Tanduay overtakes Bacardi as world’s best-selling rum brand

By Arra B. Francia, Reporter

SALES of Tanduay rum in Visayas and Mindanao fueled Tanduay Distillers, Inc. (TDI)’s performance in 2017, allowing it to overtake international brand Bacardi in a world ranking of top-selling rum brands by think tank Drinks International.
The rum manufacturer led by tycoon Lucio C. Tan, Sr. reported on Wednesday that it has sold 19.5 million cases of rum in 2017, 17% higher year on year. In contrast, international brand Bacardi sold 16.8 million cases, declining by 3% from the year before.
This marks the first time that TDI outpaced Bacardi since the group took over Tanduay rum brand in 1988, according to TDI Chief Financial Officer Nestor C. Mendones.
“Aggressive marketing efforts in the Visayas and Mindanao drove sales,” Mr. Mendones told reporters on the sidelines of the company’s press conference in Manila on Wednesday.
The company said it has secured a 25.2% market share in the entire country in the distilled spirits category, which also includes gin and brandy. In Visayas and Mindanao alone, Tanduay has a market share of 64% in 2017, and 66.3% during the first quarter of 2018.
In terms of sales abroad, TDI said the export segment accounted for less than 1% of total sales. The company looks to grow the unit in the next three to four years, in order to further contribute to its top-line performance.
“If we could sell four to five million cases of Tanduay Asia abroad, we don’t have to sell locally anymore. Because that alone will match what we sell locally. That’s the opportunity we are seeing in the export business,” Mr. Mendones said.
The higher sales for 2017 translated to a 12% increase in revenues to P16.79 billion in 2017. During the first quarter, the company saw a slight dip at the top-line to P4.243 billion, versus P4.246 billion the year before.
Despite the increase in volumes, TDI’s bottom line took a hit due to higher input costs. Net income went down by a third to P633 million in 2017, and also by 35% to P135 million during the January to March period this year.
“Our products are for the masses, so we cannot just raise prices without affecting demand. So while we are happy with the volumes we are getting, especially with our progress in Mindanao where we are regaining a substantial market share. The pressure for the company is to keep the bottom line as healthy as the top-line revenue item,” Mr. Mendones said.
Asked whether the company will be putting up more facilities in the south to meet the demand for more rum in the region, the TDI executive said they have yet to make concrete plans.
“Capacity talaga namin ay nasa Luzon pa (Capacity is really in Luzon), so either we just shift some of our equipment rather than investing new ones, and entirely buy new ones na lang. Keep the one we have in Cabuyao, and new lines na lang ang ilagay (will be put in),” Mr. Mendones said.
The company said it currently has 120,000 barrels of aged rum containing almost 200 liters each, which will be able to meet the demand for rum in the coming years.
TDI is part of Mr. Tan’s conglomerate LT Group, Inc., which also has interests in banking, tobacco, and property development.
Shares in LTG dropped 4.06% or 85 centavos to close at P20.10 each at the Philippine Stock Exchange on Wednesday.