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Open questions

It’s a new calendar year and things are changing for mezcal. As we all hold our breath this Friday we do know a few things, and all of them have some impact on the mezcal world.

It’s never been so cheap to create a mezcal brand

There are more mezcal brands on the market in the United States than ever before. With the growing interest in the cocktail space and even the retail world, the business case is there and brands are being built to fill niches in the market. We routinely talk to distillers, brand creators, and others who are interested in creating or bringing a mezcal brand into the United States.

In Mexico there are even more brands, so many that it’s been difficult to even imagine what’s going on in the mezcalosphere. That points to one fascinating contradiction in our moment: The production is there, the business interest is there, arguably the consumer interest is also there. But there are some big questions.

It’s never been so expensive to import mezcal to the United States

Economies of scale make it reasonable for someone with a consistent and/or large volume production. Much less so for a small volume producer. I was talking to someone the other day who had been working on importing a boutique selection to the United States, exactly the sort of small batch mezcals from very distinctive maestro mezcaleros that everyone prizes so much. This person decided that it was impossible to make any money in the U.S. because the per bottle price would be exorbitant. We’re fortunate enough to have a few people working on this front, William Scanlan’s Heavy Metl Imports is notable for bringing in some Mezcaloteca selections under the Mezcalosfera name in the US, ditto Arik Torren for bringing in La Raicilla Venenosa, and Wahaka’s collaboration with the Fundación Agaves Silvestres on Vino de Mezcal, plus a handful of others.

If you’ve ever been to Oaxaca or any other mezcal producing areas in Mexico you know that there is a universe of mezcals out there, it’s special, and maybe a good thing that they remain in Mexico. But it’s also frustrating because those are the amazing bottles that I’d love to pour for more people here in the U.S. Plus, if we could create a market for them, their producers might earn a better income and we might encourage more people to share their fantastic spirits with us. And then there are all the incredibly positive aspects of returning to traditional production.

Who’s driving this ship?

Brand mezcal is being defined by the people who import and promote it. The legal battles to define mezcal for the global market while writing traditional mezcals out of the picture have and will continue to cloud the picture. So will the absence of a stronger appellation system that allows local areas with diverse production techniques to be acknowledged in their striving for recognition. Lately the CRM has been making positive steps, there is still a long road to travel.

Susan and I have been focused on helping with these questions for some time in our critiques of the NOM 70 and 199 battles and sustainability questions. We’ve also been working as positive forces to tell the world about all the great things in mezcal through our tastings, panels, and industry gatherings. We’ll be doing much more on all these fronts because this is such an important area for everyone concerned. If you have thoughts on this area get in touch or start a conversation on our Facebook page.

Clouds on the horizon

Aside from the obvious storm front, (see below) there are many other huge issues that will have some impact on mezcal in the coming months. Two critical economic issues are the rise in fuel costs in Mexico and the devaluation of the peso.

The Peña Nieto administration recently allowed the price of gas to rise to achieve a goal of market pricing. Most Mexicans can’t afford this and really depend on gas for the most basic aspects of life so there have been plenty of protests which have ranged from blockades of Oaxacan highways to larger movements in cities. As far as our little myopic world of mezcal is concerned this means that it’s more expensive to get your product to market because of the rising cost of gas and delays. Last year’s teacher protests in Oaxaca also had very direct negative impacts on tourism there which meant fewer people in mezcalerias, buying bottles, taking trips around the countryside. Everyone suffered. It looks like there is more of this on the horizon.

Then there’s the value of the peso. As I write, the peso is trading at an amazing 21.85 to the dollar which is the worst it has ever been. Worse than the 2008 depression, worse than the crashes in the 80’s and 90’s, take a look at this chart to visualize that data:


source: tradingeconomics.com

I know, it’s simplified but the impact is also simple. Mexicans can’t buy as many imports, Americans can buy much more. So, if you were thinking of a trip to Mexico, now is the time. Just make sure that you pay everyone well and tip because you’re getting a tremendous bargain.

What this means for Mexico and Mexicans is up in the air. Their exports to places like the United States have gotten much cheaper, remittances to Mexico much more valuable. So, all those key issues that apparently determined the presidential election just got much more out of whack.

No one really knows what’s going to happen in a Trump administration

Donald J. Trump will officially be sworn in as the United States’ 45th President this Friday. Along with him comes a world of uncertainty for all the reasons widely covered elsewhere. But the uncertainty is especially acute for Mexico. Truthfully no one really knows what he’ll do. Build a wall or arrive at some strange compromise? Widespread deportations or will he walk that outrageous race baiting back as well? The one thing we know is that Mexicans everywhere are terrified. Central American kids in my daughter’s school live in fear of authority figures, their parents are taking extra precautions, and that’s in San Francisco which has to be one of the safer places in the United States.

While traveling through Mexico over the holidays I heard plenty of people voice anxieties and sharper fears about what Trump means for life in Mexico, for their relatives in the United States, and more generally what he’s going to do to all our lives. Mezcal is a rather insignificant part of this but it’s going to feel the squeeze if there are trade restrictions and the currency imbalance can’t help but exacerbate all the trade issues Trump has vowed to resolve. So, hang on, it’s going to be a rough ride. The best I can recommend is that you spend more time in Mexico just to keep your sanity.

One Comment Post a comment
  1. Jerry #

    Have you read the mezcal book “Holy Smoke”? Opinion? Do you think it’s worth $40?

    January 19, 2017

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