A century, sugarcane was cultivated in the fertile

            A commodity is defined as “an
article of trade or commerce, especially a product as distinguished from a
service”1.

Commodities are central to the capitalist system we live in today. I have
chosen to conduct this commodity chain analysis on Ron Santa Teresa. Santa Teresa is a brand that was founded 200 years
ago and was the first licensed rum produced in Venezuela. I will begin by
explaining the history behind this particular rum and the company that produces
it, then I will describe the production process, geography and workers
conditions. Finally, I will address the economic and social implications that
surround this particular rum.

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I. History

 

From the beginning of the 16th century,
sugarcane was cultivated in the fertile valleys of Aragua, a central-northern
state of Venezuela. It was there where in 1976 the Count of Tovar founded the Hacienda Santa Teresa, (hacienda is a
plantation) in what is now the town of El
Consejo. The Hacienda Santa Teresa
was devastated by the Realists during the War of Independence from Spain. In
1826, Gustav Julius Vollmer immigrated from Hamburg, Germany to Venezuela in
search of new business and opportunities. Once in Venezuela, he met and married
Panchita Ribas who was the niece of the general in chief José Félix Ribas and
cousin of the Liberator Simón Bolívar. Panchita and Gustav went on to have six
children. In 1885, their son Gustavo Julio Vollmer Ribas bought the hacienda
where sugarcane was already being produced, he introduced new varieties of
cane, and systematized the crops. In 1896 the Hacienda Santa Teresa produced the first rum from Venezuela and
became the oldest rum manufacturing company in Venezuela, and now the fourth
oldest rum processing company in the world. In 1909 the Ron Santa Teresa brand was registered, the third registered
trademark in the country and since 2004, it has carried the denomination of
superior rums of the country.

 

II. Production and Workers

 

            The geography and topography of the
state of Aragua where Hacienda Santa
Teresa is located is a key factor to the company’s success. The richness in
potassium of the land in Aragua allows for a higher level of sweetness in their
sugar cane, combined with high levels of rain which provide the water needed to
secure fast-growing crops has allowed the Vollmer family to harvest what they
need to make their rum. Santa Teresa also has a privileged
position at the beginning of the Valley of Aragua. The mountains close up around
this valley, and because it is a small valley that opens up there is an equal spread
of wind that allows for large amounts of rain. Aragua’s agreeable climate is
ideal for the growth of sugar. Temperatures vary from lows of 8º ceIsius on the
coolest nights to highs of 40º celsius during the hottest times of the year. These
drastic differences in temperatures allow for the higher level of sweetness in
the sugar canes. 2

 

Rum is a distillate meaning that it does not
have a grain base like wine or a grain base like beer or vodka, instead it has
a sugar cane base. They extract molasses from their own sugar mill and from
other mills that are owned by other members of the Vollmer Family. These are
extracted from the cane that is grown on the Hacienda Santa Teresa. The Vollmer family employs the continuous
fermentation process, a process that is rarely used by other manufacturers in
the rum industry.3 This
continuous fermentation process consists of a tank that is continuously
receiving diluted molasses, the constant flow of molasses in the tank causes
the yeast to thrive and as new amounts of molasses are inserted that same
amount of “digested” liquid is extracted from another part of the tank and is
then ready to be distilled. After the liquid is distilled it is collected to be
aged, blended and bottled.

 

            In Venezuela, there is a law that
says companies are required to age their rum for a minimum of two years, to the
Vollmer’s advantage rum ages three times faster in tropical countries. Santa Teresa has various rums, their
most premium rum is named Santa Teresa
1796 Ron Antiguo de Solera. This rum undergoes a second aging process
called Solera.  In the Solera method of
aging, the blend enters the
top barrel which is called the Series 1 barrel and is passed down from barrel
to barrel until it reaches the Series 4 barrel. This is the heart of the Solera
system. Firstly, about half of the rum of the Series 4 barrel is drawn off and
is replaced with half of the rum from the Series 3 barrel. This is repeated
until the Series 1 barrel is half empty. At this point, the empty half of the
Series 1 barrel will be filled up with the blend. This rum is reduced to the correct
strength by adding demineralized water taken from Santa Teresa’s own wells.

Then the half empty wooden vat is filled up with the “crianza de barril”
from the series 4 barrels. Santa Teresa estimates that these rums age for about
6 years in the solera system.

 

            Ron
Santa Teresa generates around 400 jobs in the state of Aragua in Venezuela,
it is known as one of the top three companies to work in Venezuela.4
According to a study conducted by Trust Index, which is the basis for the
ranking by Great Place to Work said that, 92% feel proud to work at Ron Santa Teresa, 88% believe that
the company has great credibility, 85% value it as a respected company, 84%
appreciate the atmosphere of camaraderie and 81% value it for their
impartiality. In addition, 99% of the workers are proud of the work they do at
Ron Santa Teresa, 95% are proud of the company and 88% are part of the team
that makes the company possible, which this year celebrates 215 years of the
foundation of the Hacienda Santa Teresa
in 1796. 5
Santa Teresa also pays some of the Venezuela’s highest salaries and claims to
have exceptional working conditions for their factory workers.

           

III. Social Projects

 

            In 2003, three young men who were
members of a local gang stole a gun from the security guard and entered the
hacienda in hopes of looting. After they were arrested Mr.Vollmer asked the
police for a chance to speak to them, he gave them a choice: they either went
to jail or worked at the Hacienda for three months. The three young men decided
to take the option of working for three months but asked that their gang mates
be accepted as well. In time, another band of delinquents who were rivals of
the first band joined. Mr.Vollmer created El
Proyecto Alcatraz, a foundation that focuses on helping gang members in the
state of Aragua to leave their gangs and live lives of centered around honest
work. After several weeks of working separately the gang members were asked to play
rugby, this rugby match was intended to facilitate a transition from their
rivalry to comradery and helped them fight their street wars in a controlled
environment. During an interview Mr.Vollmer said, “In this process, rugby has
proven to be a powerful tool for transformation as it instills through its
practice the values of respect, discipline, teamwork, sportsmanship and humility,
as fundamental to sport as it is to life itself.”6This
project continued to grow as different gangs asked to join the project. It is a
project that has transcended on to the youth in Aragua as well.

 

            Crime rates in Venezuela have been
high for a long time, in 2003 murder rate in Aragua was 114 homicides per
100,000 inhabitants. The Alcatraz Project
has had a powerful impact on these numbers, in 2015 the same statistic dropped
to 24 homicides per 100,000 inhabitants.7
The Ron Santa Teresa company has
utilized its resources to provide an alternative to violence for these young
men, while simultaneously gaining honest workers and reducing the levels of
theft to their properties. While crime is not 100% gone, this project has
hundreds of young men stay off the streets and become working members of
society.

 

IV. Economic Factors

 

            Over the last few years Venezuela’s
economy has shrunk by at least one-third. The current inflation rate is at 741%
and was at an all-time high of 800% just last month. 8There
are immense scarcities in the market ranging from foods, medical supplies,
basic necessities and most other products. This is due to low purchasing
abilities for imported goods and high dependence of these goods because of lack
of diversification in Venezuela’s economy. Whiskey was one of the main imported
goods of Venezuela but when prices began to rise alongside the rising inflation
it became virtually impossible to buy imported Whiskey. Even though Rum was
always part of the Venezuelan culture, the middle class really began to buy
domestic rum in reaction to the prices of Whiskey. Today, 75% of Santa Teresa Ron’s sales are domestic,
they have worked towards maintaining price points that can still be afforded by
middle class families.

 

            The other 25% percent of Santa Teresa’s sales are generated from
exports. These exports allow them to keep 80% of hard currency earned. This
hard currency in the form of dollars and euros has allowed Mr.Vollmer to keep
his company afloat meanwhile most Venezuelan companies have closed. The ability
to earn in dollars and euros has also allowed Mr.Vollmer to payer higher
salaries to his employees, which significantly impacts their way of living in
the current harsh conditions of Venezuela. In order to increase their ability
to export and secure greater entrance into foreign markets Santa Teresa Ron signed an exclusive international distribution
deal with Barcardi this year. According
to Mr.Vollmer they export rum to about 40 countries, their biggest buyers being
Spain and the United States. A big problem with exporting happens when the rum
is transported from Hacienda Santa Teresa
where it is manufactured to the ports. In order to assure that his cargo
arrives at the ports Mr.Vollmer has had to embrace local officials, this has
caused uproar from the public saying that he stands with the government. He has
refuted these accusations and has said, “it is easier criticize than to
produce”9.

 

            In conclusion, Ron Santa Teresa is a rum manufactured from start to finish in the
state of Aragua in Venezuela. Their socio-economic impacts have been positive,
through their foundation they have been able to decrease crime rates in the
area, they have also used their dollars and euros to increase workers’ salaries
and have created a safe work environment. They predominantly export to fully
developed nations such as Spain, The United States and Japan, among others. The
topography and geographical location of Aragua has allowed them to successfully
run their business for over 200 years. In light of the negative economic and
political situation in Venezuela they have increased their exports in order to
gain access to foreign currencies that allow them to keep functioning in
Venezuela. Personally, I believe that the Vollmer family has done what many in
Venezuela could have done but only they did. They have used their wealth to
bring about positive change within their community which is something that
Venezuela desperately needs.