Philippines ‘Iron Lady’ Leads Push for Fair Alcohol Taxes

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Olivia Limpe-Aw is leading a group of Philippine liquor billionaires in asking President Rodrigo Duterte for equitable treatment in his plan to raise liquor taxes.

And she’s certain to have one tough battle as she leads both the Southeast Asian nation’s oldest distiller and the industry at a time of rising alcohol taxes, challenges from foreign brands and a debate over fairness.

Congress this month will start debating proposed tax increases, after Duterte sought a law to help finance a free health-care program partly via taxing spirits. Finance Secretary Carlos Dominguez wants it passed this year.

“It’s about having equal treatment,” Limpe-Aw said of the plan to overhaul Philippine taxes on alcoholic drinks that she says deters the local liquor industry’s growth.

She’s leading the Distilled Spirits Association of the Philippines -- a decade-old group she helped establish that includes billionaires Lucio Tan’s Tanduay Distillers Inc., Ramon Ang’s Ginebra San Miguel Inc. and Andrew Tan’s Emperador Inc. Her family’s Destileria Limtuaco & Co. Inc. is the Philippines’ oldest distiller established in 1852.

Currently, distilled spirits such as gin and whiskey are slapped a tax of 20% of the retail price and a specific sum in pesos per proof liter. Meanwhile, only the latter is imposed on beer and wine -- most of which are imported.

The proposed measure would raise the rates using the current tax structure.

“You have to be very careful in designing tax structures, so you don’t kill one over the other,” Limpe-Aw, the first female president of Destileria Limtuaco, said in an interview in her office in Manila. “They can increase taxes, and no one will complain as long as it’s equitable.”

Family-Owned Business

After taking over the family-owned business in 2004, Limpe-Aw, who’s tagged by local media as the industry’s “iron lady,” said she was questioned by male colleagues about her knowledge on distilling processes and techniques, which she said didn’t happen to men in her position.

“I was told that I’m an entrant in an old boy’s network, and I have to prove myself worthy,” said Limpe-Aw, who only drinks for research and development and not socially with colleagues. “Anywhere in the world, it’s an old boy’s network. If you’re a woman in a man’s world, you have to work harder.”

Limpe-Aw is attacking a growing list of challenges. Besides the tax issue, she’s guarding against a bevy of foreign brands seeking to jump into one of the world’s fastest-growing alcohol markets.

Hamburg-based Statista estimates spirits account for about two-thirds of the $9.2-billion Philippines liquor industry. As the economy expanded, Filipinos with more spending power have turned to premium imported brands by distillers such as Diageo Plc, according to IWSR Drinks Market Analysis.

While imported brands accounted for less than a tenth of spirits consumption in the Philippines last year, IWSR data shows volume grew 20% over five years compared with a 0.6% increase for domestic products. IWSR forecasts annual market growth of 9% for imported spirits and 1.5% for homegrown ones until 2023.

Destileria Limtuaco is trying to protect market share by producing premium spirits infused with tropical fruit flavors such as Philippines lime and mango, and marketing the company as a leader in the Filipino food movement. It also pioneered selling cocktails packed into small juice packets to cater to millennials.

Emperador and San Miguel Brewery Inc. in the past years have also tried introducing premium variants yet with little success, IWSR said.

“Always sharpen the saw,” Limpe-Aw said, adding that it’s something she says women in male-dominated industries must do.

“If they studied twice, I’ll study thrice,” she said. “If you want to be treated by men as their equal, you have to show them you’re the expert.”

New Markets

As Philippines distillers face a raft of challenges at home, Destileria Limtuaco is looking overseas for growth. It plans to add export markets that now include China, Japan, Taiwan, South Korea, Malaysia and Thailand.

Destileria Limtuaco is in talks with retailers to expand in the U.S. -- so far it is only in California -- and is looking at entering the European market in the next five years, Limpe-Aw said, declining to identify the companies involved. “Every year, we would want to add one market,” she said.

While exports account for only about 4% of Destileria Limtuaco’s sales last year, it had saved what was once the maker of the Philippines’ best-selling whiskey from bankruptcy in the 1990s. A labor strike in 1989 halted production for six months and wiped out its market share at home.

Destileria Limtuaco won’t sell shares.

“It works for us that we’re a family-owned company. There’s nothing wrong with being private and conservative,” Limpe-Aw said. Not being a public corporation makes the company more nimble and innovative as it doesn’t need to chase fast growth, she said.

--With assistance from Cecilia Yap and Karl Lester M. Yap.

To contact the reporter on this story: Siegfrid Alegado in Manila at aalegado1@bloomberg.net

To contact the editors responsible for this story: Cecilia Yap at cyap19@bloomberg.net, Jodi Schneider, Clarissa Batino

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