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New Regulations Affect Small Mezcal & Tequila Producers

Barrels in the wine cellar, Porto, Portugal

NOM 199, the Mexican government’s newly proposed regulation, could change the landscape of the agave-based alcohol market.  It is estimated that 43% of spirits sold in Mexico are illicit, which the government says is dangerous for consumers and costly through unpaid taxes.  NOM 199 ultimately aims to regulate these illicit agave distillates, which Hipocrates Nolasco, President of the Mezcal Regulatory Council, says “represent unfair competition because people confuse them with tequila and mezcal.”  The proposed regulation, however, could threaten the identities of certain mezcals.  The spirit is currently produced throughout numerous regions of Mexico, each one producing mezcal with its own unique elements.  NOM 199 could segregate production, which could result in the loss of some of these well-known mezcal identities.  While there are drawbacks from having such a large illicit alcohol market, Alfredo Coutino, the Latin American Director of Moody’s Analytics, says that the current regulations make it difficult for small distillers to become certified.  There is, for instance, a 53% levy on high proof products like mezcal, which is considered a high tax for these producers.  Because the country is responsible for its production, NOM 199 could affect the agave-based alcohol market in and outside of Mexico.

Source: https://www.ft.com/content/627e65e4-78f1-11e6-97ae-647294649b28