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As Mezcal Grows, Marketers Battle Supply Issues

February 12, 2019

With mezcal on a steep growth curve, a number of producers are concerned with potential hiccups in supply and pricing, and many are taking control of their own agave supplies.

“The current price in Oaxaca for agave Espadín is 11 pesos ($0.57) a kilo,” says Danny Mena, partner at Mezcales de Leyenda, which is handled stateside by M.S. Walker. “In previous years, pricing has been as low as 2 pesos ($0.10) a kilo. So you can imagine what happens when the biggest raw material goes up five times in price. It’s always wiser to own your own production, but that also takes a lot of money.”

At Ilegal, which is part-owned by Bacardi, founder John Rexer notes that agave supply has been of particular concern over the last three years, and that it’s likely to remain an issue moving forward. “No one knows how big or how fast mezcal will grow, and we have to keep in mind that Espadín agave takes roughly eight years to grow,” he says. As a safeguard against supply problems, Ilegal has partnered with a variety of growers and puts down new plantings every year to match its sales growth.

Montelobos, marketed by William Grant & Sons, is similarly invested in addressing agave supply concerns. “The big question for all agave spirits, not just mezcal, is the balance between supply and demand,” Montelobos co-founder Iván Saldaña says. “There are brands that are strongly invested in securing their own agave supply, and I think that’s the way to go. Partnering with farmers and paying the right prices is also important.” Montelobos currently controls 100% of its agave supply, though Saldaña notes that there are concerns that its current agave volume may not be sufficient if growth of the overall mezcal category continues at its current double-digit pace.

Banhez Mezcal ($35), imported by New York-based CNI Brands, sources from a cooperative of 35 farming families, and plants two to three new agaves for each one harvested. Curt Goldman, CEO of CNI, says of the category’s supply situation, “Certainly we see upward pressure on shelf prices, but we also see it as an opportunity for high-quality national brands to separate themselves from new, smaller entrants with limited distribution.” Banhez reached 17,000 cases last year.

One benefit of the supply issue is the resultant attention paid to sustainability. “Many brands once used only wild agave, and now they’ve started to create seed banks after realizing they needed to change their ways due to the high demand,” Saldaña says. Among those investing in agave plantings is Sombra, part of the Davos Brands portfolio. In addition to working with a number of local farmers, Sombra has laid down its own agave crops in recent years. In a further movement towards sustainability, Sombra opened a new, eco-friendly distillery in 2017. The distillery features solar panels and an electrical millstone, and uses sustainable wood and rainwater throughout the production process.

Mezcales de Leyenda is likewise innovating with sustainability in mind, with a solar-powered distillery set to open in the near future. The new facility is being built in partnership with engineers from Mexico’s Chihuahua region. “The idea is to have a completely sustainable distillery, from the roasting to the distilling, all powered by solar panels,” says Mena.—Julia Higgins

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