Mexico: Craft brewers welcome federal officials’ decision to open up the tightly controlled beer market – Newsletter No. 30a (2013-07-26)

July 11 may not ever become as momentous as other Mexican holidays, but for beer enthusiasts like Francisco Nuñez, the date is worthy of remembrance, Imperial Valley Press reported on July, 22.

“It was like our beer independence day,” Nuñez, of Mexicali-based 686 Cervecería, said. “July 11 is going to be remembered for years to come by Mexican craft breweries.”

On that historic date, Mexican federal officials opened up the tightly controlled beer market, and put a cap on the number of exclusive contracts its major brewers — Grupo Modelo and Cuahtémoc Moctezuma — could hold. To date, the two major brewers hold exclusive contracts with more than 90 percent of the nation’s point of sales, a figure that must be brought to 20 percent within five years at the risk of financial penalties.

The ruling will allow the country’s burgeoning craft breweries unrestricted access to all restaurants, bars and cantinas, the Mexican Federal Trade Commission announced.

“That’s going to help us (microbrewers) a lot,” Nuñez said.

The group of four former homebrewers made the jump to commercial brewing about a year ago. They recently bought a $3,000, 55-gallon brewing system and figure they will have to brew up to four times a month if they want to turn a profit, Nuñez said.

Although 686 Cervecería is fairly new to the Mexican craft beer scene, it is part of a region that many say is at the vanguard of burgeoning craft beer scene.

“Baja California is the state that has the best beer in all of Mexico,” Nuñez said.

Indeed, Mexicali itself boasts about a dozen microbreweries, a renowned beer bar, as well as a couple of knowledgeable beer bloggers. A downtown revitalization project also is set to be anchored by craft beer bars.

And while Mexicali certainly deserves notice, its scene is bested by that of Tijuana and Ensenada, said Carlos Castillo, president of the Asociación de Cerveceros Artesanales de la Baja California, or ACABC.

Part of the region’s success no doubt lies in its proximity to the states, and in particular San Diego.

Unlike those of Mexico’s interior, Baja California brewers enjoy access to San Diego’s retail market, its beer ingredients and its overall influence, Castillo said.

All of which shouldn’t overshadow what Baja does have.

“What we do have is a huge desire to make good beer,” Castillo said.

The 2-year-old ACABC also has been pivotal in legislative reforms that have allowed the Baja scene to blossom, and is currently working on legislation that could level the amount of taxes that brewers must pay, and which impact small breweries more.

“Our No. 1 problem is that we have so much demand that we can’t keep up with it,” Castillo, owner of Ensenada-based Cervecería Costa Azul, said. “What a nice problem, right?”

A problem that can be expected to grow considering that this month’s federal ruling gives small breweries an additional 800,000 points of sale nationwide that they didn’t have access to before.

Costal Azul operates on a five-barrel system, but Castillo projects the day will soon come when he will have to upsize to a 15-barrel system. A fluid barrel equals 31.5 gallons.

“Two years ago we never thought it would get so big,” he said. “And now it’s just unstoppable.”

Yet craft beer represents less than 1 percent of market share, with Grupo Modelo — makers of Corona — accounting for 57 percent and Cuahtémoc Moctezuma — makers of Tecate — at 41 percent, according to a June 7, 2013 report by the U.S. Department of Agriculture’s Foreign Agricultural Service.

Mexico is the both the world’s sixth-largest beer consumer and producer, the report states. Also, its beer market had total revenues of $20.3 billion in 2011, according to a Marketline Research report summary.

Mexican craft beer sales have seen between 50 to 60 percent annual growth the last couple of years, the USDA report noted.

The report, titled “The Mexican Craft Beer Market — A Market Assessment,” states that annual craft beer sales total about $8 million, a figure that is expected to double this year if growth trends hold steady.

And if current data is any indication, “unstoppable” may be the right assessment.

“The opportunity is huge within the Mexican market right now,” ACABC’s Castillo said. “Maybe later we’ll think of exporting.” Newsletter 30a July 22 - July 24, 2013 2013-07-26 11-35-27

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