TEQUILA MOCKINGBIRD

Mexico 2016 | AGRICULTURE | FOCUS: CHANGES IN THE TEQUILA SECTOR

Rapid commercialization in the tequila industry has left many traditionalists with a sour taste in their mouth, yet the sector remains hugely profitable and a big draw for investment.

Along with mariachi bands and big sombreros, tequila is one of the most widely recognized cultural symbols of Mexico around the world. However, over the 40 years since the spirit was first granted a protected Denomination of Origin—first by the Mexican government in 1972 and later by the World Intellectual Property Organization in 1978—it has also grown to become big business for the country. According to the Cámara de la Industria Tequilera (CNIT), Mexico now exports 435 bottles of tequila per minute to more than 100 countries around the world, and the industry is directly responsible for supporting more than 70,000 jobs. And although Mexico remains the world's number-one consumer of tequila, the country exports around 70% of its production to the US, Europe, and to a growing number of consumers in Asia, placing it second only to the automotive industry, which exports 82% of production.

The growth of the sector has also drawn the attention of a number of major international players in the alcohol industry. In 2014, global alcoholic-beverage giant Diageo purchased Tequila Don Julio, Mexico's third-most popular tequila brand. This came after Diageo's unsuccessful attempt to purchase Jose Cuervo from its current owners in 2012.

The rapid commercialization of the tequila sector and the entry of international players has seen mixed reactions from both inside and outside the sector. Many have expressed concern about the competition from more corporate-style distilleries, and more generally with the idea that Mexico's national spirit is being produced by multinational companies. Carlos Hernández, Director of Tequila Cofradia, told TBY during an interview that “there are 1,645 tequila brands in Mexico, and only 200 are truly profitable, the rest are in survival mode. In the Mexican market, 14 of the currently commercialized brands own 94% of the market, meaning that the niche space for other brands is barely existent."

However, many smaller tequila producers also acknowledge the benefit they themselves have seen from the efforts by the larger distilleries to educate global consumers about tequila, which has opened up space to grow internationally for some. As Michael Maestri of Casa Maestri explained to TBY in an interview, one of the benefits of the global presence of these major players in the tequila sector are the “potential and the possibilities for more global exposure to tequila thanks to these multinational marketing teams."