When creating a new mezcal private brand, entrepreneurs typically encounter a difficult path in the process of trying to produce and export all on their own. This is due to strict legal requirements along with a worldwide lack of packaging materials as has never been seeing before. So, what is the solution?
The mezcal industry as a profitable business
Mezcal’s rich and meaningful roots are making this agave distillate become a star among traditional spirits lovers worldwide. From tasters looking for authentic flavors to bartenders wanting exotic blends, everyone is finding mezcal’s smokiness a gem for the palate.
More and more entrepreneurs from different countries are looking at the mezcal industry as a profitable business, with big growth coming in the near future. Here are some numbers to understand why:
- According to BevAlc Insights by Drizly, this alcohol online shop (Drizly) reported a 600% growth in mezcal sales in 2020.
- Mezcal off-premise sales in channels measured by Nielsen were up 86% in value to $44.3 million, and up 69% by volume to nearly 90,000 cases.
- 39% of retailer respondents said they plan to stock more mezcal in the next few years, in a survey conducted for the 2020 BevAlc Insights Retail Report.
- Agave-based spirits are forecasted to grow by 4% CARG through the end of 2022, according to IWSR. By 2023, the value of agave-based spirits will be 8% higher than that of American whiskey.
What’s involved in the creation of a new mezcal private brand?
Even though we are talking about such a successful industry, it’s still hard for entrepreneurs, small producers and new mezcal brands to find a clear production path. Especially if they intend to export their product.
Different from whiskey, which can be produced anywhere in the world, mezcal has a Protected Denomination of Origin. There are laws that establish that mezcal can only be produced, packaged and labeled in certain regions of Mexico.
From there, there are numerous difficulties involved in producing mezcal that is to be distributed outside of Mexico.
Finding a mezcal manufacturer
The product must come from one of the certified distilleries approved by a regulatory council. The brand owner needs to either own a distillery or make an agreement with a mezcal manufacturer.
This is especially difficult for Mezcal Artesanal, the most valued category, as we are talking about relatively small companies. Typically family-managed in small towns of Mexico. Traditional people hardly open to new business proposals. Most of them don’t even speak English.
Some Maestros Mezcaleros prefer to keep their rustic methods, which produce incredibly good mezcal, but will hardly serve a decent distributor’s needs. Mostly, they don’t want to share their formulas with labels that are not their own.
Of course, there are some larger distilleries mass-producing mezcal in the big leagues of the spirits industry. They are normally hoarded by huge brands and liquor distributors.
As an industry only recently opened up to international business, not many options come out by googling ‘how to make my own mezcal private brand’. As such, we’ve seen entrepreneurs spending months traveling the highlands of southern Mexico, knocking on distilleries doors and hoping for good luck.
If the right distillery comes along, they will take care of the bottling process and nothing more. Supply chain, legal processes, losses, etc., are handled by the brand owner.
Legal procedures for a new mezcal private brand
The trademark must be registered in both the destination country and Mexico. In the Mexican Institute of Industrial Property (IMPI), this is a long bureaucratic process, usually taking 4 to 6 months.
It’s suggested to have a representative or a physical address in Mexico to ease the process and receive notifications.
Then, a manufacturing contract between the brand owner and the distillery must be registered. Add 4 more months for this to be completed.
After that, in a mezcal certification institute, all the procedures to certify the mezcal’s authenticity are carried out: laboratory analysis, registration of the new mezcal brand, acquisition of legality holograms, etc.
An important legal requisite, in both Mexico and the destination country, is label approval. This is a very strict process for alcoholic beverages and tricky because the requirements of two countries must be met precisely.
Learn about basic labeling requirements for distilled spirits in the U.S.
The legal procedures for a new mezcal private brand are heavy and complex, especially if the brand owner is not Mexican.
Input shortages
During and after the pandemic, this has been a nightmare for mezcaleros and other spirit manufacturers. The Mexican journal El Financiero reported last June that mezcal distilleries faced increases of up to 50% in bottle costs.
The effects of supply chain slowdowns and the limited availability of hydrocarbons as a result of the Russia-Ukraine conflict, have caused a shortage of packaging materials never seen before.
The scenario is the same with other supplies such as caps and cardboard boxes. Producers are forced to pay excessive prices to serve their productions.
Export certificates
The story doesn’t end with the mezcal in the bottle.
To complete the export process, the mezcal must have the proper certificates of origin and authenticity, invoices, security data sheets, and any other documentation needed by Mexican customs. Many of these documents are issued by different Mexican authorities.
It is necessary to hire a Mexican customs agent to carry out this process properly.
An alternative to producing a mezcal private brand
Hayden Bigelow owns Amigos Aotearoa, a new mezcal brand which emerged in 2022. The brand is fully owned and distributed in New Zealand.
So, how was it possible for Hayden to produce his mezcal in Mexico and export it to the other side of the world?
I really believe that the work should always be left in the hands of the experts… We decided to work with Tequila & Spirits Mexico since the first video-call, when they showed their expertise in mezcal production. From then, they have controlled everything; we only take care of receiving a market-ready product in New Zealand.
Hayden Bigelow
An expert team
In recent years, companies have emerged that offer integrated solutions to create a mezcal brand. They are focused on a business model made for foreign entrepreneurs and distributors who want to bring mezcal anywhere in the world.
They offer their service as a commercial partner in charge of all the affairs of the brand in Mexico. In this way, the brand owner has a permanent presence there to carry out legal processes. As well as handle the supply chain, quality control, financial transactions, etc.
Since they are constantly mass-producing inputs for different clients, they can offer start-up brands great benefits in the supply chain. From a 100% customized mezcal flavor profile to the production of a fully customized glass bottle with a reasonable cost and time.
They also process all the legal requirements. Thanks to their lawful presence in Mexico and experience carrying out these processes constantly, they have established ways to expedite the process effectively.
Partnering with an expert team like Tequila & Spirits Mexico to develop your own mezcal private brand will help you avoid critical mistakes, as well as provide you with the advantage of having 100% personalized attention for your brand in Mexico, from start to finish.
J. Romo
Nothing in this article is intended to be and should not be construed as specific legal advice.