MIAMI – Mexican tequila has conquered the world, boasting 120 countries as customers, and its Brazilian counterpart, cachaca, a “cinderella” outside its huge national market, is ready to take the global leap with government support.
“Part of our work is how to make the Brazilian government wear the cachaca shirt, just like the Mexicans put on the tequila one and the United Kingdom puts on the Scotch whiskey one,” says the executive director of the Brazilian Institute of Cachaaa (IBRAC), Carlos Lima, in an interview with Efe.
The world annually consumes about $1 billion in sugarcane distilled beverages such as cachaca, but only $15 million of that total corresponds to the Brazilian beverage, the history of which is tied to the arrival in the 16th century of the Portuguese to what is today Brazil.
Far from being discouraged with such a small share of the international market, Lima says it “shows the potential for the growth of our exports.”
“The sectoral organization of Mexico with the creation of the Tequila Regulatory Council is a model that the IBRAC has been pursuing in Brazil for a long time,” he said.
Ramon Gonzalez Figueroa, director of the Tequila Regulatory Council, says his private organization can’t take all the credit for the internationalization of the drink extracted from the agave: “It is the entire productive chain within the council,” he says - but he beams with pride when breaking down last year’s results.
“I think it’s the best in the history of tequila,” he said.
Production went from 312 million liters (quarts) in 2018 to 352 million in 2019, a 13 percent increase, and in a couple of years, he said, it would double, as millions of agaves are being planted, a plant that grows in semi-arid climates of Mexico.
Exports rose 10 percent from 222.7 million liters to 245.8 million last year. “In 2019 we exported at a rate of 467 liters per minute,” he said.
A record in agave consumption was also broken: 1,343,000 tons in 2019, 18 percent more than in 2018.
The director of the Regulatory Council said 51 countries recognize all intellectual property rights to tequila.
Gonzalez Figueroa’s colleague at the IBRAC is waiting to receive the final 2019 results, but “there are about a thousand producers and we estimate that the production is of the order of about 700 million liters a year.”
Exports are around 8 million liters, which means for Brazil revenues of some $15 million, he said.
When asked the reasons that the cachaca has not taken off internationally, he replies: “The main reason is the lack of resources for export. A joint and aligned action to promote exports is missing.”
The start of production in 1516 makes this beverage the first distillate in Latin America, before pisco, tequila or rum, and one that has been present in the Brazilian’s daily life ever since.
Cachaca has 72 percent of the spirits market in Brazil, although beer is the most consumed alcholic beverage.
Something similar happens in Mexico. Tequila is the most consumed high-grade alcoholic beverage in the country, with 35 percent of the total market, but it is not the leader.
The high fiscal burden borne by both drinks does not help to improve internal results.
“Cachaca is the most taxed drink in the country. In fact, it is the product, in general, most taxed and we have a great fear that with tax reform (...), taxation on distillates, including cachaca, will increase,” says Lima.
Brazilian Economy Minister Paulo Guedes said during the World Economic Forum in Davos, Switzerland that the Government of Jair Bolsonaro was studying increasing the tax on drinks such as cachaca.
The Tequila Regulatory Council fears that taxes that some Mexican states want to introduce would add to the 53 percent special tax on production and services and the 16 percent value-added tax already in effect.
More than 70 percent of the price paid by the Mexican consumer corresponds to taxes, says Gonzalez Figueroa, who says that so far the taxes have not caused Mexicans to stop drinking tequila.
Both cachaca and tequila are the first appellations of origin that were created in their respective countries.
Lima longs for the policies for the protection of intellectual property in the international sphere for the Brazilian beverage, as Mexico has achieved for tequila.
“Cachaca is protected only in the United States, Mexico, Colombia and Chile and recently we managed to include it in the scope of the EU-Mercosur agreement and we hope that it can finally be protected in the European Union as a geographical indication,” he said.
Lima stressed that exporting cachaca, “an exclusive product of Brazil,” means bringing the image of the country around the world and that can boost the entry of other Brazilian products into the international market.