The directors did not share more details about the modernization of the various areas, from the wineries to the vineyards, but in terms of sustainability they emphasize that they will treat wastewater, in addition to having a system to capture rainwater and also the reforestation of land, in order to make Parras a place that attracts a greater number of tourists, to which is added the creation of dams to take advantage of the water in this semi-desert area.
This sustainability trend is going to gain strength in the company’s production chain, which already has among its labels a wine made from organic grapes, a trend that is growing in the industry. Daniel Milmo comments that although this type of production suffers less from an inflationary impact, due to the fact that they do not require fertilizers; For now, most of his vineyard has a conventional treatment, which faces, for example, the high cost of anti-plague chemicals.
Inflation hits wine production costs
The rise in fertilizer prices is not the only increase that the winery faces. The directors say that other inputs that have become more expensive since the inflation They are glass, paper, cardboard boxes, corks, to which is added the availability to import supplies, which has generated an increase in production costs, and since the pandemic, until March of this year they applied a rise to its products for final consumers.
“The entire year of the pandemic we did not reflect any increase, we made an increase in March below the internal inflation of our need for raw material. We’re cushioning our margin. There are supplies whose cost rose 20%, those that minus 7% and we absorbed most of this and reflected a price increase in line with inflation, around 7%”, explains Daniel Milmo.
Casa Madero recovers pre-pandemic sales levels
Casa Madero, which has 3V among its labels, has already managed to overcome the pandemic. The company, which had a 15% drop in sales in 2020, the year of confinement, has already exceeded 2019 levels, due to the reopening of restaurants and hotels, where 70% of its sales are made.
And although the demand for wine is growing, and the winery’s labels are “oversold,” according to Brandon Milmo, for now the company does not plan to increase the productive capacity of its 400 hectares of vineyards, which produce 200,000 cases of wine a year. . Although the eye is on tourism.
“The influx of tourists is recovering. There was interest in people when they were in confinement, they wanted to visit an open space because of the pandemic. We receive groups of 40 people and we went to smaller groups, and with online reservations. We are offering a better service, and although 98% of the visitors are nationals, there is more and more interest from international tourists”, says Daniel Milmo.
There are 14 grape-producing states in the country, where nearly 400 wineries are located that produce 2.5 million cases of wine per year. Meanwhile, in the last five years, its consumption in the country increased from 450 milliliters to 1.2 liters per person per year, according to data from the Mexican Wine Council (CMV).
The tax cost
For producers of craft alcoholic beverages, the Special Tax on Products and Services (IEPS) is a competitive barrier for Mexican products compared to others that come from abroad, since they raise the price for final consumers, which is why there are proposals that they seek that the tax be paid in relation to the alcohol content, and not as a generalized tax.
“The IEPS applies to all wines, it puts us on an equal footing for all Mexican wines, the fact is that it puts us at a disadvantage compared to consumers in general, because it makes it more expensive, and in that sense there is not much to do. Initiatives that propose to price in a different way is something favorable in some ways”, says Brandon Milmo.