The recent surge in popularity of agave and tequila presents a lucrative opportunity for Mexican companies, but it also comes with challenges such as finding reliable importers and distributors, particularly in the competitive US market. In this interview, we sit down with Ernesto Wlasiuk, Export Manager and International Trade Consultant at NewMarkets, Mexico, to discuss how companies can capitalize on this demand, expand their market presence, and protect themselves from financial risks.

Can you share insights into the recent success of agave and tequila in the international market, particularly in the US?

Imports and consumption of tequila have raised record numbers in the last years, achieving second place as the most consumed distillate in the US behind vodka. Besides, it is a clear tendency and is something fashionable, thanks mainly to the mature cocktail culture existing in the American market (2 out of 3 liters of tequila end up in a cocktail mix). Mezcal, in parallel, is now becoming “the new tequila”, and in the continuum within the agave category of spirits, certainly taking benefit from tequila’s preexisting success.

How does NewMarkets assist companies in the agave and tequila industry to find reliable importers and distributors, especially in the competitive US market?

Our company specializes in business development, we have a large experience supporting Mexican and foreign companies to grow internationally. Within the beverage industry, we have developed an important business intelligence of the market over the years, with first-hand knowledge of key players in the different segments of the industry, and yes, networking is of the essence. Also, some of our executives have worked in the past as export or area managers in the wine sector, adding a complementary perspective to our projects.

Image: Ernesto Wlasiuk and Lloyd de Villamor are Managing Partners at NEWMARKETS.

What strategies do you recommend for these companies to make the most of the current demand for agave and tequila?

Promotion is a key issue, we recommend exhibiting in the main trade shows around the world, not just in the US. There are many different international markets where there are enormous chances to increase the demand – yes, there is a world beyond the USA for tequila and mezcal! Another strategy is to adapt to customer’s preferences, for instance with ”lighter” versions of products in markets that are just beginning to discover the category, paying attention to the agave-derived subproducts that can become strong introducers for the broad public.

In your experience, what are some common challenges faced by Mexican companies looking to expand their market share in the US, and how does NewMarkets help them overcome these challenges?

Typical challenges would be the technical documents involved, handling logistics, and even the language barrier.…for the big companies they are usually not a problem, but for the small ones they can be insurmountable. In any case, the biggest challenge is to develop a commercial attitude: becoming exporters rather than suppliers requires a sales strategy, a team, and a clear budget for promotion.

How can companies in the agave and tequila industry ensure they are protected financially when trading internationally, and what role does NewMarkets play in this regard?

We support our tequila producers, as well as all of our clients, with recommendations to work with consolidated international firms with a solid track record, and using some helpful financial services such as export credit insurance. Researching a potential client’s financial record is an exercise that can avoid future headaches.

Could you elaborate on the specific services and functions NewMarkets offers to assist beverage companies in their international commercial or industrial expansion?

Our services are varied and always adapted to each client’s needs, even though we do offer some standard formulas for companies such as personalized commercial agendas, B2B meetings with importers and distributors, or our Export Area Manager services. We also work with specific sectors and private organizations such as chambers of commerce,  or regional entities in promotion activities at trade shows or as coordinators of trade missions abroad. Likewise for foreign companies and organizations that require our services for the Mexican and Latin American markets.

Image: Sid Patel, CEO, Beverage Trade Network with Lloyd de Villamor , Managing Partners of NEWMARKETS at ProWein, Düsseldorf. 2024.

With almost 20 years of experience in international trade consulting, what do you consider to be the key factors for successful international market entry when it pertains to beverage companies?

As would be the case for most sectors, the beverage sector requires several key factors when entering new markets: the classical 4 P’s in export sales: Planning: a strategy upon which to lean; Persistence: today’s “NO” may be a YES in the future;  Patience: something that this sector in particular demands: being aware of the specific buying cycles and few time slots when buyers are open to new offers are key; and Perseverance: by being alert to opportunities in expected AND unexpected scenarios.  I would add a 5th “P”, which is People: forging good and transparent relationships with importers and distributors, which implies listening to their needs and translating that demand to one’s company (not always an easy task).

How does NewMarkets navigate the complexities of different markets and industries to effectively tailor strategies for its beverage clients?

All clients require a specific study of their company where we analyze in more detail its portfolio, promotion tools, pricing, and idiosyncrasy. In turn, we focus on a proposal to develop business in very specific segments and market scenarios, always under a strategic planning approach.

Image: (NewMarkets) - Client

In your experience, what are some of the challenges that Mexican beverage companies typically face when expanding into new international markets, and how does NewMarkets help them overcome these challenges?

Typical challenges would be the technical documents involved, handling logistics, and even the language barrier.…for the big companies they are usually not a problem, but for the small ones they can be insurmountable. In any case, the biggest challenge is to develop a commercial attitude: becoming exporters rather than suppliers requires a sales strategy, a team, and a clear budget for promotion.

With the rise of e-commerce and digital platforms, how has NewMarkets adapted its strategies to leverage these new opportunities for international trade?

Even though e-commerce has risen as a new distribution channel at the start of the XXIst century, due to the tech revolution still underway, we must always remember THE CUSTOMER as the central piece in our sales effort – which includes besides the final buyer, the importing and logistic companies involved. Many brands and formats can be adapted or developed specifically for this channel, which can coexist with the ones sold in the traditional ones. Therefore creativeness and marketing skills are essential.

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What trends do you foresee in the agave and tequila market, and how can companies prepare to capitalize on these trends?

Our opinion is that there is a great margin for growth internationally, with many markets awaiting the category in its introductory stages in Asia and Africa. The focus on the US market in the past decade has been natural given the proximity to the market. However almost 40% of the brands commercialized there are not in the hands of Mexicans – the top 10 tequila brands belong to major international corporations – perhaps the time has arrived to put into focus 100% Mexican brands and producers, that can tell the story of their craftmanship and tradition from origin. Both  Tequila and Mezcal, and also the rest of Mexican “jewel spirits” such as Sotol or Raicilla are widely seen as trendy, sophisticated, and fashionable, with great versatility in their consumption: as an ingredient in cocktails, or in their original presentations. Focusing on specific target groups, depending on each market situation is also key: for instance in Spain, foreign tourists have a wider knowledge of the category than most of the local population (for the time being at least); or the younger population is open to discovering new brands and flavors in night clubs in the UK with lighter versions of tequila in the form of cream liqueurs (if Sangría or Mimosas exist in wine, why not similar concepts for agave as initiation drinks to the category?). 

Could you share a success story or case study where NewMarkets significantly contributed to a company's international expansion in the agave and tequila industry?

Perhaps a sectorial case is more descriptive of our commercial and promotional attitude: for instance, under our initiative, we will be participating and coordinating for the first time in the 30-year history of PROWEIN in Düsseldorf,  a group stand of 12 that is 100% owned and managed Mexican spirits producers of mainly tequila and mezcal, but also of pulque, pox, and sotol. We expect a good turnout of importers and distributors, but also of media prescribers that will help to communicate Mexico’s rich tradition in distillation to the world. It was about time!

*The SPIRIT OF MEXICO pavilion at Hall 5 A10.

Image: The Spirits of Mexico stand at Prowein, Dusseldorf, 2024

Conclusion:

As the demand for agave and tequila continues to soar, companies in this industry face both immense opportunities and challenges. NewMarkets, through its strategic guidance and expertise in international trade, serves as a valuable partner for these companies, helping them navigate the complexities of the global market and expand their reach while mitigating financial risks. Ernesto Wlasiuk's insights shed light on the path to success for companies in the agave and tequila industry, making NewMarkets a trusted ally in their journey to international expansion.

In conversation with Malvika Patel, Editor and VP, Beverage Trade Network