Tequila Exportation – a Growing Business
Mexico’s excellent climate offers favorable conditions for producing tequila year-round. But if there is one month of the year in which the tequila trade reaches its peak, it is in September, due to the demand generated during the Mexican national holidays. It is essential to take several factors into consideration when exporting tequila (or mezcal, since the mechanisms for exportation are similar).
Mexico’s main organizations that regulate the exportation of tequila are the Tequila Regulatory Board (Consejo Regulador del Tequila) and the Mezcal Regulatory Board (Consejo Regulador del Mezcal), as applicable. All exporters must be registered with the appropriate board. First, it is important to carefully consider your production plan. We’ll answer some basic, commonly-asked questions before we get started with foreign trade operations.
Bottled or Bulk?
Tequila, like mezcal, has a high alcohol content, usually between 30-50%. Transportation of these liquids can be complicated regardless of the format:
- Bottled: the product is considered delicate cargo and the packaging itself (the bottle) ensures the minimum safety standards.
- Bulk (to be bottled at the destination): the product would be considered hazardous, and we would have to use various transportation methods such as ISO tanks (for ocean shipments) or tankers (for ground shipments).
Small or Large Quantity?
The quantity of product exported is crucial to ensure the success of your operations. There are only two categories of end clients in the tequila business, based on the size of the export: major self-service outlets and smaller retail merchants. It is an undeniable reality in the industry that the first group enjoy many privileges that make their operations a bit easier. But against all odds, even the smaller exporters have methods at their disposal to hold their niche in the market.
- Large exporters: When exporting tequila, these merchants face less restrictive standards at the destination with regard to operations, making it easier to ship several full container loads (FCL shipments).
- Small exporters: Unfortunately, these exporters experience more restrictions and commonly need to use multiple shipments to fill a container, even if they are different products (LCL or “Less than Container Load” shipments), which can result in additional consolidation expenses.
Europe, the Americas, or Asia?
As a passenger, you can only carry a limited number of bottles of wine and liquor in your suitcase, depending on the country. The same is true when importing tequila and mezcal, but on a different scale. In addition, the standards vary by mode of entry (ground/ocean) into each country.
- U.S.A: The United States is the world’s largest importer of tequila, at 91%, and also of mezcal, at 40%. The product is usually moved via ground transportation, and entry into the country is easier than for other destinations. Importers and suppliers to the U.S. must be registered with the Alcohol and Tobacco Tax and Trade Bureau (TTB), and importers must have the necessary licenses granted by the ATF (Bureau of Alcohol, Tobacco, Firearms and Explosives) and the DBPR (Department of Business and Professional Regulation) if applicable.
- Asia/Europe: At some transshipment ports (which are sort of layovers at different airports) there are restrictions as to the amount of tequila/mezcal imported, even if the final destination allows a larger quantity. You may have to pay a special fee as an import guarantee. Some key transshipment ports include Busan, South Korea and Hamburg, Germany.
Incoterms – The Great Dilemma.
Incoterms are a major determining factor in your export process. There are three main commercial agreements clients may select when shipping these products: CFR, FOB and Ex Works (EXW). Each Incoterm shifts responsibility for various charges between the exporter and importer. Below are a few of the most common responsibilities under the Incoterms as they relate to tequila and mezcal exports:
|Responsibilities by INCOTERM||CFR||FOB||EXW|
|Export Packing (bottling)|
|Inland Freight at origin (load/unload)||E||E||R|
|Export Customs Clearance|
|Carrier Costs (to destination)|
|Import Customs Clearance|
|Inland Freight at destination (load/unload)|
█ Exporter / Importer / Origin (Mexico)
█ Importer / Buyer / Destination