The Business Year

Pedro Ramón López Oliver

President, Oliver & Oliver International

Alberto Nogueira

Manager & CEO, Barceló Export Import (BEICA) — Ron Barceló

What were the core factors that led to the company to establish production operations in the Dominican Republic? PEDRO RAMÓN LÓPEZ OLIVER At the beginning of the 1960s, my family […]

What were the core factors that led to the company to establish production operations in the Dominican Republic?

PEDRO RAMÓN LÓPEZ OLIVER At the beginning of the 1960s, my family left Cuba and we established ourselves in the Dominican Republic, where my father set up his own business. Ever since then, my family has had close ties with this country—a place that offers a good location for the production of rum. We import alcohol from Panama, Guatemala, and Trinidad and Tobago, where we can get finer alcohol than in the Dominican Republic. This kind of alcohol is essential for our production of white rum. The alcohol from Trinidad and Tobago is distilled at 75°F, whereas the alcohol in the Dominican Republic is lighter, distilled at over 90°F. Jamaica and the French islands produce much stronger rum, because they use alcohol distilled at lower degrees, between 55°F and 60°F. Oliver & Oliver produces different type of rums; we produce rum using two different distilled alcohols—one at 95°F, and the other at 75°F—resulting in a different and particular rum that differs from the one produced in the Dominican Republic and those from the British and French islands. We call it “robust rum.”

BEICA has been growing both in the local and international market. Do you expect this rate to continue, and how do you plan to replicate this success?

ALBERTO NOGUEIRA The secret of our success has been a combination of decisions. First of all, the agreement that we have in the Dominican Republic with our distributor is a key contributing factor; we are growing with them even faster than before. People understand that the rum market is commercialized in the same channels as beer; however, it has its own characteristics and we work well together as a unique team and can give valuable feedback when needed. Not only this, but also our success is increasing both the number of cases marketed, and our sales in the premium category. We have realized a massive publicity and marketing drive with our rum in the high-end market. We now hold about 25% of the rum market, but in the Añejo [aged] category we are at about 85%.

What are your strategies for the different markets in which you operate?

PRLO We operate in a free trade zone in the Dominican Republic, meaning that we enjoy certain tax advantages, but also that we are not entitled to market our products in the country unless we pay high customs tariffs. The products we produce in bulk are the ones that we export less. For example, the products that we export the most are those rums aged 12 years or more. So-called “young products” tend not to be exported that much. Overall, I think that we export 80% of our old rum production with 60% of our sales volume coming from them. In the mass market, we do not have a significant presence and do not plan to change that over the coming few years. At the moment, we have 20 brands and each of them has four or five different types of rum, meaning that, overall, we commercialize around 120 rum formulas. It is undoubtedly hard work, and experience is very much required.

AN Our main market is Spain, and the market for us is 90% Añejo rum. Other markets like the Dominican Republic have some specific characteristics. In Chile, we started by selling a lot of gold rum, but now it is only about 50% of total sales. When we entered, we did so at the low end of the market because the main habit was to drink pisco. To go from pisco to gold rum was a jump you can make in price. When you are entering a market, you start with the 18 to 25 year olds and, over time, they begin to expect more from your brand, so they move on to Añejo. You cannot apply the same strategy to every market because they are all so different. When we enter into a market, we have to fight with some very large companies that have greater resources. However, their disadvantage is that they have a limited number of products, while we can offer a little more and are more adaptable in our approach. In this mix, we know about rum and we can give the consumer what they want, when they want it, and not just follow a fixed strategy around the world.

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