275 million euros is a
lot to spend on a mere whim. The Philippine magnate Andrew L Tan has become the focus of attention
since he burst onto the Jerez scene with the purchase of the old Domecq
business. Outwardly the bodegas are pleased, but inwardly they are worried as
nobody knows what he has in mind and all indications are that he is here to
stay.
Many feel that his arrival could be the spur
needed to re-inject vitality to the brandy business. Some of the bigger firms
were thinking of removing their principal brands from the DO – which gives the
brandy its nobility - so they could be sold cheaply as “spirt drinks”. The two
bodegas which opened Pandora’s Box: Osborne with Veterano and González Byass
with Soberano, have the most to lose.
Tan’s interest in Jerez brandy and in
particular Fundador stems from way back. It is the national drink in the
Philippines and Fundador is the brand leader. Tan visited Jerez 30 years ago to
study how it was made. Later on the self-made millionaire established a
commercial relationship with González Byass which he recently strengthened with
a strategic alliance for brandy production. Those who know the workings of GB
are convinced that the firm would have had serious difficulties staying at the
top without Mr Tan and not without reason. He is their biggest customer and even before their joint venture was spending 100 million euros, equivalent to half
their turnover.
The González family, who were aware of the
progress of the negotiations to buy Domecq, had a meeting days earlier with Mr
Tan, who assured them that their joint venture was not at risk, at least for
the moment. Nevertheless the family is convinced that the magnate will, sooner
or later, break the agreement to concentrate his efforts on Domecq.
Osborne is also on the alert. The firm has
represented both the good and the bad in the brandy sector over recent years
and has changed from being primarily a Sherry producer to a spirits producer
with a large number of brands, some previously bought from Domecq. Osborne was the
first to remove Veterano from the DO and at the same time reinforced their
faith in Jerez brandy by buying up any well-known brand they could get their
hands on. They felt that they had everything under control until the sudden
appearance of Andrew Tan which might completely disrupt their plans. For now
the Osborne brandies are dominant in the domestic and German markets, a
position which Tan would be in a position to compete with if his objective, as
the brandy sector believes, were to invest in Fundador and recover its
prestige.
Those who have followed Tan’s career say that
he is a patient man, one who believes in the longer term. The test will be when
the apprentice became the master. Thirty years after his first visit to Jerez
his Emperador brandy is the second best-selling alcoholic drink in the world
with annual sales of 40 million 9 litre cases – almost 30 times the total
annual sales of Brandy de Jerez and 10 times the combined sales of Jerez brandy
and Sherry. Only time will tell whether Tan will be the spur so badly needed
for Jerez brandy. If so the old Fundador slogan could be revived: “El coñac –
ahora brandy – que está como nunca.” (The Cognac – now called brandy – is as
good as ever.) This refers to the fact that for a long time Jerez brandy was
known as Cognac - or "coñac" , until the term was outlawed.
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