Craft beer lives its apogee in Mexico despite challenges

The craft beer lives a heyday in Mexico, where there are 940 independent breweries, compared to 26 in 2011. And since then, production has grown at an average annual rate of 53.29% to reach 189,250 hectoliters in 2018.

Despite the "exponential" growth of the craft beer industry, which registered investment of $5,338 billion pesos in 2018 ($279 million dollars), the average profit margin is negative, with a loss of 8.88%, reveals the report of Acermex.
Despite the "exponential" growth of the craft beer industry, which registered investment of $5,338 billion pesos in 2018 ($279 million dollars), the average profit margin is negative, with a loss of 8.88%, reveals the report of Acermex.

An example of this boom is Diego Lara, co-founder of the Falling Piano brewery in Mexico City, where a decade ago began with the import of foreign beverages and now celebrates a year with its own brewery, where it manufactures and at the same time sells its product for consumption locally.

"There is a public and a more educated consumer. It's a consumer who follows trends outside the country and when he sees them here, he's there and he tests, he gives feedback, which is very important. The industry has been transformed little by little, we are still in diapers, but there is much to do," says Lara in an interview with Efe.

The entrepreneur's success has not been without challenges, such as the cultural factor, he says, because at first people used to ask him about beer with higher alcohol content or complain about bitterness.

He has also combated the idea that craft beer is for getting drunk, because the key to craft breweries, he emphasizes, is to position oneself as a local business that integrates with neighbors, artists and other entrepreneurs, in this case from Colonia Roma, one of the most vibrant neighborhoods of the Mexican capital.

"We firmly believe that a brewery should be integrated into the community. We're not a bar, we're not an anthro (disco), it's a brewery that's part of a community, it's a place open to art, to culture, it's completely familiar, so what we're looking for is to integrate in that way," he says.

LEGAL VACUUM

Although the consumer has adapted, the laws have not yet, stresses the businessman, because Mexican law does not recognize the concept of craft beer, except in local cases such as the northern state of Baja California, which creates confusion and obstacles.

"The issue of artisanal production is not very well regulated. So there are certain loopholes, there are certain loopholes both in the law and in the regulation that, if they were regulated, we would have access to be able to abide by them, to be able to take them out in a better way," laments Lara.

Matías Cruz, in charge of the statistics commission of the Association of Artisan Brewers of Mexico (Acermex), agrees. He also warns that the big industrialists acquire small breweries and continue selling the product as an artisan to take advantage of new consumption habits.

"There is a global trend for alternative products, for alternative trade, which includes what are artisanal products, and it is this idea to stop consuming from the big chains. That is a global trend and this, in the case of beers, is a representation of that trend," he points out.

LOSSES AND TAXES

Despite the "exponential" growth of the craft beer industry, which registered investment of $5,338 billion pesos in 2018 ($279 million dollars), the average profit margin is negative, with a loss of 8.88%, reveals the report of Acermex.

The cause of this is "obvious" for Cruz: the Special Tax on Production and Services (IEPS) that the Mexican government applies for a rate of 26.5% to beer brewing, which costs artisanal producers "four times more" to assume than to industrialists.

"The reason we pay more is not that we are more harmful, it is because we are more expensive because our value chain is integrated in a completely horizontal way," argues Cruz, who calls this tax rate "absurd.

Despite this "power struggle" between artisans and industrialists that impedes a reform of the STPS, according to Cruz, the craft beer reached a sales value of 1,174 million pesos (61.4 million dollars) in 2018.

In addition, it had 6,373 employees, representing an average annual growth rate of 72.81% since 2011.

"Despite the challenges, the market is growing. But now the question is: Couldn't it have doubled," Cruz reflects.

By EFE