The relationship between alcohol consumption and cognition is still controversial. This is a cross-sectional population-based study conducted in Caeté (MG), Brazil, where 602 individuals aged 75+ years, 63.6% female, and with a mean education of 2.68 years, were submitted to thorough clinical assessments and categorized according to the number of alcoholic beverages consumed weekly. The prevalence rates of previous and current alcohol consumption were 34.6% and 12.3%, respectively. No association emerged between cognitive diagnoses and current/previous alcohol consumption categories. Considering current alcohol intake as a dichotomous variable, the absence of alcohol consumption was associated with dementia (OR = 2.34; 95%CI: 1.39–3.90) and worse functionality (p = 0.001). Previous consumption of cachaça (sugar cane liquor) increased the risk of dementia by 2.52 (95%CI: 1.25–5.04). The association between the consumption of cachaça and dementia diagnosis has not been described before.