Arriba Agave
Premium Mexican tequila gears up to reenter Chinese market
AMexican delegation recently arrived in China to promote Mexican agricultural products, with a special focus on tequila, Mexico’s iconic national liquor.
Both tequila producers and Mexican officials believe that China’s market, newly opened to premium tequila and home to exceptional consumption potential, will make it a new haven for the drink synonymous with Mexico.
Promoting premium tequila
Over dinner at a Spanish restaurant in Beijing, Raul Urteaga Trani, general coordinator for international affairs at Mexico’s Ministry of Agriculture, frowned at a bottle of tequila brought by the waitress, saying, “No, not this one. I want a 100 percent tequila, the premium one.”
Later on, in a neighboring bar, he found the premium tequila he was looking for. Urteaga had come to Beijing as a member of the Mexican delegation, in part to champion premium tequila made from 100 percent blue agave.
In an interview with the Global Times, Urteaga noted that there are two kinds of tequila – commercial and premium. Premium tequila is relatively unknown to Chinese consumers. It was only this past June that a six-year ban on its import was lifted.
The ban was first put in place during a Chinese government effort to reduce the amount of fake alcohol on the market (Many fake alcohols have a high methanol content. Genuine premium tequila is also high in methanol compared with other liquors.).
Restrictions on methanol content meant China only allowed the import of commercial tequila, which mixes agave sugar with sugar from other plants and is used mainly for cocktails, according to Urteaga.
During Chinese President Xi Jingping’s visit to Mexico in June 2013, he and Mexican President Enrique Peña Nieto signed a series of trade agreements, one of which opened the door for premium tequila to reenter the Chinese market.
Confidence in Chinese market
The lifting of ban has been welcomed by Mexican tequila producers, who are eager to explore the Chinese market.
Mexico has 119 tequila producers exporting the distilled beverage to more than 100 countries and regions. About 80 percent of exports go to the US market.
Although tequila is well-known in western countries, it remains a relative novelty in China. But Mexican producers are confident in Chinese market’s potential.
Even before premium tequila’s entry into the Chinese market, commercial tequila exports to China have seen quick growth.
According to figures cited by Urteaga, 92,000 liters of tequila were exported to China in 2009, while 2012 saw exports climb to 412,000 liters.
Mexico has set an ambitious sales goal for the next five years in China.
“We hope that by 2018, tequila exports to China will reach 10 million liters,” Urteaga said.
If the goal is achieved, China will be the second largest tequila market in the world, behind only the US.
“A few years ago, policymakers in Mexico started to become concerned about overreliance on a single market [the US]. So little by little, we’ve moved into other markets.” said Urteaga, adding that the largest opportunity for export growth remains Asia, and China in particular.
Urteaga described a target market of well-educated Chinese young people aging from 20 to 35, who are open to new tastes or already familiar with tequila from time overseas.
“The second target group is people from 40 to 50 years old, who have achieved some level of success and are able to entertain themselves.” he noted.
Ignacio Ramirez Ruvalcaba, a brand manager for the tequila brand Hacienda Vieja in China since 2008, echoed Urteaga, saying that he has seen a willingness to try tequila on the part of Chinese consumers, especially young people.
Alvin Wei, a 26-year-old Beijing resident who spent four years studying in Australia, told the Global Times that tequila is popular abroad, but Chinese young consumers are more familiar with whisky or vodka, and prefer beer during their downtime.
“Those are the drinks young people like. We’re quite different from our parents or grandparents in our drinking habits. For example, I don’t drink baijiu unless it’s with a formal meal,” Wei said.
Brandy is the current sales champion among non-Chinese liquors sold in China, followed by whisky and vodka, said Chen Tianyu, a liquor industry analyst at industry research website askci.com, in an interview with the Global Times on Tuesday.
Tian added that tequila is currently the sixth-best selling non-Chinese liquor in China.
Challenges faced by tequila
The low ranking is a sign of the challenges tequila faces in the Chinese market, particularly publicity.
In Chen’s view, foreign liquors do not do all they need to promote themselves in China, leading to lower awareness of their products.
“The main challenge was and still is to introduce the ‘tequila’ name and teach consumers the different ways to drink tequila,” Ramirez said, noting he had already sent teams to bars and clubs in Guangzhou, South China’s Guangdong Province to do just that.
Most Chinese bars told him that the demand is growing gradually, and suggested more advertisement and tasting promotions.
Apart from marketing, another major challenge is ensuring that the product consumers get is genuine, according to Urteaga.
Tequila is made from the blue agave plant. Only liquor produced in certain areas in Mexico can properly be labeled “tequila.”
But in China, Mexico’s strict standards for the beverage are not widely known, nor is the fact that similar liquor made in other countries is also sometimes labeled as tequila.
“Now we have officially requested that China grant recognition to tequila’s geographic origins, and we are doing well, making very good progress,” said Urteaga.