U.S.-Brazil pact should boost cachaça sales

Scotch whisky has long been regarded as being made in only one place. Scotland.

That is largely due to the vigilance of the Scotch Whisky Association (SWA), a feisty trade group that rigorously monitors the world spirits industry to be sure no one is trying to pass off their wares as "true Scotch whisky" without it being precisely that.

The same cannot be said for many other types of spirits, unlike such things as bourbon and tequila, which have specific government-enacted regulations about their creation.

I was chatting over cocktails the other day with Gavin Hewitt, chief executive of the SWA and a man who knows a thing or three about global trade. He has headed the organization since 2003 and concurrently has been president of the European Spirits Organisation since last November. Before that, he was the British ambassador successively to Croatia, Finland and Belgium, and worked in a number of other diplomatic postings around the world.

Our topic was regulation in the manufacture and quality of various spirits, and cachaça, the distilled sugar cane liquor, was cited as a prominent example, particular with the upcoming visit to the White House of Brazilian President Dilma Rousseff.

Cachaça is the base for the caipirinha cocktail that has so enamored tourists to South America in recent years that they demanded it when they returned home. That demand has been answered in many of the better cocktail lounges and bars throughout the U.S.

In my view, that means those consumers should be able to know the source of the cachaça is held to certain standards in purity and safety rather than being just anything tossed together and put in a pretty bottle. After judging several cane spirit competitions, I can attest to the fact that the latter has been the case too often and that quality has often been wildly erratic. Hewitt concurred.

"We do need some sort of uniformity in quality for such spirits," he said. "I'm not in favor of government or industry over-regulation, but there is the matter of safety and value for the money."

There are as many as 2,000 different names for cachaça in the vernacular, according to one authoritative Brazilian publication. Many cropped up over the years as illicit distillers sought to call their distilled sugar cane something that would not attract the attention of government tax collectors and regulators or even back in the days when the spirit was banned.

Now, the matter of quality seems well on its way to being addressed. In recent days, the U.S. and Brazil have exchanged letters of intent to increase trade in cachaça -- the bulk of which is made in Brazil -- and bourbon and Tennessee whiskey. This was part of President Rousseff's visit and various trade agreements discussed at the time between the two huge nations.

Specifically mentioning cachaça is a major change because since 2000, Brazil has had to label it "Brazilian rum," putting into a much more competitive market niche, because cachaça was not specifically recognized by the U.S.

Under the agreement, the U.S. pledges to recognize cachaça as a distinctive Brazilian product, and Brazil promises similar recognition for bourbon and Tennessee whiskey, each of which has long been manufactured under specific regulations. Inherent in the agreement is that the Brazilian government will be monitoring the quality of the cachaça its distillers export to the U.S. and, presumably, elsewhere.

There are two types of cachaça, unaged (white) and aged (gold). White usually is bottled right after distillation, although some is aged for several months, and usually matures wood barrels for at least three years.

To understand the scope of cachaça in the Brazilian economy, it helps to know that there are an estimated 40,000 distillers making 4,000 different brands of cachaça with total sales $1.1 billion (U.S.) annually, according to the Brazilian Cachaça Institute.

Brazil, the world’s largest sugar exporter, sold $17.28 million worth of cachaça to 60 countries in 2011, mainly to Germany, Portugal, the U.S. and France.

U.S. Trade Representative Ron Kirk said in an e-mail, "Cachaça and bourbon and Tennessee whiskey are among the United States’ and Brazil’s most unique and well-recognized products. This exchange of letters represents a very positive development for both of our industries, and reflects our governments’ commitment to stronger bilateral trade ties.”

By definition, bourbon must be made from a mash of at least 51% corn -- although most is made of a much higher percentage, and be aged at least two years in new, charred American white oak barrels. Tennessee whiskey is a bourbon-style spirit that then is filtered through maple charcoal.

The recognition is not yet a done deal. The U.S. Alcohol and Tobacco Tax and Trade Bureau will publish notice of the proposed change and solicit comment. If it issues a regulation designating cachaça as a distinctive Brazilian product, Brazil then will reciprocate by recognizing the two U.S. whiskeys.

"Brazilians are rapidly acquiring a taste for the finest American whiskeys, and (this) agreement -- when implemented -- will ensure the integrity and authenticity of these world class drinks," said Peter Cressy, president of the Distilled Spirits Council of the U.S. (DISCUS). "Formal recognition for bourbon and Tennessee whiskey producers is critical because it will ensure that only those products produced in accordance with strict U.S. standards will be permitted for sale in the Brazilian market."

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