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News Article

Despite Pandemic, Mezcal Will Keep Growing

By Jan Hogewoning | Mon, 07/27/2020 - 17:02

Over the past five years, the mezcal industry has seen continuous growth of 173 percent, reaching a commercial value of MX$5 billion (US$227.6 million), states the latest report of the Trusts Commission for Agricultural Relations (FIRA).

According to the Ministry of Economy of Oaxaca, mezcal’s growth has led to a reverse in migration of people from Oaxaca from US fields back to the state, Crónica reports. "Beyond being a spirit distillate, mezcal is a noble industry that has slowed migration in Oaxacan municipalities. Entire families have returned from working on a pinch of tomato and grapes in the US, to plant the sprat, tobalá and coyote on their own lands, and then pierce their leaves and extract our unique elixir, considered the most perfect alcohol in the world,” said Juan Pablo Guzmán Cobian, Minister of Economy of Oaxaca, in Crónica.

Currently, Oaxaca state’s mezcal industry employs 16,000 people directly and 48,000 indirectly. In 1994, the state obtained the denomination of origin for mezcal, lifting the drinks’ status and bringing it out of the shadow of its much more famous cousin, Tequila. Most mezcal production today happens in Oaxaca, but other states authorized for production are Durango, Guanajuato, Guerrero, San Luis Potosi, Tamaulipas, Zacatecas, Michoacan and, most recently, Puebla. Recently, a judge blocked efforts to expand the denomination of origin to Morelos, Aguascalientes and State of Mexico. Oaxaca is still known to have the widest variety of agaves, the plant of which mezcal is brewed. While the name “mezcal” derives from the Nahuatl mexcalli (meaning ‘oven-cooked agave’), it was actually the Spaniards that came to Mexico who began experimenting with fermenting the mash of the agave.

Today, mezcal is exported to 64 countries, with the US being the primary buyer (70 percent), followed by Italy, France and Spain. In 2019, Mexico produced 7.1 million L, with more than 4.7 million L destined for foreign markets. US consumption of mezcal is actually larger than Mexico’s domestic consumption. The Spirits Business reported that in 2018, mezcal consumption rose by 32 percent in the US. The overall agave-based spirits category, which includes both mezcal and tequila, was expected to overtake overall US rum consumption by 2022. While mezcal is gaining more popularity, it is still dwarfed by that of tequila, which reached 351 million L of production in 2019. This drink still has far stronger name recognition in other markets with a longer history of export.

The pandemic has had a significant impact on mezcal sales, with Mexico’s mezcal chamber CANAIMEZ reporting major order cancellations from top markets, as well as drying online sales during April. “Let us hope that the countries that are most affected (by the COVID-19 outbreak), which are also the large consumers of mezcal: the US, Italy, France and Spain, come out of this crisis as soon possible and start making orders,” said head of CANAIMEZ, Luis España, as reported by Mexico Today. The negative news contrasts with a spike in US tequila sales in March, when Americans bought large amounts as they faced lockdowns. One of the reasons why mezcal sales may have suffered a greater impact is that they are more dependent on sales through hotels, restaurants and bars. According to a 2017 study by Future Market Insights, these would remain the largest sales channel for mezcal for the upcoming years.

This same study predicted mezcal to reach a value of US$840 million in terms of global consumption by 2022. The preference, it cited, would be for 100 percent tequila distilled Mezcal. In other words, consumers would be opting for mezcal products with strong tequila-like qualities. It states: “Higher concentration of Tequila in production of mezcal is being preferred for keeping the drink additive-free, and reducing the risks of hangover.” It continues with an economic benefit in favor of mezcal: “Moreover, buying 100% agave tequila bottle is likely to cost a lot more than a bottle of mezcal with 100% concentration of Tequila. In 2017, the global mezcal market is anticipated to attain more than half of its value from sales of Mezcal with 100% Tequila concentrate.”

In an interview with MBN, Carlo Poletti, Co-founder and Director General of Grupo Mexcalito, is optimistic about the enduring strength of the mezcal brand in foreign destinations. “Products like mezcal have been widely accepted and can be sold and promoted in a very enriching manner,” said Poletti. “Throughout the world, we are seeing that people are making an effort to rediscover ancestral drinks from their places of origin.” He did concede, however, that without the popularity of tequila, this boom would not have been possible.

In an attempt to explain why so many mezcal producers aim to export their product, Poletti points to Mexico’s high taxes that make it hard to commercialize mezcal at accessible prices in the Mexican domestic market. Pointing to a new market with high potential, he identifies Germany. He specifies that mezcal’s natural healing properties can be another driver for further pushing this product across the globe.  “While mezcal might be an alcoholic beverage, it is important not to forget about the benefits the agave has, such as cellular regenerator. It has always been used as a healing plant.”, Poletti says. The Future Market Insight report echoes the importance of the perception of health benefits in driving mezcal growth, stating: “…increasing demand for beverages that improve digestion and blood sugar regulation, coupled with growing preference towards natural and gluten-free products, will drive the growth in global demand for mezcal in the immediate future.” Interestingly, it also cites “that many consider it as a healthy alternative to hard liquors such as tequila.”

The data used in this article was sourced from:  
The Spirits Business, Globe Newswire, The Future Market Insight, The Yucatan Times, Mexico Today, Crónica, Agronoticias, Mexico Business News
Photo by:   Aaron Rodriguez
Jan Hogewoning Jan Hogewoning Journalist and Industry Analyst