The Mexican wine industry report 2020

23/06/2020

The Mexican wine industry is suffering the ravages of the pandemic as its sales fell not only due to the closure of wineries, but also by the cancellation of wine tourism events, however, producers found a way to avoid a greater impact through e-commerce.

Mexican wine. Poto: Alcaldes
Mexican wine. Poto: Alcaldes

Mexican winemakers are having a hard time. Although the industry in Mexico is new, the product being sold has been around for centuries and its great variety has caused more people in the country to drink it frequently.

In five years, the average per capita consumption of the drink doubled from 450 milliliters in 2012 to 960 milliliters in 2018, according to the latest figures available from the Mexican Wine Council (CMV). Annually, the value chain produces about 2.4 million boxes of wine, which is only enough to meet 30 percent of domestic demand, because Mexicans consume an average of 9 million boxes.

The Great Confinement will put much more pressure on an industry that faces a competitive market for other beverages that are deeply rooted among consumers: beer, tequila, and mezcal. And while the outlook looks challenging, producers took action in time to target the industry through the online sales channel in order not to be left behind.

Like many other sectors, this crisis hit especially the wine tourism sector, which had losses of 100 percent, so a lot of time was spent digitizing the stores and partnering with platforms to have new points of sale different from the traditional ones

Conquering new palates with Mexican wine

Traditionally, younger or newer drinkers preferred to drink beer, mezcal, or cocktails rather than ask for a glass of wine. However, with the passage of time, this tendency began to change, thanks to the fact that the wine industry itself was able to adapt to the demands of new palates.

As a matter of principle, producers decided to break with the traditional presentation of a glass bottle to produce more comfortable, attractive, and even more economical packaging.

From the beginning, canned wine caused a stir, since for the drink purists it brought down all the schemes that had existed for centuries.

Contrary to what was thought, the product went from being just a fad to becoming a powerful business that is valued at 45 million dollars and it is expected that in the following years the figure will double, according to the specialized firm Nielsen. Tetra Pak is another example of packaging, with manufacturers arguing that cardboard is not as aggressive to the environment. These two segments, canned and box, have been very well received by the millennials.

Mexico has 14 important wine regions with a total area of more than 30,000 hectares where grapes are harvested and grouped into five vocations for various uses.

One of them is used for juices and beverage juices which is concentrated in the states of Aguascalientes and Zacatecas in a territory of 4 thousand hectares; another one is the table grape that 80 percent of its production is in charge of producers in Sonora and 90 percent of what is harvested is exported mainly to the United States, and some European and Asian markets, according to data from the CMV.

One of them is used for juices and beverage juices which is concentrated in the states of Aguascalientes and Zacatecas in a territory of 4 thousand hectares; another one is the table grape that 80 percent of its production is in charge of producers in Sonora and 90 percent of what is harvested is exported mainly to the United States, and some European and Asian markets, according to data from the CMV.

The queen of all is the one destined for the production of the alcoholic beverage. Around 70 percent of the wines in the country are made from 10 varieties of higher consumption. Some of them are Cabernet Sauvignon, which accounts for 20 percent; Merlot for 8 percent, while Syrah and Nebbiolo account for 5 percent, and Tempranillo for 4 percent.

The latest data available from Euromonitor reveals that the industry employs more than 7,000 people directly and indirectly. However, the CMV estimates that the cultivation of vines for wine, along with table grapes support more than 500 thousand agricultural workers throughout the country.

Source: Reporte Indigo

The reasons why Mexico is not considered a wine country

When talking about wines in the world, there are countries that inevitably and recurrently come to mind: France, Spain, Italy, Germany, Argentina, Chile. There will also be those who include Australia, South Africa, and the United States on the list. Very few, however, will mention Mexico and Mexican wine.

There are several reasons why Mexico is not considered a wine country. The most obvious is geographical: the wine belt in the northern hemisphere is between 30 and 50° latitude, and most of the national territory, with the exception of Ensenada, is outside that belt. Of course, it would have been different if Mexico had not lost more than half of its territory to the United States: today the Napa Valley would be a national heritage.

With the signing of the Treaty of Guadalupe Hidalgo, Mexico was deprived not only of territory, but also of full access to the wine belt. If it is any consolation, something similar happened to Peru with Chile after the war of the Pacific that developed between 1879 and 1883, and that derived in the loss, on the part of Bolivia, of its exit to the sea, while Peru had to cede territories that today correspond to the north of Chile, This includes not only the production of red and white wines, but also grape distillates such as pisco, a subject of controversy, by the way, between the two nations - even in Peru pisco is marketed whose name is "El pisco es Peruano carajo!"

In addition to geography, Mexico is associated, when it comes to spirits, with tequila, that blue agave distillate that has a protected appellation of origin - at least in five states of the country certainly headed by Jalisco, plus Guanajuato, Michoacán, Nayarit and Tamaulipas - and which, in the case of the Tequila agave landscape, Jalisco, is part of the World Heritage recognized by the United Nations Educational, Scientific and Cultural Organization (UNESCO).

What about beer?

That is another very popular drink and whose consumption is widespread among the Mexican population: so much so, that Mexico ranks sixth worldwide and second in Latin America as a beer drinker. Thus, beer intake per month is estimated at 6.1 liters per capita, although in December it increases to 7.9 liters. 69 percent of Mexican households have beer at the disposal of family and friends and is the equivalent in soccer games to what popcorn in the movies.

Despite the taste for beer, in reality, the drink preferred by Mexicans is not spirit: it is soft drinks. Compared to the more than 70 liters of beer per capita per year, the average Mexican drinks 163 liters of soda in the same period, which makes the country the champion in the consumption of this drink worldwide. Do not lose sight of the fact that the sugar/fructose used to sweeten soft drinks far exceeds the amount of sugar recommended by international organizations such as the World Health Organization (WHO) as a risk factor for the development of diabetes, obesity and other chronic-degenerative diseases that cannot be transmitted.

Consequently, according to the above, Mexico is not a regular wine consumer, as is the case in Chile, Argentina, Mediterranean cultures, and so on. It is estimated that, per year, in Mexico only drink between one and a half liters of wine per inhabitant - in some of the most traditional countries, are consumed between 20 and 45 liters per person and the extreme is the Vatican, with the world record of 60 liters per person each year.

The tax situation of spirits in the country is a factor that inhibits their consumption and production. Specifically speaking of wine, while in European legislation it is considered a food, in Mexico it is classified as a luxury product and, therefore, has a tax burden that not only makes it more expensive, but also inhibits the development of the wine sector at the national level. Another element to ponder is that all inputs for wine production are imported. This explains why, of every 10 bottles of wine consumed in Mexico, seven are foreign; not enough is produced at home to supply domestic demand.

In Mexico, there is an estimated 4,000 hectares of vineyards -less than the surface area of Uruguay, a small South American country that, despite this, has 6,343,000 hectares and certainly much less than Spain, which has 969,000 hectares or 13 percent of the world's vineyards.

According to the Mexican Wine Council, there are 14 states in Mexico that produce wines, the vast majority outside the wine belt but that benefit from microclimates. In addition to the famous Ensenada Valley in Baja California, which, as explained, is barely touched by the wine strip, there is a winery of great tradition and reputation that is Casa Madero, the oldest in America, founded in 1597 and based in the valley of Parras, Coahuila. In addition to these two states, different grape derivatives are also produced in Sonora, Chihuahua, Nuevo León, Zacatecas, Aguascalientes, Durango, San Luis Potosí, Guanajuato, Jalisco, Puebla, and Querétaro.

Despite the fact that Mexico is not one of the main producers, nor among the great consumers of these wines worldwide, wine consumption has grown significantly in the past five years. It is the Mexican Wine Council itself who says that while in 2012 they drank 450 milliliters of wine per capita annually, in 2018 the figure had increased to 960 milliliters in 2018.

Wine is an aspirational product, whose consumption tends to increase when the standard of living of the population improves. This is the case of the People's Republic of China, which currently has the second-largest vineyard on the planet - 875,000 hectares - which although they are used mostly to produce table wine, are also used to make wine that is sold in that country.

Previously in Mexico, the wine was associated with longer generations, possessing a high purchasing power and was considered an expensive and ostentatious product. Today the new generations have come closer to this product. Today, they like to buy bottles of wine to enjoy with friends, couples, or family. One factor to highlight is the growing consumption of wine by women, as a result of their participation in the labor market, by generating their own income and, as explained, because this drink is aspirational.

Unlike soft drinks, wine shares nutritional properties with food, as it contains proteins and vitamins, while the calories it contains do not have as much fat or sugar as those. Wine also has antioxidant qualities - that is, it slows down aging - and supports the cardiovascular system. Consumed in moderate quantities, it makes a very important nutritional contribution to people.

Unfortunately, in Mexico, the companies that produce soft drinks have contributed to spreading urban legends against wine consumption, and even against coffee consumption -Mexico generates high-quality coffee of the Arabica type, but what Mexicans drink the most is instant coffee, made from the Robusta variety, which is of lower quality than Arabica and is seasoned with numerous chemical products.

Mexican wine is named the best Cabernet Sauvignon in the world

Mexico is increasingly raising its name thanks to its delicious gastronomy, its tourism and its wines. Currently, Mexico is a significant producer of wine, this industry continues to grow and is even recognized internationally, especially the wines of Baja California. Although now we have another piece of good news for Mexican wines. The best Cabernet Sauvignon wine in the world this 2020 is in Mexico.

The winning wine is from Coahuila, exactly from the Don Leo vineyard, which has been awarded the Best Cabernet Sauvignon 2020 in the seventh edition of the Concours International Des Cabernets (CIDC) in France.

Every year the CIDC recognizes the best and most exquisite wines from all over the world. After a tasting with different proposals from more than 25 countries, the best sommeliers from France chose the Cabernet Sauvignon Gran Reserva 2013 as the winner of the Gold Medal and the Trophy for the Best Cabernet in the World.

With this new award to the Cabernet Sauvignon Parrense, which is smooth and refined, the quality and exquisiteness of the red wines of Coahuila is distinguished, and the name of Mexico is raised to an international level.

David Mendel, winemaker, and owner of the winery, who 20 years ago began his project on a one-hectare plot of land proudly shared the triumph. "This is good news for Mexico, for Coahuila, for Parras, and for Viñedos Don Leo," he said.

He pointed out that the "Cabernet Sauvignon Gran Reserva 2013", aged in huge wooden barrels, won a gold medal and the trophy as the Best Cabernet in the World. At the same event, the 2016 Cabernet Sauvignon Chiraz won a gold medal.

The businessman said that they manage two lines, Don Leo and Linde, Premium quality in honor of their grandparents, 97% of their production is placed in the domestic market and the rest is destined for export at the international level. The winery has won several national and international awards, but this is its first award as the Best Cabernet worldwide.

Mexico among the best wine producers

Mexico was placed, for the first time in history, in the Top 10 countries with the highest number of labels awarded in the prestigious Concours Mondial de Bruxelles Brussels 2019.

The personalized wine Caipirinha 2016 is another Mexican pride. This red wine produced by the wine house "El Cielo" was named 'Red Wine World Revelation' among more than 5 thousand labels at the Concours Mondial de Bruxelles 2019.

A jury composed of 340 experts recognized 39 Mexican wine labels (25 silver medals, 12 gold, and 2 gold), of which 70% correspond to 12 wineries associated with the Mexican Wine Council. "Mexican Wine is experiencing one of its best moments.

"The winning labels show the work that dozens of national winemakers are doing in terms of innovation and technology to produce great wines that stand out at a global level," said Gabriel Padilla, Director of the Mexican Vitivinicultural Council.

He also recognized "Valle de Guadalupe Wines" for being the Mexican winery to obtain the highest number of medals in the Contest, as well as the highest award given to red wine, thanks to its label Caipirinha 2016 (a blend of Cabernet Sauvignon, Syrah, Nebbiolo, and Malbec).

The winning wineries associated with the Mexican Wine Council were: Finca Sala Vivé de Freixenet, Wines El Cielo, Casa Madero, Puerta del Lobo Vineyards, Bodegas de Cote, Guanamé Winery, Pedro Domecq House, Xanic Mountain, Encinilla Wines, Don Leo Vineyards and Vineyards San Miguel.

In 2018 was presented the Collective Mark of Mexican Wine, a distinctive that ensures the quality and origin of the wine will allow the consumer to better identify the attributes corresponding to the labels, such as flavor, aroma, or region.