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Craft beer is in full swing in Mexico despite governmental challenges

Craft beer is in full swing in Mexico, where there are 940 independent breweries, compared to the 26 that were present in 2011. And since then, production has grown at an average annual rate of 53.29% to 189,250 hectoliters in 2018.

An example of this boom is Diego Lara, co-founder of the Falling Piano brewery in Mexico City, where a decade ago he began with the importation of foreign beverages and now celebrates a year with his own brewery, in which he manufactures and sells his own brew.

“There is a more educated public and consumer. He is a consumer who follows trends outside the country and, when he sees them here, is there to taste, gives feedback, which is something very important. The industry has gradually transformed, We are still in diapers, but there is much to do,” says Lara in an interview with EFE.

The entrepreneur’s success has not been without challenges, such as the cultural factor, he says because at the beginning people used to ask him for a beer with a higher alcohol content or complain about bitterness.

He has also fought the idea that this craft beer is to get drunk, because the key to craft breweries, he emphasizes, is to position itself as a local business that integrates with neighbors, artists and other entrepreneurs, in this case from the Roma neighborhood, one of the most vibrant neighborhoods of the Mexican capital.

“We firmly believe that a brewery must be integrated into the community. We are not a bar, we are not a club (disco), it is a brewery that is part of a community, it is a place open to art, culture, it is completely familiar, so what we are looking for is to integrate in that way,” he explains.

Although the consumer has adapted, the laws are not yet fully there, emphasizes the businessman, because Mexican legislation does not recognize the concept of craft beer, except for local cases such as the northern state of Baja California, which creates confusion and obstacles.

“The issue of artisanal production is not very well regulated. Then there are certain gaps, there are certain gaps in both the law and the regulations that, if they were regulated, we would have access to be able to abide by them, to be able to remove them in a better way”, Lara admits.

Matías Cruz agrees on this , in charge of the statistical commission of the Association of Craft Brewers of Mexico (Acermex), who also warns that large industrialists acquire small breweries and continue selling the product as artisanal to take advantage of new consumption habits.

“There is a worldwide trend for alternative products, for alternative trade, which includes what are handicraft products, and it is this idea to stop consuming large chains. That is a worldwide trend and this, in the case of beers, is a representation of that trend, ” he says.

Despite the “exponential” growth of the craft beer industry, which registered an investment of $279 million dollars in 2018, the average profit margin is negative, with a loss of 8.88%, reveals the Acermex report.

The cause of this is “obvious” to Cruz: the Special Tax on Production and Services (IEPS) that the Mexican Government applies for a rate of 26.5% to the brewing of beer, which costs craft producers four times more.

“The reason we pay more is not that we are more harmful, it is because we are more expensive because our value chain is integrated in a completely horizontal way, ” argues Cruz, who calls this tax rate “absurd.”

Despite this “power struggle” between artisanal and industrial that prevents reform of the IEPS, according to Cruz, the craft beer reached a sales value of 61.4 million dollars in 2018.

In addition, it accounted for 6,373 employees, which represents an average annual job growth rate of 72.81% since 2011.

“Despite the challenges, the market is growing. But now the question is: Couldn’t it have doubled?”, Cruz reflects.

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