Mexican micro-brewers step out of the shadow of the country’s beer giants

A display of artisanal beer at Damajuana Boutique Cervecera in Distrito Federal, Mexico, is shown on July 8. Micro brews account for a tiny percentage of Mexican beer sales, but are growing in popularity.CREDIT: Photo by Meghan Dhaliwal for The Washington Post)

MEXICO CITY — Rodrigo Escudero comes from thoroughbred Mexican beer stock, Coronas and Tecates coursing through his family’s veins.

From his immigrant great-great-grandfather on down, his forebears worked for the country’s two mega-breweries, and he started his own career as an intern with the world’s largest beer exporter, Grupo Modelo, maker of the college and beach-party favorite Corona.

“It was my dream job,” he said. “The smell. The people. The vibe.”

Now Escudero, 31, finds himself happier working with a single colleague in a cramped second-story office surrounded by samplers of oatmeal stouts, citra hops pale ales and barleywines. His tiny company, La Patrona, is in the vanguard of a boozy renaissance that is challenging what it means to be Mexican beer. As the country’s middle class expands and regulators step in to encourage competition, the craft beer scene has taken off.

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“It’s really growing fast,” said Gilbert Nielsen, the owner of the craft brewery Calavera, on the outskirts of Mexico City. “We’re reaching a critical mass of customers, of people who like craft beer and will look for it.”

From trendy rooftop beer gardens to grungy punk bars to 100-label tasting rooms, Mexican micro-beers of all kinds are flourishing. And what is happening in the beer market, with its upstart tequila-barrel-aged ales and banana brews, is something that Mexican President Enrique Peña Nieto’s government hopes to encourage in other industries as the economy develops. It has taken steps to break long-standing monopolies, most prominently the telecom empire of billionaire Carlos Slim, and later this month plans to auction off oil blocks to foreign companies for the first time in the better part of a century.

For generations, two companies, Grupo Modelo and Cuauhtemoc Moctezuma, had a stranglehold on the loyalties of Mexican drinkers. Their duopoly dominated the $20 billion market, and their exclusivity contracts with bars and restaurants meant that customers could buy beers only from one of their lines. They made all the well-known Mexican brands: Modelo brews Corona, Pacifico and Negro Modelo, while Cuauhtemoc makes Dos Equis, Tecate and Sol.

Challengers often found themselves strong-armed out of business by the mega-brewers, which could offer restaurants and bars perks such as renovations, televisions, tables and chairs, coolers, mugs, free beer and cash bonuses.

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When Jesus Briseño opened the Minerva craft brewery in Guadalajara a decade ago, he convened restaurant owners to sample his product. When they expressed interest, he bought 15 keg refrigerators to give them, but only one restaurant agreed to sell the beer, because the others had contracts with one of the giant breweries. “That was very difficult,” Briseño said.

But Minerva, which has managed to grow from three to 52 employees, now faces a more welcoming business climate.

Craft beer has taken off in part because Mexico’s gastronomic scene in general is thriving and chefs at restaurants that often make “world’s best” lists take an interest in it. But brewers also cite two major changes that helped them.

The first was a 2013 ruling by the Federal Competition Commission that limited exclusivity deals by the big brewers to a quarter of their points of sale. That ruling followed a legal challenge by Minerva and Mexico City micro-brewer Primus — teaming with London-based giant SABMiller — and opened up space for small beer-makers to sell in restaurants and bars.

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“It had been practically impossible for us to enter this market,” said Jaime Andrew, an owner of Primus beer.

The other change was the purchase by foreign companies of the dominant Mexican brewers: Heineken purchased Cuauhtemoc in 2010, and Belgian-based AB-InBev bought the half of Modelo that it didn’t already own in 2013. Since then, the industry titans have warmed to their pint-sized competitors.

The chief executives, Ricardo Tadeu of Grupo Modelo and Marc Busain of Heineken Mexico, met with craft brewers and told them they would help sort out any problems. The industry brewers’ association opened up two seats out of the eight for micro-beer makers.

“When the new guys came, the first thing they did was reach out to us,” Briseño said. “They knew they needed to stop the fighting. It would mean more damage for them right now in terms of reputation.”

Goliath stomping on David is not a good public relations strategy, but foreign Goliath on Mexican David is worse. The claim to be local, traditional and authentic has become one of the strongest marketing arguments for craft brewers.

“People started looking at Mexican craft beer with much more pride,” said Escudero, of Patrona. “I have gone to some restaurants, and the first question they ask you is: Is your beer Mexican?”

Craft beer, which costs more and is harder to find outside the major cities, still accounts for less than 1 percent of the entire Mexican beer market. But it has been growing swiftly, and there are now 50 to 100 micro-brewers operating year-round in Mexico as businesses, according to the industry association. With some growth rates surpassing 30 percent annually, they’ve attracted the interest of the industrial brewers.

Earlier this year, Modelo launched a website called Beerhouse, to sell their line, plus dozens of other artisanal and import beers, via home delivery.

“We see the artisanal market as complementary and valuable,” a Modelo spokesperson said in a statement.

Modelo has also tried to buy some of the craft brewers. Briseño said that Modelo offered him $60 million for Minerva this year but that he turned it down. Reports in the Mexican media say Modelo plans to purchase craft beer brands such as Tijuana and others.

“That rumor exists, that Grupo Modelo is interested, but until now, that’s all it is, a rumor,” said the sales manager for Tijuana, Israel Acevedo de Anda.

Some paths into the beer market are still blocked. The ubiquitous Mexican convenience store, Oxxo, is part of the same ownership as Heineken, and therefore closed to craft beer, as are other Wal-Mart-style retailers.

“We’ve had a lot of trouble with the big chains,” Briseño said. “They don’t want to let those go.”

But for an industry that just a few years ago mostly comprised home-brew enthusiasts, they’ve come a long way. Last week, Nielsen, of the Calavera brewery, was bottling a dark lager called “Pacto,” Spanish for “deal,” named for all the agreements that small and large beer companies were now striking in Mexico. It was, he said, a “commemoration that we’re in the In Group and not in the Out Group any longer.”

“For most of us, at least the first generation of craft brewers, this was not so much a business, it was a passion and a way of life,” he said. “Waking up in the morning and saying, what are you going to do today? I’m going to brew 5,000 liters of beer. That’s not bad.”

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Washington Post correspondent Gabriela Martinez contributed to this report.