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Importing Mezcal From Oaxaca Into the US & Elsewhere: First Steps
You’re considering starting up your own brand of the Mexican spirit, mezcal, yet you have some doubts as to the viability of the project in this now burgeoning market for the lesser known cousin of tequila. Alternatively, you’re just having a bit of difficulty understanding all of the steps you either must take or have as options. You want to be a part of the boom; perhaps as an ardent no-holds-barred capitalist who jumps on opportunity when it knocks. Or alternatively as someone with pure passion for mezcal and its hand-crafted production methods and rudimentary tools of the trade. Maybe you’re somewhere in between. Is there still room for your project given that virtually every month there is a new product line in the market into which you want to export from Mexico? You likely have your eyes set on importing from the southern state of Oaxaca where the lion’s share of the agave based spirit is distilled.
The simple answer to the question about market saturation is yes, there are still practical business opportunities. But this assumes that you have a reasonable price-point for the quality of mezcal you have in mind, and a solid distribution/promotional plan.
Start out by learning as much as possible about the regulatory framework of the jurisdiction in which you want to distribute mezcal. On balance it is very different from how you would go about importing and selling shirts, microwaves or sofas. Presumably you already have at least a cursory understanding of alcohol distribution in at least your home country. But remember that, for example, with respect to Canada, there are governments (i.e. of the province of Ontario) which control at least some aspects of all liquor, beer and wine sales. If you are considering the US, there are some states which are subject to the three-tier system. Accordingly, take your time and learn before diving in.
There are matters which you should at least consider even prior to visiting Oaxaca with your mezcal business in mind. They impact the extent to which your plan will be feasible and more importantly successful. Think about:
- ABV (alcohol by volume) of the spirit, because making that determination will impact the price you pay for your mezcal and the ultimate retail cost to consumers, and will have an effect on your target market. It must be somewhere between 36 and 55 percent, although it is suggested that the closer you get towards the bottom end of the range, the less successful you will be in attracting those who are already aficionados of the spirit.
- Packaging in terms of bottle, top, labeling including sealing. Are you considering a stock bottle, or having a mold made? Will it be more or less standard 750 ml shape, or do you have a more squat bottle in mind with a shorter neck. If the latter, the weight and form might adversely impact the extent to which bartenders will be inclined to grab it from a shelf containing several other products. Are you considering natural as opposed to artificial cork, and why? Would you prefer putting your money into the label rather than a costly heavy bottle? If leaning towards the latter, realize that a pallet for transporting might accommodate only 500 bottles as opposed to 900 bottles, thereby increasing your ultimate cost per unit.
- Whether you want your mezcal to be priced high-end, middle of the road, or inexpensive.
- Deciding upon whether you’ll be selling only blanco / joven (un-aged clear), or considering having an aged mezcal in your repertoire. Why?
- Will you be starting out with just one agave specie such as espadín and then over time expand your offerings, or hitting the market guns blazing? Don’t forget that there is a middle ground.
- Deciding if you will initially be working with only one palenquero, or more. Do you expect exclusivity over all of your palenquero’s certified mezcal, and recognize that at least initially this might not be in his best interests?
- You might want to consider a start-up plan of approach, working out an arrangement with a palenquero who is not yet certified and is seeking capital in order to go that route whereby he, through you, has access to the export market, either domestic or international.
- Is the plan to import ancestral (typically distilled in clay and crushed in a relatively rudimentary fashion) or artisanal (traditionally distilled in copper alembics? There are other permutations in and differences between these two categories.
- You should consider whether or not you would be prepared to live in Oaxaca, or at minimum visit the city / region of the state where your operation is located a few times a year. Alternatively you might have one or more full-time staff to run it.
- Can you afford to embark on a project which might not necessarily produce sufficient revenue for its continued viability?
- What type and amount of capitalization are you considering?
- Determining the most prudent approach in terms of numbers of bottles to initially import into your market, and the long-term goal. This will likely impact your decision on the type and size of distillery / distilleries with which you want to partner, and the ultimate number of palenqueros when your project is running at its full potential.
- Legal matters such as contracts, registrations and filings must be considered for not only the jurisdiction into which you want to import the mezcal, but also for Mexico. There is a relatively sophisticated regulatory multi-departmental administrative framework with which you must comply in order to export mezcal, and so a Mexican lawyer is suggested, better yet a Oaxacan with expertise in both intellectual property and spirits.
Brand name is of course important, but sometimes other factors play more important roles impacting a mezcal project’s success. Your brand name must be registered in Mexico even if you have no interest in the domestic market. So you should consider a name you think is available in the jurisdiction of your proposed market as well as in Mexico. Don’t spend an inordinate amount of effort and resources on brand name development until you have confirmed the name is not taken in Mexico. Some entrepreneurs actually wait until they have been to Oaxaca and decided upon a palenquero, to then select a name, or wait until in the region and somehow have been inspired to the point when a marketing concept, including name, leaps out.
The foregoing is an enumeration of a limited number of considerations to be pondered early on in the process of embarking upon a mezcal import project. The listing is far from exhaustive, and meant to merely alert those with an interest in getting into the mezcal business as to its complexity. Proceed with caution, and explore every detail meticulously, thereby maximizing the likelihood of success.
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