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The valley’s best rum and aguardiente set sail towards the U.S.

Article - August 29, 2013
A year after the free trade agreement (FTA) between the United States and Colombia became valid, the South American country’s top companies are making their way into the North – and they are bringing their best products with them, with Industria de Licores del Valle (ILV) one of the frontrunners
VICTOR JULIO GONZÁLEZ, CEO OF INDUSTRIA DE LICORES DEL VALLE, COLOMBIA
Aguardiente and rum are two of Colombia’s most popular products – aside from coffee – and the Colombian liquor industry is celebrating the news that it can start taking its business into the United States, thanks to the free trade agreement (FTA) between the two countries that became valid in April 2012.

Most of the benefits of this FTA will become visible gradually, but some positive signs are already starting to show. Some changes were made to local laws as a way to avoid complicating the FTA, but its collateral benefits are proving to be great for the liquor industry. 
 
In Colombia, the law stated (until recently) that each state could only sell liquor produced inside state lines. This meant that aguardiente made in Antioquia could not be sold in Caldas, for example. The only way around this restriction was by paying very high taxes, which made the product less competitive than locally produced merchandise.

But all that is going to change over the next four years; in fact, it has already started to transform. In order to sign the FTA, Colombia had to agree to drop these restrictions, because the United States would not sign an agreement with 32 different states; it wanted to sign an all-inclusive agreement with the country in general. 
 
This means that little by little the borderlines between states will become invisible and the trade between them will grow each year. This, of course, also means that the market will become more dynamic because competition will be tougher. But the ultimate goal for Victor Julio González, CEO of Industria de Licores del Valle (Valley Liquor Industry), is to reach the North American market. “Four hundred million people make up our American market. That is huge,” says Mr. González, who explains that it means they have to really study the market so the company can make a successful entry into the U.S. 

“Rum is a very Caribbean product. That means two things: competition is tough but we also have a very big pool of buyers to reach,” says Mr. González. Amongst the challenges that going into the U.S. will bring, he identifies “competing with rum from Guatemala, Nicaragua and the Dominican Republic” in particular, as these countries are well known for their rum.

There is also a large number of immigrants in the U.S. who come from the Caribbean and Latin America, who are used to buying these products that remind them of home. Taking that into account, Mr. González says: “We have to come in with a product that is very similar in quality and that can compete in terms of price range.” 
 
Colombians, of course, are no small part of the immigrant population in the United States. The trick is to find which parts of the country they have settled in. “We have already identified 11 states and those are the ones we are going to aim at,” says Mr. González. Amongst them he named New York, New Jersey, Florida, Texas, California and South and North Carolina. Other states, located at the center of the country, do not have as many Latin immigrants. 
 
Still, even though they will be selling mostly to Latin Americans, the company will have to adapt to certain demands typical of the North American market. For example, Mr. González explains that in the United States people expect to have a higher alcohol grade in their drink. “The aguardiente sold in the U.S. has 30 degrees of alcohol in it, instead of the 29 we are used to here in Colombia. We have to work hard at our commercial and advertising campaigns”, says Mr. González, who understands they cannot just rely on plain old melancholy to crack the American market. 

  2 COMMENTS



Jeff Kingsley
09/10/2013  |  3:34
100% of 1

I'm already looking forward to this rum

Luis Adolfo T
09/10/2013  |  18:20
100% of 1

Este ron no lo he probado aun, mi favorito es el Ron viejo de Caldas!! Pero lo tengo que probar