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Venezuela's Santa Teresa reverses fortunes at home, eyes export expansion
Impact / July 1, 2003

By Larry Luxner

CARACAS -- Ron Santa Teresa has surpassed Cacique to become the best-selling rum in Venezuela, according to liquor industry authorities in this country.

The January 2003 edition of Datos (Nielsen's equivalent in Venezuela) says Santa Teresa enjoys a 46.6% market share, followed by Seagram's Cacique (27.8%), Guinness/UDV's Pampero (16.7%) and Bacardi (3.0%). The remainder is split among Francisco Dorta, Barupano, Consorcio Licorero and other smaller producers.

That's a turnaround from less than two years ago, when Santa Teresa was trailing Cacique by five percentage points.

Alberto Cristóbal Vollmer, CEO of Compañía Anonima Ron Santa Teresa, attributes his success to three factors: its focus on rum products (as opposed to Seagram's and Guinness/UDV, which are focused on their imported products); the hiring of Carlos Flores as Santa Teresa's new sales manager, and a fundamental change in the company's distribution system.

"We have 350 to 400 key accounts and we now handle them directly. For the smaller, but more numerous accounts, we have made an alliance with Pernod Ricard, in which our brands are now handled by three Venezuelan distributors: Suramericana de Licores, Distribuidores Unidos and Licoriente," he said. "Our goal for this year is $40 million in sales."

Vollmer has also managed to lead Ron Santa Teresa back to profitability, only a few years after the family-owned rum distillery nearly fell apart due to mismanagement, negligence and corruption.

"In 1994, we did $120 million in sales and we were losing our shirt," he told Impact. In 2002, sales came to $25 million, but the company had profits of just under $1 million.

Santa Teresa claims to have been producing rum since 1796 at its distillery near El Consejo, in the Venezuelan state of Aragua, 70 kilometers west of Caracas. The company was established by Vollmer's great-great-grandfather, Gustavo Vollmer, who bought the property in 1881 and in 1905 registered Ron Santa Teresa as a trademark.

The Vollmer family now owns roughly 90% of Ron Santa Teresa; the remaining 10% is traded publicly. Vollmer says the company's debt, which is held by Banco Mercantil, Corp Banca, Banco Caribe and Standard Chartered Bank, "will be entirely paid off soon."

Santa Teresa currently produces 650,000 cases of rum and 770,000 cases of other distilled products per year. Its rum brands include Santa Teresa 1796, Ron Antiguo de Solera, Selecto, Gran Reserva, Blanco, Rhum Orange, Carta Roja, Superior and Arakú. The company also represents several non-Venezuelan brands including Concha y Toro, Baron Philippe de Rothschild, Perrier and Italian wines Santa Margherita and Fazi Battaglia.

Despite Santa Teresa's importance in the domestic market, it trails both Cacique and Pampero when it comes to exports. The total export market for Venezuelan rum is about 700,000 cases, worth approximately $70 million.

"To be able to build something durable in the export market, you have to have a solid base," said Vollmer. "We're trying to consolidate this market, because we were losing market share for a long time."

In 2003, revenue from exports will come to $4 million, compared to $5.6 million in export revenues during 2000. This is explained mainly by financial difficulties as well as an internal restructuring of the company's distributor in Spain, which forced it to slash shipments to the Spanish market from 114,000 cases in 2000 to only 41,000 cases in 2001.

But earlier this year, Santa Teresa signed a deal with Spain's Bodegas Osborne to distribute its rums in Spain — a deal Vollmer says should bear fruit within the next six months.

In addition, the company began exporting to selected U.S. markets in February. It formed a Washington-based importing arm, Aragua Services, which has signed up three U.S. distributors already: Eber Brothers Wine & Liquor in New York, Fedway Associates Inc. in New Jersey and Southern Wine & Spirits of America in Florida.

In the United States, the company's 15-year-old rum, Santa Teresa 1796, sells for around $35 per 750-ml bottle, while Rhum Orange retails for $19.

Besides Spain and the United States, Santa Teresa now exports limited quantities of rum to Chile, Peru, Italy, Japan and Russia.

By 2004, says Vollmer, Santa Teresa should be exporting 250,000 cases of rum a year, up from 80,000 cases today.

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