Mature Espadin in Mexico

The word "mezcal" often conjures images of worms and hallucinations. Closely related to tequila, mezcal has typically been relegated to the bottom shelf in the United States, as connoisseurs prefer its more prestigious blue agave-derived relative. However, extreme shortages in blue agave, the plant used to produce tequila, have influenced tequila quality and price, prompting consumers to seek alternative and in some cases more adventurous spirits from south of the border.

Mezcal's relationship to mescaline goes no further than the name semblance, though people sometimes mistakenly associate the two, and it bears no hallucinogenic properties. Mescaline comes from peyote, which is not related to agave, the plant used to produce both tequila and mezcal. In fact, all tequilas are types of mezcal. While tequila must use blue agave by Mexican law, mezcal may be derived from any one of five different varieties, including several wild types and the most popular, espadin. As for the worm...its origin is still a matter of some speculation, but consensus builds on a successful marketing gimmick in 1950 by an entrepreneurial distributor. The same worms do inhabit the harvested agave piñas, or hearts, but usually only when permitted by growers or after the plant over-ripens and begins to rot.

Mezcal production concentrates in the southern state of Oaxaca. The production process is also similar to that of tequila, though more time and labor intensive for mezcals of high quality. While tequila might take several days to process in automated plants, mezcal can take 20 days due to natural fermentation and volume limitations on pit-roasted batches. The first mezcal was crafted in southern Mexico over 400 years ago.

As tequila rose in prominence in recent decades, so did its regulation. Meanwhile, perhaps as a result of a more painstaking process and a lack of central organization and international demand, the mezcal industry remained fragmented. This fragmentation has limited quality standard enforcement and contributed to the perception of mezcal as low-quality liquor.

"Mezcal has traditionally dug its own grave," says Ron Cooper, President of Del Maguey, an exporter of Oaxaca mezcal in Taos, New Mexico. He points out that even though the production process is a low volume one, the industry historically strove to play the high volume, low margin market. Unable to compete with tequila's scale of economy, many mezcal manufacturers stretched yields by adding cane alcohol, food coloring and water. Looking back, Mr. Cooper recounts, "My first experience with mezcal was drinking gasoline with a worm in it."

It is precisely this image that the mezcal industry is trying to reformulate. With an export market worth approximately $7 million annually, the Grupo Empresarial Oaxaqueña de Mezcal (Mezcal Business Group of Oaxaca) is making inroads throughout Asia, Western Europe and North America. New sales are targeting upscale resorts and restaurants with higher quality, higher margin product. The group is promoting fine mezcals through free samples and taste tests. Sergio Hernández, Director of the Oaxaca-based export group, explains, "We are telling consumers that not only is there tequila, but also good mezcal - and to try it." Mr. Hernández is optimistic about mezcal's long-term growth opportunities, citing annual growth rates of eight to twelve percent that mirror tequila's popularity.

The 1990s saw the rise of tequila from a marginally accepted college drink to a contemporary favorite, anchored by such popular mixed drinks as the margarita and tequila sunrise. The 1995 peso crash made Mexican exports very affordable, further popularizing the signature Mexican spirit. Exports have risen every year since 1995, as has the percentage of premium lines accounting for that growth. However, the Mexican Consejo Regulador del Tequila, the tequila industry's self-regulating body, reported a slight overall decline in 2000 production, from 191 million liters the previous year to 182 million liters. Further, total production of premium 100 percent agave lines plummeted 59 percent from 1999 levels.

Immature Harvest

Amid robust domestic and international demand for tequila, what could possibly slow the industry? A source close to the Consejo commented that a series of events worked to drain the raw material supply over the last five years, most notably an excessive demand for the spirit. According to the agency, consumption of the plant rose from 230 thousand tons in 1995 to 780 thousand tons in 1999. Because the agave is grown only in Mexico and takes eight to twelve years to mature, it has been impossible to replenish the essential piña supply as quickly as it has been harvested, and total consumption fell to 615 thousand tons in 2000. Other pressures included coincidental fires, cold snaps and invasion by bacterial and fungal pathogens. Incidentally, the fungus Fusarium oxisporum has been blamed for significant agave losses in Jalisco in recent years - the same fungus promoted by the United States government as a coca eradication agent in its Plan Colombia. As a result, the Jalisco-based tequila industry has had to look elsewhere for its raw materials and often dilute agave content to the minimum 51 percent, all while raising consumer prices.

But some in the mezcal industry view their tequilero counterparts as more actively responsible for the shortage. While there is consensus that many growers left agave for other crops in the late 1980s due to low prices, the tequila industry may have played an indirect role in the plight of all agave-fueled industries. True, prices for agave piñas were depressed twelve years ago. However, Ron Cooper believes that the major tequila manufacturers forced the price artificially low by cooperating against farmers.

"They (the manufacturers) bought nothing for about three months, so that the mature plants began to rot. Finally the farmers dropped their prices and begged to sell. It also occurred to the farmers then that they could grow corn, beans and squash instead of agave, and in doing so be susceptible to losing one year's work, and not ten. So for three or four years, they didn't replant agave."

What's worse, according to Mr. Cooper, is that the present agave shortage is well known throughout Mexico, so anyone with land is planting with the hopes of cashing in on the scarcity.

"Dentists, attorneys - anyone with property is planting. If allowed to mature, there will be another glut of supply on the market in ten years, the price will drop, and nobody will plant again," he added.

What does this upheaval mean to the less powerful mezcal market? From the perspective of the mezcal producer, it's an unwelcome, albeit closer tie to tequila. Specifically, tons of agave, including espadin, leave Oaxaca daily for Jalisco. The mezcal industry, poorly organized and with fewer resources, cannot outbid the likes of Cuervo, Sauza and Juarez for their plant material. Though national product norms prohibit the integration of any strains other than blue agave in tequila, government enforcement appears to have taken exception to the rule. Exacerbating the issue is the harvesting of immature plants, jeopardizing future mezcal production.

Rafael Ballesteros, a distributor of Mezcal Mistico, a small local producer of 100 percent organic mezcal, says, "The tequila industry is buying plants as young as three or four years of age in Oaxaca. For the growers this is great, because they've sold nearly everything. But for the mezcal producers, prices have escalated so dramatically that many have discontinued production." By most accounts, piña prices for all agave strains have risen tenfold in the last two years, forcing mezcal producers without their own fields to modify their business plans or close their doors.

Mexican Truck Headed North

For many of those attempting to remain competitive in a traditionally cost-conscious market, the focus has shifted to a reduction of expenses, just as it has in Jalisco. Chemical fertilizers such as urea and ammonium nitrate can be added to the baked pulp to yield more alcohol in two days than in the fourteen needed for natural fermentation. In addition to accelerated fermentation, large volume operations are adding more cane alcohol and other substitutes to their mixes to maintain production levels in the absence of adequate agave. The few small operations still operating the old-fashioned way must choose whether to step up quantity or preserve their quality. Yet despite a lack of agave price stabilization and the resulting trend toward high volume, traditionalists hold fast.

Rafael Ballesteros reasons, "When harvesting a mature plant, it is nine to twelve years old. It would be foolish, when using 100 percent agave, to wait the full nine years or more for the plant and not have the patience to wait 15 days for the natural fermentation process. If we're already waiting nine years, 15 days more is nothing."

Single bottles of Del Maguey's 100 percent pure organic mezcal retail upwards of $60 in the United States, due largely to costlier natural processes and steep alcohol tariffs. The challenge for Del Maguey and other Mexican producers of premium lines, given longstanding perceptions of mezcal, is competing with quality tequilas on the same price point. Tequila remains king, and mezcal the unknown niche player.

To establish recognition for the best mezcal, Mr. Ballesteros believes the industry must first build its domestic market, "What we are doing first is educating people about mezcal, and that it can be a spirit of the highest category. Only then can we turn to the rest of the world, because how can we begin to position ourselves well elsewhere if we're not even well regarded here? To improve the image, you have to improve the product, and that's what we're doing." Mr. Ballesteros hopes mezcal can attain the same levels of international recognition and prestige enjoyed by tequila in ten years by promoting its distinct handmade and cultural origins.

Incidentally, this would coincide beautifully with a potential bumper crop from the present race to plant. If successful in attaining similar notoriety, and if tequila continues to push upward consumer spending limits, mezcal will finally be able to reverse its fortune and ride the thorn in its side to greatness. Those able to survive on low volume and high margins now may be poised for real success.