Forbes Philippines|July 2016

Rather than look at effluent as waste, Tanduay sells it at profit, saves on treatment cost and polishes its distillery reputation.

What will I do with the wastewater?” Gerardo Tee, chief operating officer of Absolut Distillery immediately thought when the ethyl alcohol maker started its Php800-million project to boost production four years ago. Until then, Absolut Distillery, located in Lian, Batangas, mainly sold its daily output of 60,000 liters to parent company Tanduay Distilleries, the country’s third biggest distilled spirits

manufacturer. In turn, Tanduay used ethyl alcohol as raw material to make Tanduay Rhum, Gin Kapitan, Compañero Brandy and other hard drinks that account for 25% of the market for distilled spirits. Both companies belong to the LT Group, the holding arm of Lucio Tan, the country’s third biggest billionaireas of March 2016.

But demand from gasoline retailers for ethanol – in compliance with a 2006 law requiring petroleum products to be blended with biofuels – encouraged Absolut Distillery to build a new 100,000 liter per day alcohol making facility. The new plant’s output can either be processed into biofuels for petroleum retailers or delivered to Tanduay, which uses it to make liquor.

Despite the obvious financial windfall from the increased production, Tee had good reasons to be concerned. The process of making alcohol, which is extracted from molasses, produces harmful effluents. When the untreated wastewater is released into streams or rivers, it can kill fish and other aquatic life.

At the Batangas distillery, every liter of alcohol produces up to 10 liters of effluent. With a capacity of 100,000 liters a day, the new facility, which started operating in December 2015, produces about 800,000 to one million liters of wastewater. Absolut, a fully owned subsidiary of rum maker Tanduay Distillers of the Lucio Tan group, spends about Php2.5 million a month to clean the incremental waste before releasing it to the nearby rivers. Existing treatment facilities back in 2012 were just enough to clean the slop from the 60,000-liter capacity distillery.

Fortunately, Lucio “Bong” K. Tan Jr., the 50-year-old Tanduay president and CEO, found an answer to the Absolut COO’s question and a lucrative one, too. He sealed a deal to sell the effluent to Aseagas Corp. that needs it as feedstock to produce electric power. Rather than look at the effluent as waste, the Tanduay president, one of Lucio Tan’s sons, sold it at profit.

Aseagas, a renewable energy company owned by the Aboitiz group, built a $30-million biomass plant beside Absolut’s distillery in Batangas. “Aboitiz (group) came and made an offer to buy the effluent. They said they can use it because it’s organic and they have a process to turn that into energy,” Tee says.

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