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Note: the correct way of spelling is cachaša (second c carries a cedille); for reasons of compatibility with internet browsers, the form "cachaca" will be used.

Cachaca is the Brazilian version of acqua viva; while anglo-saxons have whisky, French have cognac, Japanese have sake, Russians have vodka, Germans have kirsch, Brazilians have cachaca.

Cachaca is produced from destilation of sugar cane. Sugar cane was introduced in Brazil by the Portuguese in the 1500s, with the sole intention of producing white sugar (much more appreciated than the sugar bet used in Europe by then); much of the food, and all spirit drinks consumed by the Portuguese noblesse was imported from Europe.
In the production process, after the canes were crushed, the left overs (called bagaca in Portuguese - from which derived the word cachaca) were used to feed the cattle; the natural fermentation of the bagaca produced a very rustic kind of cachaca, which were joyfully drunken by the slaves. It didn┤t take long for the Portuguese to notice the alcoholic properties of the drink, refine its production methods and come up with the new drink.

Ever since, cachaca became the favourite spirit of Brazilians. Because of the low price (a liter can cost as little as R$2, cheaper than a bottle of mineral water), it┤s usually associated with the lower classes; cachaca has a high alcoholic degree (as much as rum or whisky), and is used by the poor to booze the problems away. However, some companies produce very sophisticated variations of cachaca, which may fetch considerable high prices; the site is specialized in selling the product, and their price list includes a brand which sells for R$210 (about US$ 70) the bottle of 600 ml.
Recently, nationalist movements and (notably) cachaca makers started a campaign trying to dissociate the cachaca from the lower classes; the intention is to inform the world about the qualities of the cachaca (much like the Caribeans did with rum) and gain markets around the world.

In this battle for commercial markets, caipirinha plays an important role. Caipirinha is a very simple to prepare drink, made with cachaca, sugar and lime; there are several variations on the "correct" way of preparing it, but basically it┤s like that: slice a medium sized lime, put a few slices in a wide short glass; pour a few spoonfuls of sugar; using a wooden piece (specific for the job), crush the lime, to get its juice mixed with the sugar; pour cachaca and add ice.
The combination of lime and sugar helps decrease the perception of liquorness; caipirinha goes down much slower than raw cachaca. While cachaca is consumed mostly by the poors, caipirinha is consumed by mostly anyone who can afford it; one can find caipirinha in bars, discos, beaches, restaurants, etc. This made caipirinha to be very popular with foreigners, which explains why the cachaca producers are trying to sell its image abroad.
Also popular are the variations of caipirinhas: replace cachaca with vodka, and you have caipiroska; replace the lime with other fruits, and you have caipifrutas (caipiruva - grape, caipirango - strawberry, etc).
Read also:
According to this study by American University, cachaša is, after vodka and soju, the third distilled liquor most consumed worldwide.
How to recognize a high quality cachaca.
Read more about caipirinha:

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