Facing a historic drop in wine demand and tightening water rules, some California grape growers are planting agave instead, betting that the plant behind tequila can succeed where wine grapes no longer pay, Bloomberg reported on October 12, 2026.
Stuart Woolf, a second generation farmer who manages roughly 30,000 acres in Huron, California, has planted about 550 acres of agave over the past four years and plans to add another 150, according to the Bloomberg account republished by Yahoo Finance. Woolf said the state's large Latino and Hispanic population, which he put at 40 percent of California's 40 million residents, made it a logical place to introduce a new agave spirits category.
How bad is the California wine slump
California's 2025 grape crush fell to its smallest level since 1999, at 2.6 million tons, according to Jeff Bitter, president of Allied Grape Growers, as reported by Vinetur citing figures tied to the Associated Press. Wine sales in the state have fallen by more than 20 percent over the past five years. Growers pulled roughly 38,000 acres of wine grapevines last year alone, about 7 percent of all grapes planted statewide, with some vintners uprooting or burning vines rather than carry the cost of unsold fruit, as reported separately by the New York Times and relayed by Yahoo Finance.
What Stuart Woolf is growing in Huron
Woolf's land sits in the San Joaquin Valley, where state groundwater rules have tightened irrigation limits for row crops and vineyards alike. Agave costs less to plant and tend than wine grapes and needs less water, factors Bloomberg cited as central to Woolf's decision. The plant is also slow: agave is typically harvested five years or more after planting, which means growers are committing land now against demand and pricing they cannot see yet. Bloomberg noted that agave in Mexico has recently gone through its own price crash, a boom and bust pattern similar to what has hit grapes.
Why a California agave spirit can't be called tequila
Tequila and mezcal are protected denominations of origin tied to specific Mexican states and production rules, which means spirits distilled from agave grown in California cannot legally carry either name, regardless of the plant or method used. Some producers are treating that restriction as an opening rather than a limit. Gian Nelson, co-founder of Napa based Jano Spirits, told Bloomberg that his operation is not bound by Mexican convention, saying the team is free to experiment with production methods rather than follow an established tradition. Separate reporting has tracked the broader movement: a University of California, Davis estimate cited by CapRadio and NPR member station coverage put California agave acreage at under 50 before 2023, rising past 200 as the California Agave Council, formed in 2022, grew to include roughly 80 growers and eight distillers.
What this means
Everything described here is an agave spirit, not tequila, since none of it can legally use that name or fall under Mexico's NOM system that this desk's database tracks. The open questions are basic and unresolved: whether American distilling capacity catches up before Woolf's vines mature, and whether buyers will pay for an unfamiliar category once the first harvests actually arrive in five or more years.