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From “Virgin’s Tears” to “Sadness Remover” and “Medicine for the Poor”, there are thought to be over 2,000 names for cachaça, the rum that has long been one of the cornerstones of Brazilian culture.
According to Datagro, Brazil’s biggest sugar consultancy, about 10 litres of cachaça are consumed per person in the country every year. Given that that figure includes babies and children, the real number for drinkers is likely to be closer to one litre a month.
However, what has been a distinctly Brazilian tradition for centuries has recently attracted the interest of multinational drinks companies and investment funds looking to gain exposure to emerging markets.
The announcement on Monday that Diageo, the UK-based distiller, is buying one of Brazil’s biggest cachaça brands, Ypióca, came as no surprise in the industry, said Plinio Nastari, Datagro’s president.
“We are really starting to see the effects of globalisation,” he said. “Cachaça is starting to be consumed a lot in Europe and it’s become fashionable for young people now.”
Last August, Italy’s Gruppo Campari paid $26m for Sagatiba, a premium cachaça producer based in São Paulo.
Cachaça, which accounts for about 80 per cent of the volume of the Brazilian spirits industry, is often drunk straight without mixers, especially among men and lower-income consumers.
It is also mixed with ice, sugar and lime to create the Caipirinha cocktail, Brazil’s national drink and a favourite among tourists.
The country produces about 1.9bn litres of the rum, taking up about 1.5 per cent of national sugar production.
However, despite the growing interest in cachaça, the industry still remains one of the country’s most traditional.
About 99 per cent of Brazil’s 40,000 cachaça producers are considered “micro-companies” – farms that bring in extra money by selling small amounts of milk, coffee or grains, according to Brazil’s national cachaça association IBRAC.
In that regard, Ypióca is typical of the industry. Despite its large size, it is still considered one of the industry’s most traditional producers.
The company, which is based in Fortaleza in Brazil’s fast-growing north-east region, was founded in 1846 by young Portuguese adventurer Dario Telles de Menezes.
Ypióca is now under the control of fifth generation descendants, with 3,200 employees and five factories with a total annual capacity of 126m litres.
About 5 per cent of production by the company, whose name means “purple earth” in the local indigenous language, is now sold abroad.
Recently, the group has branched out into other areas such as mineral water and ethanol production – businesses that will remain under the control of the family.
Although the company did not give a reason for selling its cachaça brand, analysts said the move was common among family-run companies in Brazil.
While younger generations have often wanted to get out of the business of their ancestors, it is only now they are being given the opportunity do so as foreign investors turn their attention to Brazil.
According to Höft- Bernhoeft, Passos & Teixeira, a local consultancy, 67 per cent of Brazilian companies now don’t even survive beyond the second generation.
“We’re seeing the same process that we saw decades ago in the US – companies either selling or going public,” said Renato Prado, food industry and retail analyst at Banco Fator in São Paulo.