An American couple’s fight with Mexico over what makes a true tequila

Grover and Scarlet Sanschagrin, founders of an app called Tequila Matchmaker, were at dinner on New York City’s Upper West Side when their phones began to vibrate.

A maintenance worker had sent photos of their house in Tlaquepaque, Mexico, showing the doors barricaded, windows smashed and chains around the property.

“He was really scared,” recalls Scarlet, a former journalist and native of Monterey, Calif. “He didn’t know what had happened, and the neighbors were saying dead bodies had been found.”

The rumors of bodies were baseless, but the drama was otherwise real. The photos showed the aftermath of a search conducted by Mexican authorities based on a criminal complaint by the country’s tequila regulator.

The March raid punctuated a fracas that has affected one of Mexico’s biggest industries: What makes a true tequila?

The Sanschagrins are known on both sides of the border for a program that certifies tequilas as being free of additives. They say Mexico’s regulator, Consejo Regulador de Tequila, filed the complaint—which alleged they were illegally making and distributing fake tequila and adulterating drinks—only to stop them from continuing to highlight additive-free tequilas.

The CRT, which oversees an industry that is a core part of Mexico’s cultural identity, denies this. But it is vocal about its objections to the couple’s program, which it says is based on shaky science and hurts tequila’s reputation.

“They saw a business in this additive-free,” said Martín Muñóz Sánchez, the regulator’s technical commissioner. “They created a negative environment for tequila with this certification.”

‘The magic of tequila’

Additives have long been widely used across the spirits industry, adding flavor, color and texture to everything from cognac to whiskey. If under 1% of a tequila by weight, the additives don’t need to be disclosed under Mexican law. Even critics like the Sanschagrins say there are no known health risks.

But as the use of additives becomes more widespread, the couple say tequila drinkers have a right to know which brands are produced using only the traditional ingredients of agave, yeast and water, and which are supplemented with glycerin, corn syrup and other additives.

The issue is becoming a big deal in a fast-growing industry that has many of the world’s largest alcohol companies jockeying for dominance.

At its core, the fight is between those who want to protect traditional methods of tequila production favored by many family-owned companies, and some of the industry’s giants, which have adopted more-modern methods.

Tequila production has boomed, rising 164% between 2013 and 2023, according to CRT data. The growth is in part due to surging demand from the U.S. for sugary margaritas and shots, but also more recently to higher-end tequilas intended to be sipped or drunk with soda. Celebrities from George Clooney to Kendall Jenner have piled into the category, and tequila is forecast to overtake vodka and U.S. whiskey to become the most valuable spirit in the U.S. this year, according to the industry tracker IWSR.

The demand boom has spurred a supply scramble, with many producers choosing to harvest agave plants well before they reach maturity. Traditional production equipment such as brick ovens can extract only some sugar from such young plants. By contrast, modern equipment can extract far more and make for a process that is both cheaper and quicker. The accelerated process, which avoids cooking, often necessitates that producers use additives to create the flavors in the final product.

The Sanschagrins see additives as an outgrowth of the industry’s recent mass industrialization. They say that the trend hurts mostly small brands and that many multinationals are deceptively marketing their tequilas as traditional.

The regulator says as long as distillers abide by the law, the production methods they choose are their own business.

“The different ways to produce tequila according to the equipment, the personal recipe you have, will give you thousands of different profiles,” the CRT’s Sánchez says. “That is the magic of tequila.”

Diageo, which owns the Don Julio and Casamigos tequila brands—neither of which is on the Sanschagrins’ additive-free list—says consumers should be encouraged to try different tequila profiles.

“The misconception that there is only one process for making great tequila has been a marketing angle that has not been constructive for the tequila industry and consumers,” says Sophie Kelly, Diageo’s head of tequila.

While reliable data on the subcategory is scarce, industry watchers say there is clearly consumer demand, with big retailers such as Total Wine featuring sections promoting additive-free offerings.

“Additive-free is the biggest trend in tequila right now,” says Ivy Mix, head bartender at the Leyenda bar in Brooklyn.

Trading shots

Scarlet introduced Grover to tequila soon after they met 18 years ago in San Francisco. Trying different bottles quickly became a point of connection in their relationship. When the couple married in 2009, they had a tequila-themed wedding in Tlaquepaque.

In 2012, they founded the Tequila Matchmaker app, which lists, rates and allows consumers to review the burgeoning number of brands available. It now has 328,000 users.

In 2017, the couple—who by then were living in Tlaquepaque—began noticing that some of the most popular tequilas contained nontraditional flavors.

“Certain brands started coming out tasting like vanilla or very sweet cake-icing batter,” says Grover. “We said, ‘OK, this is enough.’”

The Sanschagrins added a check box on the Tequila Matchmaker app indicating whether a tequila was additive-free. They say master distillers trained them to detect additives through smell and taste. They performed the checks during distillery visits, and eventually through testing done by a third-party lab. There were no industrywide standards on how to test for additives, which remains the case today.

Mostly small brands, eager to set themselves apart from their bigger rivals, welcomed them. So did Patrón, now owned by Bacardi, which says its tequila contains no additives.

In July 2020, the couple turned their informal list into an additive-free tequila “verification program.” After the first year, brands were asked to pay $1,000 toward the program to help cover its costs, although Scarlet says those that didn’t weren’t kicked off the list.

Following the program’s launch, the CRT accused the Sanschagrins of acting as shadow regulators and asked them to end their program.

The regulator told them—and later reiterated to The Wall Street Journal—that thousands of additives can be used to make tequila, and that identifying all of them would be impossible. The regulator said it has evidence from an accredited American lab that several of the 120 brands on the Sanschagrins’ additive-free list in fact contain additives.

Grover says trace amounts of additives can make their way into tequilas unintentionally through cross-contamination when brands made by contractors share bottling lines.

The regulator has since cracked down on other additive-free claims as well.

In October, Patrón put out a press release announcing a new additive-free seal it said had been endorsed by the CRT. Hours later, the brand pulled the announcement and deleted all social-media posts about it after the regulator fielded objections from a number of tequila makers including Diageo.

The regulator then published an industry circular that said it didn’t offer an additive-free seal and slammed brands that used the designation in their marketing. “We never permit an attack on the industry of tequila,” Sánchez says.

Patrón has since sued the CRT over the episode. Mauricio Vergara, Patrón’s president and chief operating officer, says the company wants to work with the regulator and the industry on the best way to conclude whether a tequila is additive-free.

“More than a debate about whether additives are good or bad, it’s one about transparency,” he says. “Consumers increasingly care about how products are being made.”

The setup

In February, a man named Serpiko Sevchenko emailed the Sanschagrins to say he wanted a tequila tasting for himself and his friends. Could the couple organize one?

A few days later the man and three others attended a “Millionaire’s Tequila Tasting,” costing $299 a person, at the Sanschagrins’ house.

The men were actually undercover employees with the CRT, there to gather evidence later used to justify the March raid.

The regulator says it found that the Americans were illegally making alcohol in their home. They saw distillation equipment Grover used to make a spirit he named Lotecito, and which they say he passed off as tequila.

The Sanschagrins deny the allegations. Until they were informed by the Journal, the couple hadn’t known that the tasting was a setup. “This is such entrapment,” Grover said.

Following the raid, the couple briefly returned to Mexico and left with four suitcases and their three cats after their lawyer said it was unsafe. They recently bought a house in St Johns, Fla., where they plan to remain.

The Mexico attorney general’s office is continuing its investigation into the couple’s activities.

The Sanschagrins say they won’t visit tequila distilleries until the allegations against them are resolved. But they plan to continue the additive-free program through lab tests and tastings of bottles they buy in the U.S.

“To us, it is about protecting the traditional process,” Scarlet says. “It matters to us and obviously it matters to a lot of other people. It just matters.”

Write to Saabira Chaudhuri at Saabira.Chaudhuri@wsj.com