Impact International / November 15, 1999
By Larry Luxner
KINGSTON -- Famous throughout the world for Bob Marley, reggae music, dreadlocks, beautiful beaches and Blue Mountain coffee, the Caribbean island of Jamaica is also making a name for itself in rum.
Appleton Estate, distilled by J. Wray & Nephew Ltd., is not only Jamaica's best-known rum, but is now the No. 1 imported rum in Canada, Mexico and Peru. According to Impact Databank, Appleton Estate recorded 1997 depletions of 400,000 nine-liter cases in Mexico, a 37.1% jump from the 295,000 cases in 1996. Preliminary estimates show 1998 depletions of 430,000 cases of the spirit, which is distributed in Mexico by Grupo Tequila Cuervo S.A. de C.V.
In fact, Mexico consumes 45% of Appleton's rum exports, says Bruce M. Terrier, managing director of J. Wray & Nephew Ltd. The rest goes to Canada (15%), Asia-Pacific (15%), the United States (10%), Latin America and the Caribbean (10%) and the United Kingdom and other European markets (5%). Asked why Appleton Estate is so popular in Mexico, Terrier says: "Because they have a rum pallette, and they like quality."
In the United States, however, Appleton is having a much harder time.
"The anomaly is that we have strong markets in Canada and Mexico, but in the U.S., we have less than half a percent," said Terrier. "Until two years ago, we were doing our own distribution, then we moved to Heublein [whose parent firm, IDV, merged with UD in mid-1997]. Appleton is a tremendous opportunity for UDV because they do not have another rum with the brand equity that Appleton has in the United States."
Terrier said the venerable old rum distiller dates back to 1825, when John Wray, a wheelwright living in the Jamaican parish of St. Ann, opened the Shakespeare Tavern in Kingston. Wray eventually became a rum merchant, and in 1860 took his nephew, Charles James Ward, into the business. The business was known from then on as J. Wray & Nephew. Ward became the sole proprietor when Wray died in 1870.
In 1946, the company purchased 9,000-liter stainless-steel tankers to facilitate the rail transport of rum to its Kingston warehouse from Appleton Estate, located in Jamaica's fertile Nassau Valley, along the Black River. To handle growing production requirements, a pneumatic high-speed bottling line was installed in 1949. A conveyor belt was added, and in 1954, a circular machine was installed to apply standard pilfer-proof caps. By 1970, the company had four bottling lines in continuous operation.
Today, J. Wray & Nephew -- since 1989 a subsidiary of the Lascelles de Mercado Group -- owns over 20,000 acres of sugar plantations and employs over 3,000 people throughout the island. Although the parent firm has branched out into vehicle leasing, auto dealerships and other service-related industries, its main activity is liquor production.
Besides rum, it produces under license a wide range of wines and spirits including Smirnoff Vodka, Bols Liqueurs, Gilbey's Gin and Stone's Ginger Wine (at one time it even bottled kosher vodka). It also runs the adjacent Tia Maria factory on Spanish Town Road in Kingston.
"Back when I joined the company in 1983, our main goal was to earn foreign exchange. The economy was bad, and anybody with foreign exchange was king," says Terrier, a 50-year-old accountant by profession. "In the last seven or eight years, we have changed direction and have now moved to the branded business. We're out of the commodity business. We do very little of that these days."
Today, J. Wray & Nephew accounts for 95% of Jamaica's liquor market. Roughly 60% of Appleton Estate is exported; the remainder is sold to locals, or to departing tourists at duty-free shops in Montego Bay and elsewhere.
"Our main competitors are Havana Club, Mount Gay of Barbados and Haiti's Barbancourt, but not Bacardi. I just don't see Bacardi as a competitor."
Last year, the company produced 750,000 cases of Appleton rum -- up from 150,000 cases 10 years ago. Its 1998 sales came to $25 million, of which nearly $8 million was spent on advertising. One of its most successful markets is New Zealand, where its Coruba dark rum is "neck and neck" with Jim Beam for the title of No. 1 spirit there.
In the United States, four kinds of Appleton are sold: Appleton Special (average retail price: $10.99); Appleton VX ($14.99); 12-year-old Appleton Extra ($20-25) and 21-year-old Appleton 21 ($60).
"We sell only 2,000 cases a year [of Appleton 21] in the United States," he said, explaining that supply is limited.
"We haven't been doing above-the-line advertising for several reasons. We are in the process of redeveloping our brand positioning. The second reason is, the distribution is not really there. Thirdly, the cost benefit doesn't make sense at this stage. Too few retailers are carrying our product in the United States."
Terrier says a recent decision by the European Union and the United States to abolish all protective duties on imported spirits such as vodka, rum, gin and liqueurs by 2003 could seriously harm Caribbean rum producers who depend on bulk rum exports to the EU. But he adds that Appleton Estate won't be affected much, because he's no longer dependent on bulk shipments to the extent that Antigua, Barbados and Trinidad are.
"We were in that same business until three years ago," he said. "We got out because we found there was no profit, and competition was increasing while consumption was declining. It made for a vicious circle."
Of more immediate concern is the security problem at Kingston's port. Jamaican companies are constantly on guard for drug smugglers trying to contaminate export shipments. In late March, narcotics police found two containers with 10,000 pounds of compressed "ganja" -- Jamaican marijuana -- bound for Miami. The drug was found in 221 boxes among a J. Wray & Nephew rum shipment. The police speuclate that the shipment could have been contaminated while being processed at Kingston's Norman Manley International Airport.
"We have a serious security system in our complex. We check every single shipment," says Terrier. "But this happened on the wharf. There's no way I can control what happens there. We do not wish to be linked to drugs in any form."