Tequila was the first Mexican product to obtain its Designation of Origin in 1974.
According to data published by the European Union, 60% of consumers are willing to pay up to 30% more for a product that holds a designation of origin.
The industry generates jobs for more than 100,000 Mexican families; has an estimated market value of around 7.2 billion dollars.
Tequila is perhaps the most iconic product in Mexico’s culture. For many years, the spirit has enjoyed worldwide recognition reaching more than 120 countries; five of them stand out since they represent approximately 91 percent of all tequila exports: United States (84.16%), Germany (2.11%), Spain (1.55%), Japan (1.45%). and Canada (1.39%).
How is it possible to maintain consistent quality across the globe with such high demand? Like other international products—champagne or Manchego cheese, to name a couple, tequila possesses what is called Denomination of Origin (DO), sometimes also called Appellation of Origin (AO). This designation distinguishes a product apart by indicating it comes from a specific geographic region, which influences its unique characteristics and distinctive quality.
Products that possess a DO are distinguished by their high-quality standards and, above all, authenticity. DOs are protected by several national and international laws, which in turn were set to safeguard and boost the economy of the regions that make DO products. Famous examples are champagne, which comes exclusively from the Champagne region; Manchego cheese, made in La Mancha, a geographical area that comprises parts of Albacete, Cuenca, Ciudad Real and Toledo, Spain; and of course, tequila, which is made in five Mexican states only. As a result of these measures, the proliferation of low-quality imitations, which were abundant decades ago, are prevented.
Tequila’s Denomination of Origin: An Overview
The Tequila Denomination of Origin (TDO) guarantees that all tequila produced in Mexico meets strict standards for quality, authenticity and traceability. According to official data from the Mexican government, the TDO protects tequila production in 181 municipalities across five states:
Jalisco – 125 municipalities
Michoacán – 30 municipalities
Tamaulipas – 11 municipalities
Nayarit – 8 municipalities
Guanajuato – 7 municipalities
The designation was established exclusively in these locations due to their ideal geographical characteristics for growing Blue Agave. Moreover, these five states possess a longstanding tradition of Tequila production, handed down through generations. According to the official information published by the Tequila Regulatory Council, some of the variables that are taken into account to bestow a TOD are the following:
Tequila must be produced in a delimited geographical area: 181 municipalities in five states of the Mexican Republic.
Producers must comply with specific production techniques: specific traditions and crafts that are passed down from generation to generation.
Must use a specific type of agave: The Agave Tequilana Weber blue variety is the only species of Agave allowed for the production of tequila.
Climate: Mostly temperate climates, with average precipitation.
Land: Agave must be planted in soils of variable textures, with a PH of 5.5 to 7, with average organic matter of 2.5% to 4.9%.
The general declaration of the Tequila Designation of Origin was published in Mexico’s Official Gazette on December 9, 1974 (Tequila was the first Denomination of Origin in the country. Today, there are 18). The TDO is protected and regulated by several laws, such as the Federal Law on the Protection of Industrial Property, the Official Mexican Standard “NOM 006”, as well as various agreements between countries and international organizations. As the holder of the TDO, the Mexican government can exercise, in countries that recognize it, legal actions against anyone who imitates or uses the name “tequila”.
Tequila’s DO is currently recognized in 57 countries. Canada was the first to acknowledge it in 1979. 20 years later, the European Union and Mexico agreed to the mutual recognition and protection of their respective DOs. In 2017, the United States joined the list of countries, further boosting tequila’s popularity in the world.
Denominations of origin are extremely important for protecting, promoting and strengthening unique products by differentiating them from imitations and counterfeits. Is it indeed reassuring to know that consumers appreciate the effort to a great extent: according to the study “Voluntary food labeling schemes”, published by the European Union, “On average, around 60% of respondents would choose a product with a logo related to its origin, even if it is almost 30% more expensive.”
What is the role of the Tequila Regulatory Council?
The Tequila Regulatory Council (TRC) is a non-profit organization that brings together the different players of the Agave Tequila chain: agave and tequila, bottlers, distributors, marketers and government agencies. It also operates as the body in charge of inspecting, analyzing and certifying that tequila complies with all established standards, thus safeguarding its designation of origin and guaranteeing the authenticity of the spirits that consumers buy.
In addition to combating counterfeiting and piracy, the TRC promotes sustainability and social responsibility in tequila production. The organization implements programs to reduce water consumption, generate renewable energy, and minimize the industry’s carbon footprint. Their commitment includes the launch of their ambitious sustainability strategy, which establishes concrete goals to be achieved between 2025 and 2030.
The TRC is also one of the authorities responsible for granting the TDO to new Tequila producers. Among the TDO’s strict requirements, we will find, first of all, that the distillery must be located in any of the five approved states. Secondly, each distillery must comply with the corresponding technology, infrastructure and technical capacities required to make authentic tequila. The TRC carries out a technical assessment on said distillery and, if everything meets the required standards the Mexican Institute of Industrial Property authorizes the distillery to use the term “tequila” on its products, as well as the NOM (Official Mexican Standard) brand, for a period of 10 years. Once authorization is obtained, the distillery will be subjected to constant inspections and verifications by the TRC.
Tequila: legacy and business reason
As reported by specialized media, the economic impact of tequila is substantial. The industry generates jobs for more than 100,000 families and has an estimated market value of around $7.2 billion. Exports are also worthy of attention, reaching 416 million liters and generating 3.3 billion dollars in income.
Since its recognition in 1974, tequila has come a long way to become an international symbol of quality and authenticity. This 2024 marks the 50th anniversary of the Tequila Denomination of Origin, as well as 30 years of the creation of the Tequila Regulatory Council, and the figures don’t lie: today, the Tequila Denomination of Origin has become a national treasure. In addition to contributing to preserving the history, traditions and roots of our country, protecting tequila is key to promoting the economy and improving the quality of life of thousands of families in regions where promoting employment and economic growth is essential to the country’s development. In short, tequila is a legacy of our history, but it will also be a legacy of our future. Therefore, it is imperative to preserve, protect, and ensure its sustainable growth through generations to come.