Ouzo (ούζο) is an anise-flavored aperitif that is widely consumed in Greece and Cyprus. It can be consumed neat or mixed with water.
The precursor of ouzo is tsipouro or rakia in many Balkan countries. It is a traditional alcoholic drink distilled throughout, and during the time of, the Byzantine Empire and continued throughout Ottoman times. However, tsipouro or raki in Greece is generally not anise-flavored (unlike raki in Turkey which is).
Traditionally, Tsipouro is said to have been the pet project of a group of 14th century monks living in a monastery on holy Mount Athos. One version of it is flavored with anise. It is this version that eventually came to be called ouzo.
Modern ouzo distillation largely took off in the 19th century following Greek independence, with much production centered on the island of Lesbos, which claims to be the originator of the drink and remains a major producer. When absinthe fell into disfavour in the early 20th century ouzo is one of the products whose popularity may have gained (it was once called "a substitute for absinthe without the wormwood"). In 1932, ouzo producers developed the method of distillation using copper stills, which is now considered the canonically proper method of production. One of the largest producers of ouzo today is Varvayanis (Βαρβαγιάννης), located in the town of Plomari in the southeast portion of the island, while in the same town pistillate (Πιστιλαδή), a variety of high quality ouzo, is also distilled.
Ouzo is traditionally mixed with water, becoming cloudy white, sometimes with a faint blue tinge, and served with ice cubes in a small glass. Ouzo can also be drunk straight from a shot glass. Mixing ouzo with cola destroys the liquorice-like taste of ouzo.
In modern Greece, ouzeries (the suffix -erie is imported from French) can be found in nearly all cities, towns, and villages. These cafe-like establishments serve ouzo with mezedes — appetizers such as octopus, salad, sardines, calamari, fried zucchini, and clams, among others. It is traditionally slowly sipped (usually mixed with water or ice) together with mezedes shared with others over a period of several hours in the early evening.
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Ouzo of Lesvos, greeknet.com