These Mezcaleras Have Survived Multiple Crises – Can They Survive The Entrance Of Big Alcohol?

Mezcal has been a companion to many during the pandemic. In the US, it’s gotten us through long winter nights and solo summer days. Berta Vasquez, a 65 year old master mezcalera in Oaxaca, has continued to make mezcal through the pandemic, as she has during many times of challenge over the last four decades — through deaths of her husband and her two children. As mezcal sales have soared in the U.S. over the last year, Berta’s sales – and those of many of her compañeras – have plummeted.

Vasquez is of Zapotec origin, and lives in the village of San Baltazar Chichicapam in the central valley of Oaxaca. She, like all of the mezcal producers I spoke with, has struggled over the past year. Mezcal is an artisanally produced, traditional liquor from the southern Mexico state of Oaxaca, and it is an agricultural crop. Between the pandemic, an unprecedented frost in Oaxaca, and an ongoing drought, incomes have dropped dramatically. Migration from rural regions has intensified in recent years due to climate change’s impact on farming, leaving women as head of household in many rural communities.

Some mezcaleras estimate a loss of at least half of their revenue over the past year. Large mezcal brands have stopped buying from them, and tourism – the top industry in Oaxaca – has ground to a halt. That means poverty-level income and a dependence on subsistence farming for those who are lucky enough to have arable land.

In contrast, the U.S. market for mezcal is roaring. When the pandemic hit a year ago, fears abounded of alcohol sales falling due to the closing of bars and restaurants. While alcohol consumption declined in most of the world in 2020, it increased by 2% in the U.S., which is the main market for Mexican mezcal. Mezcal is still experiencing double digit growth when compared to its cousin, tequila. 

Enter beverage giants Diageo and Pernod Ricard, lured by an estimated 12.5% CAGR in North America between 2020 and 2025. With the launch of celebrity-backed mezcal brands, like George Clooney’s Casamigos Mezcal, and LeBron James’ Lobos 1701 Mezcal, there is a fear that local producers will be undercut. Casamigos which was acquired by Diageo, and has an estimated value of $1BN. 

Mezcal production goes back hundreds years, and is traditionally produced by family labor on a ‘palenque,’ which is a home distillery. It is a manual labor of love. Espadín, which is the most common agave variety used in mezcal production, takes 8-10 years to grow to maturity. And once it grows to maturity, it can be harvested just once. Families have run their own palenques for generations, and mezcal is truly a handcrafted, artisanal liquor.  

The jury is out on if and how the large brands entering the space will work with small producers. Yola Jimenez, founder of Yola Mezcal and one of a few women-owned mezcal brands in the U.S., shared, “The problem that mezcal is having right now is that there are brands growing exponentially and need supply. They were buying from lots of small producers and making a homogeneous flavor that they can bottle. A lot of larger companies were buying from smaller producers. During the pandemic they started their own distilleries and hiring workers, without buying from small producers.” 

So, as the market booms, where do the profits go? For Natalia Sanchez Bustamantes, a 5th generation mezcalera from the village of Mengoli de Morelos, Miahuatlán, sales per liter are a paltry 10% of what they were pre-pandemic. She and her family sell to brands like the award-winning Alipus. “This pandemic has affected everything,” she says. “Before [mezcal] brought us tourism, and the tourists bought mezcal.” Pre-pandemic, Bustamantes gave cooking classes via the ecotourism operator Mezscouting, in addition to selling mezcal directly to tourists. Her family is paid significantly more when tourists buy mezcal directly from her, versus selling to a bottler or a brand.

One of the underlying dynamics of mezcal is how women have kept mezcal production afloat over the past few decades. Oaxaca is in the top third of Mexican states sending migrants to the US, according to Mexican census data. And historically, 78% of migrants from Oaxaca to the US are men. From the mountainous coffee regions of the Sierra Madre Sur to the semi-arid mezcal producing regions, it’s the women who have been left to tend to the young, the old, and to their farms.

Kaylan Rexer, the Chief Marketing Officer for Ilegal Mezcal, first met the producers she collaborates with in a bar in Los Angeles. She shares, “We met in southern California where they were barbacking. They realized that while there is mezcal on the top shelf, it is what they grew up with in the fields in Oaxaca. It is what their family does. They had been a part of the migration wave – in fact, in their hometown of Santiago Matatlán, over half of the men over 15 had left. Women had to take the helm back home.”

The mezcal market likely survive the pandemic. The question is, will mezcal production endure into the next generation? And if it does, what survives? Do the high-quality, heirloom producers like Berta and Natalia have a seat at the table?

One place to look for instruction is coffee. The coffee market bifurcated over the last 20 years into two: a specialty, premium market (think Intelligentsia), and commodity coffee (think Folgers). Now, over 50% of the coffee consumed in the US is specialty. Some of the best coffee comes from Oaxaca, and follows the same story of female-led coffee growing households, due to migration. But coffee producers are still the poorest link in the supply chain, with persistent poverty-level incomes.

The opportunity in mezcal is for Big Alcohol – and for celebrities like George Clooney – to recognize the opportunity to incorporate the artisan producers who created mezcal into the global supply chain in sustainable ways, rather than to exclude them. Additionally, the large brands like Diageo have the money to buy up all of the agave supply while bearing little-to-none of the risks of agave production. This would make the prices of agave too expensive for artisanal mezcal producers to afford.

Margarita Blas Hernandez, owner and operator of El Palomo in Santiago Matatlan, concludes, “Really, women have always participated in mezcal production, we just were not always recognized. Now, women are in front of the work. The change in gender politics has meant that men need to accept a women’s place. My mother, my grandmother always worked in mezcal. Now we are running palenques, we are being recognized, and there is not as much machismo as there was in the past.” Her hope is that this inclusion translates into dollars, so that she can feed her family, and her community.