Tommy's Margarita on bar of Tommy's Mexican Restaurant
Behind the Bar Stick People

Julio Bermejo on the State of the Tequila Industry

The man responsible for how you drink tequila talks about its rise and what’s happening right now.

Even if the name Julio Bermejo doesn’t immediately ring a bell, you’re almost certainly familiar with his contributions to the world of tequila. 

You’re probably aware that you should be drinking tequila made with 100% agave rather than a lower-quality “mixto.” You’ve probably heard of, and very likely had, a Tommy’s Margarita—knowingly or not—if you’ve ever had a Margarita on the rocks rather than blended, made with fresh lime juice instead of bottled sour mix and with agave syrup rather than orange liqueur, the better to highlight the good-quality tequila within. 

Julio Bermejo behind bar of Tommy's Mexican Restaurant with Tommy's Margarita / Tim Nusog

All that’s the work of Bermejo, who as a tequila expert, educator, and evangelist running his family’s business, Tommy’s Mexican Restaurant in San Francisco, has spent decades working to ensure that both consumers and bartenders are better informed about tequila, educating them at his bar and bringing them to Mexico to tour distilleries.

It could be said that no single person has done as much as Bermejo to elevate tequila’s profile in the U.S. and around the world and enlighten people about the agave spirit.

Here, in a conversation with Alexis Doctolero, the V.P. of, Bermejo talks about the changes he’s observed over the past few decades, the role he played in the spirit’s rise, and where he sees tequila today and into the future.

This interview has been condensed and edited for clarity. 

The Rise of 100% Agave and the Turning Point for Quality

When you got into the business, mixto tequilas dominated the market. How did you make the groundbreaking decision to carry only 100% agave tequilas at Tommy’s?

The way I've always looked at business is, you do your best until you know better. In my particular case, I tried mixto products, then I tried 100% agave products—granted, in a completely different era than we’re in today, when in my opinion there was a lot of love and passion and not just decisions driven by economics—and when I knew better, we changed. We weren’t trying to purposely radicalize or change or disrupt. I just wanted my guests to have the best things. Our pour cost went from five bucks a liter to like 19. But we knew the product was superior, hence the decision to use it. And so again, it all comes down to my mantra: Do the best you can until you know better. 

Tell us about the tequila club you created for your guests at Tommy’s, and how that evolved into you bringing people to Mexico for distillery tours.

When I started the club 30 years ago, I did it because I was carrying products that no one had ever heard of and had no marketing budgets. They are distillery owned and operated, they're wonderful, traditional brands. But they did not have big presences in the U.S. So how could I get my guests to order something they have never heard of? I only did it so I could teach people about the brands I was carrying. I wasn’t trying to teach ambassadors or make category brand lovers or docents or anything like that. 

Tommy's Mexican Restaurant sign / Tim Nusog

In this club, as people tried to become tequila masters and “graduate,” they demanded more knowledge. Back then, the only people who got to visit distilleries were district managers for the liquor companies. And honestly, all those trips were all about getting wasted and having a phenomenal party time, and not really about learning about the product. You get the standard one-hour tour or the three-hour tour, they give you the mariachi and the little limes, and you get wasted and you go, “I love Mexico.” I was trying to do something different. 

So after my guests had learned so much, I said, “Let’s go to Mexico.” And I started taking small groups of four, six, 10 people. And because they had a fair foundation of knowledge, people in Mexico were really impressed that, even though we partied very hard, our groups always asked good technical questions. Not just “Is the agave a cactus” kind of questions and “Do I always put salt on the rim?” It was more serious. 

In 2001, I was invited by the CRT [Consejo Regulador Del Tequila, the regulatory council] to go to the United Kingdom, where Vicente Fox, the president of Mexico, was going to sign a denomination of origin agreement with the U.K. and the E.U. for tequila. It was the largest convergence of tequila distillers outside of North America, and we were all hosted by [noted tequila expert and co-founder of Tequila Ocho] Tom Estes, and we had a phenomenal time. My responsibility was talking to bartenders about tequila. What blew my mind in London was that I was expecting questions from bartenders about flavor profiles of tequila and how to recommend tequilas to guests, but what I got were questions about how they work with fresh ingredients. The only fresh ingredient we used was lime, honestly, but here I had young bartenders wanting to know if I used cilantro or passion fruit. And that was really mind-expanding for me. 

And then it occurred to me: Oh my god, people here give a shit. By this time, we had already given up pouring mixto in our well, and for years had been pouring 100% agave, but people had no idea there really was a difference. So when I saw in London that people cared … Well, I made friends. 

So eventually in 2004 I put together a trip where I took Angus Winchester, Charles Vexinet, Sue Lackey, Jacques Bezuidenhout, Steve Olson, Jimmy Yeager, Rebecca Chapa, and other people like that to visit distilleries. And again, the distilleries were really impressed that we really had a thirst for knowledge. 

So that was monumental; that started opening up floodgates. I honestly would say we were partly responsible for the wells in London switching from mixto to Tradicional, which was the 100% agave tequila widely available in London. 

It was an accident for me, but it was fortuitous, because my vision has always been inclusive. I want to meet like-minded people; I want to meet people who are serious and passionate. And so when we organized [the initial] trip to Mexico and we started taking our guests, I also realized that guests can’t really do anything for the category. We need people who can do things for the category. Let’s bring these serious bartenders, and the zest and the zeal for knowledge from these people was amazing. And they went back and started tequila restaurants, wrote books with tequila cocktails, started brands of tequila. The success was phenomenal and the passion was genuine and real. And that really made me pretty proud. 

Issues As the Industry Grows

You’ve been spreading the gospel of tequila for more than 30 years. How have you seen the industry grow over that time? 

When I made the decision to put 100% agave tequila in the well at Tommy's, at that point over 98% of all the tequila consumed in America was mixto. Now, more than 50% of all the tequila made in the world is 100% agave. That’s monumental. If you compare it with scotch, Scotch whisky today is still 95% blended.

Julio Bermejo toasting portrait of his father at Tommy's Mexican Restaurant
Bermejo raises a glass to his late father, Tommy, for whom the restaurant is named. / Tim Nusog

We’ve been talking about the history of the rise of tequila. How would you describe the state of the industry now? 

That was honestly the golden age. The parents of our contemporaries who were in the tequila business had a passion for making good product, and their competition was regional or local, not global. But in the late ’80s or early ’90s, that changed. Kind of like what’s happening now with mezcal. 

But what I’ve seen over the last two decades is that no one in Mexico wants to disappoint anyone. They’ll say, “Oh my god, they want more tequila, let’s make more!” Well, the agave takes time to grow. Do we adopt different standards? 

So what you’re saying is, people are consuming tequila in much greater quantities, and the makers of quality tequila are saying they can’t fulfill that demand. So what happens when they can’t produce enough tequila?

What happens when any industry is strained is that technology is created to adapt. So you can see over the last 30 years, several technological advances have increased the production of tequila. It went from cooking the agave in the ground, like ancestral mezcal producers do today, to cooking in a stone oven, which was much faster and easier, then to cooking in the autoclave, a pressure cooker, which was even easier and faster, to, today, hydrolyzing with acids in the diffuser—incredibly efficient and fast. But everything comes at a consequence. 

The marketplace’s volume has increased tremendously, and tequila last year overtook rum and bourbon in terms of sales in the largest consumer market on earth. But this is a finite resource, so compromises have to be made. In the case of a small company like Tommy’s, where the goal is honestly to sell the best things we can get our hands on, well, it seems like a lot of the best things are now vintage products. 

Interesting. Clearly, adaptations have to be made as the industry scales, and some of that's done well and some of that’s done poorly. So now where are we? What’s the state of tequila production right now, and what are some of the major issues facing the spirit? 

Today, the majority of the volume in the tequila industry is no longer made by cooking agave in a pressure cooker or in a stone oven. It’s hydrolyzed with acid. Several of the major brands are doing it. 

The goal to grow tequila production and get it everywhere has resulted in a dumbing-down of the product. In my opinion, today, the “tequila agave expert” has a very poor reference point of what quality tequila tastes like. What does quality tequila taste like? For hundreds of years, tequila has always been hydrolyzed with steam, and hydrolyzing that way gives a full-bodied character in the taste of the agave, whether you want to describe it as cooked yam or sweet potato or whatever. In my opinion, that should be present. If not, why don’t we make the distillate out of a neutral grain instead? 

But also, tequila has deep secrets. For example, the fact that a tequila distillery can buy tequila from another registered tequila distillery and never disclose where they buy it from. Certainly, many of the major players cannot produce enough tequila to satisfy the demands they have. 

And yes, products can change for a million reasons. If all companies are transparent, they will allow the people who sell the products, like us, to be transparent with our guests and help guests understand why their tequila tastes completely different now than it used to. But if a company says “It’s the same,” and it’s not, it looks bad for everybody. And if I can’t find out the truth, or if I do find out the truth and it’s very different, I'll stop putting an emphasis on that product because I can’t trust it. If you’re not transparent with me, it’s difficult to sell.

Is there anything else happening in tequila production that’s influencing the spirit?

Sure! How about the fact that the CRT [Consejo Regulador Del Tequila, the regulatory council], in their nomenclature, no longer requires you to harvest mature agave? It says “agave.” So people are harvesting extremely young agave. And some people are experimenting with irrigating and trying to build residual sugar faster, but what people don’t understand is that even though your agave can have the residual sugar level of 30 brix, an agave that was heavily watered and fertilized and looked after tastes very different from agave that struggled and got to 30 brix after eight years and not four years. 

It’s like force-feeding for foie gras or something. 

You bet. There’s a consequence for every action. And I totally get it; it’s a business. But there have to be people, in whichever category of business, who follow the traditional roles and are there to keep the standard. And unfortunately, many consumers today are driven more by likes than by quality and process. And we all know taste is like art, it’s subjective—no one can tell you what’s good or bad. Quality is not subjective. When you use mature agave, when you ferment naturally, when you distill slowly, it’s going to be pretty good.

We skipped over an innovation in the ’90s. If you look at distillation as a bell curve, and we know that we’re going to take the heart of our distillate, where you cut your head or tail can make a significant difference in the price of what you're producing. But the more you retain, the greater the chance that distillate will have qualities that many people perceive to be unpleasant and harsh. So in the ’90s, people started oxygenating everything to make it more drinkable. People would say, erroneously, “I distill, and then I have to let it sit for days or a month.” Why is that? “Oh, it just doesn’t taste right, or it’s not stable yet.” Okay. I know a lot of people who don’t do that. They distill and distill well. I mean, look at the growth in high-proof tequila that’s well-made. It doesn’t burn your throat; it’s well-made. 

You can also make a lot of crap and need to help it, filter the daylights out of it, oxygenation, filtration, all this mumbo-jumbo. And, of course, additives: When you’re using really young agave that tastes like nothing, you need to add something to make it taste like tequila. 

Just remember, though, it’s legal. One of the amazing misconceptions that has pervaded the industry was when people would ask a company, “Hey, do you add anything to your tequila?” the answer is always no, because “We follow the rules,” and it’s in the rules that you can use additives. So no one is, in theory, breaking the law. They’re just using the law, right? 

People need to be aware and concerned about who’s acting appropriately and sustainably.

And the more chemicals you use, the worse it is. Previously the volumes were miniscule, and you could let things just compost naturally. Now there’s a serious vinasa [wastewater] problem that needs to be addressed responsibly if the category wants to continue to grow.

People are trying to innovate any way they can. It’s not as simple as back in the day, when producers made a couple thousand cases, where sure, you could feed the bagazo [leftover fibers after the agave is milled] to your cows. Now there’s a lot of bagazo. There’s a lot of wastewater. And with distillate, there’s a lot of consumption of water. 

It can be done right. But it’s got to start with the consumer. And I know the consumer is price-driven a lot of the time.  

Considerations for Consumers

What should consumers be looking for if they want to be looking at well-made, good, sustainable tequila? 

First, the consumer needs to understand distillate, in the sense that because there is alcohol content—and generally a minimum of 40% in the United States—it has heat and spice. And so well-made distillate should be bone-dry, as in nothing added to it. That’s a very basic start. I don’t care if you drink gin, vodka, whatever, it should be bone-dry; it should have no residual sugar. It’s legal in many categories to add residual sugars, as it is tequila. But not everyone does it.

The job of the distiller is to distill or convert the sugar source into alcohol. With the palate change over the last 15 years, a problem is that it’s become so sweet it’s almost cloying. With things like honeyed whiskeys, or Fireball, or sweet tequilas, or whatever, the consumer seems to be demanding it, unfortunately, so people are willing to make it. But good distillate isn’t sweet. It can smell incredibly sweet; it can be overwhelmingly sweet-smelling. But on the palate, it should be bone-dry. 

I think the brands that are coming out that are not trying to showcase the raw material are doing a disservice to the category. As a professional judge of spirits, I've had the opportunity to try many of these new celebrity tequilas. And what's fascinating is, you can make extremely mediocre distillate and add enough glycerin and enough sugar and flavor so that, even though the distillate itself is scorching the front part of the tongue and palate, as it moves over the tongue and palate it is soft and smooth. 

And so the regular consumer would go, “Oh, that’s quite nice and smooth,” when in fact it’s burning the hell out of your tongue, but it’s missed because there’s so much glycerin and there’s so much residual sugar that you’ll overlook that and concentrate on the marshmallowy, log-cabin-syrupy smell and taste that you’re perceiving. 

And the problem is, that’s not tequila. You can get tones of vanilla and maple from a serious amount of time in the barrel, but that’s really expensive. Time is money. We’re getting it today just with someone in a lab. And the consumer doesn’t know the difference. 

What’s fascinating to me is, some traditional tequila producers see great opportunity in developing new SKUs to go after this other segment of the market. Maybe that’s good business practice, but tequila never wanted to get everybody [to drink it]. And when it didn’t want to get everybody, the quality of tequila was at a very high level. I foolishly remember that I would try 10 tequilas that were honestly very well-made, and I would drink two or three of the ones that I liked more, because they were my style. I look back and think, I should have bought all of them, and in large quantities, because they don’t exist anymore. 

The category has exploded to the point where there are all these brands, and consumers don’t know what they’re tasting; they don’t necessarily know what to look for.

Tequila was always a product that was sold at the bar. Everybody already had their traditional vodka or bourbon; people have their traditional brands that they enjoy. But tequila was so new that people depended on their bar and the bartender to educate them and offer them a selection. 

Now, again, you do your best until you know better. I realize a serious tequila bar has many constraints and is pulled from many angles. But if in your signature drinks you’re going to use additive-laden products or diffuser-made tequilas, I think you should also put that on your menu. So 100% agave doesn’t cut it any more. You should put “100% agave, diffuser-made” on your menu, so the consumer has a choice. Because right now they don’t know the difference. Marketing is winning.

What should consumers and bartenders be doing to choose the right bottle for their back bar or their home bar? How should they be making these decisions?

They need the bar to be proficient, and a lot of times they’re not. Because if the bar solely depends on what their [liquor] reps tell them and doesn’t also do independent research, then most times, it fails. Especially with agave, and if you are concerned about sustainability or about additives in the products. I go to top-50 bars all over the world, and even they pour crap and feature it, unknowingly or knowingly. I see menus that are clearly driven just by the price of the featured product. 

How can the consumer learn about good tequila, and how can bars better educate them?

Julio Bermejo behind bar of Tommy's Mexican Restaurant / Tim Nusog

I would ask the bar what they recommend. And then you do a little bit of research. Tommy’s is a place where it takes me 20 minutes to make a sale, because if you’re at the bar and you don’t know what you want, I’ll have you smell options. Because 50% to 80% of your experience isn’t on your palate, it’s on your nose. And you don’t have to pick anything; you’re gonna smell them. And you decide. I empower the guest. I don’t want to just make a recommendation. I feel better if the guest makes the decision because I don't feel like I'm forcing the guest to drink things that I want to sell.

I’ll ask an easy question: What distillate do you normally drink? If you tell me you drink bourbon, I’ll recommend a reposado, añejo, or extra añejo to you. Or if you usually drink unaged distillate [such as vodka or gin], I’ll show you an unaged product [such as blanco]. 

Industry Decisions

How is the pandemic affecting tequila production?

The raw material is in such scarcity, and the pandemic still is causing such shortages. The glass shortage is not just a silica shortage. It’s an oxygen shortage. It’s a natural-gas price increase affecting people. Previously, people would make fun of getting your glass in China, but now everyone’s turning to China. And it’s costing the same price, but with shipping it’s then three times the price. 

How do such downturns affect tequila producers?

Big players have the advantage of generally being multinational and owning other types of distillate. Tequila's a distillate where, arguably, if that's your sole business, it’s feast or famine. When agave’s really expensive, you struggle, but your strategy to not lose market share is that you’ll maintain your prices. You may not make money, but you won't raise prices and scare your consumer to drink other distillates. If all goes well, and in a couple of years agave becomes affordable, then for the next five or six years everyone’s gonna print money. And then we’re gonna hit the cycle again, like we have for 200 years. 

In other traditional liquor businesses, when your demand goes up and you need more juniper berries, you can order them from Croatia or Italy. Here, we have a finite number of plants from a finite geographical location, which makes it all more complicated. The consumer doesn’t understand; they just think, “This is sold out again; why don’t these idiots make more?” Well, it’s because it’s not that easy, if you want to make it at the same quality. If you just want to triple production, you can do that, but the quality will suffer. And there are still people who care about that. 

So some companies are still choosing quality over quantity?

This fascinates me: Patrón decided to suspend Roca and kill XO Cafe. XO Cafe [sold] 200,000 cases [a year]. That’s a huge profit center. But they decided to shelve it because they need quality agave for their core line. Most people would go, “Man, I'm selling 200,000 cases of anything? I need to keep selling 200,000 cases. Let’s cheapen it; let’s put diffuser tequila in it.” Patrón said, “No, we’re gonna shelve it. We’d rather lose the money on that and devote it to our core line, which is well-made.” That’s the opposite of any other business.

That’s encouraging. Are there other producers of tequila who are making good decisions, and who are they?

There are several people doing very well, they’re doing really well sticking to their traditions, but they’re not making money. And the problem in our society is that we're under pressure to make money every single minute of the day. And tequila and mezcal are unlike any other distillates; you can’t just open the floodgate and make more. 

Now there are even tequila distilleries that have gotten into the business solely to contract and to sell whatever it is because people want it. God bless them as well. But the people doing good work are really small, and they’re not making money. In our society, if you do well, then by doing well you should make money. But tequila’s a little bit of feast or famine. 

Who’s doing it right, and why aren’t they making money?

Fortaleza, Siete Leguas, Cascahuín, Tapatio, G4, Atanasio. Of the big companies, Espolòn is pretty solid. Pernod with Altos. They’re not making money with tequila either, but the big companies' advantage is, they sell vodka and gin and whiskey—things that are really profit-laden all the time. So that’s where they can succeed easily and also can continue to promote tequila. Everyone who owns just a tequila distillery is just trying to maintain their market share. 

Tequila bottles on bar of Tommy's Mexican Restaurant / Tim Nusog

Which brands or bottles do you think currently offer the best product, hands down? 

I’d say mostly the same people who’ve been offering it for the last 40 years. Siete Leguas, Tapatio. G4 is new; Atanasio is new. Cascahuín only in the last maybe 15 years. Espolòn has made good tequila since 1998. Everything from Enrique Fonseca and Tequileño is incredibly solid and delicious. Oh, I have to mention Patrón! Patrón, since they left Siete Leguas, has been very consistent and good, and the quality of agave is incredibly high. They distill well. 

What about, say, Ocho and Tesoro?

Well, those are contracted brands. I’m giving you distilleries. The contracted product is difficult to talk about because they [contract with] a particular distillery. If something happens, they’ll need to find someone else to make their tequila. And that’s the story of a contractor. Whereas if you own the infrastructure, you’re going to be consistent in your profile. I mean, Casa Cuervo all tastes like Casa Cuervo. That’s good, right?

So as for contracted brands, for me, if I'm looking at a back bar, Ocho is something I would go for almost every time. El Tesoro, if there’s no G4. I would go for those two bottlings above Espolòn or Patrón. I think all of those four would be good. But there has to be a difference for me, because two of those are contracted, and the other ones are made at their own distillery. 

You can argue that Ocho has already changed. It’s now made at a different distillery by my brother-in-law, Carlos Camarena. The first release, called Tigre, does not resemble an Alteña product. As it should not. Because the water is different; the yeast is different; the size of the stills are different; the size of the fermentation tanks are different; everything’s different. So it should be different. But whether or not the consumer was so used to the flavor profile of La Alteña [the name of the distillery where Tequila Ocho was previously distilled], that remains to be seen. 

Ocho is also a unique case, because the founder, Tom Estes, passed away last year. The brand was just sold twice. Tom sold it to Samson and Surrey, and they sold it to Heaven Hill. So what is the future of that brand? Heaven Hill has a great relationship with a very large valley producer. Maybe they’ll choose to make it there? It’s a wild card. You don't know. In bourbon, this would never happen. Jim Beam would never be made at a different distillery, unless theirs burns down and people help them and give them whiskey or cooperate. But that’s not a common practice. 

Where do you see the future of tequila going?

What saddens me the most is that before, good tequila was really available to everyone, right? And by that, I mean well-made distillate. Now, well-made distillate is a luxury. But there’s a mini-revolution, in that there are companies that see value in doing things the natural way. They're never going to be the volume leaders now, and they never could be; that’s out of the question. But if you’re passionate about it, you can have a small tequila company, and if you hit it at the right time, you can be successful and make great product that’s respected all over the world. 

Are you feeling hopeful about the future of tequila? And what do consumers and bartenders need to do so there’s a brighter future for tequila?

Well, I’m going to spin that question around. The onus should be on the producer. And for many generations, the tequila producer that made quality product was always proud that he or she never spent one penny on advertising. But unfortunately you lose if that's your strategy, in the sense that if you don’t promote yourself when you do good work, you allow people who promote themselves and do mediocre work to become the standard. So people who do good work, regardless of what it is, they need to clamor a little more loudly. And maybe they might not have the reach of the big company, but they can clamor with specific pockets of people. For this discussion, that’s serious bartenders and serious bars. 

What other hopes do you have for tequila?

The beauty of tequila, to me, is that it’s the last denomination of origin spirit still in the hands of its founders. So the very fact that Casa Cuervo is still owned by Mexicans? Holy shit. The whole category’s still Mexican. Even though there are big players. Cognac is owned by everybody, and scotch is too, obviously. But tequila is still culturally Mexican. And it would be a shame if that’s lost.