Nov 2009 Financial News

Angostura shortage shakes global trade

Nov 12, 2009

Cocktail connoisseurs should be on alert. There could be an aromatic kick missing from your next manhattan or pink gin. The world is suffering an acute shortage of angostura bitters, the herbal concoction used to give an extra twist of flavour to classic alcoholic drinks.

Bars are struggling to replenish supplies of angostura following a shutdown at the sole manufacturer, a recession-hit firm in Trinidad and Tobago.

Made from a secret recipe of herbs, barks, roots, spices and rum, bitters became popular in Britain as an additive for gin, partly to conceal quinine in tonic water.

In the UK the website of angostura’s main importer, WB Distribution, says the product is completely sold out.

Trinidad’s House of Angostura has blamed a shortage in ingredients and a financial restructuring. The firm, hit by a liquidity crisis, prompted an emergency bailout earlier this year by the government. Patrick Sepe, chief executive of the US distributor, Angostura USA, said the production line ran dry in June and was only just getting back on track.

“There has been a shortage,” said Sepe. “You can’t just turn on and off supply of bitters. It’s not like producing bottled water – it’s a very delicate, intricate process.”

Invented in 1824, Angostura was named after a town in Venezuela where a German doctor, Johann Siegert, came up with the recipe as a stomach tonic to ease tropical ailments among soldiers.

Bereft of the classic bitter, certain bars have now turned to alternatives, including supplies from a German company, The Bitter Truth.

“A lot of bars are not happy,” said Mark Ludmon, editor of Bar magazine.

“Any bar that’s trying to do cocktails seriously will feel it’s wrong not to use the right bitters.”

Once owned by the rum firm Bacardi, the House of Angostura was sold in 1997 to CL Financial, which has failed to respond to requests for comment.

CL leveraged Angostura’s profits against a series of acquisitions including a deal to buy control of a Jamaican industrial company, Lascelles deMercado. It was reportedly left with a TT$600 million hole in its balance sheet.

The company, once a subsidiary of the CL Financial, is now in the hands of the Government and is clawing its way back to profitability.

Delivering the feature address at the inaugural Securities Dealers Associations Capital Markets Pioneer Awards, Bideshi said the restructuring of Angostura has been worked out between CL Financial and First Citizens CEO Larry Howai and his team.

“We have just restructured so we have a good breathing space and we will be announcing that very soon,” Bideshi said.

Earlier this year, Angostura was forced to delay the release of its accounts partially due to issues surrounding the fact that CL Financial had leveraged the company’s profits against deals that looked like a sure bet at the time, including US$676 million used to finance the purchase of Lascelles deMercado in 2008. Angostura has been reported to have been left with a TT$600 million hole in its finances by CL Financial.

On October 2, Minister of Trade and Industry Mariano Browne pledged support for Angostura at the post-Cabinet press briefing as the company faced the prospect of losing access to its lucrative European markets.

The shortage of the bitters is just the tip of Angosturs’s woes Angostura Ltd has also been concerned that its business strategy in Europe could be in jeopardy if the European Union (EU) does not grant an extension allowing the company to access its funds.

If the EU does not extend the time for funding, Angostura could lose traction in key EU markets and also run the risk of losing money already invested. The problem was that the application for EU funding ended in June this year with Angostura still not having rolled out its business strategies for Europe.

Without funding, he company runs the risk of having its projects postponed. Angostura has invested up-front over $TT 60 million to modernize its plant, and to promote new brands. While the investments have put the company in a position to increase its exports, several of these projects are not yet completed

Each country developed a business plan in order to access the funds and once this was approved distilleries, including Angostura, would invest in the projects but they would be reimbursed through the West Indies Rum & Spirits Producers’ Association (WIRSPA), an organisation that represents Caribbean distilleries.

Tony Conigliaro, an award-winning cocktail inventor and owner of 69 Colebrooke Row, a bar in Islington, north London, said he had stockpiled angostura after learning of the shortage.

He described bitters as a crucial finishing agent in well-mixed drinks: “What bitters will do is stretch the rest of the flavours across the palate.”

Distributors say the US is the world’s biggest consumer of Angostura bitters, drinking the equivalent of about 750,000 four-ounce bottles or equivalents annually.

Sepe said he hoped supplies would improve in time for Christmas, as shipments are just beginning to resume from the Caribbean: “There have been a lot of rumours that we’re going out of business and that people will never see Aangostura bitters again. I want to be clear that is not the case.”


Source:
Trinidad Newsday
Thursday, November 12 2009

http://www.newsday.co.tt/businessday/0,110756.html