Boosting The Spirits
The Barbados Investment & Development Corporation (BIDC) is embarking on a multifaceted project to distinguish Barbados’ rum above all others.
Details of the Rums of Barbados Expansion programme were recently announced during a stakeholder consultation which sought to uncover solutions to the many challenges confronting the rum industry.
The project, according to BIDC’s Manager of Export Promotion, Paul Waithe, is intended to enhance the competitiveness and profitability of Barbados rum producers by assisting in the transition from the export of bulk rum to the export of high-quality, high-value branded rums.
It will see the application of a Geographical Indicator (GI) and the development of a marque for Barbados’ rums, which is to be used as a differentiating tool in the marketing of our local brands. It will also see the roll out of an integrated marketing communication strategy locally, regionally and internationally, intended to position Barbados as the premier rum producer in the world.
Barbados currently exports the majority of its rum production in bulk quantities at a fraction of the price of the exported, branded/bottled rums. It is felt therefore that the island stands to benefit significantly more from the export of branded rum. The success of the project will however require the support of all industry stakeholders as well as increased collaboration across the manufacturing, agriculture and tourism sectors.
Speaking at the official launch of the initiative, Minister of Industry, Small Business and Rural Development, Denis Kellman, gave his full support to the Programme, adding that Barbados must do all it could to ensure it reaped the full benefits of the rum industry.
“I have been told that 80-85 per cent of the rum produced in Barbados is sold as bulk rum. Thus, the real beneficiaries of the prestigious Barbados rum are those persons who purchase our product and merely re-bottle it. Little value is added, if any at all, and it is my firm belief that every effort must be made to safeguard this heritage of ours.
“Therefore, now is the time for us to seize the opportunity to convert the significant throughput of our bulk rum into a branded product. To this end, the Rum Expansion Programme is a step in the right direction, since it provides us with the nuances that will enable us to better exploit the untapped value potential of this vital segment of our export industry,” Mr. Kellman said.
President of the Barbados Rum Producers’ Association, Dr. Frank Ward, highlighting some of the key challenges confronting local rum producers, made it clear that the local industry would not be able to compete without the excise taxes applied domestically on imported spirits. At the same time he noted that the cost of the main raw material input, molasses, is one of the chief impediments to the sector’s profitability.
With molasses representing around 40% of the total cost of imputs and the bulk of it being imported, Dr. Ward said “this does not lend itself to us being competitive with those who can source theirs domestically”.
The US billion dollar subsidies offered to the world’s largest rum producers which essentially makes it significantly cheaper for them to produce, much to the detriment of the smaller producers, is also a major concern. The situation becomes even more critical Dr. Ward said, when one considers the multilateral trade negotiations as well as the Doha Round discussions have stalled on concluding any rum agreement.
Dr. Ward made it clear that “the average consumer in target markets doesn’t care about Barbados’ rum being the best”.
According to him, “They just want a product that tastes good and meets their expectations and that is affordable.”
The challenge for Barbados then is to give the customers what they want and to convince consumers in the target markets that Barbados rum is worth trying and worth a premium price.
Pointing out that “there is no protection for Barbados’ rum on the international market at the moment”, he said there is also the issue of counterfeiting of rum and the sale of ageing rums which do not conform to either the CARICOM or EU definitions of aged rum”.
It is felt that with the GI, the value, quality, uniqueness, integrity, authenticity and heritage of Barbados’ rum could be leveraged to enhance its competitive market advantage.
And where the other challenges are concerned, Minister of Agriculture, Dr. David Estwick, said Government is committed to building a viable and sustainable sugar cane industry which should translate into significant benefits for the rum industry. Dr. Estwick pointed out that the restructuring process could lead to improved sugar cane yields and the production of grade “A” molasses, which in turn would have significant benefits for the growth of the Barbadian rum industry.
“Based on a supply of 350,000 tonnes of canes to an upgraded Andrews facility, the potential supply of grade ‘A’ molasses is 24,500 tonnes. The rum industry, which is a significant foreign exchange earner will benefit from increased security of local molasses supply, higher quality molasses input into rum making, foreign exchange savings and the ability to boast of our rums being made from local molasses,” the Minister remarked.
Minister Kellman added that Government would lend assistance to the rum industry towards achieving competitiveness by putting polices and strategies in place to ensure sustainability of the domestic export sector as a whole. He maintained, “We need to reposition ourselves to become innovative, more export driven and marketable. We cannot settle on mediocrity. Our rums/products must therefore be second to none.”
Barbados’ exports of rum came in at $57.2 million in 2009 and $66.7 million in 2010.
Read More articles in the latest edition of the Barbados CatalystWednesday, February 15, 2012