Vinexpo: UK and Mexican spirits seek growth

Mexico's tequila and mescal producers tussled for premium recognition at Vinexpo in Bordeaux this week, while Scotch whisky distillers were seeking growth from existing and new markets.

With sales of tequila and mescal are dominated by three large brands in Europe, the bulk of Mexico's distillers are seeking to grab a larger share, particularly of export business. But the picture is complicated by what the producers see as poor perceptions of tequila, virtually no understanding of mescal, small promotional budgets and complex export and re-export structures.

In an attempt to solve the last two problems, the Mexican government’s Pro-Mexico promotion body was exhibiting at Vinexpo, Bordeaux, this week for the first time to showcase six tequila and two mescal distillers.

It is estimated that there are between 150 and 170 tequila and mescal distillers in Mexico producing around 25 million cases in 2012, according to Vinexpo/IWSR data. In the next four years sales are forecast to reach nearly 28 million cases.

Tequila is distilled from Mexico’s blue agave plant to produce two qualities: premium, 100% agave spirit and Mixto, agave blended with up to 51% other spirits. Mixto probably accounts for 90% of sales.

The smaller and medium sized distillers such as La Cofradia or Distilleria Santa Lucia producing 100% agave spirit claim that Mixto damages the image of tequila. “We must create awareness of premium tequila in Europe,” says Carlos Hernández Pérez, Cofradia’s export manager. “Tequila is getting a bad image,” he says. “People drink it as shots. But 100% agave tequila should be discovered as a sipping spirit to delight the palate.”

At present Europe accounts for circa 10% of premium tequila. Most of that finds its way into other European markets via Germany and Spain. Germany in particular is a large re-exporter; and the UK to a smaller extent.

Rodrigo Castro Vieyra, international sales and logistics manager for Distilleria Santa Luca, says Germany is a huge bulk importer of tequila. “In many cases the spirit is rectified, mixed with other spirit and re-exported.” 

Mescal, meanwhile, made from other varieties of agave using small artisanal methods, claims to be benefiting from the tarnished image of tequila.

Mario Mendoza of family-owned Sin piedad mescale brand sees tequila’s image issue as an opportunity. “People want authenticity. Mescal is 100% agave and has a distinctive, smokey aroma and full taste. Chefs and mixologists are discovering it. Mescal is the coming thing.” 

For the moment, though, mescal accounts for as little as 1% of agave distillation in Mexico. Finding distributors in Europe is a crucial part of the brand’s strategy. Brands like the top three – Heradura, Cuervo and Patron – besides being premium tequilas also have huge budgets.  

“We can’t compete with that level of budget,” says Santa Luca’s Vieyra. Both he and Cofradia’s Hernández Pérez came to the show seeking distributors with the ability to be co-investors in their brands.

Scotch whiskies look for growth

Sales of niche whiskies are growing because consumers in many markets are looking for different tastes that set their chosen whiskies apart from universal brands. Faster growth is a requirement to ensure niche products do not miss the current upward sales trend for whisky overall. Markets emerging as prime target areas are Central and Eastern Europe, Russia, Asia and the USA.

However, gaining distribution for niche brands is often complicated in some markets by the agreements potential worthwhile distributors have with major brands. Such limitations slow down the process of broadening distribution.

Says Richard Lombard- Chibnall, sales director of Lombard Brands: “For smaller companies like us Vinexpo offers an ideal solution. We cannot visit all the markets in which we can see growth opportunities, it would simply take too long. By the end of the exhibition we estimate we will have had over 200 enquiries.” 

Start up Whisky Legends opened for business this year with the unique offer of re-creating famous whisky blends of years gone by. Potential distributors are attracted by the chance to obtain whiskies no longer available. Through Whisky Legends, who buy casks of aged whiskies from other distillers, unique bottlings can be obtained to satisfy a growing demand by consumers for something different. Comments Scott Watson, founder: There is quite definitely a growing consumer demand for niche brands and our speciality is to recreate whisky legends. This is our first Vinexpo and it looks like giving us access to a number of potential business partners.”

Angus Dundee Distillers are a regular Vinexpo exhibitor with many customers who expect to see them at the show. Apart from maintaining a presence in the niche sector it does bring potential new distributors to the company’s attention. Says Jimmy Robertson, regional sales manager: “Even though we are already in 80 markets there is always room for growth. We are particularly interested in expanding our presence in Central and Eastern Europe and Russia. Asia is also a huge market in which we seek broader representation”.

20 June 2013 - Felicity Murray