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Ay Caramba! Mexico’s Tequila Industry Protests Phony Margaritas

August 9, 1995

WASHINGTON (AP) _ Representatives of Mexico’s tequila industry made the rounds Wednesday, from the White House to the Treasury Department and trade representative, to protest _ ay caramba! _ the sale of ``phony margaritas″ in America.

Adolfo Riveron, chairman of the Regional Chamber of the Tequila Industry, said Seagram & Co. and E&J Gallo Winery’s margaritas could be violating the North American Free Trade Agreement. The coolers don’t contain Mexico’s national liquor, but derive alcohol from malt or wine instead.

The coolers, which cost less than tequila-based margaritas, are damaging the Mexican economy and confusing the American public, Riveron said.

``This is an important issue for us and is unfair trade practices,″ Riveron said in a telephone interview after meeting with U.S. officials. ``This is a big part of our economy.″

Mexico sells 5 million cases of tequila in the United States each year, 80 percent of its export market, for about $500 million, the industry group said.

Riveron said he believes sale of the ``phony margaritas″ without tequila in the United States violates the unfair trade practices and intellectual property rights portions of NAFTA.

Officials in the White House, Treasury and the office of U.S. Trade Representative Mickey Kantor said they took the complaint seriously. But they added it might be a labeling problem that could be regulated by the Bureau of Alcohol, Tobacco and Firearms.

``Tequila is regarded as a Mexican product under NAFTA ... but it doesn’t say anything about margaritas,″ said U.S. trade spokeswoman Dianne Wildman.

Seagram and Gallo both said their cooler products, introduced more than a year ago, are clearly labeled as ``margarita flavored″ drinks with malt and wine ingredients to add the alcoholic kick.

``This is just one of a line of cocktail-flavored coolers that we have,″ said Seagram spokesman Chris Tofalli. ``We’ve got banana daiquiri coolers, fuzzy navels, Long Island iced tea, pina colada, planter’s punch. What should we expect next, a complaint from the banana counsel?″

Riveron also is director of relations for Heublein Inc., the largest importer of Mexican tequila, which has a lawsuit pending against Seagram and Gallo over their margarita coolers. He said he was leading the Mexican delegation, however, to represent 34 tequila sellers and makers.

Heublein is the importer and marketer of Jose Cuervo Tequila, which controls about 50 percent of the U.S. market. The company also has its own ``margarita cooler″ product that does contain tequila.

A Heublein executive told U.S. trade officials that since the introduction of tequila-less coolers, sales of Heublein’s margaritas have dropped from 1.4 million four-packs to 400,000 four-packs a year.

The tequila industry leaders already have met with the Mexican Trade Ministry on the issue. Riveron said those Mexican trade officials plan to ``present the case″ to the United States officially _ probably in October when NAFTA members are scheduled to meet.

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