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On-Premise Strength Drives Rapid Gains For Mezcal

February 11, 2019

While mezcal remains tiny compared to its better-known cousin, Tequila, its consumption has risen dramatically over the past five years, with 288,000 cases depleted in the U.S. in 2018, according to Impact Databank—up from just 65,000 cases in 2013. That torrid growth looks set to continue this year, as new brands and increased investment bolster excitement and awareness.

Much of the growth in mezcal is coming from the on-premise, which accounts for the majority of the business for prominent brands like Sombra, marketed by Davos Brands, and Ilegal, handled by Bacardi. “The bartending community has embraced mezcal, and they’ve played a critical role in the discovery of the category,” says Guillaume Cuvelier, vice chairman of Davos Brands, which took a controlling stake in mezcal label Sombra in 2017. “Our consumers are still very much early adopters and tastemakers, who’ve expanded into mezcal by ordering from cocktail menus, or getting recommendations from a bartender.” To that end, Sombra ($40 a 750-ml.) has emphasized mezcal’s potential in classic cocktails, where it puts a smoky spin on popular drinks such as the Negroni.

William Grant & Sons has similarly seen on-premise success for Montelobos, which is focused on high-end restaurant and bar accounts and jumped 51% to nearly 10,000 cases last year. “Mezcal’s authentic, traditional history, including its production methods, resonates with consumers,” says senior brand manager Jill Palais. “They value quality, provenance, and substance, which we provide,” and bartenders expand upon in their conversations with consumers.

One of the category’s larger-volume brands, Del Maguey Single Village mezcal, increased 45% to 45,000 cases last year, according to Impact Databank. While Pernod Ricard’s acquisition of a majority stake in the brand in 2017 has enhanced its retail presence, most of the label’s business continues to come from the on-premise, with the flagship Vida expression ($37 a 750-ml.) leading the charge in upscale accounts. “We’re seeing Vida emerge in a lot of craft venues, which are interested in starting off with one or two brands on the back bar,” says Del Maguey global business leader Michael Gardner.

Mezcal’s rapid rise continues to draw new entrants to the category. Sazerac launched its Los Vecinos del Campo label in December, which currently includes an Espadín offering ($34) but will add limited-edition Tobala ($90) and Ensamble No. 1 ($60) expressions later this year. Diageo is likewise active with Casamigos mezcal ($60), which hit 7,500 cases last year, and the Pierde Almas brand ($69 and up). Elsewhere, industry veteran John Esposito was recently named chairman of the independent Gem & Bolt mezcal brand.

Bacardi-marketed Ilegal mezcal also has seen significant growth—rising by around 60% in 2018, led by the on-premise. Still, Ilegal founder John Rexer notes that mezcal is gradually maturing into a more mainstream category. “Mezcal is no longer an obscure darling of the mixology world,” he says. “The spirit has slowly found its way to a wider audience.” It’s also making inroads at retail. In both NABCA and Nielsen channels, the majority of the market’s top 15 mezcal brands have registered strong gains lately. Overall NABCA volumes for mezcal were up 42% in the 12 months through November, while Nielsen channels saw gains of 20% in the 52 weeks through December 29.—Julia Higgins

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