DOMINICAN REPUBLIC - Industry
Alberto Nogueira was born in 1965 and graduated in Business from the Universidad de Madrid. Between 1988 and 1992 he worked in the Department of Sales at Procter & Gamble before becoming Regional Director of Northern Spain at Leche Pascual. Between 1998 and 2002 he worked as Director at Varma. Nogueira is currently the CEO of BEICA.
BEICA came to the Dominican Republic some 12 years ago. At that time, we were based in Spain, and thanks to our vast experience in the rum industry as a group of entrepreneurs, we reached an agreement with the Barceló family. Back then, we were present in five countries: Spain, Honduras, the US, Mexico, and the Dominican Republic, and we were exporting an average of 170,000 cases per year. To put these figures in context, the company today exports 1.7 million cases per year and we are active in 55 countries. The main markets are Spain, where we sell around 900,000 cases, and Chile, where we sell another 350,000 cases. The Dominican Republic represents a small percentage, but it is growing fast and we believe there is big future potential here, as well as in the US, Russia, and China.
We set up a joint venture (JV) in order to expand the company at the international level, and we ended up buying the brand. In fact, the negotiations took between five and six years, and we did not purchase any facilities from the family, just the Barceló brand. In this regard, some members of the family stayed with us after the purchase, as well as the García family, who were co-founders of the brand. A total of 92% of the company’s capital belongs to two Spanish families, 5% belongs to Dominican families, and the rest is spread between minority shareholders such as staff.
Our policy is to have either an importer or a distributor in each country where we export, and we believed it was the right move also in the Dominican Republic. This is a very complex market. There are over 50,000 selling points in the country and it requires a very large sales force. In this regard, the agreement with Cervecería Nacional Dominicana was very advantageous for us because it holds vast experience and knowledge in the market. It has well-developed infrastructure and its logistics network is large and very efficient. It also distributes other brands. The move has enabled us to compete in a better position in the local market.
Sales in the country are around 400,000 cases. However, we have seen huge growth in the last few years. Three years ago we were selling 100,000 cases. In this regard, our estimations are quite optimistic for the local market, and we expect to approach 1 million cases within three years. Our high-end products represent 70% of our sales in the Dominican Republic, and sales of our lower-end products are minimum. That gives us a privileged position in the market, because there is still plenty of room to grow in the latter area.
When we purchased the Barceló brand, we did not obtain any of the facilities the family was using. In 2002, we developed our first production facility, BEICA, which currently employs 150 people and produces 40,000 aging barrels in three different types of bottling. Recently, we built Ron Barceló Historical Center, a sort of museum that aims to attract many of the visitors that come to the Dominican Republic. Since we had a few problems with the delivery of some alcohol we were buying from other companies, we invested in our own distillery along with Alcoholes Finos Dominicanos (AFD), a Venezuelan investor, and two sugarcane producers. It is the only distillery producing alcohol from sugarcane juice in the country. We also produce our own electricity from the remaining sugarcane. At the moment, we are developing a third facility in the San Pedro de Macorís free zone that will produce rum and manufacture bottles only for Spain. Overall, the company employs 400 people directly, and 2,000 indirectly, and the investment we have made in the country, along with our partners, totals around $70 million.
When exporting to the US you need to have an import partner, which at the same time has to have a distributor in each state. Every state is completely unique in terms of tax and alcohol-related laws. Recently, we signed an agreement with a sister company of Southern Wines and Spirits, the largest distributor of alcohol beverages and wines in the US. We believe that in the next three to four years the US will become one of our main export markets with great growth rates.
The aging period of this type of rum is between eight and 10 years, and we currently produce over 50,000 cases per year. However, we see the highest growth rate in Añejo rum, which varies from this one only in the aging period, which is between three and seven years. I would also like to say we do not tend to add the year to our bottles, because, among other things, if you compare the aging processes in the Dominican Republic and Scotland, you will see that it is much faster here due to weather conditions.
In order to be on such a privileged list, you have to comply with certain requirements. You must sell 1 million cases and export to more than 16 countries. Additionally, 40% of your sales must be exports. In this regard, we have complied with all these requirements for the last four years. We started in 22nd position and today we rank seventh. The Chicago Beverage Tasting Institute awarded us the “World’s Best Rum” prize after scoring 97 out 100 points—the highest score ever. Also, we are certified as producing “Authentic Caribbean Rum,” and we possess other international certificates such as ISO 9001 and ISO 4000 related to security and environmental friendliness. We are constantly seeking to strengthen our international brand.
We strongly believe in the need to invest in R&D, as well as look for international partners who share the same passion and business philosophy. I would not say we are an aggressive company, but rather we invest in innovation at all the levels, including products, packaging, and presentation.
In my opinion, the sector does not need governmental help, but rather room to maneuver, as well as more legal and tax security that can be addressed through a long-term strategy for the industrial sector. Policies and national strategies should not change like the color of the government. Also, I believe that the country needs to update some of the key laws such as the Alcohol Act, which dates from 1951.
© The Business Year – October 2012
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