Small Caribbean rum maker looks to tap U.S. market
CAYMAN ISLANDS (Reuters) -Walker Romanica hopes the novelty of making rum brewed on the ocean floor will help him tap the lucrative U.S. spirits market.
The Cayman Islands-based distiller of Seven Fathoms Rum recently signed a deal with Florida-based importer Luxe Vintages with the goal of selling the high-end liquor online and in 30 different states.
Romanica, who co-founded the micro-distillery three years ago, said about 1,000 people visit each week, of which 80 to 90 percent are vacationing Americans. Travelers can tour the facility, taste the rum, or grab a cocktail at the adjacent pub and purchase a bottle of Seven Fathoms to take home with them.
"It's been a great introduction to the U.S. market," said Romanica, adding there are direct flights to the Caribbean island, via Cayman Airways, from major U.S. hubs such as New York, Chicago, Miami and Washington. "We hope to bring a small piece of Cayman culture to everyone and perhaps remind them of their time spent enjoying a rum punch while watching a sunset on Cayman's Seven Mile Beach."
Seven Fathoms (www.sevenfathomsrum.com) gets its name from its unique brewing process, where the rum is aged in oak casks that are stored on the ocean floor at a depth of 42 feet, or seven fathoms. Romanica said they are continuously putting barrels into the ocean for maturation while, at the same time, bringing up barrels to blend into their product.
"What we have here in Cayman is beautiful, pristine Caribbean seas… to help gently massage the rum so that it ages and produces a smooth, very clean drinking rum," said Romanica, adding that since the brewing process takes anywhere from 1-3 years, Seven Fathoms is now primed to ramp up sales. Production has gone from 1-2 barrels of rum each month, to 3-4 barrels a week, he said.
"We're just getting to the point now where we're starting to see cash flow."
Romanica and co-founders Michael Kennedy and Nelson Dilbert bought their first still for $5,000 and have seen rapid growth since they began to aggressively promote Seven Fathoms in a host of international competitions starting in 2008.
Seven Fathoms is hitting the U.S. at the right time, as liquor volumes rose last year after two years of weak sales during the recession. Revenues in the U.S. jumped 2.3 percent in 2010, according to the Distilled Spirits Council of the United States and super-premium spirits saw both volume and revenue rise nearly 11 percent.
"Clearly the interest in premium, small batch spirits, whether it's rum or whisky, is so intense right now, that's really the market potential," said Peter Staley, the managing director for Luxe Vintages, adding Seven Fathoms would likely retail for $55 to $60 per bottle. "That seems to be where we can be based on costs. We clearly don't want to push the limit because that seems to be a sweet spot for rum of this quality."
Romanica said Seven Fathoms' biggest challenge is to carve out a niche in a market dominated by major alcohol distributors such as Diageo Plc (DGE.L), Pernod Ricard SA (PERP.PA) and Fortune Brands Inc FO.N.
"You can't compete with many of the larger companies in terms of advertising dollars or in terms of the economy of scale," Romanica responded. "So we compete in being unique, different, something that's handmade and something that's obviously very high quality."
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