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Mezcal: Smoky Spirit Finds A Growing Audience

February 10, 2020

While the entire mezcal category is still smaller than many individual Tequila brands, mezcal is emerging as a dynamic growth area. Since 2013, its U.S. volume has expanded more than four-fold, and last year it grew by 19% to reach 295,000 cases, according to Impact Databank. Mezcal’s pricing is skewed heavily toward the super-premium-and-above tier, and growing consumer interest has led many big spirits players to enter the category.

Pernod Ricard has the lead position with its Del Maguey brand, which is now above 50,000 cases. Del Maguey’s extensive range spans from $37-$200 a 750-ml. “Del Maguey Vida is leading the growth, because of the popularity in cocktails,” says Del Maguey global business leader Michael Gardner.

Bacardi took a minority stake in the Ilegal mezcal brand back in 2017, ahead of the brand’s push toward national distribution. Ilegal has three releases—Joven, Reposado, and Añejo—all made from Espadín agave distilled in the Santiago Matatlan Valley in Oaxaca. Last year, the brand neared 30,000 cases on 50% growth. “We’re seeing growth across the board,” notes Ilegal founder John Rexer. “The Mid-Atlantic and Midwest are big growth markets for us.”

Campari entered the category last October, taking a 51% stake in the Montelobos label and its sister brand, Ancho Reyes spicy liqueur, for $35.7 million. Montelobos jumped 44% to 14,000 cases in the U.S. last year, and currently offers two releases: Espadín ($45) and the higher-end Tobalá ($80). A third Montelobos label, called Pechuga, will hit the market soon. The Pechuga expression—a less common style of mezcal that’s distilled with fruit and meat (in this case turkey)—is a tribute to Oaxaca’s traditions, according to Campari white spirits category director Bernadette Knight.

Elswhere, Davos Brands’ Sombra mezcal brand also continues to grow, reaching 13,000 cases on a 30% rise last year, with the on-premise accounting for over half of depletions. Diageo, meanwhile, has a two-pronged play in the category—one part of which is Pierde Almas, a luxury-priced Oaxaca-produced brand it acquired in 2018. The second part is Casamigos Mezcal, a mezcal offering from the George Clooney and Rande Gerber-founded Casamigos Tequila brand that Diageo acquired in 2017 for $1 billion, including an initial amount of $700 million and a potential $300 million based on performance-linked earnouts over 10 years.

In April of last year, Constellation Brands made its move into mezcal by taking a minority stake in the El Silencio brand through its venture capital group. Known for its Ensamble and Espadín mezcals, El Silencio aims to leverage Constellation’s support to invest in infrastructure and growth, as well as a cocktail program and other marketing initiatives.

Sazerac has also taken aim at the mezcal segment, launching the Los Vecinos del Campo label in late 2018, while independent brand Gem & Bolt ($50) last year tapped industry veteran John Esposito as its chairman to drive expansion efforts.

“We believe the mezcal category will continue to grow at a rapid pace, as the Tequila market continues to buoy other agave offerings,” notes Campari America’s Knight.—Shane English

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