Mezcal and Fair Trade
Export brand owners of Oaxacan artisanal mezcal, the increasingly popular agave based Mexican spirit, come in many shapes and sizes. Some are proprietors of their own distilleries, or palenques are they’re known in this southern Mexico state. Others buy their liquid from small-scale family owned and operated facilities; in some cases they bottle on their own, while in others they contract with the producer to bottle, seal and label for them. There are umpteen arrangement permutations. Similarly the level of sophistication of palenqueros runs the gamut. However, by and large brand owners who are not directly involved in mezcal production are more savvy than their associate producers. This can, and does on occasion, lead to abuse within the industry as a result of inequality of bargaining power, and the palenquero’s desire to willy-nilly jump on the growing mezcal bandwagon with a view to selling much more product than previously.
Aventureros del Mezcal seeks to redress the imbalance by assisting artisanal mezcal producers to arrive at and obtain a fair price for their spirit. It does not pass judgment upon those who would take unfair advantage of hard-working palenqueros and their families while in the course of lining their own pockets. In fact Cynthia Ruíz Villalobos, co-owner of Aventureros, does not begrudge the Mexico City exporter who wears $200 USD sunglasses and sports $300 USD blue jeans, or his American counterpart who drives a Mercedes and lives in a posh Manhattan condo. By contrast, the lion’s share of brand owners are decent people who do their part to help Oaxacan palenqueros and their communities, of course at the same time earning a living for themselves.
At one end of the spectrum are non-Oaxacans who try to buy mezcal they earmark for foreign markets for as paultry a price per liter as possible. They seem little if at all concerned for the palenquero, who from time to time arises before dawn and concludes his work near dusk, often bloodied and exhausted after a day in the fields cutting and harvesting maguey. Its by-product, mezcal, is destined for export and ultimately sale at haughty retail prices. At the other end are those who want to succeed in the spirits world, but are equally concerned about ensuring a significantly improved economic lot for their producers. However palenqueros in Oaxaca are not yet at the point where the concept of “fair trade” has impacted price. Enter Aventureros.
Ruíz Villalobos is a chemical engineer with specialization in food sciences. Her business partner Paolina Musalem Ramos is a civil engineer. About two years ago they determined that of the three sectors they had begun to examine and analyze, being mezcal, coffee and crafts, mezcal was the industry requiring the most fortification from the bottom up. Retailers and wholesalers are at the top of the pyramid, intermediaries (exporters, distributors, agents, etc.) are in the middle, and the largest number and those who require assistance are the producers, languishing at the bottom.
“While our ultimate goal is to work with each of the three sectors,” Ruíz Villalobos explains, “we initially selected mezcal because in our estimation artisanal producers require more help than those in the other two [sectors], and the industry is in dire need of strengthening the beginning of the supply chain, the base of the pyramid.” She continues:
“How many palenqueros do you think arrive at the prices they charge for their mezcal by taking into consideration the cost of their [copper] alambiques amortized over the lifetime of that integral and expensive piece of equipment, or the actual cost of firewood when they do not pay cash out of pocket for it, or how much a highly skilled craftsperson or maestro albañil [master bricklayer] earns per day?”
Ruíz Villalobos and Musalem Ramos set out to find an initial complement of four palenqueros. Not surprisingly that task was relatively easy, though not a walk in the park. Who would turn away an opportunity to understand how much it really costs to produce a liter of mezcal, while at the same time receive both guidance on pricing and marketing assistance, all at no cost other than time? While the first goal of Aventureros is to calculate real costs of production for each palenquero, the plan also includes helping them to find new markets for their spirit. Part and parcel of the latter is to in due course assist them to become certified by the Consejo Regulador del Mezcal (CRM, or mezcal regulatory board). This will grant them access to the export marketplace. In addition, certification gives producers greater access to Mexico’s domestic markets by enabling retailers to legally call the spirit “mezcal” rather than “destilado de agave” (agave distillate).
The four palenques are located in two different districts of the state. In each case the process has been for Aventureros has been to set up an initial meeting with the palenquero and his family to explain the program, and for both sides to feel comfortable proceeding. This includes the palenquero trusting the motives of Aventureros and his willingness to provide detailed frank information of all facets of his operation, and his life. On the other side, Aventureros must be confident that its client will take the time to diligently gather information and follow through with disclosure promises, and be willing to embark upon next steps.
A key component of the project is the creation of spreadsheets or tables, onto which monthly or yearly pesos amounts are inserted into a plethora of categories; both fixed costs, and variable amounts contingent upon, for example, different labor requirements depending on stage of production. Since the learning curve regarding mezcal production is vast, and because each palenquero’s tool of the trade and methodology vary at least to some extent, creating the charts became part of the process in the course of Ruíz Villalobos and Musalem Ramos assisting each of their distillers. The ultimate result would become a blueprint for costing the production and sale of artisanal mezcal. Many columns are necessarily left blank pending the palenquero advancing with further steps such as expenses involved in batch certification, cost of export to Mexico City and further abroad, advertising and promotion, etc. And if production of the spirit, certified or not, is where his costs end, then he can determine his price per bottle and leave it to others in the chain to do their own extended analyses.
“I’m not aware of anyone else who has embarked upon precisely this kind of project in the state of Oaxaca, that is micro-analysis at the level of ancestral or small scale traditional mezcal production,” Ruíz Villalobos avows. Accordingly, while there are likely no intellectual property issues with disclosing Aventureros’ spreadsheets and the broader blueprint, I will leave it to Ruíz Villalobos and Musalem Ramos to, at their discretion, field questions and provide further information to those who are acquainted with palenqueros who might benefit from the program.
Notwithstanding the foregoing, I believe it is important for the reader to have a more concrete idea regarding the work Aventureros has been doing in terms of some of the categories that have been examined in the four instances, and the steps which follow after the initial agreement to proceed.
The second meeting between Aventureros and a palenquero enables the former to obtain raw data from the latter, based on presentation of receipts such as for electricity, telephone, internet, tarps for covering ovens, fermentation vats, gasoline for transport, small metal condensers in the case of clay pot distillation, etc. In many cases he can only go by memory since receipts are either lost or never provided. Discussion must ensue regarding, for example, how many tons of what specie of agave is harvested how often, the average yield (with its own set of variables), and so on. How many days per month does the palenquero work, how often are his wife and children involved, how much does he pay day laborers at what stage of production, and how does one value the labor of the palenquero and his family members? What if no money is paid to laborers, but rather compensation is in the form of trading of labor, goods and services, known as guelaguetza? How do you calculate the price of agave when cash is not paid to the comuneros, members of the village who determine, amongst other things, who has the right to harvest how much based upon that person having fulfilled his civil duty to the community, known as tequio?
Once the data is collected, and analyzed within the context of the broader Oaxacan economy, it is input into the spreadsheets back at the office. Matters such as valuing labor and materials where cash is not exchanged, significant capital costs, depreciation and amortization must be considered before a real per liter peso amount is reached.
At the final disclosure meeting Ruíz Villalobos and Musalem Ramos are armed with their completed charts and spreadsheets, and backup documentation, some of which is statistical. This is generally the first time the palenquero and his family truly gain an appreciation of the value of their work, and an understanding of why their price per liter requires substantial adjustment. According to Ruíz Villalobos, in one instance the palenquero had been charging about 70% less per liter than he should have been. After reviewing the material he understood two crucial points: 1) the reason why despite all the hard work, increased production, and growing popularity of mezcal, his family were little better off than they were five years earlier, and; 2) why it became imperative for him to increase his price per liter.
But if others in the local palenquero community are charging less, the question becomes how does the producer raise prices and still be competitive. The other arm of Aventureros’ project is promoting the concept of fair pricing through explanation and discussion at events arranged at mezcalerías in Oaxaca, Mexico City and elsewhere in the country. It is assisting with bottling and labelling, an important aspect of marketing. Certification and the export market is indeed on the horizon, but the issue then becomes addressing sales on an international scale.
Aventureros is still in phase one, enlightening more palenqueros regarding their real costs of production and sale, and ensuring that the mezcal consuming public has an appreciation of the industry from the bottom up. If palenqueros who are already involved in the export of the spirit recognize their actual costs, they may indeed be inclined to raise prices. The problem then becomes the exporter seeking other producers with whom to associate and maintain that inequality of bargaining power. In almost every industry you can find producers who will almost give away their widgets, just for the sake of a sale; and as in the case of many artisanal mezcal producers, it is done without embarking upon the type of analysis Aventureros preaches.
The mezcal market cannot likely withstand a much higher pricing level if it is to continue to compete and grow in the global spirits market. A solution for those exporters motivated primarily by avarice might be to pay the palenquero what he deserves, and at the same time downscale his lifestyle, just a tad. But frankly, how many exporters of artisanal mezcal have levelled the playing field by aiding their producers in understanding their real costs of production and sale. Bravo Aventureros del Mezcal!
Alvin Starkman operates Mezcal Educational Excursions of Oaxaca. He and Ruíz Villalobos are organizing their first daylong group event scheduled for March, 2016, consisting of a mezcal educational experience combined with a visit to one of Ruíz Villalobos’ clay pot distillers and his families. They are using it as a means of promoting the project and exposing both aficionados and novices to the lifestyle rural palenqueros. The day will include a luncheon prepared by the family and (optional) hike.