Lucio K. Tan Jr. takes future in own hands | Inquirer Business

Lucio K. Tan Jr. takes future in own hands

By: - Business Editor / @tinaarceodumlao
/ 03:10 AM March 22, 2015

THE BIO-METHANE plant of Aseagas, a member of the Aboitiz group, will process effluents of Absolut Distillers Inc., a subsidiary of Tanduay Distillers Inc.

THE BIO-METHANE plant of Aseagas, a member of the Aboitiz group, will process effluents of Absolut Distillers Inc., a subsidiary of Tanduay Distillers Inc.

To find your place in the sun is a difficult enough task, but it becomes even more formidable if your father has covered practically the entire territory.

Lucio K. Tan Jr., son of taipan Lucio Tan, is confident, however, that he has what it takes to rise to the challenge and emerge victorious.


And one sector where the younger Tan feels he can put his own stamp on is energy, through the corporate programs of Tanduay Distillers Inc., which he took over as president and COO in May of last year, and the investment plans of newly incorporated LCT Power Corp.


“We want to show the country that we are serious about our energy business,” Tan told the Inquirer in an interview at the Century Park, one of the business entities belonging to the sprawling Lucio Tan Group of companies. The group has interests in banking, airline operations, agriculture and real estate development.

According to Tan, these are the early days for the energy company. But the intent is to turn it into a big player in the energy sector.

He believes that the sector offers lucrative opportunities, considering that the group itself uses a lot of energy, and that the Philippines will need additional energy sources to support its economic growth.

“Right now, the real opportunity is in energy,” said the 49-year-old Tan.

Among the plans being considered by LCT Power is the commercial operation of a 100-megawatt plant that will run on liquefied natural gas.

At the same time, Tan will work on similar energy projects under the aegis of TDI, the oldest of the subsidiaries of the Lucio Tan Group and best known for producing the award-winning Tanduay Rum that is said to control 99 percent of the local rum category.


Next week, for example, Tan will be on hand for the scheduled inauguration of the group’s 2-megawatt solar plant in Lian, Batangas, within the compound of Absolut Distillers Inc.

It is the first solar project of the Lucio Tan group and also the first to operate in Batangas.

The solar facility can supply 60 percent of the alcohol distillery’s power requirements, but Tan said the option was there to sell the entire output to the energy-starved Luzon grid, which runs the risk of suffering from a shortfall in the summer months, when power demand is at its highest.

The installation of the solar plant at the alcohol distillery is part of the general direction for the Tan companies, under his leadership, to fully embrace green manufacturing principles and significantly reduce their carbon footprint.

For example, Asian Alcohol in Negros Occidental, another distillery under the Tanduay group, is looking to invest in wind power.

“When it comes to green manufacturing, nothing comes close to us. That is our rallying point, our competitive advantage,” said Gerardo Tan Tee, general manager of ADI, a subsidiary that sells ethyl alcohol to parent firm, Tanduay Distillers Inc.

Tan said he was particularly proud of what the distillery had accomplished so far because it has become synonymous with green manufacturing expertise—and it has the international awards to prove it.

“Distillery operations are being reinvented,” said Tan, adding that the distillery is actively looking for other markets and income sources to reduce its reliance on TDI.

“You cannot rely on just one company for survival,” explained Tan, who earned his Bachelor of Science degree in Civil Engineering from the University of California, Davis in 1991 and has a Master’s Degree in Business Administration from the Kellogg School of Management Northwestern University.

To hasten its diversification, ADI has come up with a proposition that it has the highest quality alcohol products—byproducts of sugar—in the market.

For now, it produces ethyl alcohol mainly for Tanduay, which needs it for rum production. It also sells alcohol to the pharmaceutical industry, and dry ice to Philippine Airlines.

But recently, it signed a supply contract with petroleum product distributor Seaoil, which needs bioethanol to blend with gasoline.

The Tan group has also signed a contract to sell effluents of its distillery to Aseagas of the Aboitiz Group, which will in turn process it to produce methane gas. Effluents are already being reprocessed to become liquid fertilizer, which is distributed for free to farmers in Batangas.

Aseagas, which started this month the construction of what it claims will be the world’s biggest and Asia’s first liquid biomethane plant, will convert every cubic meter of distillery effluent into a minimum of 15 cubic meters of pure methane fuel. The plant will start commercial production in the fourth quarter of this year.

With this new venture, ADI will improve its capability to treat distillery waste, while generating profit at the same time.

ADI is likewise preparing to invest in the modernization of the distillery to retain its reputation as the leader in best green practices.

“I personally take pride in saying that our distilleries have gone way ahead in its mission to sustainably produce quality sugar alcohol, always, with the environment in mind. This is the same alcohol that goes into every bottle of Tanduay. Our customers deserve nothing less than the best,” Tan said in a statement.

One of the awards ADI is most proud of is the Green Apple Environmental Award, which was granted in 2011 by The Green Organization at The House of Commons, Palace of Westminster in London, the United Kingdom. It is the first alcohol distillery to earn such a distinction for its green manufacturing practices.

In 2012, ADI also earned a special citation for Excellence in Ecology and Economy from the Philippine Chamber of Commerce and Industry for its “efforts to improve operations through sound environmental practices.

The Tan group’s attention to quality has contributed to the growing reach of the 160-year-old Tanduay brand in the United States.

“We are positioning Tanduay as a major international brand. We now have a presence in the United States and we are looking to expand its reach to other countries in Asia,” said Tan.

Tanduay penetrated the US market with its Asian rum mix, which combined the signature taste and character of Tanduay with hints of dried tropical fruits and spices.

A year after Tanduay Asian Rum was introduced to the US market in 2013, it won the gold medal and “Best in Class” in the Miami Rum Renaissance Festival. It was also recognized as having the “Best Value” by a panel of tasting experts from the Ultimate Spirits Challenge in New York.

The aggressive expansion of Tanduay’s reach to new territories is part of multipronged efforts by the Tan-led group to take its mature operations, such as alcohol distilling and rum production, to the next level and explore new areas at the same time.

The father has provided the firm foundation for the group, and it’s now up to Tan and his siblings to build on it amid daunting challenges that come with running a growing multi-billion-peso enterprise.

The younger Tan is, fortunately, unfazed by uncertainties and what may come his way.

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After all, Tan subscribes to the principle that the only way to predict the future is to create one you can call your own.

TAGS: Business, Lucio Tan, lucio tan group, Tanduay, Tanduay Distillers Inc.

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