Ever wonder why some mezcals cost less than $50 per bottle, and others close to $150 and more?  Are the expensive bottles better?  And if so, in what ways?

Before entering the mezcal industry, I had these same questions.  That was before my co-founder and I set forth to start Erstwhile Mezcal, an importing company, from scratch.

Welcome to the first installation of Erstwhile Mezcal’s blog series, in which I share my firsthand experiences and takeaways on Why Is Mezcal So Dam$ Expensive in the United States.  You can find the second installation of this blog series here.

We are now approaching the end of 2019, Erstwhile’s first year of sales in the US market.  Reflecting on my conversations at tastings and education events over the past year, I know that just like my old pre-Erstwhile self, many US consumers have little transparency when it comes to the pricing of mezcal – and wine & spirits in general – in the United States.

One of Erstwhile’s core values is mezcal education.  I believe education comes in many forms.  A deeper understanding of mezcal’s pricing and economics is as important as, say, understanding the differences in agave plant varietals, production methods, etc.

At least the economist nerd and former antitrust lawyer in me thinks so.

In this post and a series of future posts, I will share with you some of the key factors driving mezcal pricing.  They are rooted in my experience of building a brand, and learning firsthand what it takes to bring a bottle of mezcal from rural Mexico to individual consumers all over the United States.

It is more complicated and expensive than you might think.

 

What US Consumers Should Know About the Prices They Pay for Mezcal

 

So why is mezcal so dam$ expensive in the United States?

I do not presume to speak for everyone in the mezcal industry.  My opinions below are based on, and limited to, my own firsthand experiences from running Erstwhile Mezcal.  Erstwhile’s business model, and as a result my opinions stated here, are not necessarily the same as that of others in the mezcal community.

Most discussions of mezcal prices in the United States focus on the producers and production process in Mexico.  For example:

  • the importance of compensating mezcal producers fairly for their craft and labor;
  • the amount of hard manual labor it takes to make mezcal the traditional way;
  • the steadily rising price of agaves, the raw material necessary for mezcal production, driven by worldwide demand for mezcal; and
  • the astounding amount of time it takes for a single agave plant to mature before it can be ready for mezcal production – up to 20-30 years, depending on the agave varietal.

 

I wholeheartedly agree.  All of these factors above are important topics for mezcal education.  They are part of why fair dealing with small producers has been one of Erstwhile Mezcal’s core values from day one.

Our definition of “fair” is straightforward, including but not limited to the following: we pay our producer partners the prices they ask, do not ask them for discounts or exclusivity, and front the investment (e.g., legal fees, application fees for necessary permits and licenses) to get them ready for export.

But in my experience of running Erstwhile, a company that has fair dealing with producers as one of our core values, production costs — including but not limited to the factors bulleted above — explain only about 20-25% of the shelf prices that US consumers pay for mezcal.

So what accounts for the other 75-80% of shelf prices in the United States?  What happens after our mezcals leave our producers’ facilities in Oaxaca, touch US soil in a shipping container, and eventually arrive in our warehouse in the United States?

In reality, the three-tier system is the primary reason of why not just our mezcals, but all alcohol, are so dam$ expensive in the United States.

Are you intrigued?  Want to know more?  Read Part II, the next post in Erstwhile Mezcal’s blog series on Why Is Mezcal So Dam$ Expensive in the United States.

 

Sign up for our newsletter so we can keep you posted on future blog posts on the economics of mezcal.  You can do so by emailing us at info@erstwhilemezcal.com, or scrolling to the bottom of our website.

 

Yuan Ji, founder of Erstwhile Mezcal