Largely dependent on U.S. bars and restaurants, Mexico’s craft distilleries are in trouble, and trying to find new ways to connect with consumers
Initially, it seemed as though tequila and mezcal sales might fare well in the U.S. during the pandemic. Retail purchasing surged amid stay-at-home mandates, with spirits leading off-premise sales growth—up 31 percent for the total coronavirus-impacted period as of June 13, according to Nielsen.
Compared to the same period last year, tequila exports were up 17 percent from January to April, according to Ramón Gonzalez Figueroa, the general director of the Tequila Regulatory Council(CRT), in part due to increased consumption at home. Nielsen has reported that tequila has seen the second-highest amount of growth within the spirits category.
But most tequila producers are not benefiting from this retail sales growth. “Without a doubt, those that represent the majority of that volume are the larger companies,” says Gonzalez Figueroa. Major players such as Jose Cuervo and Patrón are the winners. Smaller, independent brands are reporting very different numbers.
“All the small producers are 50 or 60 percent down in sales, no matter who you talk to,” says Eduardo Orendain, a fifth-generation family member and sales manager for Arette Tequila.
In addition, that same Drizly data reports positive sales trends for cocktail ingredients and mixers, indicating that although consumers might be shopping for mezcal or tequila during the pandemic, they’re not necessarily going for the higher-priced, artisanally crafted spirits that have lured people into the categories.
Like spirits and wine producers in other regions, many tequila and mezcal businesses also rely on tourism revenue. With travel restrictions in place due to the pandemic, those income sources have dried up. The combination of dismal tourism and decreased sales could have a ripple effect for local economies, which have grown to depend on both.
Producers understand that it’s essential to pivot toward retail to drive sales right now, but the pandemic’s impact on the U.S. beverage industry as a whole has complicated things. The closures of on-premise accounts have restricted cash flow among importers and distributors, preventing them from ordering high volumes—or any quantity—of tequila and mezcal products to sell to retailers.
Like other companies in the beverage industry, agave spirit brands have taken to the virtual world to connect directly to consumers by offering guided tastings, tours, and live conversations via Zoom and social media. As brands have turned to virtual education and social media to reach consumers, one bright spot might be a wider appreciation for lesser known spirits.
