Tequila's History:

Part 3 of 3: 20th & 21st Centuries

By the turn of the century, many companies had started selling tequila in bottles, instead of just barrels, a move that helped increase sales. The most popular were the small pocket-sized 'pachoncita' bottles that fit into the baggy pants of worker, first appearing in 1906.

 

The first wave of modernization began around this time, and the number of distilleries in Jalisco grew to 87 by 1910, then dropped precipitously to only 32 when the Diaz regime collapsed and the country was thrown into political and military turmoil during the Revolution. Exports had fallen to about 10% of total production (estimated at about 600,000 liters total).

 

But the same was also happening to other spirits producers: the number of aguardiente distillers in Jalisco dropped from 38 to 27 between 1900 and 1910, in part because of the growing popularity of tequila.

 

In 1900 Ana González Rubio (the second wife of Jesús Flores) inherited "La Constancia." She married José Cuervo Labastida, who renamed this distillery "La Rojeña" the name it still has today. In the early years of the century, Cuervo's tequila won prestigious international awards at exhibitions in Europe, including the Gran Premio in Madrid, 1907, and the Grand Prix in Paris, 1909.

 

In 1902, the blue agave was renamed to the Agave tequilana Weber azul (also written as Agave tequilana Weber var. azul) to honour German naturalist Franz Weber, who classified Mexican flora in 1896.

 

Cuervo was the first distiller to put tequila into bottles - pioneered by owner Flores - in the late 19th century when others were still using barrels. His first bottled tequila was sold in 1906. The difficulty of handling and transporting tequila to the city of Monterey led to the creation of a cylindrical, half-litre bottle. This was the first step to establish the bottling of tequila on a commercial level. Soon distillers were putting tequila in handy flat-sided bottles that could easily be kept in a pocket.

At the same time, he moved Cuervo to his new, larger site - La Constancia - to take advantage of the transportation network the new railroad offered.

 

In 1904, Porfirio Torres Perez founded the El Centinela distillery. In 1910, El Centennario (makers of today's  Siete Leguas) was founded, the first distillery in the highlands (Los Altos).

 

Many of the distillery owners had homes in the capital, Guadalajara in this period, a 12-hour coach ride from Tequila. Political differences divided the families, with the Cuervos leading the Liberal faction, and the Sauzas leading the Conservative. The more prosperous families also diversified their investments, mostly in real estate, mining, textiles and flour. They also expanded their plantations to include other crops such as bean and corn, and raised cattle as well.

 

Tequila gained national importance during the Revolution in the early part of this century, when it became a symbol of national pride and the passion for French products was replaced by patriotic fervour for Mexican goods. However Pancho Villa was a teetotaller, who had drunks in his army shot as cowards and traitors. And when he was Revolutionary Governor of Sonora, Plutarco Elias Calles dealt with public drunkards by putting them in front of the firing squad.

 

Tequila quickly became associated with the hard-riding rebels and gun-slinging heroes of the revolutionary period from 1910-1920. During this time, tequila was also smuggled to American troops guarding the border, helping spread it to nearby US states. In the first novel about the Revolution, Mariano Azuela wrote of one character, "Rather than champagne, which sparkled in bubbles and dissolved in the light and the candles, Demetrio Macias preferred the clear tequila of Jalisco." Pancho Villa's real name, by the way, was Doroteo Arango - commemorated in Los Arango tequila - and his horse was Siete Leguas, now another tequila brand.

 

As the rebel forces of Pancho Villa approached Guadalajara, many people from the Jalisco countryside joined forces with the Villistas. Villa entered Guadalajara on December 17, 1914, forcing Manuel M. Diéguez, an ally of President Venustiano Carranza and the Governor of Jalisco, to flee. Soon after, Villa called together the richest men of both Jalisco and Guadalajara and announced a forced loan of one million pesos. Passing out money to the poor, Villa became enormously popular, but his victory was short-lived and soon he had to leave the city. By April, the Constitutionalist forces of Diéguez once again controlled Guadalajara.

 

Revolutionary troops occupied Guadalajara, confiscating cartloads of tequila for their own use. The popular drink in those days was the torito de Jalisco, a mix of tequila and fruit juice.

 

American troops invaded Veracruz in 1914 after a confrontation between Mexican troops and American sailors in that city. American soldiers are reported drinking tequila in 1916, as they defended against Pancho Villa's raids against the US town of Columbus, NM.

 

In 1914, Virginia Gallardo, future heiress of the Cuervo holdings, married the German consul in Guadalajara, Juan Beckmann. In 1921, Jose Cuervo died, leaving everything to Anita Gonzalez Rubio.

 

The end of the Revolution brought stability, but also changes. The Francophilia of Diaz's regime was replaced by a new national sense of pride and place. National products and art became popular again, and tequila enjoyed a renaissance.

 

During these years, Don Eladio Sauza took over the business from his father, Don Cenobio, and expanded it by opening branches in Mexico City, Monterrey and even a concession in Spain.

 

By the 1920s, the last of the tequila makers had switched from cooking the agave heads in ground pits to above-ground ovens. This irrevocably separated mezcal and tequila as products.

 

In 1926, President Plutarco Elías Calles signed the so-called "Intolerable Acts" These strongly anti-clerical laws antagonized many Catholics and laid the foundation of the so-called "Cristero Religious War." Los Altos and the "Three-Fingers" border region of northern Jalisco became battlefields in the war which started in 1926.

From 1926 to 1932, the government of Jalisco changed hands ten times. At one point, some 25,000 rebels had been mobilized to resist the articles of the Constitution. The bloody conflict was formally ended in June 1929. However, outbreaks of violence continued into the 1930s.

Distillers conveniently 'forgot' that many of the revolutionary armies raided their plants and confiscated tequila for which the owners were never repaid. But many of the larger tabernas suffered in the aftermath when the government redistributed their land and gave away many acres of agave to the peasants.

 

In 1928 distillers attempted to for an organization to represent themselves, but it broke apart in bickering before it could get started. By 1929, the number of distillers was down to a mere eight to suffer through the Depression. The post-Revolutionary leaders like Victoriano Huerta eschewed tequila for French cognacs - as had Diaz and his cronies - but tequila managed to make a comeback through its popularity among the people.

Modern production techniques, many copied from the wine industry, including cultivated yeasts and microbiological sanitary practices, were introduced in the late 1920s when peace returned and after the Depression, the industry expanded again.

 

Prohibition in the USA (1920-33) boosted tequila's popularity when Mexican liquor was smuggled across the border. But that was short-lived because the Depression (1929) came swiftly on the heels of Prohibition.

 

In 1930, an epidemic of Spanish Influenza attacked Northern Mexico. Doctors prescribed tequila as the best medicine to fight it. From then on, tequila was drunk with lime and salt because that’s how the doctors prescribed it. Tequila producers shipping to the city of Monterrey started to produce cylindrical glass bottles of 0.5 liter (17 ounces), to make it easier to transport tequila.

 

As the tequila sales slump continued into the 1930s, the government's land reform of this period broke up many large estates, including several haciendas used for tequila production. The combined effect meant that the number of agave plants under cultivation dropped by two-thirds. Only eight distilleries were left intact in Tequila by 1929. Once again tequila makers tried to create an organization to represent themselves, and this time it managed to stay together until World War 2.

 

The decision to use non-agave sugars (usually cane sugars) in fermentation along with those from the agave was made in the 1930s in part because of this shortage, a fateful move that changed the industry and affected its reputation for decades. The official standard established in 1949 required that the sugars in the beverage come 100% from blue agave, but by 1964 distillers were allowed to use 30% other sugars, which soon climbed to 49%.The blander product, however, was more palatable to American tastes and helped boost export sales.

 

Tequila Orendain was founded in 1926, by Don Eduardo Orendain (today it is the third largest exporter of mixto tequilas).

 

An agave shortage in 1930 forced the government to relax regulations on tequila production, and allow tequila to be made from only 51% agave sugars - the start of the mixto trade. For many years after this, Herradura was the only company exclusively producing 100% agave tequilas, and was for 30 years the only 100% agave tequila available in the USA. These new mixto tequilas were more bland than 100% agave tequilas, which also made them more appealing to American consumers, thus helping promote tequila sales north of the border.

 

Don Javier Sauza took over the family business from his father, Don Eladio, in 1931.

 

Several important laws regarding tequila manufacturing were also passed in the 1930s, including the 1932 requirement for manufacturers to be certified to be able to make tequila. A law permitting local (municipal) taxes on alcohol production was passed Feb. 16, 1933. Another law regarding tax collection on alcohol production was enacted on Nov. 30, 1935.

 

After the death of Ana González Rubio, in 1934, her niece Guadalupe Gallardo inherited everything. Later on she gave everything to Virginia Gallardo, who married Juan Beckmann, German consul in Guadalajara. Today her grandson, Juan Beckmann Vidal, still presides over the José Cuervo Company.

 

1935 is the earliest date suggested for the invention of the margarita, when the bartender at Rancho La Gloria, Carlos 'Danny' Herrera, created if for his customer, fledgling actress Marjorie (Margarita) King. This story has also been dated in 1938 and the early 1940s.

 

During World War 2, tequila rose in popularity in the USA after spirits from Europe became hard to get. This was also good for the domestic market, because Mexicans turned to tequila when imports of whiskey and other spirits became difficult to get. Production grew, the demand for tequila increased, and agave fields expanded 110% between 1940 and 1950. The market became flooded with poor-quality products to meet this sudden demand.

 

The first reference to appellations of origin in Mexico was made in the Industrial Property Law of 1942, which established the concept of appellation of origin. This law was repealed in 1976 and replaced by the Law on Inventions and Marks, which established the protection process and added obligations for the user of the appellation of origin.

 

In 1943 "La Perseverancia" was fully in the hands of Francisco Javier Sauza, son of Eladio Sauza and grandson of Cenobio Sauza, its founder. He would push Sauza's success even further during his lifetime.

In 1948, when European spirits like whisky were once again available to Americans, exports fell to an all-time low, while national consumption grew - thanks in great part to the positive portrayal of tequila as a macho drink of heroic rancheros in Mexican movies from the 1930s to 1950s.  Tequila manufacturers began looking for new export markets in Europe and South America.

 

Despite the slump the increased demand during the war meant more money coming in, and in the 1950s many distilleries used their extra revenue to modernize and upgrade their facilities. Agricultural reform under President Lopez Mateos during this time saw 30 million acres of land parceled out to farmers - some of it going to maguey farmers across the nation. Sometime between 1930 and 1955, depending on which legend you believe, the margarita was born in Mexico or in a nearby state. This cocktail would become the most popular mixed drink in bars for the next four decades. See the recipes page for more.

 

Efforts to regulate the industry also grew in this period, with two groups created between the two world wars, eventually evolving into today's regulatory organizations. In 1944, the Mexican government decided that any product called 'tequila' had to be made by distilling agave in the state of Jalisco. Labelling practices were also standardized in the 1940s and 50s, but it would be several years before standards became law.

 

The first standards for tequila were laid out in 1947 and "de calidad para el tequila" was passed on June 14, 1949. It has been upgraded and revised ever since, most recently in 2006.

 

During the 1950s, many producers modernized to meet the new standards and the increased demand. The number of agave fields grew in 1950 to 5,697, a 110% increase over 1940.

The first normas (law) to define tequila types was passed 12 Mar., 1964, but this only had blanco and añejo as types, and allowed caramel colouring in añejos. The DEN-R-9-1964 law also set the percentage for mixto at 70% agave sugars (it was dropped to the current 51% in 1970). The requirement for agave content in mixto tequila was recommended to be increased from 51% to 60% in the latest normas, but this was not done.

 

Reposado was included in the 1968 normas. In 1970, conditions defining the use of the term 100% agave were established, and the amount of agave sugars in mixto dropped to 51%. These were followed with additional refinements to the specifications and descriptions in 1976, 1978, 1993, 1994 (when the permitted additives to mixto were specified) and 2000, the latter date when the Denomination of Origin was included in the law.

 

Tequila production doubled in the 1951-55 period, leading to a crisis of overproduction and no growth for the rest of the decade.

On October 21, 1959 the Cámara Regional de la Industria Tequila (Regional Tequila Chamber), an industry organization,  was officially founded. This would become the National Chamber in 1990.

Popularity grew again in the 1960s along with increased consumption; and the 1968 Olympic Games in Mexico City helped worldwide exposure. But it wasn't until the growing population of American tourists and baby-boom visitors to Mexico started to discover the premium brands in the mid 1980s that tequila moved from a 'party' drink to snob appeal among the cocktail set.

 

In September, 1966, Mexico signed the Lisbon Agreement which states that all parties shall undertake to protect, on their territories and in accordance with the terms of the agreement, the appellations of origin of the products of other countries which are recognized and protected as such in the country of origin, and registered with the World Intellectual Property Organization (WIPO).

 

In 1973 Tequila Herradura and the Regional Chamber of the Tequila Industry applied for the declaration of protection for this appellation of origin from the Secretariat of Trade and Industrial Promotion. In 1973, Cazadores opened its distillery, near Arandas. Today it is the fifth highest-selling brand in Mexico.

 

On December 9, 1974, a declaration of protection was published in the Official Federation Gazette. It stated that tequila could be applied only to the liquor of the same name. This was published in accordance with the Official Quality Standard (NOM) for tequila, which also and delimited the territory of origin. This first set of regulations governing where tequila could be made were amended in 1976 when the first NORMA was released. Although tequila had already been subject to compliance with standards since 1949, the NORMA also gave legal protection to the name tequila for the first time.

 

Tequila gained international recognition when the Mexican Government issued its Declaration for the Protection of the Appellation of Origin Tequila (also called the Denomination of Origin Tequila - DOT). Because of its geographical origin,, reputation and essential specific qualities, the government decreed that "tequila" was to be considered a geographical indication of Mexico. This prevented the word from being used as a generic name on other spirits not made under the controls of the Mexican government. 

 

The AOC, or Appellation de Origin Controllee was published on April 13, 1978 in the Registry of Appellations of Origin under the Lisbon Agreement created by the World Intellectual Property Organization (WIPO). Since then, every single bilateral and multilateral trade agreement that Mexico has entered into, including NAFTA, contains a clause granting exclusivity of the name Tequila to Mexico. However, it wasn't until 1996 that Mexico, as a member of the World Trade Organization (WTO), signed an international agreement for all countries to recognize tequila as a Denomination of Origin product from only a certain geographical area in Mexico.

 

As a result of this declaration, there are only five regions where tequila can be legally made, most within the northwest part of the country and within 100 miles of Guadalajara. Most are within the state of Jalisco (including the communities of Tequila, Tepatitlan, Guadalajara, Amatitan, Arandas, Arenal, Capilla de Guadalupe, Zapotlanejo and Atotonilico), the rest are in the adjoining states of Guanajuato, Michoacán, Nayarit and the northeastern state of Tamaulipas. The areas are all semi-arid with clay soils, mostly plateaus and highlands. In Jalisco's Tequila region, the fields crowd the slopes of two extinct volcanoes.

The margarita blossomed at the cocktail of choice in the 1970s, driving a new tequila boom. Cuervo and Sauza were producing 60% of all tequila in 1976, when a strike of both laborers and transport personnel paralyzed both firms for 20 days. The two companies then agreed to buy their agave from the union representing the strikers and to pay 1% of the value of their finished product.

 

The Official Gazette of October 13 1977 states that "it is necessary to have more volume of raw material in order to produce tequila and in that way satisfy the increased demand for this product, especially in the exterior and avoid using different sugars of agave in its manufacturing." This suggests an early awareness of the importance of 100% agave tequilas for the export market.

 

In order to guarantee tequila's quality, the Normas Oficial Mexicana (NOM also called the NORMA) was established in 1978 to regulate all of the agricultural, industrial and commercial processes related to tequila.

 

In the 1970s while demand for tequila was increasing worldwide, Sauza distillery formed a partnership with the leading Mexican brandy producer, Pedro Domecq. Pedro Domecq purchased the entire Sauza operation in 1988.

 

Tequila reached high society in the 1980s when Robert Denton launched Chinaco's ultra-premium tequila into the market. In 1983, it was the first ultra premium on the shelves. As noted on Wine Patrol's site, "Denton marketed the tequila like a fine cognac, and demanded the highest prices of any tequila on the market. The rich, elegant Chinaco Añejo lived up to the promises, and almost single handedly created the North American market for upscale tequila. "

It took US drinkers by storm and demand outpaced production - and many other distillers quickly followed Chinaco's lead. Despite its initial success, Chinaco closed for a few years in the early 1990s. This drove two diehard Chinaco drinkers - John Paul De Joria and Sammy Hagar - to make their own tequila: De Joria went on to found Patron, and Hagar Cabo Wabo, both successful. Chinaco returned in 1998, by which time it had to compete against considerably more ultra-premium tequilas beside it on the shelves.

 

The severe Mexican economic crisis of the early 1980s resulted in tequila sales dropping from 34 million liters in 1980 to 13 million in 1986. Forty percent of all tequila producers went out of business during this period. Even Cuervo's Los Altos distillery closed for a year. A common measure was to reduce the alcoholic content from 45% to 38%, the minimum allowed by law.

 

By 1980, there were 33 distilleries cultivating 30-35,000 hectares and employing 5,800 people to make tequila. That has grown in the past 27 years to more than 100 companies (see the NOM list); all but two are in Jalisco, the main outsiders being Chinaco in far-away Tamaulipas on the Gulf coast, and Corralejo in nearby Guanajuato. More than 50,000 hectares of agave are under cultivation today, and the workforce is around 38,000-40,000, of which 33,000 work in the fields or production.

 

By 1987, Cuervo was leading Sauza in tequila production, 18 million liters to 16 millions liters, even though the latter had 65% of the Mexican market, because Cuervo was exporting 70% of its production.

 

In 1988, Pedro Domecq purchased the Sauza operation. When Allied Lyos acquired Pedro Domecq in 1994, Allied Domecq was formed and Sauza Tequila joined some of the world's leading spirit brands including Kahlua, Maker's Mark bourbon, Courvoisier, Tia Maria liqueur, Beefeater gin and others.
 

In 1991, the Law on Industrial Property Promotion and Protection, was passed, later changed to the Industrial Property Law. It was amended 1994. This law provides the legal framework in force in Mexico for the protection of appellations of origin.

 

The Tequila Regulatory Council (Consejo Regulado de Tequila, or CRT) was founded in 1994 to oversee production, quality and standards in the industry. That same year, Mexico joined NAFTA, the world's largest free trade agreement. And hot on the heels of the signing came the 1994 economic and currency crisis in Mexico, widely known as the Tequila Crisis (or the Tequila Effect: Efecto Tequila).

 

Mezcal was protected by an AOC designation, signed in March, 1995.

 

In 1996, as tequila's popularity grew, agave farmers felt they were being exploited by some producers. They formed a protest that saw many producers blockaded, and although eventually solved, the protest cost the industry millions.

 

In November, 1996, La Parternidad Mexicana de Tequila was formed in Brussels,  consisting of a body of 15 countries within the European Union. This opened a market for tequila of a potential 350 million people.

In 1997, tequila producer Don Jesus Lopez Roman was gunned down in a still-unsolved gangland-style killing in front of his distillery. Roman, owner of the Tequila San Matias distillery, had been a vocal proponent for improvements in the industry, but his persistent and highly vocal stand on having all tequila bottled in Mexico - no more bulk mixto shipments - gave him enemies in the industry.

 

The European Union signed a trade accord in 1997, recognizing Mexico as the sole producer of tequila. before that agreement, Mexico had been concerned about the lack of recognition of appellations of origin in countries that were not party to the Lisbon Agreement. before the 1997 agreement, only France, Italy and Portugal respected the AOC under the Lisbon agreement. The EU and Mexico celebrated by smashing thousands of bottles of counterfeit tequila made or sold in the EU. Some of those companies have since come under the regulations and make or sell real tequila, but others disappeared.

 

South Africa recently threatened to ignore this international agreement by allowing a distillery to open to manufacture a product called 'tequila.' In 1997, a South African firm in Graaff-Reinet announced it would open a 'tequila' plant in that country in 1998, using blue agave grown locally from Mexican stock that had invaded South African ecosystems. Although they planned to call it 'tequila, their product would have only 10% agave, the remainder will be other alcohols and sugars. Protests from the Mexican government finally deterred the plans of Reinet Distillers, and their product is to be named 'Spirit of Agave,' not tequila.

 

In fall, 2000, agave growers within the Denomination of Origin Zone formed a National Union with around 2,600 individual members. The organization's first President was Miguel Angel Gonzalez Aldana.

 

On January 1, 2000, the Agreement on the Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) with the World Trade Organization (WTO)came into effect in Mexico. This agreement defines geographical indications as those which identify a good as originating in the territory of a signing party, or a region or locality in that territory (indication of source), where a given quality, reputation or other characteristic of the good is essentially attributable to its geographical origin (appellation of origin).

 

In October, 2000, the CRT started working with Interpol to track down and eliminate fake tequilas. That same month, the CRT revealed that 110,000 liters of adulterated tequila had made it across the border into the United States, as heavily bribed officials looked the other way. The CRT launched legal proceedings accusing the un-named Mexican
exporters of "theft" for illegally placing the tequila label on the adulterated liquor.

 

On August 16, 2001 the Official Federation Gazette published an amendment to the Declaration of Protection for Tequila to allow the use of tequila in other beverages.

 

Between 2000 and 2003, the agave shortage sent the price of agave soaring from $0.40 a kilo to $16-$18 USD per kilo. The years 2001 and 2002 were named "Oro Azul" - Blue Gold as a result. In February, 2000, the CRT allowed tequila to be made at a lower alcohol level -35% - to help companies cope with the shortage.

 

In 2002, a nephew of then-president Vicente Fox  announced plans to launch both tequila and wine bearing the family name.  Xavier Fox Padilla, planned to launch sales of Mi Mexico Fox tequila and Gran Pasion de Fox wine in the United States and Europe. The company was registered with the CRT, but this author has not been able to determine if any products have been released as of June, 2007.

 

Also in 2002, Francisco Beckmann Vidal, and his sons Francisco and Jorge Beckmann, seventh-generation descendants of Jose Antonio de Cuervo, formed Agave Brands, based in Guadalajara. They started shipping their La Certeza Tequila, an ultra-premium, 100% agave tequila, to the United States in 2006.

 

 In June, 2004, a WTO dispute between the United States and Mexico over Mexico's 20% tax on certain soft drinks that used any sweetener other than sugar cane grown in Mexico, escalated to tequila. Senate Finance Committee Chairman Charles Grassley, R-Iowa, demanded retaliatory tariffs on Mexican tequila and other products if the corn syrup tax was not removed. The WTO later ruled Mexico's tax was discriminatory and should be removed.

 

Since 2005, South African producers have made what they claim is a 100% blue agave product, now sold under the brand name Agave as an 'agave spirit.' Similar efforts to make tequila outside Mexico have been made in Japan and Spain. In response to this crisis, Mexican tequila manufacturers opened trade offices in Madrid and Washington to protect the use of the name tequila, and to promote the spirit in export markets.

 

For the last two decades, large international corporations have shown a growing interest in tequila, usually manifested in buying distilleries. Some of the largest tequila manufacturers - Cuervo, Sauza, and most recently Herradura - are owned by international companies.

 

The CRT announced that in 2006, tequila sales reached an all-time high, exporting 140 milling litres, an increase of 19.65% over 2005. Total production was 242 million litres, a 15.68% increase over 2005. About 778,000 tonnes of agave were used for the 2006 production.

 

There are almost 1,000 brands of tequila available today, many of which are for export only and not sold in Mexico. About 110 companies are registered as producers, although there are only 50-60 actual distilleries. Although the US has been the largest consumer for many years, Mexican consumption has grown apace and internal sales almost equalled exports by 1997 (exports: 84.35 million liters; national sales 72.19 million liters).

 

Sources

• El Duende's history of tequila
• Cuervo family and company history
• Managing Intellectual Property
• The Protection of Geographical Indications in Mexico (WIPO)
• Francisco Javier Sauza Mora biography
• Phillip Soto Mares launches El Duende
• WTO disputes and tequila
• World Trade Organization
• History of tequila
• La Certeza fact sheet
• Juan Francisco Beckman Vidal

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