July 2014

Enterprising Spirit

By by Nicolas Lupo Sonnabend

G o to any club in Beirut that requires one to hire a table and you will immediately see upon said table, alongside ice and some mixers, a bottle of vodka. For the Lebanese, vodka is a premiere choice when it comes to hard liquor, so much so, that according to market research done by the Middle East Beverage Company, in 2010 Lebanon imported no less than 1.5million liters of the booze that is usually set at 40% alcohol.

With such a drink being so popular it seems it was only a matter of time before someone decided that Lebanon should come up with its own vodka. So, when it first hit Adam Aboulhosn that he wanted to be such a person, he probably didn’t think he would actually end up being the first to be so. Sitting with his brother-in-law, now the second highest shareholder in their founding company Middle East Beverage Company, they devised the plan that has finally brought them to a Beirut rooftop on a humid June night, publicly launching the first Lebanese vodka "J2".

Alcohol revival

Aboulhosn, it could be said, is savvy in following a well publicized trend in Lebanon. In recent years the burgeoning alcohol scene has proven that where there’s a will there’s a way, and where there are those enjoying alcohol, there is a market. With beers 961 and Lebanese Brew doing so well, and Colonel Beer soon to be opening its microbrewery doors, it could be seen as inevitable the someone would eventually attempt to make spirit. The Lebanese clearly enjoy their alcohol and so the market in that sense is wide open to new ventures.

This is where the similarities end though. While the beers are brewed and bottled here, J2 does no such thing. Distilled and bottled in Poland, a country famed for its vodka production, the only Lebanese ingredient is the use of melted snow water from the mountains. "Lebanon is famous for its water," says Aboulhosn, "and water is an integral part of the vodka making process and the type of water is very important." According to Aboulhosn, when most vodkas are made the manufacturers simply use the tap water available - to use the tap water of Lebanon he says would not have been good, and the snow melt water has just the right amount of mineral content. So to the mountains they went.

The plan

"We wanted to create a vodka for the Middle East," says Aboulhosn, "Lebanon alone has a huge market for the drink." But that brings up the fact that there are already lots of vodkas here in Lebanon that do very well. Research by Aboulhosn’s team showed that Stolichnaya had the greatest market share of the brands, and while "Stoli" was unable to disclose the amount it is selling year on year, the International Wine and Spirits Research does confirm the popularity of vodka all around. Between 2008 and 2013, the increase in vodka imports has been just over 30% - leaves whisky and flavored spirits in their wake with under a 9% increase and 3.5% decline, respectively in the same time frame.

Initially Aboulhosn says that they wanted to produce the vodka here in Lebanon, but, circumstances, namely the commonly termed "situation" in the country and region, meant that it was eventually deemed safer to do the work elsewhere. Water is collected from the mountains’ distilleries in Falougha and Ain Dara, and then shipped in special containers to Poland.

Given the terrible winter that Lebanon has just experienced, it is probably a good thing that the Middle East Beverage Company collected enough water for the next two years. "We had to teach the government here about the exportation of bulk perishable liquid," he says. No doubt that was an experience all in itself, and the Polish probably thought it an interesting venture also.

For the time being it’s strictly a family business: "Partners in the company are mostly family with my brother-in-law being the second highest shareholder," says Aboulhosn. "The only non-family member who owns shares is Sam Wahab, our chief marketing officer. Once we begin to expand outside we will seek further capital funding, possibly from the current shareholders or outside investors."

When it came to setting up the company, Aboulhosn says that funding for the project began with approximately $500,000 and this covered the first phase of three: the startup and brand creation; the launching in Lebanon and the beginning of operations; then there will be regional expansion, namely the Middle East and Africa.

Future plans

Since its first production round, Middle East Beverage Company has done various blind tasting sessions, and it found that J2, in comparison with other brands that are popular, such as Absolut, scored much higher. "These companies spend most of their budgets on marketing rather than the actual drink." The feedback has been positive. "People have told me they enjoy the smoothness of it and the fact that it doesn’t make them sick the next day." Aboulhosn also believe that people in Lebanon are pleased to see the country producing unique products despite the problems in the region.

According to annual reports from the IWSR the consumption of alcohol in Lebanon, in recent years, has actually decreased. With a fall in tourism and purse strings all around being tightened, it’s not surprising, but Aboulhosn doesn’t see this as a reason to think the drink won’t do well. "We don’t believe consumption has dropped, if anything it goes up. The interesting thing about Lebanon is that people carry on and in this case all that changes is where people drink - nightclubs still have their place but more people are going to smaller venues."

Aboulhosn is not naive to the fact that launching a drink in a market that is already widely flooded with other successful brands could be risky, but he believes the product to be different enough for it to stand out. "It’s not enough to have a super premium vodka in terms of quality and taste, that is just the basic requirement to enter the market," he says. "What distinguishes J2 Vodka from our competitors is that we are capturing our spirit or essence in every bottle by using Lebanese snowmelt water. This is a connection to the people of the region, whereas all our competitors just see the market here as typical sales, we see a connection to our product and the consumers."

Labelling J2 as a "super premium" vodka a 750ml bottle will set a consumer back $40. "We had considered wine and whisky," says Aboulhosn, "but the wine industry here is huge and whisky, well, that would take about 11 years at least to get the first batch out, Vodka can be turned around in two to three weeks." With a five-year plan under their belts they have North America, as well as the MENA region, in their sights, but for the time being, it’s all about Lebanon.

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