Image credits: Tauralbus
News Article

Michoacan Mezcal Producers Desperate to Increase Local Sales

By Jan Hogewoning | Sat, 11/21/2020 - 11:40

According to figures released by the National Chamber of the Tequila Industry (CNIT), tequila exports grew by 12.5 percent in the first 10 months of this year. Mezcal has not seen the same fortunes. In April, Forbes reported that mezcal exports had fallen by 80 percent. In July, we wrote about the contrasting performance of the tequila and the mezcal industries amid the pandemic, with the latter seeing foreign orders fall drastically. Part of that reason, we noted at the time, was that mezcal is a drink that is highly dependent on bars and restaurants as a sales channel. With an estimated 63 percent of all mezcal destined for exports, the drop in orders has been devastating for certain mezcal producing areas of the country. The impact is especially hard when considering that over the last five years, mezcal was on the rise, increasing in total market value by 38 percent in 2019. Demand was rising so fast that Publimetro reported in February that mezcal production was in danger due to overexploitation of agave land.

One state lesser known for its mezcal production is Michoacan, with the most well known state being Oaxaca. La Voz de Michoacán reports that local Michoacan distillers have seen tens of millions of pesos in losses due to the pandemic. Now, they are trying out new strategies to increase local sales. One of these is to partner with producers of other artisanal products, such as copperware and Cotija cheese. Participation in the Ruta de Mezcal (Mezcal Route), a local producer in the municipality of Villa Madero remarks, has already driven other local entrepreneurs to build cabins. Another aspect that local producers have considered important for local sales is to have their mezcal certified. This, La Voz reports, is perceived as increasing consumer confidence to try the local mezcal. Of the 100 mezcal brands that are members of the Michoacan Association of Mezcal Producers, 40 have a certification. Of those, only five export to countries including the US, Belgium and Spain.

While the pandemic could not have come in a more unwelcome time, another painful factor that is hurting sales in Mexico is the high taxes. Mezcal is subject to a 53 percent Special Tax on Products and Services (IEPS) along with a 16 percent VAT. This, Publimetro reports, has severely punished families which are distilling the drink and further complicates efforts to increase domestic sales.

The data used in this article was sourced from:  
Mexico Business News, Debate, Milenio, Forbes, Publimetro, Inforural, La Voz de Michoacán
Photo by:   Tauralbus
Jan Hogewoning Jan Hogewoning Journalist and Industry Analyst