Why It's So Hard to Start a Craft Brewery in Mexico
If I knew how much work it would be to open up a brewery in Mexico, and how the tax system works against craft brewers, I probably would have never done it at all.
Photo courtesy of Baja Brewing Company
I never really liked working in general.
My realization about this coincided with me getting really into beer. I'm from Steamboat Springs, Colorado, and I went to school in Boulder just when the craft beer scene there was really kicking off. I eventually started making my own homebrew while living in my dorm room, but at that point it was only a hobby. When I graduated, I tried working a normal job but that only lasted about a year until I realized that way of life was not for me—so I decided to travel instead.
I eventually ended up in Cabo San Lucas. My initial reason for being there was just to learn Spanish and learn how to surf. I told myself I was only going to live there for a year because I grew up in the mountains and wanted to experience another way of life. Then that year passed, and I found myself not wanting to go home. At that point, I must have gone through at least a thousand Pacificos and had gotten tired of most Mexican beers since Mexico is lagerland, after all.
Thus, anytime that friends or family would visit me from the US I would beg them to bring me craft beer. Then I thought, If I felt this way, there has to be other people that feel the same. This was when I started to look into opening my own craft brewery in Mexico: Baja Brewing Company.
However, if I knew how much work it would be to open up a craft brewery in Mexico, I probably would have never done it at all. The process—filled with everything from lugging my own brewing equipment from California, a Mexican tax system that works against craft brewers, and a hurricane that nearly destroyed my brewery—took a total of two years to open our doors.
I love Colorado, but there are a ton of good breweries there already. In Cabo, there were absolutely none. At the time that I opened up BBC in 2007, there were only a dozen breweries in the entire country. There were none in Baja California Sur, so I wanted to be the first one here.
When I went to the local municipalities to tell them that I wanted to open a brewery, they didn't know what I meant when I said I wanted to start my own "beer factory."
"Like, making your own micheladas?" one representative asked me.
I had to draw out diagrams of the whole beer-making process and explain everything to them to find out what kind of permits I would need to make it all happen. Then there was the issue of craft beer-brewing equipment, since there weren't any factories in Mexico that made it back then. I would eventually have to drive down to the States and lug back my own heavy duty, mass-brewing equipment via a semi truck.
I also had to teach a lot of the Cabo residents about craft beer. At the beginning, people would drink my Cabotella—a blond, smooth ale that goes down easy—and think it was the strongest beer imaginable. Oh, the faces they would make! I gave out so many free samples then.
Nowadays, there is a real acceptance for craft beer, so I've started making darker, more bitter beers like our Peyote Pale Ale. It is one of our more popular beers, probably because of a batch I made with real peyote, uni, and mezcal that was featured on Esquire's Brew Dogs.
In Mexico, craft brewers pay 300 percent more than the big breweries do, just because of the way that the tax system works here.
Mexican beer is dominated by two corporations that own everything: Grupo Modelo and Cuauhtemoc. They own everything, from distribution networks to the liquor licenses that a lot of bars and restaurants have down here. They also have exclusivity deals with restaurant- and bar-owners, and own a lot of the barley fields that grow malt in the country. This, along with hops not growing very well in Mexico's climate, make it a logistical nightmare to make your own beer in Mexico—everything is imported from the US and Canada.
The beer industry is so controlled down here. Craft brewers have a disadvantageous tax law in Mexico. In the US, if you're a craft brewer, you pay half as much per gallon of beer you produce than a big brewery does. In Mexico, we pay 300 percent more than the big breweries do, just because of the way that the tax system works here. This is partially why we are starting ACERMEX along with other breweries like Minerva in Guadalajara, Tempus in the state of Mexico, and many others. It is an association made up strictly of independent craft brewers to try to formalize ourselves and change this ridiculous legislation.
The demand is growing like I've never seen it grow before, and customers are voting with their pesos. There are now over 300 craft breweries in Mexico. While most of them are really small, this is a reflection of the craft beer trend that is already happening in the United States. Cucapá and Tijuana Brewing Company have already been bought by Grupo Modelo.
These last eight years since I left Colorado and started Baja Brewing Company have been a wild ride. It's not always good but it is always exciting, and that is all that matters.
As told to Javier Cabral
Editor's Note: Baja Brewing's Cabotella is now available in the US.