Product diversification is becoming more commonplace in the beverage world. And, we’re speaking not just of what’s in the bottle, but where it is produced.

Those who follow the adult beverage industry know the occasional battle erupts over the use of such terms as “champagne,” “Scotch whisky” and “vodka.” The next tussle shaping up could well be over the use of the term “tequila.”

Presently, only spirits distilled from pure or high-percentage blue agave plants in the Mexican state of Jalisco and several adjacent spots can be called tequila. That’s the Mexican government’s stance and it is adhered to worldwide.

Now, however, a Hollister, Calif., entrepreneur who already has a successful winery, Leal Vineyards, and has been making tequila from imported agave is eyeing a pure American tequila. He has planted 10 acres of blue agave in the hills near Gilroy, an area already known as the “Garlic Capital of the World.”

Frank Leal attracted notice last year when he won two gold medals and one silver at the Spirits of Mexico competition in San Diego for his Tequila 5150, which he aged in repurposed wine barrels.

He won a medal each for his three styles of the 100 percent blue agave spirit: anejo, aged 13 months; reposado, aged seven months, and unaged blanco.

Another example of diversification can be found on the other side of the country, in Kentucky. The state is known for its bourbon, but a new product called Lyons Reserve may broaden that description just a touch.

Alltech, which owns the Lexington Brewing Co., is planning on making a malt whiskey named for Pearse Lyons, the company’s founder.

Lyons himself announced the project in a recent speech at the Kentucky Chamber’s Economic Summit and Annual Meeting in Louisville, Ky. He said production is expected to begin in about six weeks and yield the first whiskey in time for the Alltech FEI World Equestrian Games at the Kentucky Horse Park in 2010.

Alltech is a biotechnology company in Nicholasville, Ky., that is paying $10 million to be the Games’ title sponsor.

Lyons said it also is developing a bourbon drink similar to Irish coffee.

It has not yet been named. He said the bourbon ingredient in the drink will be purchased from other Kentucky distillers.

When Alltech receives final federal approval for the Lexington distillery, it will result in creation of the only distillery-brewery combination in the country. Alltech produces Kentucky Ale and other beverages at its Lexington brewery.

Those are merely two quick examples of the trend. Here’s a third one, helped along by a quirky state legislature.

For 87 years, the St. Julian Winery has been turning out a variety of table wines at its Paw Paw, Mich., facility. Now it has joined the boutique vodka craze.

The state’s oldest operating winery now is allowed to sell its own grape vodka after getting state approval to do more than manufacture the spirit.

Dave Braganini of St. Julian said the company had been allowed to make vodka, “but we’re not allowed to sell it. There’s a quirk in the law.”

That quirk was removed by the state senate in June and Michigan Gov. Jennifer Granholm signed the legislation into law.

William M. Dowd covers the adult beverage field at billdowd.com.

(c) 2008 Hearst Newspapers