As wine sales slide and water limits tighten, farmers from the Central Valley to Santa Barbara County are planting a drought-tolerant crop with a long wait, a big question mark and no name to borrow.
On the west side of Fresno County, second-generation farmer Stuart Woolf has spent the past several years putting a crop in the ground that few Californians would have recognized a decade ago. His agave now covers about 550 acres of his land near Huron, with more than 600,000 plants, and he intends to plant another 150 acres. He started with just five.
Woolf is not alone. Across California, vintners and farmers watching wine demand shrink and water allocations tighten are testing whether the spiky blue-green succulent behind tequila and mezcal can anchor a new, homegrown spirits category. The promise is real. So are the risks.
| ~$10,000 | Approximate cost per acre to plant agave. Converting back to grapes can run as much as $70,000 per acre, depending on the region. |
| 5+ years | Typical wait between planting and harvest for agave. |
| 550 acres | Planted by Stuart Woolf, with more than 600,000 plants. He plans to add 150 more acres. |
| ~100 growers | Roughly 100 California growers in 38 counties manage about 1,000 acres of agave. |
| −5% | Drop in US wine sales last year, the steepest among alcoholic beverages. |
| 2028 | Earliest O’Neill Vintners & Distillers expects its California agave spirit to reach shelves. |
A category in retreat
The push toward agave begins with wine. US wine sales contracted 5% last year, the steepest decline among alcoholic beverages, according to Circana data compiled by Bloomberg Intelligence. The category still brings in more than $15 billion a year across the retail channels Circana tracks, but it has not grown since at least 2022.
Dale Stratton, managing director of the alcohol consulting group Azur Associates, says some growers are pulling out vines or letting crops go unharvested. Higher labor and operating costs have made matters worse.
For Woolf, the squeeze is also about water. His farm covers 30,000 acres, much of it subject to strict state limits on water use, and he was already coping with a grape oversupply. He told Cal Poly’s College of Agriculture, Food and Environmental Sciences earlier this year that he did not want to lose the family land as his water supply shrank. He says agave is a way to protect jobs, keep farming and keep the land in his family. The idea, he recalled, came one night while he was sipping mezcal and wondering what he could grow that needs little water.
The math behind the pivot
The numbers help explain the interest. Soil scientist and consultant Steve Vierra, who has worked in California wine country for nearly 30 years, puts the cost of planting agave at around $10,000 per acre. Going back to grapes can cost as much as $70,000 per acre. Once established, agave can largely survive on rainfall, while grapes need added irrigation. Vierra says he has helped more than 20 wineries move part of their land from grapes to agave. The trend began with small boutique operations, he says, but larger commercial farms are now joining in.
Demand for the end product looks steadier than demand for wine. Tequila sales were flat over the 52 weeks Bloomberg reviewed, while vodka, whiskey and other liquors each fell by at least 1.5%. Woolf also sees a built-in audience at home: California has 40 million people, he notes, and about 40% identify as Latino or Hispanic.
Who is planting
Beyond Woolf, a mix of growers, winemakers and larger producers are testing the crop:
- Woolf Farming (Huron and the Central Valley). Woolf also serves as president of the California Agave Council, a nonprofit trade association of growers and processors formed in early 2022. He and his wife, Lisa, have funded research at UC Davis and Cal Poly.
- Shannon Family of Wines / Castilleja Farms. Growing half an acre of agave for High Chaparral Agave Spirit, part of a broader pivot in its wine business.
- Brutocao Family Vineyards. Exploring a shift of acreage toward agave as the wine market faces a multi-year contraction.
- Ryan Carr (Santa Barbara County). A viticulturist and winemaker planting agave alongside traditional grapevines as a hedge against falling wine production.
- John Oswald (Temecula). A CPA and agave grower managing 10 acres in Temecula wine country who also sits on the California Agave Council board.
- O’Neill Vintners & Distillers. The company, which makes 8 million cases of wine a year under brands including Line 39 and FitVine, has planted about seven acres of agave to work with and is testing California agave spirits.
Overall, roughly 100 California growers across 38 counties now manage about 1,000 acres of agave, many of them on former or active vineyard land, according to a Sacramento Bee report.
A five-year clock
Lower costs do not make agave a safe bet. Agave grows slowly and is generally harvested five years or more after planting, and a lot can change in that time. Vierra calls it “a purely speculative crop,” noting that no distillery is offering pre-plant contracts to guarantee a buyer.
Mexico offers a cautionary tale. Agave Today’s 2027 Market Report notes that agave prices there have fallen roughly 90% from a peak of about 30 to 35 pesos per kilogram, with growers reportedly receiving as little as 0.80 to 3 pesos per kilogram by September 2026. About 500 million liters of unsold tequila were reported in inventory in early 2025, according to figures from the Consejo Regulador del Tequila cited by the Financial Times, and the council’s president has acknowledged that some fields are being abandoned because prices are too low. It is the same boom-and-bust pattern California grape growers know well.
California growers are hoping their plants will behave differently. Woolf told Cal Poly that early indications suggest most California agave matures faster, yields more and contains more sugar than plants in Mexico, all good signs for spirits production. He stressed that those are early indications, and the new crop still has long maturation cycles.
The harvest problem
Then there is the harvest. Agave plants can weigh upwards of 200 pounds each. In Mexico, skilled harvesters known as jimadores cut them by hand with a long-handled, razor-sharp circular blade called a coa de jima, a craft passed down for generations. That skill set is not readily available in California.
Woolf’s answer is to mechanize. He commissioned seven students from Cal Poly’s BioResource and Agricultural Engineering Department to build an automated harvester as their senior project. The team designed it in CAD during the fall and is now modifying a grape harvester, stripping out the grape equipment and adding a trimming head for the leaves. Associate Professor Mohammad Sadek says the goal is a machine that can remove up to 80% of the leaves and pull the plant from the ground, cutting manual labor significantly. He is seeking grant funding for further research aimed at fully automating the job.
A field visit gave the students a sense of the challenge. Carson Stueve, a fourth-year agricultural systems management major, said the plants were huge and stabbed him through his jeans the moment he stepped out of the truck. The team managed to harvest only eight plants in about four hours by hand. Teammate Brock Robertson says the machine is being built so it can be customized as the crop and its needs change.
From core to bottle
Harvest is only the first bottleneck. Turning agave into liquor is labor-intensive: workers prune the leaves from the plant’s core, the cores are cooked over a long period and crushed to extract juice, and the juice is fermented and distilled. California has very little local distilling capacity, and knowledge about processing agave is still thin.
Connor Vaccaro, founder of Calavé Spirits and also a winemaker, says he is likely one of the few operators in the state with commercial-scale equipment for larger volumes. He is on his fourth production run, and reaction to his blanco and reposado has been very positive. He says the aim now is to get the distilling side caught up, and he hopes to scale up over the next couple of years.
O’Neill Vintners & Distillers is building its capacity step by step. The company has invested around $300,000 in equipment bought in Mexico to cook, process and distill agave, according to chief operating and financial officer Matt Towers, and plans to double or triple that outlay in the coming year. Founder and CEO Jeff O’Neill says the focus is on perfecting the product, which will probably not reach shelves until 2028. He expects most of the state’s agave to be harvested over the next two to three years and wants to match production capacity to that maturity cycle.
The state’s agave story did not start yesterday. Craig Reynolds, a former California Agave Council board colleague of Woolf’s, first planted agave in 2014 and helped a few small distillers make spirits from his crop. Those early efforts showed that California-made agave spirits are viable, he says, even if suggesting it at first felt like a joke.
What do you call it?
California’s agave spirit cannot legally be called tequila or mezcal, because both names are protected by denomination-of-origin rules. Mexico’s industry is watching closely to make sure those rules are respected. Whether drinkers will embrace an agave spirit that is not Mexican remains an open question.
Producers say they are not trying to copy Mexico. Tequila is an inspiration, but they want to put their own spin on it. Gian Nelson, co-founder of Napa-based Jano Spirits, says his team is not bound to any tradition or any one way of making the spirit, which is already leading to experimentation in the production process.
Agave Today’s 2027 Market Report notes that the US Alcohol and Tobacco Tax and Trade Bureau recognizes “agave spirits” as a distinct class of distilled spirits. It names Ventura Spirits, Shelter Distilling and Venus Spirits among California’s domestic producers, and says the California Agave Council supports the “Mezcalifornia” movement. Most US producers still rely partly on imported Mexican agave syrup, the report adds, though domestic cultivation is accelerating. Its marketing guidance for non-Mexican agave spirits is blunt: do not pretend to be tequila, and lead with what makes the place and the plant different.
Vaccaro says the hardest part is awareness, not the sale. Once people taste it, he says, it sells easily. His shorthand is to compare the category to sparkling wine and Champagne, a framing that lands quickly with consumers who already know the difference.
A market in transition
California’s growers are entering a US agave market that is no longer in boom mode. According to the 2027 report, citing DISCUS data, US tequila and mezcal revenue fell 4.1% to $6.4 billion in 2025, the category’s first annual revenue decline in more than a decade, while volume slipped 0.3% to 32.1 million nine-liter cases. Ready-to-drink cocktails were the one major spirits category that grew, up 16.4% to $3.8 billion, with many of them tequila-based.
The lesson for newcomers, the report suggests, is that growth now comes from winning share rather than from category expansion. For a new California category, that means making its case on proof, provenance and a clear story.
The long view
Jeff O’Neill hopes a number of brands and agave products reach shelves in the coming years so that California can establish a category rather than a single product, and says he wants more than one product coming to market. Woolf’s ambition is bigger still. Looking at the hardship water shortages have brought to rural Central Valley communities, he says he hopes agave can help revive them, and he dreams that western Fresno County could one day be the “Napa Valley of agave.”
Between now and then lie five-year harvest cycles, a still-forming supply chain and a market that must be convinced. California’s first commercial agave spirits are only starting to arrive, but the plants already in the ground will decide how far the idea goes.
Sources
Bloomberg, Redd Brown, “California’s Wine Slump Is Fueling a Risky Bet on Agave,” Oct. 12, 2026
Cal Poly CAFES, Annmarie Cornejo, “Rooted in Resilience: Agave Takes Hold in California’s Thirsty Heartland,” Apr. 15, 2026
Agave Today Magazine, Agave Spirits Market Report, 2027 Edition (published October 2026), Parts I and II.
Grower profiles: New York Post, “California’s struggling wine industry plots major pivot,” July 28, 2026
KSBY, “Drought-tolerant agave offers new hope for California farmers”
California Agave Council, board members The Sacramento Bee, statewide agave acreage