Mexico is a large country, home to nearly 130 million people with growing expendable income. Mexicans like to party, too — they drink an average of 233 bottles of beer yearly; not bad compared to the 282 consumed in the neighboring United States, the world’s leading market for alcohol consumption. Still, there aren’t many wine lovers in Mexico. Is this a missed opportunity?
“This might be one of the most under-developed wine markets worldwide”
Let’s talk about the Mexican wine market, its challenges and the opportunities for wine producers, distributors, importers and exporters. This might be one of the most under-developed wine markets worldwide. Is there an opportunity in Mexico for you?
Wine Consuming Habits in Mexico
Mexicans consume on average 0,8 litres of wine yearly. In comparison, the French consume 46.9 liters, and Italians are not far behind. Still, Mexican wine enthusiasts are catching up and have the second-highest consumption growth in America, with yearly increments of around 8%.
“Wine consumption in Mexico is increasing, representing an extraordinary opportunity for everyone involved in the trade, but not without challenges”
Wine consumption in Mexico is increasing, representing an extraordinary opportunity for everyone involved in the trade, but not without challenges. It goes without saying, wine is not part of the Mexican diet, and people are not used to the fermented beverage. This might change in the future — after all, Mexico is a wine-producing country in its own right.
Mexico as a Wine Producer
Mexican wine producers make 22.5 million liters of wine annually, mostly up north, in Baja California. There are 8,431 hectares of vines destined for wine production, planted with Chardonnay, Cabernet Sauvignon, Ugni Blanc, Carignan, Merlot and others.
Nebbiolo and Tempranillo, although not as widely planted as those mentioned above, show the most promise. At the same time, grapes reminiscent of the country’s Brandy days in the 70s-80s, including Ugni Blanc and Colombard, are often the least attractive; of course, the Mexican market has yet to discorver the extraordinary European renditions of these grapes. Overall, Mexican wine is getting better every year. The problem is that there is not enough to go around.
Most Popular Wine Styles in Mexico
Wine consumers in Mexico are deeply in love with red wine, representing 56.29% of the market, followed by sweet, fortified wines (16.82%), sparkling wine (14.10%) and white wine (11.94%).
“There might also be an opportunity for value brands to capture the emerging market’s attention”
There’s a strong consumer preference for Mexican wine, but local production only makes for 2.3% of the available wine due to its small scale. Spain and Chile dominate nearly half the Mexican wine scene and, along with France, Italy, Argentina and the USA, have a hold on 98% of the market. What does this mean to wine importers, wholesalers and retailers? These are the hard facts.
- The Mexican wine market is growing at an astounding rate. Mexico’s wine production is also increasing, although it might never fully satisfy the country’s demand for wine. Imported wine will continue to dominate the sector.
- Mexican wine drinkers are just discovering the complexities of the wine world, so consumers will stick to recognizable brands and wine grapes for the foreseeable future. You’ll sell plenty of Cabernet and Tempranillo, but don’t expect bottles made with rare varietals or from lesser-known wine regions to fly off the shelf.
- Wine is expensive in Mexico, especially for the high taxes on alcoholic drinks, expected to rise during the current administration. Alcoholic beverages in the country have a 26% production tax plus a 16% value-added tax. Shortly, wine lovers are expecting to pay 46.5% of taxes on alcoholic beverages.
- Wine consumption might be increasing in Mexico, but the fermented grape juice is still almost exclusively consumed by people with middle-high to high incomes; in other words, the country’s privileged one per cent. This represents an opportunity, even if small, for luxury brands and high-profile wines. There might also be an opportunity for value brands to capture the emerging market’s attention. Still, wine meant for connoisseurs will have to wait for Mexico’s wine consumers to develop a wine-friendly palate. Will Mexico ever fall in love with wine?
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- Trejo-Pech, C.O., Arellano-Sada, R., Coelho, A.M. and Weldon, R.N. (2012), Is the Baja California, Mexico, Wine Industry a Cluster?. Amer. J of Ag. Econ., 94: 569-575. https://doi.org/10.1093/ajae/aar080