Tequila - A Definition
Tequila, the first distilled sprit of the Americas, is made from the blue Weber agave under the supervision of the Tequila Regulatory Council, a part of the Mexican government. Tequila has internationally recognized denomination of origin, much like champagne, bourbon or Roquefort cheese, meaning it can by definition only be produced in a certain geographical region. Namely, the entire Mexican state of Jalisco, and a few villages in the states of Guanajuato, Michoacán, Nayarit and Tamaulipas. The vast majority is produced in Jalisco, principally in the Tequila valley.
The Process
The blue agave is a fascinating organism, flowering only once in its long life, and being pollinated primarily by bats. Indigenous Mexicans cultivated agave for 9,000 years before the Spanish Conquest for food, textiles, tools and weapons. It is a succulent and relative of the lily family (not a cactus).
Cultivated agaves produce asexually creating miniature clones of
themselves at their base. A planted clone takes between 8 and 14 years to reach maturity, and will be regularly pruned and monitored during all those years. When agaves reach maturity, they are harvested by jimadores, skilled farm laborers who generally pass along their knowledge through family lines and use highly specialized tools. Within seconds, a good jimador can pare down a four foot agave to the piña, so named for resembling a giant pineapple.

The dense, 100-pound piñas are transported to the distillery where they are carefully arranged in ovens and roasted for hours or days. Their starches converted into sugars, they give off an unmistakable aroma similar to a sweet potato.

After cooling, the roast agaves are crushed, separating the thick aguamiel ("honey-water") from the tough fibers (later to be used for paper, furniture stuffing or compost). There are many different methods used for crushing - from huge assembly-line mills, to the millennia-old tahona, a two-ton volcanic-stone wheel.
The agave juice is then fermented for several days in vats - usually of wood or stainless steel. The temperature of the juice rises as microorganisms convert the sugar into alcohol. At this point, the concoction has an alcohol content similar to beer or wine, and this much of the process had been carried out in some form for millennia by indigenous Mexicans prior to the Conquest.
The Spanish arrived not just with the cross and the sword, however, but with the copper still, which they had learned to use from their former occupiers, the Arab Moors. Missing their brandy and fed up with high liquor taxes imposed by the Crown, the settlers soon began distilling fermented agave juice into what was variably called mezcal wine, Mexican brandy or Mexican whiskey. Today, fermented agave juice is distilled at least twice, and the result, cut with water to bring it to the appropriate alcohol percentage, is tequila.
100% Agave versus Mixto Tequila
The first distinction to make amongst tequilas is the source of their sugar. By law, a 100% agave tequila is made from two principal ingredients: agave and water. This makes it a purer, more predictable tequila. Nothing has been added to hide flaws or make it seem smoother than it is. A 100% agave tequila is much less likely to give you a hangover for that very reason.
Any tequila that is not labelled "100% agave" is a mixto, and most likely is almost half cane sugar, regardless of any other labeling (e.g., "100% tequila," "all natural"). While being all-agave is not necessarily a guarantee of quality, and many people use mixtos in cocktails, those who know drink only 100% agave tequilas.
Four Basic Types of Tequila
Tequila is divided into types based on if, and for how long, it is aged.
A blanco or plata ("white" or "silver") is a clear, un-aged tequila. It is bottled immediately or shortly after distillation, and is the purest form of tequila, usually featuring a strong presence of roast agave. While some people find blancos overly aggressive, a well-made one can be quite complex, with floral, vegetal and mineral flavor notes. Purists often prefer blancos because there is no way to hide any flaws.
A reposado ("rested") has been aged in oak barrels for between two and twelve months. The aging imparts color and flavor to the tequila, often smoothing it out and adding subtitles to the palate. Sometimes, the agave flavor becomes subdued by the influence of the oak. Reposado is the best-selling type of tequila in Mexico.
If a reposado is left in the barrel even longer (over one year), it becomes an añejo ("aged") tequila. Añejos have usually traded in much of their agave essence for oak characteristics after so much time in the barrel. Some argue that an añejo, while obviously tequila, more closely resembles a cognac or Scotch than it does a blanco.
Extra-añejos are left in the barrels for at least three years, and sometimes as many as five.
More information is available on the FAQ.