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1. The Issue

Lambanog is a Philippine alcoholic beverage most commonly described as coconut wine or coconut vodka. The drink is distilled from the sap of the unopened coconut flower, and is known for its potency and high alcohol content (80 and 90 proof). Most of the Lambanog distilleries are in the Quezon province of Luzon, Philippines. In the late 1990s, the Industrial Technology Development Institute, along with the Department of Science and Technology began working with the three biggest distilleries to standardize the distillation process. This collaboration has improved the quality of the product. Its introduction to the world market began with exports to Taiwan and Cambodia in 2001. Since then, it has enjoyed increasing exposure and popularity since. Because it is an organic, (chemical-free) product, Lambanog makes a unique addition to the liquor market.

2. Description

Lambanog is an alcoholic beverage known for its potency (it is sold in 80 or 90 proof variations). It is primarily produced in the Quezon Province of the Philippines, or about 143 kilometres southeast of Manila. The lambanog making process has been a tradition passed down through generations of coconut plantation farmers in this region. In fact, the Mallari distillery was established in 1918.

The process begins with the coconut tree — “the tree of life.” As with most fruit-bearing trees, flowers turn into the fruit. Lambanog making trees never produce fruit, because it is the sap from the coconut flower that is the crucial ingredient for this unique coconut wine. Plantation workers called mangagarit climb the coconut trees every afternoon to prune the flowers so that their sap drips into bamboo receptacles called tukil. (This process is analogous to rubber tree tapping.) The next morning, the mangagarit returns to collect the sap from these receptacles. The sap is then put through a cooking or fermentation process, which produces a popular coconut toddy called tuba. The tuba is then taken and distilled to produce lambanog. Until recently, lambanog was primarily an local drink, much like home-made apple cider or backwoods moonshine. Lambanog is widely enjoyed by the locals of the Quezon province, and festive occasions are incomplete without the traditional “tagayan” or wine-drinking. While the “tagayan” can take on different forms, the most common kind involves taking turns drinking out of a single glass set in the middle of the group.

Because of its long history as a cottage industry product, lambanog is still beginning to gain worldwide recognition. Also, in an efforts to increase its appeal to people of all ages, it is now marketed in several flavors: mango, blueberry, bubblegum, cinnamon, etc.

Cultural RelevanceBecause coconut trees abound throughout the Philippines, and because the process of distilling lambanog from tuba is a relatively inexpensive process, it is known as a poor man’s drink. Farmers often wind down by drinking lambanog after a long day’s work.

In Quezon, drinking lambanog is usually a communal thing – men sit around in a circle and take turns drinking shots from a cup placed in the middle of the group. Usually, there is also someone singing and playing the guitar to add to the festivities; he takes his turn at drinking too, so the music gets more interesting as the drinking goes on.

Government InvolvementCoconut Products are among the Philippines’ top ten exports. In recent years, other countries have increased their investment in the coconut industries, rivaling the Philippines in terms of export production. In response, the country has been looking for new ways to recover its corner on the market. Lambanog was one of the products selected for export development. The Industrial Technology Development Institute, along with the Department of Science and Technology began working with the three biggest distilleries to standardize the distillation process; their suggestions improved the quality of the product. To prepare for export, the government’s Brand Development Program worked with the distilleries to develop unique bottling and packaging; they hoped to introduce lambanog with a Philippine trademark on the global market to increase its competitiveness.

Market Penetration and PotentialLambanog was launched on the export market in 2001. Exposure and popularity have also been helped by the tourism industry. Tourists who visit the Philippines inevitably sample lambanog and look for it abroad. Recently, hotels and corporations have begun to introduce creative desserts that feature lambanog as a key ingredient. One of these is the Werdenberg Corporation Manila, whose recipe is called Tirami-Asia. Under the Brand Development Program, work is being done to trademark lambanog and make it more competitive on the global market. The distilleries have also begun to release flavored lambanog (ranging from bubblegum, mango, calamansi, and blueberry), which has increased its appeal on younger consumers. Efforts are also under way to market it to the more health conscious consumers as an organic wine.

Environmental impactBecause lambanog comes from the distilled sap of the unopened coconut flower, it is in the industry’s best interests to take good care of its coconut trees. As the demand for lambanog increases, it will naturally serve as an incentive to plant more trees.

3. Related Cases

Coconut –focused on nata de coco – an indigenous Filipino dessert that enjoyed great popularity in Japan in the early 90’s. According to this case study, the popularity of nata de coco as a trendy dessert caused such a surge in demand for the coconut product that it caused some environmental and unemployment problems, which were further complicated when the dessert’s popularity declined.

Sugar — Philsug case which highlighted sugar as the Philippines’ leading export crop and the large impact that the U.S. quota reduction in the late 1980’s has had on the Philippine economy and environment.

Sake — Sake is a Japanese rice wine that is now widely known, and often consumed with sushi and other Japanese foods. Like lambanog, there are traditional ways of making sake, and great care goes into making it. Currently, sake is the only Asian wine featured in the TED database.

Grappa — The Grappa case describes it as “a distillation of the sediment left after pressing grapes to make wine. It goes on to say that while it “originally emerged as a poor man’s drink, grappa has recently attained status equivalent to that of Scotch whisky or exquisite cognacs. Italians sip it for breakfast, it is added into coffee and also used as a digestive after meals or an ingredient in cooking (e.g., in cakes, cookies and homemade sausages).”

TsingTao beer — This case study explores the history of TsingTao and Taiwan Beer, the politics of Taiwan and the Mainland, relevant economic issues, and the legal principles that would be involved in possible litigation.

Keywords: coconut, wine, Philippines

4. Author and Date: Jolene V. Porter, 4/6/2005 II. Legal Clusters

5. Discourse and Status: Allegation and In Progress

As a member of the WTO, the Philippines is a party to negotiations that took place during the Uruguay round of the GATT. As such, all products that it exports or imports are subject to the “schedules” or commitments that the Philippines has submitted as part of those negotiations. As a relatively new product, lambanog is not directly involved in any current WTO disputes, but a dispute raised by Argentina in September 2002 could be applicable. In September 2002, Argentina brought a request for consultations regarding EU regulations and other requirements regarding oenological practices and on trade in wines, pursuant to Article 14.1 of the Agreement on Technical Barriers to Trade of the GATT 1994. Argentina’s complaint concerned bilateral negotiations between the EU and several WTO members, providing exceptions to requirements about the acidification of wines with malic acid. Argentina argued that these arrangements were an infraction of the EU’s commitments under the Agreement on Technical Barriers to Trade. If this dispute is decided in favor of Argentina, it would benefit the Philippines with regards to lambanog, because this product is not acidified with malic acid. Although it is called a coconut wine, the Lambanog making process does not involve malic acid or any other additives; instead, it is produced by distilling the fermented sap of the unopened coconut flower.

As a product developed and produced exclusively in the Philippines, lambanog does qualify as geographical indicator. Also, because it is an alcoholic beverage, lambanog could be afforded the additional protections currently available for wines and spirits. Work is being done to trademark lambanog in the Philippines, and worldwide. Consequently, the Uruguay Round Negotiating Area most relevant to lambanog would be the Agreement on Trade Related Aspects of Intellectual Property Rights, Including Trade in Counterfeit Goods (TRIPS).

The Philippine government’s Brand Development Program has been working with the three leading lambanog distilleries to develop unique bottling and packaging for the beverage with the intention of releasing it on the global market as a trademarked alcoholic beverage. Since the late 1990’s, the Philippine Department of Science and Technology has worked with distilleries to standardize a process that has been passed down over many generations as a cottage industry.

Because lambanog is produced only in the Philippines, it qualifies as a geographical indicator that is protectable under the Agreement on Trade Related Aspects of Intellectual Property Rights, Including Trade in Counterfeit Goods (TRIPS) section of the 1994 Uruguay Round negotiations. The agreement states that all parties should avoid the use of any indication that would mislead consumers regarding the origin of the goods, as well as any acts that would result in unfair competition. Furthermore, a higher level of protection is provided for geographical indications for wines and spirits, which are protected even when there is no danger of the public’s being misled as to the true origin. The name “lambanog” would therefore be preserved specifically for the Philippine beverage, even if other countries started to produce a similar product. In recent years, countries like Thailand and Indonesia have become increasingly competitive in producing coconut-based products. In fact, the Philippine government’s involvement in the improvement of the lambanog industry has been partially motivated by the desire to regain an edge on the coconut market. If the demand for lambanog continues to grow, other coconut producing countries may attempt to produce it as well. Therefore, both the process and the product should be protected as the intellectual property of the Philippines.

6. Forum and Scope: WTO and Multilateral

7. Decision Breadth: 148 Member Countries

8. Legal Standing: Treaty

Under the WTO’s Doha mandate, there is an ongoing effort to establish a multilateral register for geographical indications for wines and spirits. In October 2002, the Philippines was part of a group of countries that submitted a proposal for the creation of a voluntary system where notified geographical indications would be registered in a database. Other EU countries submitted a separate proposal, and a draft text incorporating the suggestions was released in April 2003. III. Geographic Clusters

9. Geographic Locations

a. Geographic Domain: Asia

b. Geographic Site: East Asia

c. Geographic Impact: Philippines

10. Sub-National Factors: Yes. Lambanog is primarily produced in the Quezon Province of the Philippines.

11. Type of Habitat: Tropical IV. Trade Clusters

12. Type of Measure: Intellectual Property

Because of lambanog is such a new product on the international scene, and the levels of exportation are not so high, I was not able to come across any relevant trade measures dealing with lambanog in particular.There is currently no import ban on alcoholic beverages, or coconut based products from the Philippines. The absence of an import ban means that there are no restrictions or prohibitions to the importation of lambanog into the United States. There is no quota, or limit to the amount of lambanog allowed into the United States, and there is no associated tariff for containers with a volume of less than 4 liters.

13. Direct v. Indirect Impacts: Direct

14. Relation of Trade Measure to Environmental Impact

a. Directly Related to Product: Yes, Lambanog

b. Indirectly Related to Product: No

Currently, the United States and Japan are the two largest importers of alcoholic beverages from the Philippines, where distilleries produce beer, rum, and whiskey for several popular international brands.

c. Not Related to Product: No

d. Related to Process: Yes, Intellectual Property

15. Trade Product Identification: Lambanog

16. Economic Data

In 1996, the Philippines, Indonesia, and India accounted for 69.6% of the world’s coconut production of 9.6 million metric tons. About 25.4% of the Philippines’ arable agricultural land was planted with coconut in 1997. Since then, efforts to increase country’s competitive share of the coconut market have been underway, including the push to plant more coconut trees, and to develop new coconut products. The Philippine coconut industry is generally viewed as a monopoly, controlled by a very privileged few. Small time coconut farmers’ livelihoods are being threatened as an increasingly powerful United Coconut Planters Bank, has been buying out or absorbing most of the market share. In response, these farmers have become more organized and united over the past decade.The lambanog industry, although it has been around for centuries, takes up a fairly small share of the overall coconut industry.

In recent years, the product has been launched onto the world market, and it is hoped that this industry will grow. This would, however, necessitate the planting of more coconut trees, since production is dependent upon the amount of sap collected daily. As noted in the story below, the process of sap collection is largely dependent on the skill of the mangagarit, who have a very risky job. Although they are afforded health and housing benefits due to the risky nature of their work, their living situations and financial compensation still leave room for improvement. Unless more safety features are installed for them, it will be hard to attract new workers for this position as public education becomes more accessible, and other job opportunities arise.

As far as the environment is concerned, the lambanog industry does not pose any major threats, since it is in their best interests to encourage more tree planting. Both the product and the process do not include any harmful chemicals; in fact, it is being marketed as an organic product.

17. Impact of Trade Restriction: Low

18. Industry Sector: Agriculture – Food & Beverage

19. Exporters and Importers: Philippines and many

Because lambanog has only recently begun its introduction onto the international market, trade data tracking export and import of this product is very limited. In terms of production, lambanog-making is still very much a cottage industry with deep historical roots. The Mallari Distillery, one of the three major producers in the country, was established in 1918; today, it still has only 21 employees. So far, my research has shown that the Mallari distillery has been the most active in trade fairs promoting product awareness. It lists its annual sales at $40,000. A one-gallon bottle of lambanog retails for $3 to $4, depending on the alcohol content (80 or 90-proof).Lambanog exports have increased since 2001, as reflected by data from a report generated by the Philippine Department of Trade and Industry, but it seems the listed quantities are still too small to be reflected in most (inter)national export/import statistics. (See Table 1).

Table 1. Lambanog Exports 2001-2003

20. Environmental Problem Type: Intellectual Property or Culture

21. Name, Type, and Diversity of Species

Name: Cocos nucifera

Type: Plant

Diversity: this type of coconut tree is common to most tropical climates

22. Resource Impact and Effect: Low and Product

Because lambanog comes from the distilled sap of the unopened coconut flower, it is in the industry’s best interests to take good care of its coconut trees. As the demand for lambanog increases, it will naturally serve as an incentive to plant more trees.

A coconut harvester’s story.

Every morning, as the sun begins to rise, 58 year-old Rolando Rubiales makes his way to his “starting tree” in his area of the 24-hectare coconut plantation. Rolando is the oldest of 19 mangagarit (sickle handlers) for the Mallari distillery, one of the three largest lambanog distilleries in the Philippines. Watching Rolando at work on his sixty trees is reminiscent of watching tightrope artists at a circus. The trees that he climbs average 30 feet in height, and are connected by thin bamboo bridges – one to walk on, and a higher one to hold onto. Rolando goes from tree to tree collecting sap or nectar into a stainless steel container strapped onto his back. His other tool is a sickle, which he uses to prune the coconut flowers every afternoon, making sure that the precious nectar flows into the bamboo containers overnight. He empties these during his morning collection rounds.

There are no safety nets, and the danger of falling is ever present. Recounting one of his two falls, “the bamboo cracked and split midway while I was crossing the bridge. Luckily, I landed directly on a soft moist spot below. I was hospitalized for almost a month,” he recalled. “This is the only work I know since I was 17. This is the job that all my four sons have also learned. Yes, there is risk and danger but it’s an honest job,” Rolando said.

On average, a mangagarit makes 2,000 to 4,000 pesos a month ($40-$80). The company provides each mangagarit with a housing allowance and a basic shelter, which he is free to improve upon, inside the coconut plantation. “The income is not good when it rains. But it is still okay. There are lots of food for the table inside the plantation. One has just to go around and gather,” Rolando said. He smiles, and adds, “sometimes, we can ask for a free bottle of fresh lambanog, especially when it is cold, to make us warm.”

According to Abe Paderes, Mallari Distillery plant supervisor, all the mangangarit are Philhealth and Social Security System cardholders. “Because of the dangerous nature of their work, all the ‘mangangarit‘ have been recipients of numerous benefits and incentives from the company,” he said. “All work-related injuries are shouldered by the distillery owner. And as they recuperate from their injury, the company also allots free substantial allowance until they fully recover and start working again,” he added.

The vital role of the mangangarit in lambanog production is commemorated through a colored sketch of his job, which can be found on the box and the backside of the label of the bottles produced by the Mallari distillery.

23. Urgency and Lifetime: Low (Lifetime of Coconut Tree)

24. Substitutes: tuba, basi wine, rice wine VI. Other Factors

25. Culture: Yes

26. Trans-Boundary Issues: No

27. Rights: No

28. Relevant Literature

“Coconut Program Area Research Planning and Prioritization”by Corazon T. Aragon, Philippine Institute for Development Studies, Discussion Papers Series 2000-31. July 2000

“Evaluation of yeast strains for biomass production from cane molasses”Ma. Lourdes T. Escarrilla, Ma. Florencia T. Logrono and Teresita O. Macurohttp://www.sra.gov.ph/absird07.html

“Study shows coco flour good for diabetics, weight conscious people”

http://www.stii.dost.gov.ph/sntpost/frames/dec2k2/pg5a.htm

http://www.discoverquezon.com/lambanog.htm

http://www.stii.dost.gov.ph/sntpost/frames/julytosept04/fotonews_pg12.htm

http://mis.dost.gov.ph/itdi/lambanog.htm

http://www.ias.org.uk/publications/theglobe/01issue3,4/globe0103_04_p12.html