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updated 2:54 PM CDT, Jul 28, 2018

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Prominent Latino friends target healthy slice of growing U.S. mezcal market

A retired Seattle baseball hero and two successful entrepreneur friends, all of Latino heritage, are embarked on an effort to bring Mexico's most popular mezcal spirit to successful penetration of the U.S., and possibly other parts of the world where the cousin of tequila might find a market.

 

It was five years ago that Mike Sotelo, a Seattle businessman with deep roots in the Latino communities around the state, formed La Plaza International LLC with exclusive U.S. and world rights to El Zacatecano and sought out Gene Juarez and Edgar Martinez as partners.

 

Gene
Gene Juarez

Juarez, who grew up poor in the Yakima Valley but went on to establish the Northwest's best-known chain of hair salons that still bears his name, and Martinez, whose career with the Seattle Mariners likely destines him for baseball's Hall of Fame, quickly decided to come aboard.

 

So did Greg Brown, managing director of the Caprock Group, a wealth management firm, whom Sotelo sought out as a partner who brought both money and financial expertise to the business.

"Mike brought in a money guy, a marketer and a celebrity," says Spencer Kunath, whom Sotelo and Juarez brought aboard as the key executive to oversee the business operations and growth of the company.

 

Mike Sotelo
Mike Sotelo

Juarez and Martinez, who have already had substantial financial success in their professional lives, seem less intent on making a fortune in the mezcal business than they do on raising the fortunes of the 400 or so residents of Huitzila, where El Zacatecano has been made for almost 100 years. The spirit gets its name from Zacatecas, the state in which the town is located.

 

Mezcal is the older but less-known brother of tequila. But sales of the two in the U.S. in recent years suggest Mezcal, which was actually created by the conquistadors whose experimenting with the maguey plant to find a fermented mash resulted in the first mezcal, is overtaking tequila, the national liquor of Mexico.

 

Edgar
Edgar Martinez
Although mezcal's share of the agave spirits market (tequila and mezcal) is only 5 percent, sales of mezcal are growing four times as rapidly as tequila sales and have a compound annual growth rate of 42 percent over the past three years, according to figures from the U.S. International trade Commission.

 

El Zacatecano is fermented from the Highland Weber Blue Agave plants that stretch beyond Huitzila and have been harvested for almost 100 years by the family with which Sotelo and his team have an agreement.

 

The El Zacatecano distillery is the largest employer in
Huitzila , which lies in the foothills of the Sierra Madre mountains, about 10 miles northeast of Jalisco state but 141 kilometers, or two and a half hours, by rough road and Mexico 23, to Guadalajara.

 

In an interview, the three principals agreed that their objective is to "support the organic and sustainable economic development of Huitzila by focusing on employment growth. We want people to have good quality and regular jobs to support their families," said Juarez.

 

I asked the three if tourism might become a residual benefit for Huitzila in the event they are as successful developing the brand as they hope.

 

"Not with 75 miles of dirt road to get to the town," Sotelo replied.

 

In addition, Kunath noted the name of the product is about to change.

 

"We are migrating our brand over from El Zacatecano to ZAC," he said. "The bottles currently say El Zacatecano but that will be changing next month. It is a slow process. We don't want to do it instantly as we could risk losing loyal customers."

 

Asked to explain the reason for the change, Kunath quipped: "We want our customers who are downing their third shot to still be able to pronounce the name of their mezcal."

 

This isn't the first business venture for Sotelo and Juarez. Sotelo was the founder-organizer of Plaza Bank, with the goal of creating a lender whose focus would be on "enhancing the opportunity for Latino entrepreneurs in the state to find funding."

 

A year after its founding in 2007, the bank, on which Juarez served as a board member, ran into the economic storm that impacted a host of small banks in Washington and across the country.

 

Kunath says the effort to expand current ZAC distribution on the West Coast will soon expand to Texas, Arizona and Nevada, He adds that they are "close to securing distribution in Korea, Japan and the Emirates Group in the Middle East and North Africa. We have tantalizing opportunities in front of us."
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