The Sazerac is a local New Orleans variation of an old-fashioned cognac or whiskey cocktail, named for the Sazerac de Forge et Fils brand of cognac that was its original prime ingredient. The drink is some combination of cognac or rye whiskey, absinthe or Herbsaint, and Peychaud's Bitters; it is distinguished by its preparation method. It is sometimes referred to as the oldest known American cocktail, with origins in Pre-Civil War New Orleans, though there are much earlier published instances of the word cocktail. Around 1850, Sewell T. Taylor sold his bar, The Merchants Exchange Coffee House, and went into the imported liquor business. He began to import a brand of cognac named Sazerac-de-Forge et Fils. At the same time, Aaron Bird took over the Merchants Exchange and changed its name to the Sazerac House and began serving the "Sazerac Cocktail", made with Taylor's Sazerac cognac and, legend has it, the bitters being made down the street by a local druggist, Antoine Amedie Peychaud. The Sazerac House changed hands several times and around 1870 Thomas Handy took over as proprietor. Around this time the primary ingredient changed from cognac to rye whiskey due to the phylloxera epidemic in Europe that devastated France's wine grape crops. At some point before his death in 1889, Handy recorded the recipe for the cocktail, and the drink made its first printed appearance in William T. "Cocktail Bill" Boothby's 1908 The World's Drinks and How to Mix Them. Though this recipe calls for Selner Bitters, not Peychaud's. After absinthe was banned in the US in 1912, it was replaced by various anise-flavored spirits, especially Herbsaint from New Orleans.
The drink is a simple variation on a plain whiskey or cognac cocktail (alcohol, sugar, water and bitters) and could have been ordered in any latter 19th Century bar in the US as a whiskey cocktail with a dash of absinthe. It was this type of variation to the cocktail that caused patrons not interested in the new complexities of cocktails to request their drinks done the Old Fashioned way. By the early 20th Century, vermouth was fairly prevalent, and simple cocktails like the Sazerac had become a somewhat rare curiosity, which aided its popularity.
The creation of the Sazerac has also been credited to Antoine Amadie Peychaud, the Creole apothecary who moved to New Orleans from the West Indies and set up shop in the French Quarter in the early part of the 19th Century. He dispensed a proprietary mix of aromatic bitters from an old family recipe. According to legend he served his drink in the large end of an egg cup that was called a coquetier in French, and that the Americanized pronunciation of this as "cocktail" gave this type of drink its name. However, the word cocktail predates this by decades, first appearing in print in 1803, and first defined in print in 1806 as "a mixture of spirits of any kind, water, sugar and bitters, vulgarly called a bittered sling.".