Why Mexico's Tequila Council May Take Heineken to Court

Tequila has been responsible for countless bad decisions and an unquantifiable amount of regret, and even the world's second-biggest brewer isn't immune from its effects. It probably would've been easier—and less expensive—if Heineken had just done a bunch of Cuervo shots and then barfed in a mailbox instead of putting the word 'tequila' on one of its beer labels—but that particular bad decision might land them in court, with a legal headache that all the Advil in the world can't help.

According to the Financial Times, Mexico's Consejo Regulador del Tequila (CRT), also known as the Tequila Regulatory Council, is considering a lawsuit against Heineken because the Dutch beer giant says its Desperados beer is flavored with tequila, even though lab tests show that it doesn't contain any actual tequila. "We cannot permit someone unscrupulously to affect tequila's prestige," Ramón González, CRT's director-general, told the Financial Times. "Either they take the word tequila off it, or they put some tequila in. [If they refuse], we'll have no choice but to fight this."

Tequila has a protected designation of origin which regulates how and where it can be made, much like Champagne, Cognac, or Parmesan cheese. According to the CRT, in order to be called tequila, booze must be made "from the heads of the Agave Tequila Weber Blue Variety." Additionally, 25 percent or 51 percent of the beverage's alcohol content must come from tequila in order to wear that word on its label.

Desperados doesn't seem to meet those criteria. Although Heineken claims that the beer is aged in tequila barrels and spiked with an unexplained "75 percent tequila flavoring," the CRT and the Public Health Laboratory in Madrid found 0 percent actual tequila in the beer. [Desperados] is a beer flavored with tequila," a Heineken spokesperson insisted to the Times. "The flavoring we use contains tequila, which we buy in Mexico from one of the members of the CRT . . . We make sure the product fully complies with all regulations and labeling requirements."

The CRT shrugs its collective shoulders at that statement, saying that Heineken would need to purchase "a world of tequila" in order to comply with its strict standards for labeling a beverage as tequila.

Although a US court will not hear these arguments (and Heineken stopped selling Desperados in the States in late 2015), there is a legal precedent here for allowing CRT to regulate the use of the tequila name. In January, the Trademark Trial and Appeal Board ruled that "tequila is not a generic name for a type of liquor" and that, as a trademarked name, the CRT could "set conditions" for how other companies or entities use it.

In that case, Luxco, the alcohol producer behind bottom-shelf spirits Everclear, Lady Bligh Rum, and Lord Calvert Whisky, fought CRT for its own right to sell its own booze under the name tequila. (Luxco has several 'tequila' brands, including Exotico, El Mayor, and Juarez). The St. Louis-based company basically said that most Americans thought tequila was a generic word and had no idea it referred to a specific kind of spirit made in Mexico. The court heard evidence proving otherwise, and CRT got to toast its good fortune, hopefully with real tequila.