Tequila is a recognised Appellation of Origin (AOC) and can only originate from an officially delimited region, which includes 181 municipalities in five Mexican states, being the entire state of Jalisco and specific bordering areas of the surrounding states of Guanajuato, Michoacán and Nayarit. The exception to this is a small area of the State of Tamaulipas.
Tamaulipas, most notably the home of Chinaco tequila, lies far away from Jalisco on the eastern coast of the country. When the designated tequila region was originally established in December 1974 the state of Tamaulipas was not included. However, plantations of agave were established in Tamaulipas back in the late 1960s, and in 1977 the officially delimited region was modified to include several municipalities in Tamaulipas. This controversial inclusion is suspected as being largely political and brings the total delimited region up to a sizeable (11,194,600 hectares / 43,222 square miles).
The two main production areas remain in the state of Jalisco, in the Amatitán-Tequila valley, where tequila production originated around the town of Tequila (about 34 miles/55 km west of state capital Guadalajara), and in the highland region of Los Altos, in eastern Jalisco around the town of Arandas. At an average of 2,000 metres above sea level, Los Altos has less humidity and is cooler than the Tequila Valley which has an elevation of 1,200 to 1,600 meters, so tends to produce agaves with a higher sugar content due to greater differences in the temperature between night and day.
Agave grown in highland areas needs more time to mature so tend to be more expensive per kilogram. The way the land faces will also affect the maturation time. West facing slopes receive more sunlight so produce mature agave the quickest. South facing slopes are the second best with north facing slopes requiring the most time.
the iron oxide rich red soil of the highlands
The microclimate and soil conditions also have an effect on the flavour profile of the agave. Those grown in the volcanic soil of Tequila Valley tend to produce more "masculine" tequilas with herbal, spicy flavours while those grown in the lower pH red coloured (due to iron oxide) clay soil of the highlands tend to be more "feminine"; sweeter, softer and fruitier.
The sheer numbers of agave required to produce the major brands means these are usually produced using agave from many different regions so eliminating any discernable link to regional terroir. Some 70% of all agave used in tequila production is grown in the highlands of Los Altos, much more than is grown in the Tequila Valley where much of the highlands grown agave is actually distilled.