Agave spirits are surging in the U.S., with consumers flocking to Mexican exports in droves. Brands across the pricing spectrum are rising as consumer knowledge grows and a class of connoisseurs helps develop the high end of the market. While Tequila, Mexico’s largest spirits export, has been the driving force and chief beneficiary of this blooming interest, mezcal has also seen a tremendous boom. Since 2015, mezcal exports to the U.S. have exploded, growing fivefold to reach over 500,000 cases in 2019, according to an estimate from Impact Databank. Producers and retailers alike are bullish on the category’s future, as consumers embrace home cocktail-making and grow more familiar with mezcal. Globally, mezcal exports reached 827,000 cases in 2019, adding 170,000 cases over 2018.

Retailers see potential for the segment, even if it’s still niche in the spirits world. “We’re growing the category as much as we can because we like it,” says Jeff Feist, category lead of spirits and more at retail chain BevMo. “If you look at one of our ads today, there’s almost always a mezcal in there. It doesn’t always deserve a spot because of overall sales, but when we do advertise, we get a huge lift on the program.”

Though the overall category is still small, mezcal’s growing presence in the market is generating excitement from retailers and large companies eager to add a brand to their portfolios. The sector over-indexes in the on-premise and is an integral part of America’s growing cocktail culture; the typical mezcal brand on sale in the U.S. retails in the super-premium tier or higher; and the variety of ways to produce the spirit fits neatly into the increasingly artisan-focused marketing used for other booming categories, like Bourbon and Scotch. While mezcal’s appeal is mounting rapidly and consumers are increasingly including it in their home bars, it’s still very much weighted toward America’s trendy urban centers, with Drizly noting that New York City, Los Angeles, San Francisco, Seattle, and Austin, Texas, among other cities, are the top markets for the spirit.

“We carry more than 35 different mezcals,” says Christian Navarro, president and principal of Wally’s Wine & Spirits in Los Angeles. “In the beginning, there were just a couple of true artisanal products, but now you’re seeing creators come from all over to bring these artisanal products to the market.” He adds that the category is developing day-by-day, especially now that more flavor profiles are available in the U.S. “More variety in smokiness is great news for adoption of the category,” he notes. “It means there’s a mezcal for every palate.”

High-End Demand

In a category as young as mezcal is in the U.S., the difference between a leading and an up-and-coming brand is quite small. A banner year for a middleweight brand could very easily see it reach the top of the market. “It’s not impossible in this category to have a top-ten mezcal within six months of launching, because it’s such a small category and there’s so many people coming into it,” says Feist.

In Nielsen channels for the 52 weeks ending December 26, 2020, mezcal sales were up 86% by value to $44.3 million. By volume, mezcal was up in Nielsen channels as well, growing 69% to nearly 90,000 cases. The average price per 750-ml. rose year over year as well, going up $3.68 to $41.08; few categories in spirits see such high average prices per 750-ml., illustrating that the category is driven by the higher end and that consumer demand continues to rise despite a high entry cost.

At K&L Wine Merchants, the focus is on brands connected to their creators and distillers, and those tend to sit at the higher end of the price spectrum. “We’re really interested in brands owned by the distiller or brands that are specifically supporting the people that create them,” notes spirits buyer David Othenin-Girard. “We attract a knowledgeable and involved clientele, and our selection plays into what they’re looking for: something with terroir, character, and soul.” He points out that the buzz and excitement around the category creates incentives for mass-producers to bring mezcals to market which often stray from the traditional flavor profiles and showcase the complexity of the spirit.

While a handful of markets, like California, are approaching sophistication in mezcal, others, like Pennsylvania, are still in their infancy. “Mezcal sales are growing noticeably—not at the rate of Tequila, but they’re certainly gaining more consumer awareness and market share,” says Pennsylvania Liquor Control Board (PLCB) press secretary Shawn Kelly. “Mezcal will likely never be an equal to vodka or even Tequila in sales, but it certainly has a bright future, especially at premium price points.”

Fine Wine & Good Spirits stores in Pennsylvania carry 22 mezcal SKUs, up from 15 SKUs in 2019. Overall, mezcal sales were up 18% in 2020, and following the PLCB’s month-and-a-half long shutdown during the Covid-19 pandemic, growth was spread fairly evenly across the state, according to Kelly. The largest 16 counties in the state saw mezcal sales rise 27% and the smallest 17 counties were up by 24% in the 28 weeks after the state stores reopened, he says.

Category Leaders

The leading mezcal brand in the U.S. is Pernod Ricard’s Del Maguey, at 59,000 cases and up 21.4% in 2019. In a typical year, Del Maguey typically sees around 65% of its sales in the on-premise. For 2020, the brand, like all in the category, was forced to shift focus to retailers. Global business leader Michael Gardner notes that Del Maguey has been successful in its pivot—especially with its entry-level Vida expression—but that they were not entirely able to offset the lack of on-premise demand. “We’re growing at single digits right now, whereas we’re normally experiencing solid double-digit growth,” he says.

At the higher-end, Del Maguey focuses on a series of single-village spirits, tied to the terroir and style native to the regions. Gardner says that, compared to Vida, describing and introducing consumers to the higher-priced releases has been a challenge during the pandemic but that the assistance the brand receives from owner Pernod Ricard has been invaluable to developing higher marques. Though Vida is still the brand’s leader, retailers noted that Del Maguey’s wide portfolio gives consumers easy entry into a wide variety of styles and regions for mezcal. “Del Maguey is still the powerhouse in the category,” says Sandra Spalding, marketing director for Texas-based retailer Twin Liquors, which has nearly 100 stores across the Lone Star State. “They’re a brand that has a price point and style for every mezcal consumer.”

While Del Maguey stands out in Twin Liquors’ stores, the chain typically carries up to 12 different offerings. Spalding described the overall category as relatively small. “It’s not a broad market product yet, but it certainly has a larger-than-niche audience,” she says. “As a sipper, it’s kind of like Scotch, meaning you need to find the one that pleases your palate. And as a cocktail ingredient, it’s a great substitute for Tequila and even gin.”

In addition to retail partners, Del Maguey has found success with its higher-end releases on Drizly. According to the e-commerce platform, Del Maguey Vida is the bestselling mezcal listed on the service and Del Maguey Chichicapa, a $70 single-village expression, is the tenth bestseller overall. Another top performer on the e-commerce site is Bacardi’s Ilegal mezcal. Drizly reports that the brand’s Joven expression is the second most popular mezcal on its platform.

In 2019, Ilegal was up 53.5%, reaching 30,000 cases in the U.S., according to Impact Databank. While the Covid-19 pandemic interrupted the brand’s activations, in a more typical year Ilegal is active in promoting its offerings among bartenders and influencers, aiming to raise the profile of the entire category through concerts and bar activations. To combat these losses, Ilegal is currently marketing cocktail kits on its website, encouraging consumers to engage with the brand at home like they would in a bar. Beyond the kits, Ilegal’s online cocktail recipe library is deep, featuring drinks designed by partner bartenders like Gilberto Marquez and Carlos Abeyta.

In the PLCB’s Fine Wine and Good Spirits stores, Ilegal is one of the top brands, up 45% this year, according to Kelly. Fine Wine and Good Spirits has encouraged consumer trial through its online store. “Sales of Ilegal benefited from three luxury items in the 375-ml. size, which were sold exclusively through Finewineandgoodspirits.com starting in September,” says Kelly. “The sales have been low in volume but steady—about three bottles a week.”

CNI Brands’ Banhez mezcal reached roughly 37,500 cases in 2020, rising nearly 25%. The brand has grown substantially since 2016 when it was at just 1,700 cases. Banhez’s portfolio contains eight variants, including the popular entry-level Ensemble expression, which is a blend of Espadín and Barril agaves, and stretching up to higher-end spirits distilled from a variety of agave strains. “There are people that use Ensemble as a gateway, and then adopt the brand and they go on to explore,” says CNI CEO Curt Goldman.

Lately, that exploration has largely taken place outside of bars and restaurants. “In years past, we certainly focused on bars and restaurants, but this past year with Covid-19 the off-premise has made up for any of the losses on-premise,” says Goldman, who adds that the brand is paying more attention to its online presence. “We’re focusing on our social media channels, particularly Instagram. We went into e-commerce specifically with Cocktail Courier, and it’s allowed us really to reach and engage consumers that are looking for information and knowledge.” Beyond offering its portfolio on Cocktail Courier, Banhez is featured in a cocktail kit—South for the Winter—designed by mixology influencer Natalie Migliarini. In addition to Cocktail Courier, the brand has found success on Drizly, where its Ensemble release is the sixth bestselling mezcal on the platform.

Campari’s Montelobos reached 14,000 cases after seeing substantial growth in 2019, according to Impact Databank. Campari acquired Montelobos in October 2019 for just under $36 million from William Grant & Sons. “As the appeal of the agave category grows, our focus will be on expanding the brand’s distribution footprint so it’s discoverable by more and more people,” says Bernadette Knight, category director for white spirits at Campari America. “In support of that effort, the team has added a new brand ambassador team focused on Montelobos. This summer, we partnered with PDX Cocktail Week team to bring mezcal education to the trade. Our digital Campari Community efforts are also focused on sharing details on mezcal production.”

While the category continues to thrive, Knight pointed out that agave management will be key for mezcal to retain its quality and history. From the brand’s establishment in 2011, founder Dr. Ivan Saldaña has made proper agave management a brand tenet. “We have established partnerships to grow Tobalá and Cupreata agave varieties—typically considered challenging to farm—as a responsible practice to avoid the deforestation of these agaves,” Knight says. “As Montelobos farmers plant Espadín they keep the buds and use them to replant. For Tobalá and Cupreata, our farmers let a handful of plants go to seed and use them to replant.”

Diageo’s Casamigos mezcal extension debuted in 2018 and, thanks to the overall success of the brand, it’s since rocketed to a substantial position in the U.S. market, reaching 14,000 cases in just two years, according to Impact Databank. Casamigos’ success at retail is widespread; ABC Fine Wine & Spirits’ director of sales Alex Poreda notes that the brand does well in the Florida chain. Casamigos also stands out among BevMo’s mezcal selection, with Feist noting that the company successfully piggybacked off the buzz around its Tequilas to build a substantial following.

Capitalizing on Casamigos’ success in the market, Diageo acquired Davos Brands, marketer of Sombra mezcal, in 2020 to further boost its profile in the category. The brand was up 30% to 13,000 cases in 2019 and, according to Sombra senior brand manager Persia Tatar, successfully pivoted to the off-premise to offset the loss of on-premise sales. “Our team pivoted quickly to taking people on virtual tours of our palenque [distillery] in Oaxaca,” she says. “We partnered with many of our friends in the industry from Sacred Agave and Mezcalistas to Arte Agave and Agave Road Trip to host virtual mezcal tastings and events.”

Sombra works with a team of its own bartenders as well as outside mixologists like Nick Bennett of New York City-based Union Square Hospitality Group, Ash Nelis of VeraCruz in Brooklyn, New York, and Jess Weinstein of Washington, D.C.’s Maydan to develop its cocktail program, giving consumers entry to the brand beyond standard cocktails like a mezcal Margarita. In addition to many fruit-flavored Margaritas, popular cocktails the brand promotes include the Shadow Margarita, Oaxacan 75, and Besos de Mezcal.

Coming in just behind Sombra is 3 Badge Beverage Group’s Bozal, which jumped 37.4% to reach 16,749 cases in 2020, according to Impact Databank. The brand presents a unified aesthetic, with each of its 16 varieties packed in clay bottles with cork stoppers, and a label clearly naming the brand and agave variety. “Bozal does well,” says ABC’s Poreda. “They have fabulous packaging across the board.”

Up-And-Comers

Beyond the category leaders, there are many emerging mezcal brands angling to capture market share and bring more of Mexico’s spirits heritage to the U.S. In early 2020, Hotaling & Co. entered the mezcal market with the luxury-priced Convite. The brand debuted with three expressions—Esencial, Coyote, and Espadín-Madrecushie—and is now available in 15 states.

“Though an untraditional year, the team launched the brand and quickly pivoted to focus on the off-premise channel and growing brand awareness that way,” says Hotaling’s director of product development, Elizabeth Staino. “The Esencial expression is performing particularly well as consumers are gravitating toward making cocktails at home during the pandemic.” To support the new brand during the on-premise shutdowns, Hotaling organized Zoom seminars and tastings with wholesalers and partnered with social media influencers to keep the brand in front of consumers even as bars closed. Staino notes that Convite also has plans to add at least one new expression in 2021, a Tepextate-based mezcal.

Chopin Imports’ Koch El mezcal, like the wider category, rose to the occasion in 2020, and maintained growth in spite of the challenging market. The brand is currently available in 16 export markets and expanded into Asia last year. Koch El appeals to retailers like K&L Wine Merchants, who look for the specificity and variety offered by the brand, which works with 52 families to produce over 30 expressions. “In the U.S., the drivers are Espadín, Ensamble-Angustifolia, and Karwinsky,” says director of exports and brand development Thalia Friligos Reyes, adding that the brand’s ancestral expressions are the jewels of the portfolio. “These are smaller-batch expressions with particular flavors related to earthiness from the clay and sweetness from the agave plants such as Tobalá and Coyote.”

On-Premise Complications

While 2020 was a strong year for mezcal and many brands and retailers are reporting growing success, the Covid-19 pandemic had the potential to devastate the category. In a more typical year, the vast majority of brands are over-represented in the on-premise, and rely on the creativity of bartenders and mixologists to introduce newcomers to the spirit. “We’re used to thinking of the on-premise as our main target, and suddenly we had to shift to the off-premise channel and develop a strategy to strengthen contact directly with our consumers and our natural promotors,” says Koch El’s Friligos Reyes. “One of the most successful livestreams we’ve done was from our agave nursery. We shared how we manage agave reproduction with over 18 producing communities in Oaxaca—people fell in love with our baby agaves immediately.”

Though mezcal drinkers were largely sipping at home throughout much of 2020, mezcal’s strength in the on-premise is undeniable and will return. While perennially popular as a substitution in classic cocktails like the Negroni and the Last Word, mezcal is also inspiring bartenders to build new drinks around the spirit. At Portland, Oregon’s King Tide and Tacos + Tequila, lead bartender Amy Wong often includes Del Maguey mezcal in her Penicilina, a riff on the classic Scotch cocktail. Among classic cocktails and mezcal substitutions, retailers across the U.S. attest to the popularity of the Paloma with home mixologists. Feist from BevMo notes that sales of Squirt, a grapefruit soda, have blossomed alongside mezcal sales. He believes that consumers were trying Palomas in the on-premise and making simple two- or three-ingredient versions at home since they’re unable to go out.

Mezcal cocktails are also extending beyond Mexican-inspired drinks into other restaurants. Indian restaurant Junoon in New York City features the El Matador on its cocktail menu, which mixes Siete Misterios Doba Yej mezcal with house-made turmeric tincture, house-made curry leaf-jalapeño maple syrup, and lime juice. At Harlem whiskey bar Uptown Bourbon, mezcal is featured in the Mezcal & Pine, a cocktail that uses lime and honey to support the titular flavors.

Amid the shutdowns, the e-commerce sector rapidly grew throughout 2020 with mezcal booming alongside it. Drizly reports that mezcal was up 57% through early December when compared to 2019, and that the category is attracting increased attention from retailers. Overall, mezcal was the fourth most common trending spirit that retailers planned on investing in more for 2021, according to the platform.

“Working with Drizly and their platform has been evolutionary because they have accelerated rapidly, and so where we started with some ads on the platform, we ended the year with dedicated brand pages for Del Maguey,” says Gardner. “We developed custom assets for Drizly to highlight ways to consume our products.”

Navarro of Wally’s also believes that mezcal’s star will continue to rise. “Remember, Tequila was way ahead in California too,” he says. “Now you go to New York and there are a number of stores that have an incredible selection of Tequila. You’re going to get the same thing with mezcal as people start to discover it, You need to get to the discovery-oriented people and once you get a hold of that, then it’s real. Now that big companies start to see that the geeks and the connoisseurs are gravitating toward mezcal, it’s a real business.”