CRT claims the beverage is in violation of designation of origin rules by using the name tequila but it does not contain significant quantities of the spirit. It now says it has the necessary funds to pursue legal action against the company.
'Not a spirit'
The council alleges tests show there is no tequila in Desperados beer, which is marketed as a "daring" brew flavored with tequila to make it "refreshing and wild" and is giving Heineken until the end of the month to stop labeling its bottles with the world “tequila.”
"There is no link between Desperados and the tequila industry," the council said in a statement.
In response, Heineken denies the allegation and claims the flavoring it uses does contain genuine tequila which it buys in Mexico from one of the members of the CRT, but would not say who.
“We are fans of Tequila. However, what is important to remember is that Desperados is a beer, flavored with Tequila, not a spirit,” a Heineken spokesman told BeverageDaily.
“We make sure the product fully complies with all regulations and labelling requirements. The flavoring we use contains genuine tequila which we buy in Mexico from one of the members of the CRT.
“75% of the flavoring we use is from tequila (clearly stated on each Desperados bottle).
“We have produced Desperados for 20 years and have enjoyed a good relationship with CRT and its members. As such, we cannot comment on the specifics of our dialogue.
“We would like to emphasize that Desperados and the CRT cover a lot of common ground: we’re all huge tequila lovers and through the Desperados brand we promote the greatness of tequila in 85 markets across the world.”
Millennials
Tequila-flavored beer has been met with a mixed reception among drinkers. Over 85% of tequila is consumed in the US and Mexico but Heineken discontinued Desperados in the US in 2015 due to weak sales and it is not sold in Mexico.
The beer brand which is targeted at millennials is sold in 85 countries and remains popular in Europe even though residents are not traditionally big tequila drinkers.
It also goes against the sophisticated image tequila sellers have been trying to cultivate - promoters of Mexico’s signature drink have been marketing it as a high-end spirit, and downplaying its former image as a quick way to get drunk at parties.
Last week actor George Clooney sold his tequila brand Casamigos to Diageo for $1bn.
“With the global strength of Diageo we expect to expand the reach of Casamigos to markets beyond the US to capitalize on the significant international potential of the brand,” said Ivan Menezes, CEO, Diageo.
Tequila is similar to champagne in that it is a protected product that can only be called tequila if it's made in certain areas in Mexico according to specific rules. The Mexican Institute of Industrial Property monitors if companies misuse the tequila name.
The global tequila market has experienced strong growth with volume sales of super and high-end varieties increasing by 706% and 292%, respectively, since 2002 – an average rate of 5.7% per year, according to Distilled Spirits Council data.
Euromonitor also reports Tequila consumption has grown by 6% globally in the past year.