Industrial Policy in the Mexican Spirits Industry

• In Event: Comparative Political Economy of Food

Abstract

While tequila and mezcal are quite similar products, state policies in Mexico for these two spirits support different classes of producers. Mezcal policy is developmentalist, with important initiatives at the state and federal levels to promote the insertion of small craft distilleries into global export markets. In contrast, tequila policy is oriented to preserve a homogenous, large volume industry, dominated by large (mainly transnational) corporations. Drawing on interviews with producers, exporting organizations, and politicians in these two sectors, analysis of trade negotiation archives, and historical data on land tenure and production, I trace this distinction to two contrasts between the tequila and mezcal sectors. This paper contributes to a new wave of scholarship on industrial policy—state efforts to guide development in nascent industries—a topic that dominated the economic development agenda in the early- and mid-twentieth century.

First, I analyze the scale of organization of large- versus small-scale producers in these two sectors. These organizational patterns are legacies of historical settlement and land tenure patterns in the regions where tequila and mezcal are mainly produced, Western and Southeastern Mexico, respectively. Persistent practices of smallholder agave production and collective land preservation in the Southeastern state of Oaxaca has preserved informal institutions necessary for cooperative production and the preservation of artisanal methods. In contrast, land concentration among oligopolistic agave and tequila producers in the Western state of Jalisco set the stage for domination of the sector by multinational corporations. The higher prevalence of small-scale production of both agave and mezcal facilitated pro-smallholder institutions by pressuring the state to construct amenable regulatory and subsidy policies.

A second driver of variation is the relative timing of multilateral trade negotiations and the onset of export booms for these two products. Tequila had already been established as a large export sector prior to negotiations for the 1994 North American Free Trade Agreement (NAFTA). Thus, through overt pressure by corporate tequila producers, Mexico adopted a set of institutions to classify tequila as a homogenous—and thus industrial-grade product. In contrast, mezcal exports were miniscule in the early 1990s, and thus not seriously considered in NAFTA negotiations or Mexican sectoral policy. This relative neglect allowed the naturally diverse and fragmented ecosystem of domestic producers to establish a foothold in export markets. The “artisanal” character of mezcal has solidified as consumer tastes in the United States and other export destinations gravitate to mezcal’s diverse flavor profiles and traditional production methods.

Author

• Brian Palmer-Rubin, University of Southern California