The global agave nectar market is expected to reach $296.44 million in 2025 at a CAGR of 11.1%. Agave is the key ingredient in tequila. The US tequila market is worth $8.15 billion according to Statista, this nets the industry an 8.6% share of the country's spirit market and growing.
There is a major issue facing Tequila producers: "Our number one cost is still agave," says Guillermo Erickson Sauza, owner of Tequila Fortaleza. "Ten years ago it cost us about US$1,875 to fill our small (15 ton) oven. Now, it costs us around US$22,500."
This key factor will effect which tequila investments will be most profitable.
Rogue One, Inc. (OTCMKTS: ROAG) may actually benefit from the high price of agave. Its recent acquisition Human Brands International currently owns and manages over 400k+ agave plants. They use these plants to produce several premium spirit brands such as Armero Tequila, and has supply contracts with well-known tequila brands, distilleries, celebrities, athletes, and restaurant groups.
ROAG will not only be able to produce tequila at a lower price than the competition, but it will profit as other producers purchase its agave.
ROAG will be releasing its first financial report since the acquisition this quarter, and the inclusion of Human Brands' revenue will be a major boost to the company's bottom line and thereby proper valuation.
Like the world's largest tequila producer, Becle, S.A.B. de C.V. (OTCMKTS: BCCLF), who released their second-quarter numbers 6 months ago. Volume increased 2.7%, net sales increased 9.7%, gross profit increased 9.8%, and gross margin was 53.2%, an increase of 0.1 percentage points year over year. These numbers highlight the industry-wide growth, BCCLF could be due to release year-end numbers soon.
These stocks are pure tequila plays, with ROAG's extra benefit being its agave production capabilities.
Diageo plc (NYSE:DEO) organic sales advanced 16%, based on Robust demand for its tequila brands and Johnnie Walker whisky, backed by strong growth across all regions, led by gains in North America, the company's largest market. While not a pure tequila play, DEO is certainly worth a look.
Another tequila play, Splash Beverage (NYSE:SBEV) saw gains last week after announcing Walmart (NYSE:WMT) will be adding its Tapout beverage line to 47 stores in Florida. The company expanded the distribution of SALT Citrus flavored tequila by 48% over the first quarter of 2021 into 20 additional stores.
Again, like DEO this is not a pure tequila play, but the stock is worth a look.
For investors looking to play tequila's growth while minimizing the effect of rising agave prices, Rogue One, Inc. (ROAG) should be on top of your watchlist.
Start your research here:
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