Players ‘without a proper plan’ pose risk to mezcal

The mezcal category could be at risk if “players sweep up agave without a proper plan for its future growth”, the co-founder of Mezcal El Silencio has warned.

Growing agave is a “seven‐ or eight‐year process”

Fausto Zapata, CEO and co-founder of Los Angeles-based Mezcal El Silencio, said the category faces a challenge “in the sustainability of agave”.

Speaking to The Spirits Business last month, he said: “Players that come in and sweep agave without a proper plan for its future growth and for the support of its farmers are putting the category at risk. This is a particularly sensitive issue when it comes to wild agaves. There is always ample room for growth when planning properly.”

Stephen Rannekleiv, global sector strategist for beverages at Rabobank, said that managing the supply of agave is a huge challenge for the category.

Growing agave is a “seven‐ or eight‐year process”, Rannekleiv noted. “Because it’s such a long production cycle, it’s easy to move into cycles of over‐supply and under‐supply. Right now Tequila is really struggling with a supply shortage, which will likely in the coming years move into excess supply. This has been the traditional headache of the Tequila market for forever and I think the same challenges face mezcal.”

Mezcal El Silencio gained investment from US firm Constellation Brands last year

He added that it’s difficult to “ramp up” the production cycle. “It’s hard to industrialise mezcal production without losing quality and authenticity,” Rannekleiv explained.

Zapata also said the sector must deal with “less sophisticated options on the market”.

“Many people are still learning about what mezcal is and there is a danger when they think they’ve tried mezcal when it really isn’t,” he warned. “The job of the artisanal mezcal community is to support the proper growth of the category by continuing to produce great products and educating consumers to embrace quality.”

Success in the US

Mezcal continues to be a hit in the US, where consumption of the agave‐based spirit grew by 40% in 2019, according to IWSR Drinks Market Analysis, compared to 9.3% for Tequila. The mezcal category is expected to grow at a 20%+ rate over the next four years.

In April 2019, US firm Constellation Brands acquired a minority stake in El Silencio through its venture capital group, Constellation Ventures.

The companies are planning to focus on “strong growth, creative branding and forward‐thinking innovation”. Sales will focus on the Californian market, initially in Los Angeles, followed by San Diego and San Francisco.

Last October also saw Italy’s Campari Group move into mezcal with the purchase of a controlling stake in Montelobos.

For an in-depth analysis of acquisitions in the mezcal sector, don’t miss the February 2020 issue of The Spirits Business.