Nov 142016
 

The production of (genuine) tequila is tightly regulated because tequila has denomination of origin status. This status (sometimes called appellation of origin) sets specific standards for producers in terms of how a product is grown or produced, processed and presented. Equally importantly, it defines the geographic indication, the specific places or regions where the product has to be made. Other items having denomination of origin status include champagne, asiago cheese and Melton Mowbray pork pies.

Geographic indications are “indications which identify a good as originating in the territory of a Member, or a region or locality in that territory, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographic origin.” (World Trade Organization)

Mexico’s denomination of origin area for genuine tequila includes includes 180 municipalities in five states, a total area of about 11 million hectares (27 million acres).

Tequila producing areas of Jalisco and neighboring states.

Tequila producing areas of Jalisco and neighboring states. Credit: Tony Burton; all rights reserved. Click to enlarge

The main area (see map above) is the state of Jalisco (all 124 municipalities), with extensions into three neighboring states:

  • Nayarit (8 municipalities): Ahuacatlán, Amatlán de Cañas, Ixtlán del Río, Jala, Xalisco, San Pedro Lagunillas, Santa María del Oro and Tepic.
  • Guanajuato (7 municipalities): Abasolo, Cd. Manuel Doblado, Cuerámaro, Huanimaro, Pénjamo, Purísima del Rincón and Romita.
  • Michoacán (30 municipalities): Briseñas de Matamoros, Chavinda, Chilchota, Churintzio, Cotija, Ecuandureo, Jacona, Jiquilpan, Maravatío, Marcos Castellanos, Nuevo Parangaricutiro, Numarán, Pajacuarán, Peribán, La Piedad, Régules, Los Reyes, Sahuayo, Tancítaro, Tangamandapio, Tangancicuaro, Tanhuato, Tinguindín, Tocumbo, Venustiano Carranza, Villa Mar, Vista Hermosa, Yurécuaro, Zamora, and Zináparo.
Tequila growing area in Tamaulipas.

Tequila growing area in Tamaulipas. Credit: Tony Burton; all rights reserved. Click to enlarge.

About 80% of all blue agave is grown in Jalisco, and almost all tequila distilleries are located in the state.

The municipality of Maravatío in the eastern section of Michoacán is a tequila outlier, some distance away from the main producing area centered on Jalisco.

The other major outlier is a group of 11 municipalities in the northern border state of Tamaulipas (see second map) where 11 municipalities (Aldama, Altamira, Antiguo Morelos, Gómez Farías, González, Llera, Mante, Nuevo Morelos, Ocampo, Tula and Xicotencatl) are included in the denomination of origin for tequila.

The first denomination of origin for tequila was registered with the World Intellectual Property Organization in 1978. Since that time every trade agreement signed by Mexico has contained a clause to ensure that tequila’s special status is fully protected by the other signatories. Mexico has signed free trade agreements with more countries than any other country in the world.

For example, the relevant NAFTA clause states that:

“Canada and the United States shall recognize Tequila and Mezcal as distinctive products of Mexico. Accordingly, Canada and the United States shall not permit the sale of any product as Tequila or Mezcal, unless it has been manufactured in Mexico in accordance with the laws and regulations of Mexico governing the manufacture of Tequila and Mezcal.”

In 1996, Mexico succeeded in getting the World Trade Organization to recognize tequila, and also mezcal, as denomination of origin products.

The following year, Mexico signed an agreement with the European Union whereby Mexico recognized 175 European spirits, including champagne, cognac, grappa and scotch, as having denomination of origin protection, in exchange for E.U. protection for tequila and mezcal. At that time, Mexico’s Tequila Regulatory Council (CRT) estimated that some 3.5 million liters of “pseudo-tequilas” were sold annually in Europe under such names as “Blue Tarantula” in Italy and “Hot Tequila” in Finland (In search of the blue agave: Tequla’s denomination of origin).

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Jun 232016
 

At the Mexico-China Forum for Cooperation in Mexico City in May 2016, authorities from China’s Guangdong Province met with Mexican officials and discussed plans to invest in Mexico’s recently-established Special Economic Zones.

special-economic-zones

These zones offer tax benefits and support services to investors in order to generate new sources of employment in southern Mexico (Guerrero, Oaxaca, Chiapas, Michoacán, Veracruz and Tabasco).

Trade between Guangdong Province and Mexico was worth $10.4 billion last year, 25% of the two countries’ total trade. Chinese firms are considering projects related to aerospace, vehicles, electronics and energy, which could add $480 million in foreign direct investment. In support of closer ties between Mexico and China, China Southern Airlines plans direct flights between Guangdong and Mexico starting next year, which would serve business travelers and also boost tourism.

Jun 202016
 

Mexico is the world’s leading producer of silver and has occupied top spot for several years. Mexico’s output of silver rose 2.0% in 2015 to 5,372 metric tons (189.5 million ounces). Mexico is responsible for 21% of global production, followed by Peru (15%), China (12%) and Australia and Russia (each 6%). About 70% of silver produced in Mexico is exported, the remainder is sold on the domestic market.

Global silver production fell slightly in 2015 due to decreased output from Canada, Australia and China. World demand for silver in 2015 reached a record 33,170 tons (1,170 million ounces), due to surges in three manufacturing sectors: jewelry, ingots and coins, and photo-voltaic solar panels.

The increased output in Mexico came from expansions in the Saucito and Saucito II mines, operated by Fresnillo, and the El Cubo mine, managed by Canadian firm, Endeavour Silver. A similar increase in production is predicted this year, given the on-going expansion of the San José mine, owned by Canada-based Fortuna Silver Mines.

Zacatecas is Mexico’s leading silver producing state (46.5% of total; see map), well ahead of Chihuahua (16.6%), Durango (11.3%) and Sonora (6.9%).

Silver production in Mexico, 2011. Data: INEGI. Credit: Tony Burton/Geo-Mexico

Silver production in Mexico, 2011. Data: INEGI. Credit: Tony Burton/Geo-Mexico

In Zacatecas, silver mining is especially important in the municipalities of Fresnillo (24% of total national silver production) and Mazapil (15%) as well as Chalchihuites and Sombrerete (3% each). The main silver mining municipality in Chihuahua is Santa Bárbara (3% of national total). In Durango, San Dimas and Guanaceví are each responsible for about 3% of national production, while the leading municipality for silver in Sonora is Nacozari de García (1%).

The legacy of silver

The importance of silver mining in colonial New Spain can not be over-emphasized. For instance, during colonial times nearly one third of all the silver mined in the world came from the Guanajuato region!

Even today, the cities and landscapes of many parts of central and northern Mexico reveal the historical significance of silver mining. The legacies of silver mining include not only the opulent colonial buildings in numerous major cities such as Zacatecas and Guanajuato, as well as innumerable smaller towns, but also the deforestation of huge swathes of countryside.

The landscape of states like San Luis Potosí, Zacatecas and Guanajuato was forever changed by the frenzied exploitation of their woodlands. Silver mines needed wooden ladders and pit props. The smelting of silver ore required vast quantities of firewood. Barren tracts of upland testify to the success of those early silver mines. Mining played a crucial role in the pattern of settlement and communications of most of northern Mexico. The need to transfer valuable silver bullion safely from mine to mint required the construction of faster and shorter routes (see, for example, El Camino Real or Royal Road, the spine of the colonial road system in New Spain), helping to focus the pattern of road and rail communications on a limited number of major cities.

Once workable ores ran out, smaller mining communities fell into obscurity and many became ghost towns. Some of these settlements, such as Real de Catorce and Angangueo, have enjoyed a new lease of life in recent years due to tourism.

The main town associated with silver and tourism is Taxco, the center of silversmiths and silver working in Mexico.

Mining towns described briefly previously on Geo-Mexico.com include:

Note: This is a 2016 update of a post first published in 2013.

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Jun 132016
 

Mexico’s national electrical system serves about 97% of all Mexicans. In recent years electrical generation has not been able to keep pace with demand for electricity, which is increasing at about 6% to 7% per year. Attempts to increase private sector investment in energy as a means to keep up with surging demand have met opposition in the Mexican Congress. Under current law, private investors may generate electricity but transmission and distribution are restricted to the Federal Electricity Commission.

Mexico's major power stations. Fig 16-2 of Geo-Mexico; all rights reserved.

Mexico’s major power stations. Fig 16-2 of Geo-Mexico; all rights reserved.

About 30% of Mexico’s total installed electricity generating capacity of 60,000 MW comes from conventional power plants burning oil. Natural gas-fueled power plants account for about 35%, while coal plants contribute about 9%. Altogether, fossil fuel burning facilities account for almost three-quarters of Mexico’s generating capacity.

Many of Mexico’s newer power plants are highly efficient, gas-fired, combined cycle plants which integrate gas and steam turbines. On a per megawatt basis, they are relatively economical to build. Their major disadvantage (equally true for conventional thermo-electric power stations) is that their emissions contribute to air pollution (particularly sulfur dioxide) and global warming. About 25% of Mexico’s annual emissions of carbon dioxide are due to electricity generation.

Hydroelectric power has been important since the early part of the twentieth century. Currently about 22% of the electricity generating capacity is from hydroelectric plants. The largest hydroelectric plants are on the Grijalva River in Chiapas. Other rivers providing significant hydropower are the Balsas, Santiago, Fuerte, Papaloapan and Moctezuma.

Mexico has one nuclear power plant at Laguna Verde in Veracruz, which provides about 2.6% of the nation’s generating capacity. No additional nuclear plants are planned.

Mexico has the world’s second largest geothermal electrical potential, after Indonesia. This resource might be more important in the future but at present it accounts for less than 2.4% of Mexico’s electricity capacity.

The region of Mexico with most potential for wind power is the low-lying and flat Isthmus of Tehuantepec in southern Mexico where annual wind speeds, at a height of 30m (100 ft) above the ground (the height of modern windmills), average more than 30 kph (19 mph). Despite the success of the windfarms already operating in La Venta (Oaxaca) and Guerrero Negro (Baja California Sur), wind power is responsible for less than 0.05% of all electricity. The government hopes to boost wind power capacity significantly within the next five to ten years.

Most solar power interest is focused not on large scale plants but on small-scale photovoltaic (PV) systems providing electricity in remote rural areas. About 3 million people (3% of the population) live in small or remote settlements not yet connected to the national electricity grid. More than 60,000 PV systems have been installed nationwide, benefiting 250,000 rural inhabitants.

This is an excerpt from chapter 16 of Geo-Mexico: the geography and dynamics of modern Mexico. Buy your copy (Print or ebook) today!

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May 092016
 

AT&T and Telcel are competing for the concession of 80 megahertz (MHz) of spectrum for the provision of 4G-LTE mobile broadband service in Mexico. The winner is expected to have to pay somewhere in the region of 700 million dollars to the government in order to acquire the rights.

Movistar coverage, 2G, 3G, 4G - 2016

Movistar coverage, 2G, 3G, 4G – 2016

The three major competitors currently in the 4G-LTE market in Mexico are Movistar (Telefonica), Telcel (America Movil), and AT&T.

Telcel is the dominant player and reaches 65 million users nationwide. Movistar serves about 50 cities (see map). AT&T’s 4G-LTE network currently reaches 40 million people in 36 cities, but the firm is investing aggressively, with plans to reach 75 million people by the end of 2016 and 100 million by 2018. Under construction is AT&T’s new 300-million-dollar operations center in Guadalajara, which will benefit from that city’s well-qualified workforce and enhance its importance as Mexico’s tech sector hub.

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Apr 112016
 

According to ECOCE, a non-profit environmental grouping of 24 food and beverage firms, representing more than 80 brands such as Peñafiel, Bonafont, Herdez, Jumex and Coca-Cola, Mexico is the world’s leading recycler of hard plastic PET (polyethylene terephthalate) bottles and containers.

Mexico has 14 PET recycling plants, the construction of which represents total investments of around US$314 million.

Ever wondered what thousands and thousands of crushed plastic bottles look like? Try this short video showing the processes involved in a PetStar PET-recycling plant:

In 2015, Mexico produced 722,000 metric tons of PET, of which 364,000 tons (50.4%) were recovered for recycling. This rate of recycling is well ahead of Canada (40%), Brazil (42%), the U.S. (31%) and the European Union (21%). Recycled PET, worth about $250 a ton, is reused to make bottles, containers, and various textile products.

60% of Mexico’s recycled PET is destined for the national market, the remaining 40% is exported to China, the U.S. and elsewhere.

Source:

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Mar 282016
 

In 2014 there were 285 tortillerias in Chilpancingo, the capital of the state of Guerrero, when the troubles with the drug cartels really started. Now only 185 remain open as a result of drug gangs attacking the tortilla shops and workers, kidnapping owners and forcing others out of business out of fear of the violence.

Chilpancingo, with a population of over 280,000, is situated in the mountains 105 km north-east of Acapulco. As elsewhere, the tortilla shops are concentrated in the poorer barrios where local criminal gangs also tend to be located. Tortillas are sold from small shops with a view to the street, or are delivered door-to-door by young men on motor cycles.

The drug cartels in Chilpancingo, such as Los Rojos and Guerreros Unidos, realized that by controlling the business owners and the employees of tortillerias, they would have a wide-spread and well-placed network of drug distribution points, lookouts and street dealers, operating under the guise of these many small legitimate businesses.

tortilleria

The take-over began in 2014 with the kidnapping of shop owners and workers, often involving a week’s captivity in a secure house, and demands for ransom ranging from 30,000 pesos (US$2100), up to 2 million pesos (US$140,000 for owners of multiple tortillerias.) After release, the victims were forced to co-operate with the cartel’s drug distribution and look-out system, under threat of business closure. The leader of the Chilpancingo tortilla sellers, Abdon Abel Hernandez has been threatened numerous times, kidnapped once, and his family had to borrow a million pesos to secure his release. He says about 35% of the local tortilla industry has shut down since 2014 out of fear.

The regional president of Corpamex (Mexican Confederation of Business Owners) Adrian Alarcon says he also lives with the fear of death for trying to defend his threatened union membership. “Today the tortilla industry is kidnapped by them (criminal groups) just like what happened with public transport when they forced taxi drivers and bus drivers to become the hands and eyes of the narco. The industry is completely infiltrated. The money that comes from the tortillas is used to buy weapons. We are financing them”.

January 2016 march by owners of tortillerias asking for state government help

January 2016 march by owners of tortillerias asking for state government help

He also stated that 36 businessmen were kidnapped and tortured in the central region of Guerrero in the first two months of 2016, with most of the victims being associated with the tortilla industry. “It wasn’t a coincidence”, he said, “that a national survey named Chilpancingo as the country’s worst city to live in. Crime has put an end to everything: investments, jobs, and the desire to make a family here. But if you think the situation here is in a critical state, you should go to Acapulco. Here, the tortilleros are kidnapped, but there they are being killed.” According to Arcadio Castro, leader of the Tortilla Association of Guerrero, 20 tortilla workers lost their lives in 2015 in clashes with organized crime.

The previous chief of police of Acapulco was dismissed after he failed to pass control examinations, known as trust tests, designed to identify those with possible links to organized crime. His replacement expects some 700 of his current force of 1901 municipal police will also fail their next control exams. Given his current budget, he has no hope of renovating his police force with younger, healthier, law-abiding officers. The assault on the tortilla industry is generally not felt in the tourist areas of the city.

In 2010 UNESCO included the traditional Mexican cuisine of Michoacán in its list of the Intangible Cultural Heritage of Humanity, in large part based on the multiple uses and cultural centrality of corn in Mexican traditional cooking. This decision was very publicly celebrated by the tortilla industry. Unhappily, today, the tortillerias of Guerrero are struggling to survive the extortion rackets of the local drug cartels.

Main source:

Oscar Balderas. Drug Cartels Are Taking Over the Tortilla Business in Mexico. VICE News, , 16 March 2016; article re-published in Business Insider.

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Mexico continues to be the world’s leading exporter of beer

 Mexico's geography in the Press  Comments Off on Mexico continues to be the world’s leading exporter of beer
Jan 012016
 

For the fifth year in a row, Mexico was the world’s leading exporter of beer in 2014. The final tally shows that Mexico exported 1,700 million liters of beer in 2014, worth 1.6 billion dollars. (Export figures for 2015 are not yet available but will show that Mexico remains well in the lead over Belgium and the Netherlands)

Cuauhtemoc Moctezuma brewery in Monterrey

Cuauhtemoc Moctezuma brewery in Monterrey. Photo: Tony Burton.

Mexico is the world’s sixth largest producer of beer and is predicted to leapfrog Germany and Russia this year (2016) into fourth place, behind only China, the U.S. and Brazil. Significant investments during 2015 have raised national production capacity 39% to 125 million hectoliters.

The two largest beer producers are Grupo Modelo and Cuauhtémoc Moctezuma (formerly Femsa). Grupo Modelo is building a new 310-milion-dollar brewery in the state of Yucatán and also expanding its breweries in Zacatecas and Coahuila. Cuauhtémoc Moctezuma is building a new 450-million-dollar facility in Chihuahua. A third brewer, Constellation Brands, is undertaking a 500-million-dollar expansion to its Piedras Negras plant in Coahuila, which will triple its annual production to 30 million hectoliters by 2017.

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Oct 152015
 

Since we first reported on Bicycle manufacturing in Mexico in 2010, a number of things have changed.

At that time, the website of the National Association of Bicycle Manufacturers claimed that its 14 member companies produced about 3 million bikes a year and employed, between them, 4,000 workers. Today, the group has fewer members – 12 – who make “over 2 million” bikes a year and provide 3,000 jobs.

Stamp of Bike exports

The Mexican bicycle manufacturing industry looks like it has to overcome a tough problem. Recent press reports suggest that the total number of bicycles produced nationally fell to around 1.8 million in 2014. Manufacturers are blaming the uncontrolled imports of less expensive bikes made in China. Gunter Maerker, a representative of the National Association of Bicycle Manufacturers, argues that manufacturers need greater protection from Chinese imports, which have an average cost of about 7 dollars a unit, compared to a unit cost of production that is closer to 20 dollars to make a bicycle in Mexico.

Domestic manufacturers sold 1.5 million bikes in the national market in 2014. Mexican manufacturers believe that sales of imported bikes equaled or exceeded that number. The fall in national bicycle manufacturing has already had impacts on suppliers of components since national bikes are made largely of domestically-manufactured parts (along with some items sourced in China or Taiwan).

Mexican bicycle manufacturers are also worried about the implementation of the Trans-Pacific Partnership (TPP), agreed in principle earlier this month, but still needing formal approval in all signatory countries. The 12 countries involved are Mexico, the U.S., Canada, Chile, Peru, Australia, Japan, Brunei, Malaysia, New Zealand, Singapore and Vietnam.

China has had no part in TPP discussions, but it is feared that Chinese manufacturers may triangulate their products into Mexico via signatory countries such as Malaysia or Vietnam.

In 2015, the National Association of Bicycle Manufacturers lists 12 bike manufacturers:

  • Bicicletas Cinelli – Santa Catarina, Nuevo León
  • Nahel – Durango, Durango
  • Goray – Torreón, Coahuila
  • Grupo Veloci – Zapopan, Jalisco
  • Rebimo de Guadalajara – Zapopan, Jalisco
  • Bicicletas Mercurio, Mérida, Yucatá and San Luis Potosí (they acquired the famous Acer-Mex Windsor brand in 2001)
  • Bimex – Mexico City
  • Magistroni – Mexico City
  • Benotto (primarily a distributor) – Mexico City
  • Grupo Oriental – Mexico City
  • Corporativo La Bici – Mexico City
  • Bicileyca – Yauhquemehcan, Tlaxcala

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Mexico’s multinationals: Mexichem, a world leader for PVC pipes and other products

 Other, Updates to Geo-Mexico  Comments Off on Mexico’s multinationals: Mexichem, a world leader for PVC pipes and other products
Sep 202015
 

Mexichem is a Mexican chemical and petrochemicals company (2014 total revenues: US$ 5.6 billion), with headquarters in Tlalnepantla, in Greater Mexico City. Mexichem is a world leader in making and marketing plastic pipes and other products required in the infrastructure, housing, telecommunications, drinking and potable water sectors.

It employs 19,200 workers and has 120 manufacturing operations in more than 30 countries, with a sales presence in 90 countries.

Mexichem operations, 2015

Mexichem operations, 2015 (Source: mexichem.com)

The company’s origins date back to 1953 when a group of Mexican and English investors founded Cables Mexicanos S.A. to make high carbon steel wire ropes. Several changes of name and owners later, it emerged in 2005 as Mexichem. Mexichem has grown rapidly since then, largely due to an aggressive series of acquisitions.

In 2006, Mexichem bought Bayshore Group (PVC compounding). In 2007, it bought Amanco (PVC pipe systems and fittings), Petroquímica Colombiana (maker of PVC resins) and DVG, Industria e Comércio de Plásticos (producer of rigid PVC water and sewage pipes).

In 2008 Mexichem acquired Fluorita de Río Verde (fluorspar production plants and two fluorite mining concessions), Quimir (sodium phosphates), Geotextiles del Perú (geotextiles), Fiberweb Bidim Industria e Comércio de Não-Tecidos (Brazilian geotextile producer) and Colpozos (Colombia’s leading supplier of irrigation and well drilling systems).

The list goes on in succeeding years, with a succession of acquisitions of companies making PVC pipes, connections, polymers, resins, and fluorochemical competitors to become a world leader in the fluorine chemical segment, particularly in the production of refrigerant and medical gases.

mexichem-fluor

To consolidate its fluorite business, in 2012, Mexichem bought Fluorita de México, ensuring access to the highest pure fluorspar available worldwide.

Mexichem has four main business divisions:

  • Pipe systems, fittings, conduits and plastic accessories for the delivery of data, video, communications, electricity, water and gas. The pipe systems are made from polyethylene, PVC, polypropylene and specialty flame and smoke resistant compounds.
  • PVC resin and valuable industrial compounds based on chlorine and caustic soda. PVC has uses from pipes that carry drinking water, wastewater or water for irrigation to construction materials and products, as well as  auto parts, household appliances, clothing, footwear, packaging and medical devices. Caustic soda is used to make soap, shampoo, lotions and detergents and to treat water.
  • Fluorine-based products, technologies and services. Mexichem’s “Mine to Market” structure ensures a secure supply chain of flourine-based products for the steel, cement, aluminum, automotive, refrigeration and pharmaceutical sectors.
  • Energy. This division was created in 2014 in order to capitalize on opportunities arising from Mexico’s new energy policies.

A note on Mexico’s importance for fluorite

Exports of fluorite from Mexico were worth $180.7 million in 2014 (29% of the world total), making Mexico the world’s leading exporter of that mineral, ahead of China ($120.2 m). In 2014, Mexico mined 1.1 million metric tons of fluorite, and was the world’s second largest producer after China (4.4 million tons).

Mexichem sits on the world’s largest high-grade fluorite deposits, in its mine in San Luis Potosí. It produced 529,464 metric tons of fluorite from this mine in the first six months of 2015, 96% of the national total.

The world’s largest total reserves of fluorite are in South Africa (41 million tons), followed by Mexico (32 million), China (24 million) and Mongolia (22 million), according to U.S. government figures.

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