Exploring the Rise of U.S.-Based Agave Spirits

By: Becky Garrison

According to research from the International Wines and Spirits Record Drinks Market Analysis, agave spirits represent one of the fastest-growing drink categories in the United States. The agave spirits category is forecast to grow by 4% compound annual growth rate through 2022. The most popular agave spirits, Tequila and Mezcal, posted respective gains of 8.5% and 32.4%. 

  Tequila represents an internationally recognized geographic designation, or, Appellation of Origin. As such, Tequila may only be produced in the Tequila region of Mexico, which includes the state of Jalisco and some municipalities in Guanajuato, Michoacán, Nayarit and Tamaulipas. Along those lines, agave spirits can be certified as mezcal in all or some of the municipalities within Oaxaca, Zacatecas, Durango, Guanajuato, Guerrero, San Luis Potosí, Tamaulipas, Michoacán, Puebla and Sinaloa.

  However, hundreds of agave species grow throughout the world, with a diversity of distillation methods. In particular, 100% agave spirit brands and blends are being developed in the U.S., Peru, Australia, France, South Africa and India.

  On May 4, 2020, TTB Notice No. 176 governing agave spirits sold in the U.S. went into effect. The notice proposed to create, within the standards of identity, a class called “agave spirits” with two types within that class, “Tequila” and “mezcal,” replacing the existing Class 7, Tequila. Hence, Tequila and mezcal are now considered types within the Agave Spirits class, and the standards of identity for those products are not changed.

  The proposed standard would include spirits distilled from a fermented mash, of which at least 51% derives from plant species in the genus Agave and up to 49% derived from other sugars. Agave spirits must be distilled at less than 95% ABV and bottled at or above 40% ABV. Aging, blending, flavoring and coloring of agave spirits are allowed and provide distillers with the ability to develop a unique brand within this category.

  Currently, most agave spirits distilled in the U.S. use syrup imported from Mexico. For example, State 38 Distilling in Golden, Colorado, and NOCO Distillery in Fort Collins, Colorado, obtain 100% organic Blue Agave from Mexico. Each distills and bottles agave alcohol using pristine alpine water from the Rocky Mountains and then adds its unique signature to the spirit. According to Don Hammond, owner and managing partner of State 38 Distilling, they age their spirits in North American oak barrels. Sebastien Gavillet, co-founder of NOCO Distillery, said they triple distill their agave spirits for a smoother finish.

Distilling Agave Spirits in the United States

  The San Francisco Bay-Delta/Sacramento region, internally described as the “farm-to-fork” capital of the world, shows signs of emerging as a hub for growing agave. Situated at an edge of hardiness zones nine and 10, it does not have a prolonged frost or severe winters, making the region an ideal growing climate for various products, including agave.

  Craig Reynolds of California Agave Ventures, LLC in Davis, California, began experimenting with growing agave and producing spirits in Northern California after receiving seedlings of Agave Tequilana Weber Azul (Blue Weber Agave) from a grower in Southern California. Agave Tequilana has a higher sugar content and a faster time to maturity than other agave species. It’s also the type of agave exclusively used in Tequila.

  In Reynolds’ estimation, the appeal of growing this hardy plant in California is that it can be grown in numerous environments with different variables and soil conditions. Also, as this plant requires very little water, it can be an ideal crop for drought-prone areas. Depending on the species, agave plants take between five to eight years to mature. Hence, growers need to allow time before seeing a return on their investment.

  Because the agave spirits industry is still in its infancy, Reynolds sells his agave to distillers via word of mouth. Also, he custom cooks his agave in a traditional stone pit for clients upon request.

  Reynolds’ clients include Karl Anderson and Jason Senior, co-founders of Shelter Distilling in Mammoth Lakes, California. Anderson became interested in agave spirits after one of his investors, coming from a long line of landscape artists, had a friend pull a 700-pound Agave Americana from his yard and donate it to Shelter Distilling for experimentation. Typically, this variety of agave is used in landscaping, but is now harvested for distilling purposes in the U.S.

  Agave Americano produces flavors more in line with mezcal’s earthiness and vegetal notes than Blue Weber Agave Tequila. However, due to the scarcity of this particular species being used for distilling, Anderson and Senior began buying Organic Blue Agave Nectar from Mexico in 50-gallon drums. “Unlike grain, fermenting agave nectar is really difficult due to the lack of nutrients,” Senior said.

  As Anderson and Senior came from the craft beer industry, they did not want to be known as distillers who purchased other producers’ wares and sold them as their own. “Making a spirit from the plant or the grain all the way to the bottle is important to us. If we can use ingredients from our region, all the better,” Anderson said.

  Anderson connected with Reynolds because he sees him leading the charge in growing agave plants in the United States. “We have an opportunity to grow new and interesting varieties that are new to the U.S. market and are different and higher quality than all those gold tequilas on the shelf,” Reynolds said.

  Senior and Anderson started experimenting with their fermentation techniques to see if they could make something work. “The agave sugars are such that most yeasts can’t easily consume the sugars to produce alcohol. We have to make sure we have the correct yeast and that the yeast is healthy before pitching it into the agave fermentation,” said Senior.

  After purchasing the raw agave plants, brought over the Sierra Nevada in a boat, Senior steams the agave hearts in a mash tun for a few days until the plants are soft and sweet. Next, they send the plants through a wood chipper to shred the hearts and allow the yeast easy access to all the agave sugars. They add these agave fibers to a fermentation tank with pure alpine water, pitch yeast, add nutrients and allow the fermentation to proceed. Once fermentation is completed, and sugar has been converted into alcohol, they pump the liquid and fibers into the still.

  Then, they distill the agave wash twice in a hybrid pot still. The first distillation is a quick run to separate the solids and water from the alcohol and flavor components. The second run is the slow finishing distillation, where they separate the heads and tails from the hearts of the spirit. “The nice flavors of an agave spirit really only come out when the agave fibers are in the fermentation and distillation,” said Senior.

  Shelter Distilling primarily set up its distillery for using malted barley as a raw ingredient. As it doesn’t have room to install a dedicated facility for processing agave, Senior finds making agave spirits time-consuming and labor-intensive. “It’s not just dumping bags of barley into a mill. It’s chopping, splitting, pounding, steaming, pounding some more. It’s sweaty and difficult work, but it’s well worth it when you pour yourself a splash, and you can taste the product you’ve been working on for a month. With agave, you really get to taste the terroir and varietal of the plant. It’s always different, much like wine.”

Assessing Consumer Demand for Agave Spirits

  According to Anderson, while customers are drawn to the nuance and flavor of their agave spirits, they need to be educated about the agave spirits market. In his experience, most people remember Tequila and mezcal from their college days and haven’t learned the nuances of sipping premium agave spirits.

  Presently, consumer demand for Shelter Distilling’s agave spirits exceeds the amount available. Anderson attributes this to the lack of agave being grown in the U.S. and the difficulties of processing the plants.

  Along those lines, the growth of the agave spirits market has altered the availability of quality agave plants in Mexico. Lou Bank, founder and Executive Director of S.A.C.R.E.D., a nonprofit organization working to improve the quality of life in the rural Mexican communities where heritage agave spirits are made, has concerns that, as agave spirits increase in popularity, consumers will love the plants to death. “If you drive around Oaxaca today, it looks significantly different than it did 10 years ago. Where you used to see a lot of wildlands, now you see more and more agave farms popping up.”

  Bank is concerned that the greater quantity of plants may come at the cost of quality, that mass agriculture methods will raise lower quality agave, leading to lower quality spirits.

  With the TTB beginning to define agave spirits, Anderson predicts more distillers and growers will look to enter this new market. “We do what we can with putting out promotional material and educating our guests. The more U.S.-based distilleries who get into this market and educate their customers, the more people will understand that this is an American product that can be as good as, if not better than, what’s being produced in Mexico,” Bank said.

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