Local drinks producers are finding the running increasingly good on international export markets, as the desire for higher quality rums begins to make its presence felt.

Rum has been distilled in Panama since early in the 20th century. One of the country's most well known producers is Varela Hermanos SA, which distills for both the local Panamanian market and for export. In 2009 the UK drinks trade magazine highlighted the growth in popularity of Central and South American rums in the UK market, including the Ron Abuelo and Ron Cortez labeled rums produced by Varela Hermanos SA. At the time, Panamanian rum production was rapidly increasing with a YoY growth of 32.1% between August 2009 and August 2010, according to At the same time Varela Hermanos SA signed a distribution agreement to enter the US spirits market, further increasing its international presence. Luis J. Varela Jr., Varela Hermanos' Executive Vice-President, told TBY in his 2014 interview that, “We control approximately 90% of the domestic spirits market, so the only real option is to look beyond Panama. We now export our leading product, Ron Abuelo, to 36 countries. Fortunately for us, the aged rum market is growing and premium rums are becoming popular." In fact, in 2011 Panama was ranked 13th in the world in terms of rum and tafia export value (at $26.16 million) behind such countries as Germany, Spain, the US, and its closer neighbors Mexico, Jamaica, and Barbados. And Panama had a world market share of 2.4% that same year.


The growth of export markets would appear to be positive news for Panama's liquor producers; however, domestic consumption patterns in the alcoholic beverages market have gone in the opposite direction as the economy develops. The demand for local rum in the domestic market has declined, with middle class consumers preferring to spend their disposable income on imported wines and overseas produced alcoholic offerings. H.Tzanetatos, Inc., one of the largest distributors of consumer products in Panama, supplies Drappier Champagne from France, Pascual Toso wines from Argentina, and White Birch vodka from Russia to the domestic market, amongst other products. When speaking to TBY for this publication, Alberto Paz-Rodriguez Jr. General Manager of H.Tzanetatos, Inc., commented, “We continually add new items to our portfolio. Part of our new strategy has also been to add liquor, in terms of wines and spirits, and this strategy is adding to our growth." As a result of this change in consumer tastes in-country, the local production of alcoholic beverages in Panama has actually declined 2.2% in the period August 2012 to August 2013 from 180.2 million liters down to 176.8 million liters. Rum production in particular dropped from 5.3 million liters to 4.7 million in this same period, according to the Comptroller General of the Republic of Panama.


Panama's current annual consumption of beer is 72 liters per capita. However, the local market in Panama is naturally enough experiencing this same change in consumption patterns, with a growth in demand for craft beers, and premium or international brands. Chris Ritchie, President of Cerveceria Nacional, which produces two iconic Panamanian beers, Balboa and Atlas, along with international beers such as Miller Light, explained to TBY that, “What typically happens, and it is happening in Panama, is that while GDP continues to grow … per capita consumption of beer starts to tail off." The challenge for companies such as Cerveceria Nacional in Panama is to maintain revenue growth despite the decelerating sales volumes by tapping into new or niche consumer preferences in the beer market.


The re-exportation of liquor from Panama to the wider Latin American market is also a key area for the alcoholic beverages sector in Panama. According to figures published in The Spirits Business magazine in 2012, almost 80% of Scotch whisky exports to Central America, worth some £66 million, went to Panama. Much of this is then re-exported by Panama to other countries in the region. A new EU-Central America fair trade deal, which came into effect on August 1, 2013, removed a 15% tariff on whisky entering Panama, freeing up this trade opportunity further.


The mix of alcoholic beverages consumed in-country and being exported from Panama might be changing; however, the overall message remains that the sector is a vibrant and important part of Panama's trading economy and looks set to remain so. That's worth celebrating.