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The spirit of empire building

ANDREW & KEVIN TAN

Tan Ha was beaming with pride. As a child, the radio factory worker’s parents had been too poor for him to complete his own education. Now, though, his son Andrew had just graduated magna cum laude in business administration from the University of the East in Manila.

This called for a celebration. Tan Ha had therefore bought three bottles of Fundador, a Spanish brandy, which he poured out to his assembled family and friends. As they toasted his achievement, Andrew relished the subtle sweetness and spicy notes of the contents of his glass. He knew that this was something special.

With his freshly minted degree, Andrew set about building his career. Although his father had wanted him to become a banker, he had other ideas. Ever since childhood, he’d aspired to having a business of his own. First, though, he would need some capital. Some early success as an importer and seller of kitchen appliances helped generate both some savings and a business idea. One day, he was interviewing a potential new sales manager, whose background was in the liquor trade. Impressed by the man’s knowledge and network of contacts, Andrew decided not only to hire him but also to switch industries.

It was as a maker of gin that Andrew made his entry to the spirits business. This may have seemed an obvious choice, given the drink’s huge popularity in the Philippines. What’s more, it can be much quicker to bring a gin to market compared to certain other spirits. This too made it attractive to a start-up with very modest resources. But the new company’s early experiences proved rather tougher than expected.

We really struggled to begin with, recalls Andrew. We were up against at least four rival liquor companies locally, some of which had more than a hundred years of heritage. Our operations were tiny by comparison. For maybe two or three years, we lost money. At one point, I was even asking myself whether it was worth keeping going.

Rather than abandon distilling, Andrew and his team decided to change course. While the market for gin was fiercely competitive, whisky represented a niche where they would not be pitted against big Filipino competitors. The company thus launched its first whisky, which met with rather more success than its gins had. But what should be its next move? Andrew knew very well that his compatriots had a taste for brandy, but that it was all imported. Perhaps the time had come for a local variety.

The birth of Emperador

Although the Cognac region of France is brandy’s spiritual home, it was to the Spanish city of Jerez that Andrew traveled for inspiration. After all, this was where they made the delicious Fundador, with which he’d marked his graduation a decade or so earlier. The young entrepreneur delighted in visiting Jerez’s bodegas, the historic facilities that produce not just brandy but also the sherry for which the city is most famous. He watched and listened intently as the master distillers explained their age-old craft.

Not only did Andrew need to understand the brandy making process, he also needed a name for his future product. During a visit to Seville, he turned to a Spanish friend for advice, mentioning his admiration for Fundador. He thought about it overnight and suggested Conquistador, which means ‘conqueror’ in Spanish, says Andrew. Given that the Philippines had been conquered by Spain a few centuries earlier, I gently replied that this might not go down too well back home. He went away and returned with the name Emperador, meaning ‘emperor.’ I really liked it and so that’s what we settled on.

It took several years to bring Emperador to fruition. In 1990, though, Filipinos took their initial sips of their nation’s first locally produced brandy. And they quickly developed a liking for it. So much did the spirit shape the fortunes of Andrew’s company that he subsequently decided to rename the whole organization – then called Consolidated Distillers of the Far East – as Emperador Inc. Just over two decades later, the eponymous liquor was selling more than 400 million bottles a year across Asia. However, the imperial thirst for expansion was not nearly quenched.

Emperador’s Asian growth – driven partly by the rapid rise of the region’s middle class – contrasted with the experience of many European distillers at the time. While dark spirits such as brandy were still in demand, increasing sales were hard to come by. Andrew, however, saw opportunity. In 2013, he went to Spain to acquire the San Bruno bodega and vineyards in Jerez. Two years later, he returned to complete the purchase of a further selection of household name sherries and brandies, including Fundador. That acquisition was a real milestone for a Filipino company, says Andrew’s son Kevin. Fundador had inspired us from the very beginning. Not only had Emperador gone on to outsell that brand, here we were actually buying Fundador ourselves, along with its incredible heritage that went back over a century before ours. I think that deal really helped to put the Philippines on the map as a global investor.

Raising the Filipino flag: Acquisition & diversification

Besides brandy, aspirational Asian consumers were showing an increasing appetite for whisky. They had long enjoyed the locally produced varieties, such as that which Andrew had started out distilling many years before. But with their fast increasing disposable incomes, they were turning to more expensive imported varieties, especially from Scotland, the birthplace of whisky. When the historic Whyte & Mackay brand came up for sale in 2014, Emperador Inc. stepped forward.

 
 
It is a really satisfying feeling when we raise the Filipino flag on all our overseas ventures.
 
For me, Whyte & Mackay was simply a once-in-a-lifetime opportunity, says Andrew Tan. Some of the whisky in their warehouses has been maturing for sixty years. Clearly, that is not something you can replicate easily. The brands that accompanied it included Tamnavulin and Dalmore. Dalmore’s history goes back seven hundred years, and the rarest bottles have sold at auction for around £270,000 ($373,000) each. I would have to say the acquisition of Whyte & Mackay was one of the proudest moments of my career. Whisky is a drink that’s been growing pretty much every year here in Asia, says Kevin. We decided to buy the Whyte & Mackay business because we felt we could really expand our footprint in our region. And we have indeed been very pleased with the subsequent growth. People are eager to learn how to appreciate a good whisky, especially the younger generations in Asia. Enabling this development has been great.

The Tans’ diversification has gone far beyond liquor, though. The parent company that includes Emperador is one of the Philippines’ biggest conglomerates. Its operations include quick-service restaurants, real estate, integrated tourism and infrastructure. More than half of the organization’s revenues come from these other businesses. However, it is Emperador that puts the global into Alliance Global, with its distribution network of more than a hundred countries worldwide. It is a really satisfying feeling when we raise the Filipino flag on all our overseas ventures, says Andrew. But then again, so is knowing that five million people in our homeland are enjoying our brandies every day – and many millions more around the world. For us, it all boils down to one basic principle: doing our best to make our customers happy.

 
 
My beginnings were extremely humble.
 

Dr. Andrew Tan: My life

I was born in Fujian province in Southern China. My beginnings were extremely humble. When I was still a young boy, the family moved to Hong Kong, where we shared a tenement apartment with only one bathroom with four other families. Even the corridors of the apartment block had been let out as accommodation. We then relocated to Manila when I was a teenager.

On my way to school every day, I remember taking in all the shops as I went: grocery stores, hardware outlets and ‘soda fountains,’ as I called the cafés. When I discovered that some of these thriving small businesses belonged to the families of classmates, I was really impressed. I told myself that after I finished my education, I would open a grocery store. Although that never happened, the dream of being an entrepreneur stayed with me. My father placed huge importance on education. He had not been able to have proper schooling himself because his family had needed him to go out to work. So he was always determined that I would be able to finish my studies and have a better life than he had had. To pay my way through university, I worked as a private tutor. I tried to save money however I could, walking for miles every day to avoid having to pay bus fares.

Sharing my blessings

Education is critical to society. It is probably the greatest equalizer of all. With the right education, a child from a poor family gets a big chance to transform their life. I know this better than almost anyone, given my own history. So I very much feel that it is my privilege now to be able to help others who find themselves in the same situation that I did, economically disadvantaged but academically promising.

Under the auspices of our company, we created the Megaworld Foundation. Every year, its flagship scholarship program assists a thousand deserving students to get access to good education from elementary to college level. In partnership with around 50 reputable schools in Metro Manila and the surrounding provinces, we pay students’ tuition fees and other allowances. When our scholars graduate from university, we offer them opportunities to join our companies.

The scholarship program is only one aspect of our foundation’s work. We also build and renovate schools, run literacy programs in some of the poorest rural areas, and provide school boats, which help children who previously had to wade or swim across rivers to get to school. We feed malnourished children, deliver disaster relief and plant trees. The foundation partners with many other organizations to accomplish what we do. Life has given me many blessings and I love to share them with others. Uplifting the lives of other Filipinos is a wonderful thing to be able to do. I will always go the extra mile when it comes to building a brighter future for the nation’s youth and empowering the marginalized.

 
 
Taking over from my father as CEO of Alliance Global was a great honor but also an enormous responsibility.
 

Kevin Tan: Global citizen

I was born the year after my father started our company. I always took an interest in the business as I was growing up. I’d accompany him on visits to the distillery as a child. In my teens, I spent a few of my summer vacations doing work experience there, which was a brilliant way of learning about the business. It was also great having a front-row seat as my father diversified from liquor into real estate and then into other areas.

After I graduated from college, my first job within our company was selling condominium units. Through this role, I encountered many kinds of people and really got to understand the ins and outs of our activities. Subsequently, I was tasked with establishing our mall business. This was a really steep learning curve, but I discovered my passion for property development and innovation in the process. Watching a major property go from concept to reality is something I find incredibly fulfilling.

 
 
Sustainability is critical to our organization.
 

Taking over from my father as CEO of Alliance Global was a great honor but also an enormous responsibility. Our family has never believed that working for or leading the family business is a birthright. As children, we were always told that education, skills and experience were prerequisites, but also a genuine passion for the company and what it does. We took this on board and set our expectations accordingly.

Sustainability is critical to our organization. At Emperador, for example, we use the biogas waste generated during the distillation process to create electricity. This helps to meet around one third of our distillery operations’ power needs. The Philippines is suffering the effects of climate change with increasing frequency, including more violent typhoons and other extreme weather events. Alliance Global has therefore set a goal of becoming carbon neutral by 2035. We’ve also got a target of helping to create five million jobs – directly and indirectly – by the same date.

The COVID pandemic has been a real wakeup call for humanity. It has made everyone realize our vulnerability and the need to work more closely together for the common good. For me, global citizenship is about upholding certain values that are intrinsic to our wellbeing. These include integrity, diversity, sustainability and unity. If we regard ourselves as global citizens, we will not only conquer the pandemic together but also create a better world thereafter.

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