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Inside the grogue wars of Cabo Verde

The government and some producers are pushing to industrialize the sugar cane-based spirit to boost its popularity around the world, while small farmers…

Grogue, the national drink of Cabo Verde, is a spirit distilled from sugar cane. Martin Zwick/REDA&CO/Universal Images Group via Getty Images

At what point does a craft spirit no longer qualify as craft?

For centuries on the archipelago nation Cabo Verde off Africa’s west coast, farmers have produced a sugar cane-based craft spirit known as “grogue.” The liquor – an effervescent spirit with light grassy notes – has a rich cultural legacy and has historically been made in limited quantities by skilled workers using traditional distilling methods.

We’ve been studying tensions between some traditional producers and the government, which seeks to more strictly regulate the production of the spirit to popularize it in international markets.

The industrialization of this drink could be a boon for a struggling rural economy. However, some small-scale producers are being forced to close shop, unable to meet new regulatory demands.

A brief history of grogue

The history of grogue reflects the story of the islands themselves.

After the archipelago was discovered by European mariners between 1455 and 1461, the islands became a stopover along Atlantic trade routes, a place for ships to resupply and their new crews to embark. By 1490, Portuguese merchants brought enslaved peoples from the African mainland to grow crops, particularly plantation sugar cane, which largely failed due to degraded soil and lack of consistent rain.

A map of Africa with a zoomed-in section featuring the 10 islands of Cabo Verde.
The vast majority of Cabo Verde’s sugar cane is grown on the island of Santo Antão. South Africa Gateway, CC BY-SA

Today, 82% of the arable land in Santo Antão, the country’s second biggest island, is still planted with sugar cane, which represents about 30% of the island’s GDP. Grogue, which uses sugar cane as its base, doesn’t rot and can be kept for years, which makes it an attractive export.

On July 5, 1975, Cabo Verde became one of the last African colonies to achieve independence. The nation’s newly independent government quickly moved to promote domestic agriculture through subsidies and investment, with unanticipated consequences on the grogue economy.

The decision to subsidize desired staples throughout the islands, such as refined sugar in 1993, resulted in an increase in grogue production – not from freshly pressed sugar cane, but from imported sugar. The glut of industrial sugar impaired the quality and value of grogue and became known colloquially as “merdon” or the “grogue of democracy.”

In 2008, the Confrérie du Grogue de Santo Antão, a guild of grogue producers, claimed grogue was being threatened by quality control issues and subsidized imported sugar. The guild lobbied for stricter government regulation to protect grogue’s legacy and cultural importance.

Regulating grogue

As a result of this lobbying, the government passed laws in 2015 and 2018 to establish rules governing the production of grogue, such as the banning of the use of refined sugar. The regulations considered national and international food standards, environmental protection, public health, and consumer and producer rights.

The law strictly defined grogue as a sugar cane spirit produced in Cabo Verde, specifically from the distillation of naturally fermented syrup that was directly pressed from Cabo Verdean sugar cane.

Once the regulatory apparatus was established after the COVID-19 pandemic, however, many small distilleries were forced to stop production because they couldn’t meet the new fermentation, storage and labeling standards.

A metal machine with toothed gears crushes stalks of sugar cane on a floor covered with sugar cane detritus.
A machine for crushing sugar cane to make grogue on Santo Antão, the second-largest of Cabo Verde’s 10 islands. Jon G. Fuller/VW Pics/Universal Images Group via Getty Images

Instead, these farmers sent their relatively meager sugar cane harvests to larger processors, since it was no longer cost effective to produce grogue in small batches, or they left the enterprise entirely.

The new regulations primarily affected artisanal distillers throughout the main island of Santiago, which has more small-scale production sites. Most of the larger producers are in Santo Antão, where 80% of the country’s grogue is made.

Be careful what you wish for

In some contexts, small-batch production represents high quality and care – French cheeses, Italian olive oil and Kentucky bourbon, for example. In others, it signifies cheapness and inferior quality.

Cabo Verdean grogue can possess both elements, leading to highly charged debates over its value.

Almost 35% of Cabo Verde’s population participates in agriculture, and a deep and complex agricultural ethos has been cultivated over the centuries in what scholars Aminah Fernandes Pilgrim and João Resende-Santos describe as a “fading and failing rural economy.”

Does scaling up to meet industrial standards hold the key to rural renewal? Or will it create insurmountable barriers for small-scale producers, closing one more path out of poverty?

That is the current conundrum facing Cabo Verde, which has implications for other places where craft spirit production is highly valued as a cultural asset and is scaling up.

Cabo Verde and grogue go hand in hand, and locals, diasporas and tourists seem to broadly support the expansion of sugar cane cultivation and grogue distillation. Many local consumers see grogue as a quality drink that’s better than cheaper, imported alternatives. It represents a piece of cultural heritage and is key to rural economic development.

Hand of man holding cup over metal contraption made up of tubes and funnels.
A man distills grogue at a small distillery on Santo Antão. Jon G. Fuller/VW Pics/Universal Images Group via Getty Images

However, our analysis shows that the shift toward industrialization has deep implications for food security and public health.

Farmers producing grogue can use money they earn from grogue to pay school fees and achieve some financial stability.

Yet regulatory efforts to improve quality and consistency of grogue may have inadvertently and negatively affected small producers.

Improperly or illegally made grogue is now being confiscated and destroyed, pushing clandestine producers back underground. Agricultural figures from the World Bank suggest that there may be more grogue being made than available sugar cane to produce it, which indicates that refined sugar is still being used to make poor-quality merdon.

Of course, improperly produced grogue could get people sick. And it goes without saying that any alcohol consumed – regardless of how it is produced – can lead to alcoholism, violence and drunken driving.

It’s somewhat ironic that a local grogue guild of artisanal producers lobbied for new legislation to enhance the quality and highlight the cultural significance of their product. These efforts, however, have ended up pushing the smaller outfits – the kind most likely to use traditional methods – out of business, into cooperative arrangements or underground.

On Cabo Verde, all of the elements of craft spirits that make grogue special – a connection to people and place, a unique taste and a symbol of local celebration and identity – are in danger of being lost.

Brandon D. Lundy receives funding from the National Science Foundation.

Mark Patterson receives funding from the National Science Foundation.

Monica Swahn receives funding from The National Science Foundation.

Nancy Hoalst-Pullen receives funding from The National Science Foundation.

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Four burning questions about the future of the $16.5B Novo-Catalent deal

To build or to buy? That’s a classic question for pharma boardrooms, and Novo Nordisk is going with both.
Beyond spending billions of dollars to expand…

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To build or to buy? That’s a classic question for pharma boardrooms, and Novo Nordisk is going with both.

Beyond spending billions of dollars to expand its own production capacity for its weight loss drugs, the Danish drugmaker said Monday it will pay $11 billion to acquire three manufacturing plants from Catalent. It’s part of a broader $16.5 billion deal with Novo Holdings, the investment arm of the pharma’s parent group, which agreed to acquire the contract manufacturer and take it private.

It’s a big deal for all parties, with potential ripple effects across the biotech ecosystem. Here’s a look at some of the most pressing questions to watch after Monday’s announcement.

Why did Novo do this?

Novo Holdings isn’t the most obvious buyer for Catalent, particularly after last year’s on-and-off M&A interest from the serial acquirer Danaher. But the deal could benefit both Novo Holdings and Novo Nordisk.

Novo Nordisk’s biggest challenge has been simply making enough of the weight loss drug Wegovy and diabetes therapy Ozempic. On last week’s earnings call, Novo Nordisk CEO Lars Fruergaard Jørgensen said the company isn’t constrained by capital in its efforts to boost manufacturing. Rather, the main challenge is the limited amount of capabilities out there, he said.

“Most pharmaceutical companies in the world would be shopping among the same manufacturers,” he said. “There’s not an unlimited amount of machinery and people to build it.”

While Novo was already one of Catalent’s major customers, the manufacturer has been hamstrung by its own balance sheet. With roughly $5 billion in debt on its books, it’s had to juggle paying down debt with sufficiently investing in its facilities. That’s been particularly challenging in keeping pace with soaring demand for GLP-1 drugs.

Novo, on the other hand, has the balance sheet to funnel as much money as needed into the plants in Italy, Belgium, and Indiana. It’s also struggled to make enough of its popular GLP-1 drugs to meet their soaring demand, with documented shortages of both Ozempic and Wegovy.

The impact won’t be immediate. The parties expect the deal to close near the end of 2024. Novo Nordisk said it expects the three new sites to “gradually increase Novo Nordisk’s filling capacity from 2026 and onwards.”

As for the rest of Catalent — nearly 50 other sites employing thousands of workers — Novo Holdings will take control. The group previously acquired Altasciences in 2021 and Ritedose in 2022, so the Catalent deal builds on a core investing interest in biopharma services, Novo Holdings CEO Kasim Kutay told Endpoints News.

Kasim Kutay

When asked about possible site closures or layoffs, Kutay said the team hasn’t thought about that.

“That’s not our track record. Our track record is to invest in quality businesses and help them grow,” he said. “There’s always stuff to do with any asset you own, but we haven’t bought this company to do some of the stuff you’re talking about.”

What does it mean for Catalent’s customers? 

Until the deal closes, Catalent will operate as a standalone business. After it closes, Novo Nordisk said it will honor its customer obligations at the three sites, a spokesperson said. But they didn’t answer a question about what happens when those contracts expire.

The wrinkle is the long-term future of the three plants that Novo Nordisk is paying for. Those sites don’t exclusively pump out Wegovy, but that could be the logical long-term aim for the Danish drugmaker.

The ideal scenario is that pricing and timelines remain the same for customers, said Nicole Paulk, CEO of the gene therapy startup Siren Biotechnology.

Nicole Paulk

“The name of the group that you’re going to send your check to is now going to be Novo Holdings instead of Catalent, but otherwise everything remains the same,” Paulk told Endpoints. “That’s the best-case scenario.”

In a worst case, Paulk said she feared the new owners could wind up closing sites or laying off Catalent groups. That could create some uncertainty for customers looking for a long-term manufacturing partner.

Are shareholders and regulators happy? 

The pandemic was a wild ride for Catalent’s stock, with shares surging from about $40 to $140 and then crashing back to earth. The $63.50 share price for the takeover is a happy ending depending on the investor.

On that point, the investing giant Elliott Investment Management is satisfied. Marc Steinberg, a partner at Elliott, called the agreement “an outstanding outcome” that “clearly maximizes value for Catalent stockholders” in a statement.

Elliott helped kick off a strategic review last August that culminated in the sale agreement. Compared to Catalent’s stock price before that review started, the deal pays a nearly 40% premium.

Alessandro Maselli

But this is hardly a victory lap for CEO Alessandro Maselli, who took over in July 2022 when Catalent’s stock price was north of $100. Novo’s takeover is a tacit acknowledgment that Maselli could never fully right the ship, as operational problems plagued the company throughout 2023 while it was limited by its debt.

Additional regulatory filings in the next few weeks could give insight into just how competitive the sale process was. William Blair analysts said they don’t expect a competing bidder “given the organic investments already being pursued at other leading CDMOs and the breadth and scale of Catalent’s operations.”

The Blair analysts also noted the companies likely “expect to spend some time educating relevant government agencies” about the deal, given the lengthy closing timeline. Given Novo Nordisk’s ascent — it’s now one of Europe’s most valuable companies — paired with the limited number of large contract manufacturers, antitrust regulators could be interested in taking a close look.

Are Catalent’s problems finally a thing of the past?

Catalent ran into a mix of financial and operational problems over the past year that played no small part in attracting the interest of an activist like Elliott.

Now with a deal in place, how quickly can Novo rectify those problems? Some of the challenges were driven by the demands of being a publicly traded company, like failing to meet investors’ revenue expectations or even filing earnings reports on time.

But Catalent also struggled with its business at times, with a range of manufacturing delays, inspection reports and occasionally writing down acquisitions that didn’t pan out. Novo’s deep pockets will go a long way to a turnaround, but only the future will tell if all these issues are fixed.

Kutay said his team is excited by the opportunity and was satisfied with the due diligence it did on the company.

“We believe we’re buying a strong company with a good management team and good prospects,” Kutay said. “If that wasn’t the case, I don’t think we’d be here.”

Amber Tong and Reynald Castañeda contributed reporting.

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Petrina Kamya, Ph.D., Head of AI Platforms at Insilico Medicine, presents at BIO CEO & Investor Conference

Petrina Kamya, PhD, Head of AI Platforms and President of Insilico Medicine Canada, will present at the BIO CEO & Investor Conference happening Feb….

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Petrina Kamya, PhD, Head of AI Platforms and President of Insilico Medicine Canada, will present at the BIO CEO & Investor Conference happening Feb. 26-27 at the New York Marriott Marquis in New York City. Dr. Kamya will speak as part of the panel “AI within Biopharma: Separating Value from Hype,” on Feb. 27, 1pm ET along with Michael Nally, CEO of Generate: Biomedicines and Liz Schwarzbach, PhD, CBO of BigHat Biosciences.

Credit: Insilico Medicine

Petrina Kamya, PhD, Head of AI Platforms and President of Insilico Medicine Canada, will present at the BIO CEO & Investor Conference happening Feb. 26-27 at the New York Marriott Marquis in New York City. Dr. Kamya will speak as part of the panel “AI within Biopharma: Separating Value from Hype,” on Feb. 27, 1pm ET along with Michael Nally, CEO of Generate: Biomedicines and Liz Schwarzbach, PhD, CBO of BigHat Biosciences.

The session will look at how the latest artificial intelligence (AI) tools – including generative AI and large language models – are currently being used to advance the discovery and design of new drugs, and which technologies are still in development. 

The BIO CEO & Investor Conference brings together over 1,000 attendees and more than 700 companies across industry and institutional investment to discuss the future investment landscape of biotechnology. Sessions focus on topics such as therapeutic advancements, market outlook, and policy priorities.

Insilico Medicine is a leading, clinical stage AI-driven drug discovery company that has raised over $400m in investments since it was founded in 2014. Dr. Kamya leads the development of the Company’s end-to-end generative AI platform, Pharma.AI from Insilico’s AI R&D Center in Montreal. Using modern machine learning techniques in the context of chemistry and biology, the platform has driven the discovery and design of 30+ new therapies, with five in clinical stages – for cancer, fibrosis, inflammatory bowel disease (IBD), and COVID-19. The Company’s lead drug, for the chronic, rare lung condition idiopathic pulmonary fibrosis, is the first AI-designed drug for an AI-discovered target to reach Phase II clinical trials with patients. Nine of the top 20 pharmaceutical companies have used Insilico’s AI platform to advance their programs, and the Company has a number of major strategic licensing deals around its AI-designed therapeutic assets, including with Sanofi, Exelixis and Menarini. 

 

About Insilico Medicine

Insilico Medicine, a global clinical stage biotechnology company powered by generative AI, is connecting biology, chemistry, and clinical trials analysis using next-generation AI systems. The company has developed AI platforms that utilize deep generative models, reinforcement learning, transformers, and other modern machine learning techniques for novel target discovery and the generation of novel molecular structures with desired properties. Insilico Medicine is developing breakthrough solutions to discover and develop innovative drugs for cancer, fibrosis, immunity, central nervous system diseases, infectious diseases, autoimmune diseases, and aging-related diseases. www.insilico.com 


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Another country is getting ready to launch a visa for digital nomads

Early reports are saying Japan will soon have a digital nomad visa for high-earning foreigners.

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Over the last decade, the explosion of remote work that came as a result of improved technology and the pandemic has allowed an increasing number of people to become digital nomads. 

When looked at more broadly as anyone not required to come into a fixed office but instead moves between different locations such as the home and the coffee shop, the latest estimate shows that there were more than 35 million such workers in the world by the end of 2023 while over half of those come from the United States.

Related: There is a new list of cities that are best for digital nomads

While remote work has also allowed many to move to cheaper places and travel around the world while still bringing in income, working outside of one's home country requires either dual citizenship or work authorization — the global shift toward remote work has pushed many countries to launch specific digital nomad visas to boost their economies and bring in new residents.

Japan is a very popular destination for U.S. tourists. 

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This popular vacation destination will soon have a nomad visa

Spain, Portugal, Indonesia, Malaysia, Costa Rica, Brazil, Latvia and Malta are some of the countries currently offering specific visas for foreigners who want to live there while bringing in income from abroad.

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With the exception of a few, Asian countries generally have stricter immigration laws and were much slower to launch these types of visas that some of the countries with weaker economies had as far back as 2015. As first reported by the Japan Times, the country's Immigration Services Agency ended up making the leap toward a visa for those who can earn more than ¥10 million ($68,300 USD) with income from another country.

The Japanese government has not yet worked out the specifics of how long the visa will be valid for or how much it will cost — public comment on the proposal is being accepted throughout next week. 

That said, early reports say the visa will be shorter than the typical digital nomad option that allows foreigners to live in a country for several years. The visa will reportedly be valid for six months or slightly longer but still no more than a year — along with the ability to work, this allows some to stay beyond the 90-day tourist period typically afforded to those from countries with visa-free agreements.

'Not be given a residence card of residence certificate'

While one will be able to reapply for the visa after the time runs out, this can only be done by exiting the country and being away for six months before coming back again — becoming a permanent resident on the pathway to citizenship is an entirely different process with much more strict requirements.

"Those living in Japan with the digital nomad visa will not be given a residence card or a residence certificate, which provide access to certain government benefits," reports the news outlet. "The visa cannot be renewed and must be reapplied for, with this only possible six months after leaving the countr

The visa will reportedly start in March and also allow holders to bring their spouses and families with them. To start using the visa, holders will also need to purchase private health insurance from their home country while taxes on any money one earns will also need to be paid through one's home country.

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