Market Watch, April 2018

APRIL 2018 MARKETW ATCHMAG COM MARKET W ATCH 53 PHOTO BY TK TK Sustainability is a big part of the process for many brands Bozal enforces a replanting initiative dictating that for every one wild agave harvested two are planted in a mountainside nursery and transported to the wild after one to two years Del Maguey Single Village mezcal 37 a 750 ml for the popular Vida expression which was acquired by Pernod Ricard last year also puts a big emphasis on environmental responsibility The brand which bottles over 20 mezcals that highlight different agave varietals takes part in reforestation efforts and is committed to biodiversity in Mexico For over 20 years Del Maguey has maintained a deep commitment to the amazing and rich cultural heritage of Oaxaca says Michael Gardner global business leader for the brand The agricultural environment in Oaxaca is getting tighter as the mezcal space grows and becomes populated with new entrants Environmental consciousness and social responsibility are the central tenets that anchor our impact philosophy From well planned agave cultivation strategies to reforestation projects that address ecosystems and wild agave our environmental mission focuses on leaving a positive impactful footprint in the Oaxaca region Since the mezcal category is still very young many of its primary players hope producers and new entrants take a mindful approach to building it Along with the United States mezcal is growing in Japan Australia and much of Europe Ilegal mezcals Rexer says that once barren landscapes in Oaxaca are now dotted with young agave plants and many Mexican communities are investing in their land and palenques creating new opportunities for work As mezcal grows all of us who work in the category have an opportunity and an obligation to try and do this right from the beginning Rexer adds mw supply chain that can withstand this type of pressure In addition Sombra mezcal owns and operates its own distillery in Mexico giving it further control over the production process and overall costs Sombra Mezcal Joven is 35 a 750 ml Weve been sourcing agave and working directly with farmers for over a decade and the relationships weve forged are priceless Choe explains Weve always had a longterm approach to our business and we source agave in that fashion with multiple year contracts We hear reports of younger agaves being thrown in with the fully mature agaves to boost supply That creates a vicious cycle because the younger agaves have less sugar and you need to use more of them which means theres even less supply for future harvests That cant happen with Sombra because we own the palenque and inspect every agave that comes through Similarly Montelobos mezcal imported by William Grant Sons controls the supply of its agave shielding the brand from pricing and supply pressures There are concerns that the agave supply may not be sufficient if the growth of mezcal continues at 40 a year says Shem Blum Montelobos brand manager There are also serious concerns surrounding the deforestation of wild agave and the long term impact of exploitation Montelobos uses organic cultivated agave not wild agave Joven is 40 a 750 ml The use of wild versus farmed agave is a point of contention within the mezcal community Some brands tout the terroir of their mezcals and emphasize the importance of using wild agave in creating unique spirits But as category growth continues wild agave is increasingly hard to find or too expensive to use Mezcales de Leyendas Mena believes true wild agaves will slowly disappear and be replaced by semi wild agaves that start their lives in a nursery and then get replanted in the wild and left to grow for upwards of 10 years Bozal mezcal from 3 Badge Beverage Corp uses both wild and farmed agave in its range The Espadín is farmed while other varieties including Arroqueño Sierra Negra Cincoañero Sierrudo and Barril are propagated and replanted in wild and rural areas Bozals range starts with Ensamble at 50 a 750 ml As Bozal continues to grow theres certainly a challenge to the scalability of our small batch portfolio says August Sebastiani president of 3 Badge Beverage Corp Were committed to sourcing and unearthing hidden gems and bringing consumers the best possible expressions of mezcal The nature of mezcal is to bring a diverse range of agaves from a variety of different palenques to consumers Thats how we approach potential supply challenges And we encourage wild agave replantings providing resources and funding for our mezcal partners and palenque maestros Mezcales de Leyenda agave harvesters pictured hasnt felt the sting of rising Espadín agave prices as it uses a wide variety of agaves