|MadSci Network: Chemistry|
I found a well writen answer by Thomas Lumley at http://www.newscientist.com : Anisette-based drinks rely on aromatic compounds called terpenes for their flavour. These terpenes are soluble in alcohol, but not in water. The 40 per cent or so alcohol in the drink is enough to keep the terpenes dissolved, but mixing with water forces them out of solution to give a milky-looking suspension. Absinthe, a similar drink based on wormwood and now banned in some countries because of its toxicity, gave a more impressive green suspension. Terpenes are responsible for a lot of the harsher plant scents and flavours such as lemon grass and thyme.
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