I don't think that anyone has ever discovered any actual mead anywhere in the game. It appears to be an omission or mis-translation.
There is some sort of bug with this as quite a few gamers have been unable to get the mayor to give the required response no matter what they are carrying to offer him, and despite trying various orders of talking to people in the area.
When it was working I was able to get the major to accept bottles labelled 'beer' 'Dwarven Ale' (Rimmer's, in the large bottle) 'Dwarven Ale' (standard, in a small bottle) or just 'Ale' - despite the mayor's insistence that he wants mead (a drink made with honey) not ale.
When it wasn't working (my 1st time through the game) nothing at all would make the mayor respond.
Fortunately the quest is not broken by this, and you can still get into the necessary area (and kill somethat that nets some good XP). <img src="/ubbthreads/images/graemlins/smile.gif" alt="" />