According to Mexican law (which the U.S. honors), the famously fiery beverage must contain at least 51 percent liquor distilled from the sweet nectar of blue agave. That desert plant grown primarily in Jalisco, though four other Mexican states also are allowed to legally produce tequila. The name comes from the Ticuila Indians of Jalisco [sources: Humphrey, Handley].
When South African distillers started making their own version of the beverage in the early 2000s, using a plant similar to agave, Mexico didn't like the idea of being undercut. Its diplomats used international trade agreements to prevent South African companies from calling their product tequila. Instead, they were compelled to market it as "Agava" [source: Associated Press].