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Luis J. Varela Jr.

PANAMA - Industry

The Rum Diaries

Executive Vice-President, Varela Hermanos


Luis J. Varela Jr. obtained his undergraduate degree in Industrial and Systems Engineering from Georgia Tech, and went on to earn his MBA from Babson College. During his educational tenure, Varela also gained experience in the manufacturing and food service industry. Later he went on to work for Destiladora Nacional, S.A. as a Production Manager, and later General Manager. Varela subsequently held the position of General Manager at Destiladora Nacional S.A., and Bodegas De America S.A. before assuming his current role as Executive Vice President at Varela Hermanos. In addition, Valera also serves as Director for Grupo Eleta and Grupo Centenario De Inversiones Panama S.A.

"The quality of our rum has a lot to do with our success."

What has your growth strategy been over the past five years?

About 10 years ago we started to explore the international market more seriously, and most of our growth during the last few years has actually come from exports. We control approximately 90% of the domestic spirits market, so the only real option is to look beyond Panama to continue growing. We now export our leading product, Ron Abuelo, to 36 countries. Fortunately for us, the aged rum market is growing internationally, and there is an increasing interest in premium aged rums all over the world.

What are your expectations in terms of production for 2015?

In the international market, we expect double-digit growth over the next five years. For the local market, it will mainly be organic growth due to the important market share we already have, but with some interesting growth in a few specific niches.

“The quality of our rum has a lot to do with our success.”

What is the importance of Ron Abuelo for Panamanians?

For many years, Panama was a market mainly of “seco” the national drink produced from sugar cane juice. Seco is for Panamanians what tequila is for Mexicans, or pisco for Peruvians. Rum always had some market share, but the impressive growth of Abuelo transformed the industry. For us it is vital to have a strong brand here, as Panama is today a great showcase to the entire world. Those visitors who try Abuelo and love it become ambassadors of Panama, and of Ron Abuelo, once they return home. Panamanians are particularly proud of our products.

What makes Ron Abuelo so successful?

The quality of our rum has a lot to do with our success. We have spent a good amount of our advertising and promotional budget just inviting people to try Abuelo, and discover everything that the brand offers. With “Añejo”, the first product we introduced, we were able to produce a relatively light rum, but with much character. You can drink it neat, on the rocks, with water, or you can also make cocktails with it. It is a truly versatile product.

What are the main challenges that Panama’s exports are currently facing?

Panama is mainly an exporter of services, with less emphasis on consumer goods. But the country has the potential to export much more than it does today. The country’s geographical location is ideal, allowing for the shipping of goods from both oceans; our airport has also become an important hub for the Americas. There are generally competitive freight rates available from here. One of our main export markets for Ron Abuelo is Chile, whose main export market is the US. We ship our rum to Chile in containers that usually arrive empty from the US. For exports to become a more important part of our economy, the country in general needs to work on developing an export culture, which will take time, resources, and serious dedication. Hopefully the recently elected government will promote this effort.

© The Business Year – April 2015



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