Impact International / April 15, 1996
By Larry Luxner
After nearly a year of promises and delays, the Paraguayan government has finally succeeded in privatizing Compañía Alcooles Paraguayas S.A. (Capasa), the national liquor monopoly.
In late February, 540 out of Capasa's 706 state employees formed an entity known as Tekojojá S.A. to purchase 77% of the company's shares for $15 million. A 23% stake will remain in state hands until the government can schedule an auction to offer those shares to the general public.
Luis Cristaldo, the new director of Capasa, said the workers bought the company under Law 636, which gives preference to workers whenever state assets are sold off.
"This was a very transparent privatization, not just for Paraguay but for all of Latin America," Cristaldo told Impact, adding that the workers obtained financing to buy the 29,000 shares, paying 10% immediately and the balance over three years, without interest.
The sale of Capasa, also known as Cañas Paraguayas, came less than a month after President Juan Carlos Wasmosy conceded that his government's ambitious privatization program had been a total failure. Before Capasa, only one state-owned company -- Lineas Aereas Paraguayas -- had actually been transferred to private hands.
"We continue to pay the salaries of railroad workers and the firewood for trains that no longer operate," Wasmosy told reporters, "and we assist companies like Cañas Paraguayas, which produces the best drinks, but that is not a state role."
Cañas produces the country's most popular liquor, Aristocrata rum, from its main distillery in downtown Asunción. The company's premium brand, Etiqueta Negra, is aged in oak barrels for three years and sells locally for 6,435 guaraníes (about $3.25) per 750-ml bottle. Its lesser, unaged brand, Etiqueta Roja, is similar to aguardiente and sells for 5,335 guaraníes (about $2.70).
Total production of Aristocrata exceeds 7 million liters a year, though Cristaldo said his new management team intends to double production over the next few years with an eye toward entering the Argentine, Brazilian and Uruguayan markets. Under the Mercosur customs union, Paraguay can export most of its products duty-free to those three countries, and vice-versa. Cristaldo said over a million Paraguayans living in Argentina constitute a natural market for Aristocrata. He also wants to export to Bolivia and the United States.