This article was initially published in the June issue of Global Drinks Intel magazine. For details on how to subscribe click here.
Beer and agave-based spirits, most notably tequila and mezcal, have long dominated the beverage alcohol market in Mexico. While that’s unlikely to change anytime soon, gin is gaining in popularity and Scotch whisky remains in growth.
The average Mexican bar is built with celebratory occasions in mind, and it’s little wonder: according to a recent survey conducted by on-premise consumer intelligence group CGA by NIQ, almost 90% of the country’s consumers visit bars, taverns and cantinas with celebration in mind.
Leading the list of such occasions are major sporting events, with one-third of Liga MX football followers choosing to watch games in a bar, and two in five watchers of last year’s FIFA World Cup also doing so in the on-premise. Research shows that during such occasions, consumers are willing to pay almost 25% more for their food and drinks than they would otherwise.
Of those drinks, beer is king. Mexico’s brewing industry is the world’s fourth-largest, producing 134.7m hectolitres in 2021, only around 10m hectolitres behind its much more heavily-populated Latin American neighbour, Brazil. While a large amount of that production is exported, to the US in particular, the population maintains a respectable rate of per capita beer consumption, rivalling that of Denmark and the Netherlands.
The second most popular beverage alcohol category is spirits, way ahead of what is still an immature wine market. Unsurprisingly, agave leads the way, in the form of tequila, mezcal and a diverse mix of other agave-derived distillates. Some of those disparate agave-based spirits are appellation controlled, such as sotol and raicilla. Others, for example, the leading Rancho Escondito agave liqueur brand, fall outside of standardised descriptions.
Tequila will ‘continue its growth trajectory’, despite supply concerns
While there is some concern in the US and other markets outside of Mexico that the supply of agave beverages, tequila in particular, may become an issue in the years to come, such worries aren’t shared by many of the country’s spirits professionals.
“The future for tequila in Mexico looks bright, and there is no evidence of market saturation occurring anytime soon,” says Raffaele Berardi, owner of Fraternity Spirits, the parent of the Corralejo and Los Arango tequila brands. “Many Mexican distillers are expanding their production to meet this demand; the category will continue its growth trajectory in the next ten years, with premium and super-premium tequilas leading the way.”
The president of Espanita Tequila, Marina Wilson, provides both context and caveat. “Farmers in Mexico are planting blue agave at an unprecedented rate,” she says. “In 2022, 372.6m agave plants were put in the fields for a total of 1.42bn under cultivation. However, due to their long cultivation period, and the unpredictability of climate change, restricted supply and high tequila prices could affect the market for the next several years unless cooling down trends emerge in the US.”
As far as domestic consumption patterns are concerned, bar consultant & mixologist Jesús Cabrera notes that in both the on- and off-premise, tequila is regularly consumed on its own, often with some sort of accompaniment such as sangrita, a blend of juice and spices meant for cleansing the palate between sips, or slices of orange and sal de gusano or worm salt [toasted ground agave worms mixed with sea salt and chilli]. In more cocktail-oriented bars, it’s also common to find tequila served in signature Margaritas, adds Arnold García Pérez, mixologist & co-founder of molecular cuisine supplier Pasión Alquimia.
While traditionally the most popular types of tequila in Mexico are blanco and reposado, Espanita’s Wilson flags that those producers attuned to developing US consumption trends are leaning towards ageing and innovation The approach has resulted in the rise of newer segments, such as extra añejo and cristalino, gaining popularity in Mexico, “especially in urban areas and among younger tequila drinkers who are more open to trying new flavours and expressions”.
Mezcal growing fast but high prices and scarcity hamper sotol
Chasing tequila’s tail is mezcal, although still a considerable distance behind, with just 7% of the domestic volume of its more famous cousin, according to IWSR Drinks Market Analysis. Still, with year-on-year growth of over 27% in 2021, compared with tequila’s +8.9%, mezcal is most certainly on a roll.
“Beyond the basic Margarita, Mojito and Cuba Libre trio, the Mezcalita is one of the most popular cocktails,” says Miguel Antoniucci, who owns two bars in tourism-heavy Playa del Carmen – Club de la Cerveza and Colectivo Mexicano Cervecero. Mexico City-based Cabrera agrees, citing mezcal as one of the capital’s fastest-growing spirits segments.
Of the remaining agave-based spirits, ‘destilados de agave’, as the collective non-regulated agave liquors and liqueurs are known, are generally inexpensive and meant primarily for home rather than on-premise consumption. Of the appellation-controlled spirits, sotol is the best-known. While the latter might be viewed elsewhere in North America as a cutting-edge category – and is indeed cited by some of our experts as having potential – its growth in Mexico is generally hampered by its scarcity and relatively high price, says Pérez.
Gin volumes leap as domestic expressions gain popularity
Gin is far smaller in Mexico than even the modest mezcal market. Nevertheless, the category experienced impressive growth in 2021, increasing in volume by almost 50% from the year prior and more than quadrupling over the last decade.
Fraternity Spirits’ Berardi puts this down to two factors. Firstly, a “growing trend towards artisanal and craft spirits – both mezcal and gin fit that profile”, and secondly, “a shift towards healthier drinking habits”. He says: “Gin, with its lower alcohol content, has become a popular choice for those seeking lighter options.”
In particular, both Pérez and Cabrera note the rising popularity of ‘ginebra Mexicana’, or Mexican gins, often made with distinctly Mexican botanicals from chillies and peppers to fruits and flowers. Some distillers go a step further, combining botanicals with a base spirit that is not neutral, as is usual, but rather agave-based, creating a kind of mezcal-gin hybrid.
Scotch still in growth
Although Scotch whisky volumes dipped 4% in 2021, according to IWSR, and are down markedly from their pre-pandemic heights, Mexico is still widely considered to be a growth driver for the segment. And with sales almost half those of powerhouse tequila in 2021, there would certainly appear to be reason. “I see Mexico as a whisky-drinking country,” says Antoniucci. “Since I opened my bars, my customers have always drunk Scotch, mainly Johnnie Walker in all its forms, Buchanan’s and The Macallan.”
Noting that blended whiskies remain popular, Cabrera adds a note of caution to Scotch’s apparent health in Mexico. “There’s still a great deal of misinformation concerning types of whiskies and their differences,” he says. “Many customers still don’t distinguish between Scottish and American whiskies, and those who know the difference don’t understand what separates a Bourbon from a rye or a Tennessee whiskey, or a single malt from a blend.”
Rum and vodka show promise, but brandy remains in decline
Behind agave spirits and Scotch, rum and vodka both appear to be picking up after many years of more-or-less stagnant showings. Rum, in particular, had seen little change in its volumes since the early 2000s but grew 19% year-on-year in 2021 [IWSR data]. And by ‘rum’, according to our experts, Mexicans mean Bacardi.
“Across all Mexican social strata, from the richest to the most blue collar, everyone drinks Bacardi,” says Antoniucci. “There are other rum brands – some more expensive and now some Mexican ones – but the biggest by far is Bacardi.”
In that regard, rum has effectively replaced the brown spirit that last unified Mexican drinkers, even boasting volumes equal to tequila’s at the start of the century – brandy.
The decline of brandy in Mexico can be attributed to several factors, says Berardi. “First, the traditional market for brandy – older consumers – is ageing out of the spirits consumer demographic. Secondly, there has been a shift towards premiumisation in spirits, and brandy has struggled to compete with other spirits, such as whisky and tequila.”
Cabrera is even more frank: “Brandy is still a strong category in cantinas and among older people, but that part of the market is slowly dying out.”
Still, of all the spirits categories tracked, from tequila and mezcal to whisky, rum and gin, brandy is the only one that has witnessed notable and consistent decline since the start of the 21st Century. Growth opportunities for spirits in Mexico are still very ripe, then, and there’s a long way to go before they start slowing down.
This article was initially published in the June issue of Global Drinks Intel magazine. For details on how to subscribe click here.
