Cocktail Quarrel : Tequila Distillers Take On Wineries Over Just What Makes a Margarita

An international incident is in the making, one that has serious people uttering the words intellectual property and Margarita in the same breath.

On behalf of venerable Jose Cuervo and other distillers of tequila, the beverage extracted from the blue agave plant native to the small Mexico town of the same name, the Mexican government lodged a protest with U.S. trade officials this month over the sale of reputedly bogus Margarita coolers--that is, Margaritas without tequila.

Cuervo says the term Margarita is the intellectual property of Mexican tequila manufacturers. But can a drink reputedly invented by Rosarito Beach bartender Carlos (Danny) Herrera half a century ago, and said to have been named for a showgirl called Marjorie, be anyone’s intellectual property?

A sobering question, one that dampened the celebratory mood a bit at last week’s 200th birthday party for Jose Cuervo, which was lavishly observed in Tequila itself, not far from Guadalajara.

Cuervo, one of the oldest companies in North America, says sales of its own bottled premixed Margaritas, called Cuervo ‘Ritas, have tumbled 50% since 1992 because E&J; Gallo Winery and Joseph Seagram & Sons are selling “Margarita” coolers made with--get this--malt and wine.

Although overall U.S. imports of tequila from Mexico are holding their own, Cuervo worries that the success of the bogus Margaritas could harm tequila sales over the long term if consumers turn away from the genuine article.

“What I guess the Mexicans are upset about is they feel that the image of tequila that comes to the United States is being adulterated and that the quality controls are not in place” in the tequila-less Margaritas, said a senior U.S. government official who asked not to be named.

Officials of the Mexican Bureau of Standards visited Washington earlier this month, along with a delegation of Mexican tequila manufacturers, to voice their displeasure over the Margarita situation to U.S. Trade Representative Mickey Kantor’s office and to White House officials.

Cuervo’s U.S. distributor, Heublein, has also filed suit in U.S. District Court in New York, contending the two manufacturers’ use of the Margarita name is “misleading, confusing and deceiving a substantial segment of consumers throughout the United States.” The case is awaiting trial.

Cuervo has also petitioned the U.S. Bureau of Alcohol, Tobacco and Firearms to change the labeling rules for coolers to keep Gallo, Seagram and others from using the hallowed Margarita name--or start using tequila.

Donna Montiel, chief of the bureau’s alcohol import and export branch, said the bureau is awaiting the outcome of the federal lawsuit before it will rule on the Heublein petition.

But as of now, there is no “standard of identity for Margaritas,” Montiel said, meaning that anyone can call just about anything a Margarita. “With the absence of that standard, there is no specific language that necessitates for tequila to be present.”

David Ichel, a New York lawyer who represents Seagram in the suit, says the Margarita is a “flavor system,” not a drink.

“At the end of the day, Cuervo and the others are just trying to monopolize a flavor system that they don’t have any right to. The flavor has been around for decades. No party owns a trademark or any intellectual property right in that flavor.”

The Gallo and Seagram drinks are doing brisk sales partly because they are cheaper and, without tequila, more readily available. The wine- and beer-based coolers can be sold at convenience stores, whereas it requires a liquor license to sell Cuervo’s tequila Margaritas.

Both Modesto-based Gallo, which sells its coolers under the Bartles & Jaymes label, and Seagram introduced their Margarita coolers in 1993, a year after Cuervo ‘Ritas hit the market.

Gallo also sells cooler products labeled Pina Colada, Strawberry Daiquiri and Mai Tai--all drinks normally associated with rum, gin and other hard liquors. In smaller print, the Bartles & Jaymes labels say the coolers are made principally with wine or malt.

But Heublein’s hands aren’t completely clean when it comes to Margaritas. The company once marketed something called a Moscow Margarita, which contained vodka but no tequila, but dropped the product in 1994.

Jack Shea, spokesman for Heublein, based in Farmington, Conn., admitted that his company briefly test-marketed the vodka Margarita, but he called it an inconsequential undertaking.

Since the 1940s, when the Margarita was supposedly created at the Rancho La Gloria bar at Rosarito Beach, the cocktail has become enormously popular. About two-thirds of the 4.7 million cases of tequila imported to the United States annually go into making Margaritas in bars or at home, according to Adams/Jobson’s Liquor Handbook of New York City. That makes it the No. 1 specialty drink in the United States.

And even if Gallo and Seagram prevail in the Margarita dispute, they had better not try to get into the tequila business. The North American Free Trade Agreement guarantees Mexico a monopoly over the production and sale of tequila.

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Sobering News

The introduction of non-tequila “Margarita” cocktails by E&J; Gallo Winery and Joseph E. Seagram & Sons has hit hard at Jose Cuervo’s own premixed Margaritas that, needless to say, do contain tequila. Sales of Cuervo ‘Ritas drinks have fallen by nearly 50% since 1992.

Sales of Jose Cuervo ‘Ritas in millions of cases:

1995: 0.53

* What’s A Margarita?

That depends on who’s pouring. According to Mexican tequila distillers, a Margarita is a tequila-based drink consisting of the following ingredients shaken over shaved ice and served in a glass whose edges have been wetted in lime juice and dipped in salt.:

1 1/2 oz. tequila

1 oz. lime juice

1/2 oz. Triple Sec or Cointreau liqueur

E&J; Gallo and Seagram, on the other hand, contend that Margarita refers to a flavor, not a tequila-based recipe. Both companies sell premixed coolers in bottles made with wine and beer and call them Margaritas. The Gallo Bartles & Jaymes Margarita Flavored Apple Wine Cooler contains, according to its label:

Carbonated water

Apple wine

Fructose

Dextrose

Natural and artifical flavors

Caramel

Artificial coloring

Sulfites

Source: Jose Cuervo