Craft Beer Niche

U.S. malted barley and hops are helping Mexican domestic microbreweries gain traction.

Primus cofounder Jaime Andreu Galván says the microbrewery industry in Mexico has grown 30% per year each year since 2013, Image by Jim Patrico

With the help of American malted barley and hops, the Mexican craft beer business is starting to take off after years of being stalled by the country’s dominant brewers.

Touring Mexico in August with the U.S. Grains Council, DTN/The Progressive Farmer toured Primus Cervecería (Brewery), in San Juan del Río, about 100 miles north of Mexico City. Primus is one of the biggest names in Mexican craft beer, selling five main varieties under the “Tempus” brand label.

“Beer is really my passion, mainly because beer is really democratic,” explains Jaime Andreu Galván, cofounder and owner of Primus Cervecería. “If you are a worker, you can buy a beer. It has been with us forever. It has been a companion of people through history.”

Brewmasters. Mexico accounts for more than 20% of global beer exports, making it the largest beer exporter in the world. And 82% of Mexico’s beer exports flow north to the U.S., according to the International Trade Centre.

While Mexico is a large beer-producing country, the country’s domestic beer market until four years ago was dominated by Mexico’s two brewing powerhouses. Grupo Modelo InBev and Cuauhtémoc Moctezuma, now owned by Heineken, controlled as much as 98% of the beer market through a variety of brands and exclusive contracts with nearly every grocer, restaurant and bar.

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Primus and other struggling craft brewers couldn’t get in bars or on grocery shelves. They formed the Asociacion de Cerveceros de la República Mexicana (Mexican Association of Craft Brewers) and challenged Grupo Modelo and Cuauhtémoc Moctezuma with a case before Mexico’s Federal Economic Competition Commission. The commission, in July 2013, ruled craft brewers had unrestricted access to all premises, even if there was an exclusive contract.

“The whole market has changed since that moment,” Andreu Galván says. “Since that date, we have been growing over 30% every year as an industry.”

At least 200 microbreweries have opened in Mexico in just the last two years, raising the national figure to roughly 400. That still pales to the roughly 5,300 craft beer makers in the U.S.; but the Mexican market has plenty of room to grow.

Supplier Solution. Mexico’s craft industry is growing, and Mexico sends a lot of beer to the U.S. But, in return, American farmers send barley and hops.

Most of the barley produced in the U.S. is for malting purposes. So, most of the barley exported to Mexico from the U.S. also comes as malted barley, thus giving a process that provides U.S. manufacturing jobs. Since the 2012–13 crop year, the U.S. has exported 1.77 million metric tons of barley to Mexico, ($914.35 million in value), including 358,153 metric tons for the 2016–17 crop year ($196.6 million), according to data from the U.S. Grains Council.

One of the main struggles when starting Primus was to source quality raw materials such as barley malt and hops. Andreu Galván initially sourced the brewery’s malted barley from the major Mexican brewers, but they stopped selling barley and hops to the craft brewers, so Primus and others had to make connections in the U.S.

“We have to import barley. We import it mainly from the U.S. That’s because it’s convenient, but not only because of convenience, but it has a great price,” he says. “If you want to make a great craft beer, you have to have great raw materials, and that’s why we are importing them from the U.S. What I love about the malt we import is that they are very clean, very efficient.”

While Primus buys most of its barley and hops from U.S. companies, it also buys from Germany for some of its brews.

Demand Despite Price. Initially, though, Andreu Galván says there were major questions about whether Mexican consumers would support the craft brew industry. Importing his raw materials made Tempus beer more expensive than the average Mexican beer drinker was used to paying.

“Our beer is a little bit more expensive. Fortunately, we found that consumers were willing to pay a little bit more for our beer,” he says. “So, in Mexico, craft beer has increased proportionally. [It’s] more expensive than in the U.S., but consumers are willing to pay for it.”

Tempus beer is sold mainly in Mexico City, but about 4% of company sales are from exports to Japan, Hong Kong and Taiwan. Andreu Galván says the Tempus brand could start showing up in a few select U.S. markets by the end of the year.

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Primus Cervecería

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