The Tequila Tug-of-War

Published October 22, 2003 at 12:00 AM EDT

Mexican farmer Ismael Vargas cuts a blue agave plant to get at its core, the "pina," which is the used to make tequila.

Indians in this region of Western Mexico harvested blue agave for centuries before the arrival of the Spanish. But these days 83 percent of the distilled liquor is trucked in bulk out of Mexico, to the United States, for bottling.

Tequila is considered a uniquely Mexican product. But, while it's made with the juice of the blue agave plant grown in the Tequila region, most of the distilled liquor is trucked out of the country for bottling in the United States. Now Mexico wants to ban the bulk exports and require all tequila bottling to occur south of the border, prompting an international dispute. NPR's Gerry Hadden reports.

The industry contends that tequila's authenticity is at stake. Mexico's Tequila Regulatory Council has filed some 10 cases against Tequila bottlers in the United States and Europe, accusing them of tampering with the product. It says the Mexican government initiative to bring tequila bottling home will give the Council more control over quality.

But U.S. bottlers dispute that there's a quality problem with the tequila they bottle. They suspect Mexico's proposal is intended to move jobs into that country.

Peter Cressy is president of the Distilled Spirits Council, which represents the major U.S. bottlers of tequila. He notes that tequila sales have nearly doubled in the last 10 years to $2.8 billion annually. Moving bottling south of the border would disrupt a proven chain of production, distribution and marketing, he says.

If the ban on tequila bottling is upheld, the two countries are likely to end up in court.