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A wind of change in Colombia’s distilled beverage market?

A wind of change in Colombia’s distilled beverage market?

3 December 2023
By Renato Molo


As you may be aware, Colombia’s market for distilled alcoholic beverages intended for human consumption operates under a rent-seeking monopoly, controlling the production and introduction of spirits. The aim of this monopoly is to accumulate resources for financing public education and health in the various departments.

Over the years, this law has significantly restricted competition among rum producers and hindered the pursuit of higher quality. Additionally, it’s worth noting that there is minimal, if any, distillation occurring within Colombia itself. Alcohol is primarily imported from Venezuela, Panama, Ecuador, and Bolivia, a surprising fact given that Colombia ranks among the top 10 sugar cane producers globally.

In 2019, a new law, known as the “Ley de la Panela,” was introduced. This legislation[1] allows sugar cane farmers to distil Panela and Virgin Honey (sugar cane syrup) to create new varieties of rums.

Now, why Panela? To answer this question, it’s crucial to understand that Colombia boasts a massive panela production, with 1.2 tons of panela produced annually.

Colombia stands as the second-largest producer globally, with India leading at 7.5 tons per year. The immense potential for alternative production, such as alcohol distillation, is emphasized by Julio Molano[2], the founder of Licores Artesanales. Colombia has a unique advantage as the largest producer per hectare of panela cane, coupled with one of the largest cultivated areas globally. Moreover, there is a well-established panela culture, with 250 thousand families depending on this product. Law 2005 aims to harness and exploit this potential by allowing panela producers to venture into the craft liquor business.

However, it’s important to note that this law won’t bring about a revolution, and the major industry players will likely remain unaffected. The law stipulates that “the limit for alcohol production can’t exceed 373,245 litres of pure alcohol per year for mills with a production capacity exceeding three (3) tons of sugarcane per hour[3].” This cap is in place to prevent a significant impact on the production of departmental liquor distilleries, avoiding an oversupply that could affect market prices.

While not revolutionary for the big industry, this law holds promise for smaller producers and promises to inject dynamism into the relatively static and “boring” Colombian rum market.

In August 2022, Fedepanela, in collaboration with Casa Pedro Domecq (owned by the European producer and alcohol distributor, Marussia Beverages B.A, and owner of Mezan rum), inaugurated a distilling plant in Santander de Quilichao[4], Cauca department. The facility is set to produce and market rum and other sugar cane-based products, with a focus on educating sugar cane farmers and panela producers.

Domecq also unveiled a new line of rums called Quimbaya[5]. Although the current batches are imported, the plan is to transition to 100% locally sourced rums in the future.

In conclusion, there is a discernible shift in Colombia’s alcoholic beverage market. While not a revolution, it represents a small step towards an open and competitive market that prioritizes local products and labour. The hope is that Colombia can quickly catch up with other rum-producing countries, and this law signifies a positive move in the right direction. It’s exciting news, but progress should be embraced step by step.





[3] See note 1



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