High molasses imports challenge rum industry
Published:Wednesday | February 6, 2019 | 6:58 AM
Jamaican rum is well known and sought after internationally. However, there is an increasingly crowded field of brands on the global market and declining acreage under sugar cane cultivation in Jamaica to produce molasses, from which the spirit is made.
The country’s producers are therefore forced to buy from abroad more than half the required amount of molasses as they seek to carve a bigger slice of the global pie by distilling greater value and profits from the production of more premium spirits while maintaining export volumes of bulk rum to distillers and blenders overseas.
Despite the many players, there is a growing global market for premium spirits, and bulk rum from Jamaica is being used in blends by distillers in different countries, chairman of the Spirits Pool Association Limited Evon Brown told the Financial Gleaner.
The Spirits Pool was created on March 10, 1932, as an umbrella for some 34 Jamaican rum producers at the time eager to halt the then-declining fortunes of the rum industry. Today, it represents the six rum distilleries still operating in Jamaica – J. Wray & Nephew Limited’s Appleton Estate, located in St Elizabeth and New Yarmouth Estate in Clarendon; Clarendon Distillers Limited at Monymusk and Long Pond Distillers in Trelawny, both owned by National Rums of Jamaica Limited; Hampden Distillers in Trelawny, operated by Everglades Farm; and Worthy Park Estate in St Catherine.
The six distilleries are dependent on molasses imports from Fiji, Guatemala, Mexico, and countries of South America.
“Right now, we are importing about 50 per cent of our requirements, with the possibility of having to import more,” Brown said. This represents upwards of 40,000 tonnes of the 80,000 to 100,000 tonnes of molasses the industry utilises to make rum each crop year. While he was unable to give exact current rum production figures for the industry, Brown said Jamaica produces between 20 million and 22 million litres of alcohol each year.
The need to shell out more and more money for high-cost molasses imports adds to other industry challenges, chief among them the fierce competition from producers whose operations are said to be shored up by subsidies and unequal treatment in international markets.
Citing examples, Brown pointed to Puerto Rico and the US Virgin Islands as benefiting from subsidies under special programmes by the United States government. Producers in those countries are able to sell at lower prices, thus providing a direct threat to the local industry.
“Jamaica’s production is still a peck on the huge global rum market stage. We have to spend heavily to market alongside some brands whose corporate budgets dwarf Jamaica’s national economy,” Brown said of the scale of the global rum trade.
The industry dynamics are forcing local rum producers to seek to wring more earnings and larger profits by concentrating on the growing end of the market for premium aged rums, a segment in which Jamaica has a competitive advantage because of the country’s reputation for producing unique full-bodied rums with rich aromas.
These characteristics are said to be derived from factors such as the soil in which the sugar cane is grown, the quality of water used in the rum distillation, and the particular woods from which the barrels for ageing rum are made.
The greater move up to the dark aged rums segment is a departure from the focus on the lighter ‘column still’ rums manufactured by Jamaican rum makers from the 1960s onwards in response to the market demand at the time. ‘Column’ still refers to the use in the distillation process of tall column vats rather that kettle-shaped pot stills used for darker, more textured, complex and nuanced rums.
Locally, as well as in the Caribbean, outdated national regulations, including excise or taxation systems described as falling short of international best practices, are said to be other issues with which rum makers must contend.
“We are actively engaged in examining these issues with a view to mitigating their impact on our sector,” Brown said without giving details.
Meanwhile, as the industry battles the challenge posed by rums from elsewhere claiming to be Jamaican, the registration in December 2016 of Jamaica Rum as a geographical indication, or GI, is seen as a major move to protect the local industry.
“We are not going to allow any watering down of the authentic Jamaican rum brand,” Brown declared. “We are now going to use the tool of GI to promote our rums in this exclusive market,” he said.