Taiwan Today

For the majority of the 20th century, the organization now known as Taiwan Tobacco & Liquor Corp. (TTL) was the island’s sole producer of alcoholic beverages and cigarettes. In the 1980s, however, its exclusive control over these lucrative markets began to erode, precipitating changes in the business practices of the long-established enterprise. In the years since, the firm has sought to meet the challenges posed by growing competition through diversifying its product lines and turning some of its storied production facilities into tourist attractions. These efforts are helping TTL maintain its dominant position in the Taiwanese market and inform the public about its rich history.

TTL president Lin Tzann-feng (林讚峰) notes that the company has developed a three-point plan to boost its growth. “First, introduce new products that can carry higher prices. Second, through research and development, create new lines that can build on our existing technologies, such as food products,” he explains. “Third, attempt to increase our export quantities, although we realize this is a challenging goal.”

Throughout its long history, the organization has been restructured and retitled in response to changes in domestic circumstances and the international economic environment. TTL traces its origins back to an opium monopoly established in 1898 during the period of Japanese colonial rule (1895–1945). In 1901, the opium concern was combined with recently created camphor and salt monopolies to create the Monopoly Bureau of the Taiwan Governor’s Office. The bureau, which became one of the most important and powerful organizations of the colonial era, was given exclusive control over tobacco and liquor in 1905 and 1922, respectively, before being granted monopolies over matches, petroleum, and weights and measures in the early 1940s.

Following the end of World War II and Taiwan’s retrocession to the Republic of China (ROC), the bureau’s opium business was eliminated. In 1947, the ROC government reorganized it as the exclusive provider of tobacco, alcohol and camphor, and renamed it the Taiwan Tobacco and Wine Monopoly Bureau. The bureau relinquished its camphor monopoly in 1968.

TTL’s exclusive positions in the alcohol and tobacco markets started to fade in 1987, when the ROC government began opening the nation’s doors to imports of both products. These markets became fully liberalized in the aftermath of Taiwan’s accession to the World Trade Organization (WTO) in 2002, with the company receiving its current name on July 1 of that year. The loss of TTL’s monopoly positions has resulted in a significant decrease in its employee levels. In 1992, it had almost 15,000 workers. This figure has now declined to approximately 6,800, notes Lin, who also indicates that about half of its current workforce is over 55 years of age.

The new TTL was granted more flexibility, but it still operates as a state-owned enterprise, with the ROC Ministry of Finance possessing 100 percent of its shares. Although there have been numerous discussions over the privatization of TTL, this will likely not occur in the short term as approval is required from both the employee union and the Legislative Yuan. Today, TTL maintains healthy market shares in its core products, controlling about 30 percent and 70 percent of Taiwan’s tobacco and beer markets, respectively. In 2013, around 57 percent of TTL’s sales came from tobacco, 29 percent from beer, 13 percent from wines and spirits, and 1 percent from other products.

Under the leadership of Lin and his predecessors, TTL has strived to adapt its product lines to a changing and increasingly competitive landscape. For instance, following Taiwan’s entry into the WTO, TTL began developing new varieties of beer to complement its Classic flagship product. In 2003, the company launched its popular Gold Medal beer. This was followed by Taiwan Beer Draft and two malt varieties. In 2012, fruit-flavored beers, such as mango and pineapple, were added to the line-up, and in the following year TTL introduced a wheat beer—Taiwan Weissbier Draft.

TTL’s tobacco business, meanwhile, has undergone significant changes since market liberalization. For many years, the firm’s Long Life brand was its standard-bearer. However, as tastes have changed, the company has introduced many new products, most notably its Gentle brand, which is now its largest seller.

Similarly, the firm’s purchasing policies have evolved in recent decades. Lin notes that in the monopoly era the company supported the local tobacco farming industry by purchasing large amounts of the raw material domestically. However, much of it was unsuitable for use as temperatures in Taiwan make it difficult to cultivate high-quality tobacco. According to the 2000 Taiwan Tobacco & Wine Statistical Yearbook, in 1988 domestic tobacco leaf accounted for 38 percent of TTL’s purchases. By 2000, this had declined to 23 percent, and Lin indicates that the ratio is now less than 10 percent.

TTL’s president notes that while the company is committed to ensuring its profitability, this is not its sole objective. “Our company takes very seriously the idea that we should make a positive contribution to Taiwanese society, including through our corporate social responsibility efforts,” he says. The firm makes regular donations to charitable and cultural organizations, and also continues to support Taiwan’s agricultural sector by purchasing large quantities of rice, fruit and other products from domestic suppliers.

In recent decades, the company has also been working hand-in-hand with local communities as it turns some of its long-established production plants into tourist attractions. To date, the company has opened the doors of 13 facilities, including the Taipei Brewery in the nation’s capital, Nantou Winery in central Taiwan and Yilan Distillery in the northeast of the country. These efforts are providing new sources of revenue in addition to building awareness of the company’s time-honored production techniques.

TTL’s Yilan Distillery, Taiwan’s oldest wine-making facility, began producing its famous line of rice wines in 1909, before being taken over by the colonial-era Monopoly Bureau in 1922. However, rice wines produced using original recipes brought over from mainland China have been enjoyed by the denizens of Yilan for more than 200 years. A sign in the winery’s main boulevard boldly proclaims, “If you haven’t drunk our wine, you can’t say you’ve been to Yilan.”

The Yilan Distillery first opened its doors to the public in 1998, and currently welcomes 400,000 to 500,000 visitors per year. It contains an operating winery as well as several display facilities where visitors can learn about traditional production processes and sample a range of foods and beverages. TTL’s broadening product offerings are fully represented, including its new instant noodles, chocolates and crackers as well as alcohol with flecks of gold. The Yilan Distillery ages its wines in ceramic urns sealed with wood and paper. These are then stacked on top of each other. “Many of the urns were imported from mainland China’s Fujian province before the Second Sino-Japanese War [1937–1945] halted trade between Fujian and Japanese-occupied Taiwan,” notes Li Min-tsao (李銘灶), the head of market promotion at the winery. “By looking at the urns, I can generally identify which ones were made in mainland China before the war.”

A more recent introduction to TTL’s range of products is its line of single malt whiskies, with production beginning at its Nantou Winery in 2008. The Nantou plant was built in 1977 as a producer of fruit-based products. In 1984, TTL began importing and blending Scotch whisky at the facility. The Nantou Winery built its whisky production facilities with a combination of locally and internationally sourced equipment. Its copper stills come from Scotland, and it uses primarily Scottish barley in its production processes. “While the development of our single malt whisky is still in its early stages, we’re confident that we’ll be able to boost production before too long,” notes plant director Pan Chieh-chang (潘結昌). “We’re targeting a medium-bodied whisky with a creamy flavor of chocolate and caramel paired with floral sweetness and notes of oak.” Several of TTL’s self-made malt whiskies, such as its Nantou Single Bourbon Cask, are now sold at the firm’s distribution outlets throughout Taiwan.

Located in the heart of the capital, the Taipei Brewery is a popular tourist attraction. Constructed by the colonial-era Monopoly Bureau in 1919, it was Taiwan’s first beer plant, beginning production in 1920. At the time, it was one of only three beer breweries in Asia, with the others being Sapporo Beer in Japan and Qingdao in mainland China. The beer produced by the brewery was first called Takasago Beer before being renamed Taiwan Beer in 1946. In the 1960s, locally grown ponlai rice was added to the fermentation process, giving the brew a distinctive flavor. The operational brewery now includes an open-air plaza and a shop selling a range of TTL products. A restaurant that once operated on the site has been closed, but plans are under way to develop new dining facilities at the location.

Change is not always easy, but TTL has responded to market liberalization by relentlessly striving to develop new products and services, and welcoming more visitors to its production facilities. Furthermore, by continuing to support local farmers as well as community tourism efforts, the company is demonstrating its commitment to making a positive contribution to Taiwanese society.

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Scott Weaver is a freelance writer based in Taipei.

Copyright © 2015 by Scott Weaver