Mexican Wine, Beer or Tequila: The Amazing Resilience of Mexico's Wine Industry
February 01, 2016
Mexico is world renowned for its beer and tequila, but few people realize that Mexico’s wine industry is reputed to be the oldest in the America’s. Records show that in the 1520’s after conquering the Aztecs, Cortes had Spanish grapevines sent to Mexico in order to plant vineyards and make wine in the Coahuila region. This is several decades earlier than vineyards were first planted in Chile (1548) and Argentina (1551).
Despite its impressive wine heritage, Mexico still struggles to capture attention for its wines. However this is slowly changing with a growing middle class in Mexico and younger consumers who are embracing wine as part of a new interest in local products. Furthermore, there is a strong positive spirit and resiliency amongst Mexican wine producers, who have a desire to produce high quality wines that celebrate the heritage and terroir of the various regions.
This article provides a brief overview of the Mexican wine industry, including current statistics, viticulture and winemaking practices, sales and marketing tactics, and future issues. It is based on a research project and paper published in the Wine Economics & Policy Journal.
Overview of the Mexican Wine Industry
According to Consejo Mexicano Vitivinícola, Mexican wineries produced 20 million liters in 2014 and accounted for 31 percent of domestic sales. The remaining wine was imported, primarily from Chile, followed by Spain and Italy.
Wine sales grew 9 percent in volume from 2013 to 2014, and are forecasted to grow an additional 11 percent by 2019, according to Euromonitor. The most popular varieties are Cabernet Sauvignon, Tempranillo and Chardonnay.
It is estimated that there are approximately 100 wineries in Mexico, with 60 headquartered in the Valle de Guadalupe of Baja, where 80 to 95 percent of all Mexican wine is produced, according to Vino Mex. The largest wine corporation in Mexico is La Madrileña, with 21 percent of the volume, according to Euromonitor, though most of this is from imported wine that they resell in Mexico, along with their famous sherry brand, Tres Coronas. The second and third largest producers are Casa Pedro Domecq and L.A. Cetto, both located in Baja.
Table 1: Major Wine Players
||Average Annual Case Production|
|La Madrileña||Not Available|
|Casa Pedro Domecq||194,000|
|Santo Tomas||Not Available
|Casa Madero||Not Available|
|Bodegas Ferrino||Not Available|
Viticulture & Winemaking Practices in the Valle de Guadalupe
The largest wine producing area in Mexico, the Valle de Guadalupe in Baja, is blessed with a moderate climate with an average temperature of 86 F degrees in the summer and a low of 42 F degrees in winter. However, rainfall averages only 3 to 4 inches per year, so most vineyards are equipped with drip irrigation. VSP (vertical shoot position) is the most common trellis system, and spacing varies from 3 x 3 feet to 6 x 9 feet.
Soils are well-draining, with a combination of sand, loam, and some red clay. Harvest occurs between July and October, with average yields of two to three tons per acre. The famous Vendimia Wine Harvest Festival taking place in August, and features the wines of the area as well as paella and other local cuisines.
The most common varietals are red Bordeaux grapes such as Cabernet Sauvignon, Merlot, and Malbec. Other varietals include Tempranillo, Barbera, Zinfandel, Nebiolo, Petite Syrah and the original Mission grape brought from Spain, where it is still known as Listan Prieto. A few wineries also plant Chardonnay and Semillon grapes.
In terms of winemaking practices, most producers prefer to ferment in stainless steel, however the length of fermentation and maceration varies depending on stylistic choices. The majority of wineries age their red wines in oak, mostly French and some American oak as well. The average aging time varies from a few months up to 12 - 24 months for higher priced wines.
With the exception of adding a 25 percent luxury tax on wine, the Mexican government currently has not set up any production requirements. Most of the Mexican producers consider this a blessing, because they have total freedom to express their creativity. This has resulted in many unusual and delicious blends. For example, Casa de Piedra produces a wine called “Contraste, which is a blend of wine from Valle de Guadalupe and juice imported from France. Other unique blends include a mixture of Vinifera grapes with table grapes, such as Thompson.
Marketing and Sales
Marketing tactics are primarily traditional, with print ads in magazines and newspapers. The Internet is mainly used as an information and publishing tool, with social media and ecommerce still in their infancy. Relationship management with distributors is very important, as well as wine tourism promotions to lure visitors to tasting rooms. A few wineries export to the US, Canada and Japan.
As in other countries, production size usually impacts distribution strategy. Larger Mexican wineries generally use distributors to have their wine placed in restaurants, wine shops, and grocery stores throughout Mexico. Major wine markets are Mexico City and Guadalajara, where more educated wine consumers enjoy purchasing Mexican wine. However, transportation of wine can be an issue in Mexico, because if shipping from Baja to Mexico City, the wine is transported through the desert and may be exposed to hot temperatures. This has hindered wine club development and other types of wine sales that require recurring shipments.
Smaller wineries, especially in Valle de Guadalupe, focus on direct to consumer sales in their tasting rooms, as well as sales to restaurants along the Baja Peninsula. Wine tourism is embraced by most wineries, and many have lodging and restaurants, so tourists can stay for several days and enjoy the wines.
In terms of wine pricing, larger wineries generally sell to distributors at a discount, similar to the FOB pricing concept in other countries, with varied discounts of 20 percent to 30 percent. In tasting rooms in the Valle de Guadalupe, average suggested retail prices ranged from a low of $15 per bottle to highs of over $100 for top tier reserve wines.
The Future of Mexican Wines
According to Euromonitor, wine consumption in Mexico is predicted to increase, especially amongst the growing middle class and younger consumers. A healthy national pride and growing interest in buying local foods and products should also assist the Mexican wine industry.
Probably one of its greatest strengths of Mexican wine is the strong positive spirit of the industry founders, with many still residing in the Valle de Guadalupe. Here winemakers have a strong desire to produce high quality wines that celebrate the heritage and terroir of the region. They are also pushing the envelope by developing innovative blends and styles. Many of the wines have received positive reviews, and prestigious magazines, such as Wine Spectator and Wine Enthusiast, have written encouraging articles about visiting the region.
Challenges include the border unrest that frightened some visitors and caused a decrease in tourism for a while. Mexican wines also suffer from an identity crisis in that there are no clear signature varietals or focus on what they do well. Mexican beer and tequila are much more famous as alcoholic beverage choices. In addition, Mexico lacks a centralized marketing organization to promote “Wines of Mexico” both within the country and internationally, though the Consejo Mexicano Vitivinícola is trying to remedy this.
Despite these challenges, the general atmosphere in the Mexican wine industry is one of optimism and innovation. As one winemaker from Valle de Guadalupe reported, “The best part of working here is being part of a growing region with lots of creativity.”
Alley, L. (2001). Mexican milestones Baja California is making new wines for a changing country. Wine Spectator, March 2001
Alley, L. (2007). “Researchers Uncover Identity of Historic California Grape: Spanish researchers solve mysteries surrounding the Mission variety and viticulture throughout the Americas". Wine Spectator Online. Retrieved Nov. 29, 2014 at http://www.winespectator.com/webfeature/show/id/Researchers-Uncover-Identity-of-Historic-California-Grape_3412.
Consejo Mexicano VitiVinicola. (2014). Economy and Markets of Mexican Wine. Wine Mexican Council Website. Translated from English: http://translate.google.com/translate?hl=en&sl=es&u=http://www.uvayvino.org/index.php/eonomia&prev=search
Delsol, C. (2009). "A toast to Mexico's undiscovered wine country". San Francisco Chronicle (San Francisco, CA).
Discover Baja. (2014). Discover Wine Country: The Wine Capital of Mexico. Discover Baja Website. Retrieved on 8/26/15 at http://www.discoverbajacalifornia.com/guides/wine-country/
Dunne, M. (2013). “Valley de Guadalupe moves toward its promise as Baja’s ‘Napa’. Sacramento Bee, November 23, 2013
Esparza, B. (2012). Valle de Guadalupe, for an entirely different kind of wine country, the place to be is south of the border. Los Angeles Magazine
Euromonitor. (2015). Passport: Wine in Mexico. June 2015.
Laube, J. (2014). Baja’s Romance Amid Reality. Wine Spectator, April 2014.
Vino Mex (2012). The Mexican wine situation. White paper. Available at: http://mexicanwines.homestead.com/Mexican_wine_situation.pdf
Weatherbase.com (2014). Weather in Valle de Guadalupe, Mexico. Available at: http://www.weatherbase.com/weather/weather.php3?s=914159&cityname=Valle-de-Guadalupe-Jalisco-Mexico
Weinberg, E. (2013). Explore Valle de Guadalupe wine country. Sunset Magazine, April 2013
Wine Enthusiast (2012). Mexico’s Surprising Wine Revolution. Available at: http://www.winemag.com/Web-2012/The-Mexican-Wine-Revolution/index.php/cparticle/6.
Wine Institute (2014). Statistics by Country. Available at: http://www.wineinstitute.org/resources/statistics
Wines of Argentina. (2015). History of Wine in Argentina. WinesofArgentina.com. Available at: http://www.winesofargentina.org/argentina/historia/
Wines of Baja. (2013). Wines of Baja – Renewing the History of Mexico’s Wines. Available at: http://www.chiff.com/a/wine-baja.htm
Wines of Chile. (2015). Chile’s Wine Heritage. WinesofChile.com. Available at: http://www.winesofchile.org/wp/chile-basics/chile-wine-heritage/www.sciencedirect.com/science/article/pii/S2212977415000307
by Jorge Covarrubias and Liz Thach
Jorge Covarrubias is a Viticulture Analyst with Trinchero Family Winery and Dr. Liz Thach, MW is the Distinguished Professor of Wine at Sonoma State University. For more information contact firstname.lastname@example.org or see the complete report at: http://www.sciencedirect.com/science/article/pii/S2212977415000307