of products there that year. The prohibitive tariffs effectively put an end to trade last November.
The wine industry “has transformed the domestic market into an international export market,” says Fairchild. “There’s no reason we can’t do the same.”
He says Top Shelf is starting to respond to inquiries about its whiskeys from Chinese distributors who are looking for new products now that the wine is off the table.
China’s love affair with Australian wine ends in messy breakup
“We’re lucky to have the scale,” he said, “to start tapping into this market. It will be interesting to see how this plays out.
Although Australia has other agave plantations in Queensland and Western Australia, Top Shelf’s farm is by far the largest and its focus on producing spirits rather than biofuel is unusual.
But while Australian agave is a rarity, the novelty’s value may not be enough to appeal to American drinkers, the heaviest consumers of tequila. With the micro-stills market quite saturated – Kendall Jenner launched his own tequila in February and even George Clooney owned a brand – taking market share from giants like Patron of Bacardi Ltd. and Don Julio from Diageo Plc will be a challenge.
Aged then filtered, a new kind of tequila is heading for the premium
Mexican tequila will be hard to move in the eyes of consumers, according to Alex Gilmour, director of world-class tequila bar Cantina OK! in Sydney, who regularly visits the country to purchase spirits from local producers.
“I think it will be difficult” to compete, he said. “These producers have been doing it in their method for generations.”
Yet the agave boom is not yet showing signs of slowing down. This is especially true in the high end of the market, according to researcher IWSR. Agave spirits sales are expected to grow 4.2% per year over the five years to 2024 in 19 key markets, with premium sales increasing 8.8%, to nearly $ 9 billion .
The potential in the Asia-Pacific region also looks promising, with annual growth in China, India, Japan, Thailand and Australia collectively projected at 8%. Hong Kong Coa – Asia’s best bar anointed on Thursdays – features a 41 page menu of agave drinks.