BEVERAGE firms, especially rum makers, are currently challenged by the increasing demand for molasses as a raw material in manufacturing alcohol.
Nestor Mendones, chief financial officer of Tanduay Distillers Inc., said the number one challenge of local manufacturers of “drinks” right now is molasses which accounts for 70 percent of the alcohol cost.
Mendones said the movement in the supply of molasses dictates the cost of manufacturing.
“What complicates the picture so far as molasses is concerned is that 15 local bioethanol producers are starting to fully operate,” he added.
The beverage firm claimed that sugar mills in the country are only producing about 1.2 million metric tons of molasses a year.
Ethanol producers alone have a requirement of 1.5 million metric tons. This is on top of another 500,000 metric tons needed by rum makers.
“So where are we going to source the two million metric tons? This is a challenge because sugarcane production is also decreasing,” Mendones said.
He added that “as sugarcane production decreases, the supply of molasses also goes down.”
It can be recalled that vast sugarcane lands in Negros Occidental were converted to industrial projects like solar power farms.
Tanduay, the country's top rum maker, has recognized that this contributes to a reduction on the supply of sugarcane.
The firm, which owns Asian Alcohol Corp. based in Pulupandan town, is solely sourcing molasses for alcohol production in the province.
Asian Alcohol produces 80,000 liters of alcohol per day. These are supplied to Tanduay's distillery in Murcia town.
As a measure to address the challenge brought by the increasing demand for molasses, Mendones said they are considering the plan to build its own sugar mill.
Mendones said through its own mill, the firm will convert sugarcane to alcohol directly instead of molasses.
“The output from the sugarcane juice itself is higher compared to molasses,” he said, adding that their Batangas distillery already has approval from the Sugar Regulatory Administration (SRA) to build a sugar mill.
Despite having a sugar mill, however, beverage firms will still be challenged if there's a dwindling sugarcane supply.
Given this situation, Mendones said local companies, like Tanduay, are buying alcohol from countries abroad like Indonesia, Pakistan, and Australia.
“We really have to address the supply of raw material,” he said, adding that for Tanduay, it needs 3.5 liters of alcohol to produce one case of the rum.