How best to scale mezcal?

23 February, 2023

It’s had a meteoric rise of late, but is mezcal becoming a victim of its own success?

Mezcal has a claim to being perhaps the world’s largest handcrafted spirits category. It has just had a record-breaking year at nine million litres – a modest sum against the 650 million litres that tequila produced in 2022, but an ocean when we consider how it’s made and where the category was a few years ago.

“[When we started] there wasn’t even a demand for mezcal per se,” says Toño Vilches, who co-founded Mezcal Unión alongside Alejandro Champion, Pepe Islas and Pepe Bezaury in 2011. In 2021, the brand was acquired by Diageo.

“It was a very, very niche group of people that used to drink it. In 2010, it was 70% reposado and 30% blanco, and it was cheap – the average price of a bottle was about $9. The entire category in Mexico was 10,000, maybe 15,000, 9-litre cases. Nothing really, 20 times less than now and you could only drink it in small mezcalerias. It wasn’t in the off-trade, it didn’t exist in supermarkets, maybe there would be one or two among the tequilas in some liquor shops.”

Hearing the people who were there at the time talk about the category’s beginnings has the feel of musicians talking about the origins of a genre. Everyone knew everyone else but was unaware of the potential they were sitting on.

“Then young people, chefs and artists started drinking and talking about mezcal, and it started to grow. But we weren’t even drinking brands, we were drinking handcrafted mezcal in small mezcalerias,” says Vilches. “Brands like Alipus, Danzantes, and Del Maguey in the US started to appear and they were so cool, so well made and there was a small group of people in Mexico City who were 10 years younger and looked up to the guys. Between 2011 and 2013 there was a handful of brands like us, Marca Negra, Montelobos, Amaras, and Siete Misterios, from a small group of people, but that number soon doubled. In 2011, the category in Mexico was at about 15,000 9-litre cases and 20 brands, by 2015 it was 100 brands and 100,000 9-litre cases.”

Since then, the industry has exploded. In 2021, the category passed the million 9-litre case mark, perhaps a modest number when compared to other spirits category colossuses, but astronomical when you consider the handcrafted production.

But therein lies mezcal’s existential threat. Simply uncorking the bottle and seeing how big the category can grow risks losing the very thing that makes mezcal unique. Production shortcuts and over-demand now plague the tequila category, a type of mezcal itself that has developed an insatiable appetite.

“The first scalability challenge that mezcal faces is in keeping its tradition,” says Andres Briseño, general manager at Archipélago Spirits, the sister company to Mezcal Unión that manages its agave plantations and mezcal palenques.

“The first scalability challenge that mezcal faces is in keeping its traditions. That’s what makes mezcal different and interesting, the artisanal process that comes from these families in Oaxaca.

“Second is the sustainability of impacts that we didn’t even consider in the beginning, things like water or our wood or soil. The third thing is maintaining the quality and the production models. You can scale anything in a big factory but that’s not our vision for mezcal. Finally, we need to plan ahead. Brands and producers have a responsibility to be involved in the supply chain, not to assume that someone else is taking care of it but to take responsibility for our impact. The brands that will last are the brands that care about these factors.

“Currently there’s no other category that is facing these four variables at the same time, but fortunately, there are solutions for all of them. If we do that then not only will we have a category that can meet a larger demand but it will also have a huge impact in one of the poorest states in Mexico.”

But for some in the communities that have produced mezcal for generations, the category has already become difficult to recognise.

“Mezcal is a drink made in communities, in families,” says Gonzalo Serna a fifth-generation master mezcalero who produces Mezcal Macurichos.

“In the early 1900s, there were around 30 factories here in Matatlán. Everything was made in clay, fermentation was in stone wells, harvests were 20 litres a month – it was practically a ceremonial drink. In the ’70s, it became more popular for parties and they began to produce a little more but it remained artisanal. Now, many of these brands are no longer mezcal. There are massive productions and Hollywood actors and other characters have arrived to exploit the category, but if you try the products, they’re no longer mezcal. It’s sad because it digs a grave for the drink.

“The truth is, mezcal cannot be made artisanally at the scale it is being done today. I predict a mezcal crisis will come in 2025, there are so many people who want to produce, sell, and make mezcal, to plant agave using chemicals and herbicides. There are problems with water and firewood scarcity. Whole mountains are being planted where native flora used to exist and all of that is being exterminated to plant agave.”

Landscape change

According to the category’s governing body, the Mezcal Regulatory Council (CRM), more than 90% of the spirit is produced in Oaxaca, much of it around the town of Santiago Matatlán. This hyper-focus is putting enormous pressure on the local ecosystems and the landscape has already been changed radically.

The existing denomination of origin limits the production of mezcal to nine states: Oaxaca, Guerrero, Guanajuato, Michoacán, Zacatecas, San Luís Potosí, Tamaulipas, Durango and Puebla. 30 species of agave can be used, yet 80 to 90% use espadín. If the category is to grow healthily, diversification is going to play a key role.

“It’s important that we start to change certain laws and bring more possibilities,” says Iván Saldaña, master distiller and chief innovation officer at Casa Lumbre, founder of mezcal brand Montelobos, and who earned a PhD in evolutionary biology with a specific focus on agave.

“If things are done in the right way, the problem isn’t the amount of it, it’s the way it’s produced. There’s enough land in this country to supply enough for 10 times the industry of tequila, mezcal and sotol, but what’s the strategy? How do we do it without destroying everything because we are short-sighted? The problem is that this is normally regulated through public policy and we don’t have that.

“When we started with Montelobos we had a distillery of four stills, now we have 24. Now instead of having a team of four, we have 85 people. I need to repeat a process that requires craft and care in each step. That is a way of industrialising it. Two years ago, 25% of the liquid we produced was rejected. The pain of growing and establishing quality without losing the core element wasn’t easy and still isn’t easy.

“Enlarging operations implies that at some point there will be a complete replacement of technology, a change in the personal involvement of whoever established existing methods. But it’s not impossible, the world needs medium-sized brands that offer quality, are as sustainable as they can be and maintain the essence of what their products are. We can’t all live with 60-litre batches and assume the people producing it can survive on that.”

There is an element of condescension to the desire for mezcal to remain humble and quaint, but it’s a concern that has reasonable foundations. As the category grows, how can it do so in a way that benefits the communities and families that have been producing mezcal long before the brands moved in? A start could be ensuring that the price always reflects the work and time that goes into each bottle.

“How we protect the category is up for discussion,” says Vilches. “Some will say that you protect the category by keeping it small, others say that if we uncap its potential then we will generate more growth in Oaxaca.

“Mezcal is an expensive product, it’s as craft as it gets. I hope that this will always be a 100% handcrafted category, and that means the price can’t be that low – if it is then it means that it has become industrial.”

He adds: “Something cool about this category is that the producers are independent, so mezcal generates a lot of entrepreneurship within those communities. We work with 21 different palenques, that’s 21 small businesses, so there’s a strong relationship between brand owners and producer. That’s the ethics that brand owners should have.”

The category has grown from a tiny curio produced and enjoyed in a few communities to an international superstar in less than the time it takes for some agave varieties to reach maturity. It’s a frightening trajectory that must give those closest to it whiplash, and it stands to reason that its notoriety will only grow – whether that growth works for everyone is in a delicate balance.

“I’d like anyone who enters into mezcal to think ahead,” says Saldaña. “Don’t believe that your job is only the commercial side. You are wholly responsible for the production from day one, even if you are only selling 10 litres.”

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