A magnitude 7.4 earthquake struck western Colombia at 7:34 a.m. local time on August 10, with an epicenter about 3 miles (5 kilometers) east of San José del Palmar in the department of Chocó, roughly 150 miles (241 kilometers) from Bogotá, according to the US Geological Survey and Colombia’s Servicio Geológico Colombiano (Colombian Geological Survey). The quake originated at a depth of more than 100 kilometers, classifying it as a deep intraslab event tied to the Nazca Plate’s subduction beneath the South American Plate. Tremors were felt as far away as Panama, Venezuela, Ecuador, and Peru.

As of August 12, Colombian authorities had confirmed more than 188 deaths, over 1,600 injuries, 222 people missing, and 260 people still trapped in debris, according to the Unidad Nacional de Gestión del Riesgo de Desastres (National Disaster Risk Management Unit, UNGRD) and figures reported by El Tiempo; earlier tallies from the UN Office for the Coordination of Humanitarian Affairs (OCHA) put damaged homes at close to 5,000, with 61 buildings collapsed and more than 550 schools and 24 health facilities affected across roughly 16 departments. Chocó, Valle del Cauca, Caldas, Risaralda, and Quindío sustained the heaviest damage. President Abelardo De La Espriella declared a national disaster, invoked an economic emergency, and decreed three days of national mourning.

Colombia’s Foreign Ministry, the Cancillería, installed an international cooperation command post led by Foreign Minister Omar Bula to field and coordinate offers of assistance from foreign governments and multilateral organizations. Vice President José Manuel Restrepo said more than 12 countries had formally pledged humanitarian aid or rescue personnel, and that multilateral institutions alone had presented cooperation proposals totaling $1.3 billion USD in assistance of various kinds. “We have already received proposals worth $1.3 billion USD in cooperation of various kinds from multilateral organizations in the midst of this tragedy,” Restrepo said.

“We have already received proposals worth $1.3 billion USD in cooperation of various kinds from multilateral organizations in the midst of this tragedy.” — José Manuel Restrepo, Vice President of Colombia

United States

The US Department of State said it mobilized an initial $15.5 million USD in emergency shelter, food, and protection assistance, along with post-earthquake structural assessments, according to an August 11 media note from the department’s Office of the Spokesperson. The funding is being channeled through five partner organizations: Catholic Relief Services (CRS), the International Organization for Migration (IOM), Miyamoto International, the UN World Food Programme, and World Vision. Of the total, $3 million USD routed through CRS draws on funding already committed under a separate, previously announced global assistance award to that organization, meaning it does not represent new incremental spending beyond what State had already budgeted for CRS programming.

The department also activated a Disaster Assistance Response Team (DART), a standing mechanism of humanitarian specialists drawn from across the State Department, with members arriving in Colombia the day of the earthquake to coordinate needs assessments and the broader US government response alongside embassy personnel in Bogotá.

Separately from the new $15.5 million USD package, the State Department noted that as part of its existing $3.8 billion USD contribution to OCHA, the United States had previously provided $200 million USD to the Colombia Pooled Fund, a standing mechanism OCHA can draw on for earthquake-related needs as well as humanitarian programming in Colombia that predates the earthquake. That $200 million USD figure reflects prior funding availability rather than a new pledge tied specifically to the August 10 disaster.

On consular matters, the US Embassy in Bogotá remained open and continued providing emergency and routine passport, notarial, and consular services; its consular agency in Barranquilla also remained open. The embassy advised American citizens in Colombia to enroll in the Smart Traveler Enrollment Program (STEP) at step.state.gov and to follow [@USEmbassyBogota](profile/USEmbassyBogota) and [@TravelGov](profile/TravelGov) on social media for security updates. US citizens seeking assistance can reach the Bureau of Consular Affairs at 888-407-4747 from within the United States, or +1-202-501-4444 from other locations.

Multilateral development banks

The World Bank disposed $200,000 USD in a non-reimbursable grant, without an associated credit line, to fund post-earthquake damage assessments. Susana Cordeiro Guerra, the World Bank’s vice president for Latin America and the Caribbean, offered technical expertise drawn from the institution’s experience responding to disasters elsewhere, in addition to the grant.

The Inter-American Development Bank (IDB) approved $500,000 USD in non-reimbursable technical cooperation funding, of which $350,000 USD was made immediately available to the Colombian Red Cross and $150,000 USD earmarked for technical support, Restrepo said. Separately, IDB Group President Ilan Goldfajn said the institution has up to $300 million USD in contingent emergency financing available to Colombia should the government request it; wire reports including CNBC and CBC cited a related figure of $50 million USD as immediately available for reconstruction support, reflecting different tranches or reporting of the same contingent facility.

CAF, the Banco de Desarrollo de América Latina y el Caribe (Development Bank of Latin America and the Caribbean), pledged $500,000 USD in humanitarian donations to be channeled through its Social and Human Development Funds, CAF executive president Sergio Díaz-Granados said.

European Union

European Commission President Ursula von der Leyen announced €2.1 million EUR in humanitarian funding for health, water, sanitation and hygiene, shelter, food, protection, and cash assistance in the hardest-hit areas, according to the European Civil Protection and Humanitarian Aid Operations department (ECHO). The European Union activated its Civil Protection Mechanism, which pools resources among the bloc’s 27 member states, and deployed its Copernicus satellite mapping service to support damage assessment. A further €100,000 EUR was reallocated from an existing EU-funded project implemented by the German Red Cross to meet immediate needs of roughly 2,500 families in Chocó and Valle del Cauca.

Switzerland

The Swiss government approved 1 million CHF (about $1.23 million USD) in aid, with half directed to the UN World Food Programme and local nongovernmental organizations for emergency assistance and the remainder allocated to restoring living conditions in destroyed areas, according to the Swiss Agency for Development and Cooperation. Swiss President Guy Parmelin offered solidarity with Colombia the day of the earthquake.

Spain

Spain’s Agencia Española de Cooperación Internacional para el Desarrollo (Spanish Agency for International Cooperation for Development, AECID) mobilized an initial €1 million EUR package covering shelter materials, water and sanitation kits, medication, and support for deployed health personnel, Foreign Minister José Manuel Albares said. Spain’s Ministry of Foreign Affairs reported no confirmed Spanish fatalities as of August 12, though it had not yet located 75 Spanish nationals believed to have been in the affected region.

El Salvador

El Salvador’s president, Nayib Bukele, dispatched two aircraft carrying 100 tons of humanitarian aid along with medical and rescue teams, according to the Presidencia de la República de El Salvador (Presidency of the Republic of El Salvador).

Ecuador

Ecuador’s Ministerio de Relaciones Exteriores y Movilidad Humana (Ministry of Foreign Affairs and Human Mobility) sent 47 rescuers with canine units and equipment provisioned for seven days of operations.

Mexico

Mexico deployed 255 specialized military search-and-rescue personnel, including canine handlers and medical staff, along with 4 tons of medications, 8.4 tons of food, satellite phones, radios, generators, and tents, according to Mexico’s Secretaría de Relaciones Exteriores (Ministry of Foreign Affairs).

Peru

Peru sent a plane carrying 12.5 tons of supplies and 62 rescuers through its Ministerio de Relaciones Exteriores (Ministry of Foreign Affairs).

Chile

Chilean President José Antonio Kast offered his government’s civil and technical resources through Chile’s Ministerio de Relaciones Exteriores (Ministry of Foreign Affairs), without publicly specifying the scope.

Venezuela

Venezuela’s government, through Vice President and Foreign Minister Delcy Rodríguez and the Ministerio del Poder Popular para Relaciones Exteriores (Ministry of People’s Power for Foreign Affairs), said it would send rescue brigades, an announcement that drew domestic criticism within Colombia given the state of bilateral relations.

Brazil

Brazilian President Luiz Inácio Lula da Silva pledged solidarity and said logistical and technical teams were on standby through Brazil’s Ministério das Relações Exteriores (Ministry of Foreign Affairs).

Argentina

Argentina’s Ministerio de Relaciones Exteriores, Comercio Internacional y Culto (Ministry of Foreign Affairs, International Trade and Worship) offered material assistance, civil protection assets, and logistics support.

Additional Latin American and Caribbean support

Several other countries in the region conveyed solidarity or more limited offers of support:

• Panama — President José Raúl Mulino offered collaboration “within our capacity” through the Ministerio de Relaciones Exteriores de Panamá (Ministry of Foreign Affairs of Panama).
• Costa Rica — The government conveyed solidarity through its Ministerio de Relaciones Exteriores y Culto (Ministry of Foreign Affairs and Worship).
• Dominican Republic — President Luis Abinader said his country stood ready to provide assistance, coordinated through the Ministerio de Relaciones Exteriores de República Dominicana (Ministry of Foreign Affairs of the Dominican Republic).
• Guatemala — The disaster-response agency, the Coordinadora Nacional para la Reducción de Desastres (National Coordinator for Disaster Reduction, Conred), remained in contact with Colombian counterparts to determine whether a formal request for assistance would follow, President Bernardo Arévalo de León’s government said.
• Cuba — Expressed willingness to help without publicly detailing specific commitments.
• Bolivia — Expressed willingness to help without publicly detailing specific commitments.

Other countries

Vice President Restrepo named Japan, Sweden, and Turkey among the more than 12 governments that formally offered humanitarian aid or rescue support, though itemized figures for their pledges were not publicly available as of this writing. Israel, France, Germany, Italy, and Ukraine also expressed readiness to coordinate assistance, according to Colombian media reporting, without confirmed dollar figures attached to those offers.

Red Cross and Red Crescent movement

The International Federation of Red Cross and Red Crescent Societies (IFRC) launched an emergency appeal for 11.7 million CHF to support the Colombian Red Cross, which activated its National Crisis Room and deployed a 30-member urban search-and-rescue team from its Antioquia branch to Chocó, alongside volunteers from its Quindío and Caldas branches. The Colombian Red Cross also activated its Restoring Family Links service to help reunite people separated from missing relatives.

Private sector

Among corporate contributions, Spanish bank BBVA (BME: BBVA) (NYSE: BBVA) said it would provide 3,500 food and hygiene kits, including nonperishable staples and personal care items, distributed through Colombia’s regional food bank network.

How to contribute

Colombian donors and members of the international community seeking a vetted local channel for contributions can direct support through somosone.com.co, the Colombian strategic-philanthropy platform operated by ONE Inversión Social. The organization has partnered with Sankofa Danzafro, La Pascasia, and Presentes Corporación on a Chocó-focused relief campaign, with a donation page linked from the platform’s homepage.

What many people may be unaware of though, is that the countries have a 150 year bilateral diplomatic history together. The countries’ ties go far beyond merely commercial ventures. A 19th century Swede even was appointed governor by the fledgeling government after Colombia gained independence from Spain. Sweden has several cultural, peace-building, civil society, and humanitarian initiatives both in Colombia and throughout the Andean region.

Ambassador Helena Storm made time in her busy schedule to speak with Loren Moss, the executive editor of Finance Colombia, where they discussed the bilateral relationship, Storm’s impressions of the country over her time here, and the potential for deepening ties between the two countries.

Finance Colombia: I’m here with Helena Storm, Her Excellency, the Ambassador of Sweden in Colombia. First, I want to thank you very much for making time for us. I know that the life of an Ambassador or any diplomat is very busy. And so it’s an honor to speak to you here briefly. So first of all, thank you.

Helena Storm: Well, thank you very much for inviting me, Loren.

Finance Colombia: I want to talk about Colombia and Sweden having a 150-year-old bilateral relationship. It’s not often the noisiest relationship. You know, like a lot of countries in the news and things like that, for sometimes good reasons, sometimes bad reasons. But of course, Sweden has a strong global reputation for quiet diplomacy and things like that. But tell me, what are the ties that bind Sweden and Colombia? And are there notable examples of collaboration or cooperation going back over the years?

Helena Storm: Yes. Well, as you pointed out, Sweden and Colombia have very good bilateral relations. And last year, we celebrated 150 years of bilateral relations. I mean, that’s 150 years of formal bilateral relations, formal diplomatic relations. Before that, we had relations with Colombia. People-to-people relations and even contacts between the two governments go beyond. Already from the liberation of the country, Sweden was here, and we were present. We had a count, a Swedish count fighting with Simon Bolivar to liberate the country. He was then appointed the first governor of Mompox by Simón Bolívar.

At this time, we had several important Swedish families migrating to Colombia, one of them very well-known, and they’ve been active in many areas of Colombian society. It’s the Familia De Greiff. So we have this tradition of people-to-people relations. And since I would say maybe three, four decades now, we have been very engaged in this Colombian peace process.

In all the formal attempts that have been executed, negotiating between different groups and the Colombian government, Sweden has been present, supporting these talks in different ways. So, a durable peace in Colombia has been part of the main kind of activities that we’ve had over the last decades in Colombia.

Yes, so it’s a strong relation. And we also celebrated the 150th anniversary with the visit of President Gustavo Petro to Stockholm, where we signed a joint declaration of bilateral partnership between Sweden and Colombia. And I would say this partnership kind of sets a new scene for our relations.

Finance Colombia: Absolutely. If I’m not mistaken, there is even a street in Medellín named after De Greiff. I never made the connection until just now, so every day you learn something, as they say. And speaking of President Gustavo Petro’s visit to Stockholm, I want to congratulate you guys. I’m from the US, and Lockheed Martin was there. But that’s an impressive accomplishment. You guys beat out lots of different competitors, all of them worthy. Of course, all of us are partners with Sweden and with the EU. And we’re all allies.

 But first, congratulations to Sweden and Saab on winning the deal to replace Colombia’s fighters, which are from the early 70s, the tactical fighter fleet. And so, how long have you guys been working on that deal? And how big is that deal? People don’t realize outside of aviation that there’s the price of purchasing the hardware, the aircraft, but there are long-term service contracts that go on for decades after; it is a whole program. So maybe if you could elaborate on that, and obviously, that’s a commercial deal, but the way that these things work, it’s a hand-in-hand thing with the government, and everyone is working together. So I’m sure that occupied a lot of your time in the past few years.

Helena Storm: Well, thank you for that comment. And obviously, we are very happy and proud of the fact that Colombia chose the Swedish company Saab to replace their fighter fleet. And these kinds of decisions are long-term; they take a long time to make. So I think we have been discussing this with the Colombian government, and Saab has been offering a solution from their company since Santos’ time in government. I think that’s when they started to look at the replacement of this fleet. And this is normal. This is how long these kinds of acquisitions take. And, as you say, we have a great respect for our competitors, the other countries and companies that were also putting in offers. We are very proud that they chose Saab.

And as you pointed out, this is a long-term relationship for us. We are not looking for clients, we are looking for associates, allies, and friends. And with this kind of agreement, we have the opportunity to reinforce all three of these aspects with Colombia. And so right now we are in the process of identifying the details of this agreement.

Finance Colombia: That’s good to hear. And so also, I understand that part of the package… And Sweden has always been, as have your other Nordic neighbors, really involved in social efforts across the globe and have been leaders in that. And I understand that part of this package, you know… fighters are necessary in the real world. But there’s also, you know, we always have that perennial conflict of guns or butter, as they say. But I understand that part of this package includes a significant investment and efforts by Sweden in Colombia’s Atlantic region, which is a region that suffered a lot of neglect and a lack of investment, and things like that. And I don’t remember the details. Maybe you can fill us in. What’s that social part of the commitment that you guys have agreed to?

“Colombia is such a rich country in culture, history, and nature. I mean, it’s just amazing.” – Helena Storm

Helena Storm: Well, as you said, these kinds of acquisitions are accompanied by an offset program. And the offset program is an agreement to transfer technology and transfer knowledge, so we can multiply, actually, the investments in Colombia. And it’s up to the Colombian government and the Colombian society to identify in which areas, in which sectors, they would like the investments when it comes to technology, and the transfer of knowledge and technology.

And as I said, we are in the process of identifying this part of the offset program, it’s as you call it, direct and partly indirect. And the indirect part, that’s what you are referring to, I guess, when it comes to the social investments. And this is right now being identified and discussed between the Colombian Ministry of Defense and the company Saab.

Finance Colombia: Great. Besides aviation, besides, obviously, Saab, besides the Gripens, what are the primary bilateral trade links between Colombia and Sweden? Has there already been a significant amount of ongoing import and export between the two countries in terms of what Sweden buys from Colombia, and then what products does Sweden export to Colombia? Maybe if you can speak to the trade that has already existed.

Helena Storm: Yes, of course. Well, we have had trade between our nations for over a century. And today, the exports from Colombia to Sweden mainly consist of fruits, flowers, and coffee. And the exports from Sweden to Colombia mainly consist of different pharma products, technology in general, and vehicles and auto parts. And we are trying to increase now, together with the Colombian side, the export possibilities from Colombia to Sweden. We just had a delegation of 20 Colombian companies to look at export possibilities in Sweden.

I went with them and we visited various actors in Sweden in the first week of June. And this was an initiative by my colleague, the Colombian ambassador in Stockholm. We are working very much hand in hand to increase the Colombian exports to Sweden. The numbers are not showing the reality, because when it comes to the trade, much of the trade goes via another European before it comes to Sweden, or before it exits Sweden, which in the statistics does not show Swedish imports from Colombia, or Swedish exports to Colombia. So, the numbers, that’s why I don’t go into numbers, but there has been a significant interest from Swedish companies to increase their presence in Colombia. We have, give and take, 100 Swedish brands and companies in Colombia.

They generate more than 25,000 direct jobs. We’ve also had big investments since I came here. One investment was the company Essity acquiring El Grupo Familia. We have had the inauguration of three IKEA stores in Colombia.

Finance Colombia: Thank you. Thank you, by the way! Thank you. A big fan, of course.

Helena Storm: Yes, thank you very much. No, but it’s an important commitment. We also have the company Zelestra, which is owned by a Swedish investment fund that has invested $300 million USD in two solar parks. And they are now discussing another investment in La Guajira. They have investment plans for several hundred million dollars more until 2027. That’s in the renewable energy sector. We also have other Swedish companies here, a big multinational that every year invests in Colombia to strengthen their position here and strengthen innovation policies that they have here.

I was recently in Rionegro to inaugurate a redistribution center, the second biggest in the world, which the company Essity has just built and inaugurated in Rionegro. That’s also a big investment of at least 35 million dollars. We also invest in the waste-to-energy sector, where we are also taking part from the government side, where we, for example, have financed feasibility studies to increase the possibility of investing in this sector for Swedish companies.

Finance Colombia: That’s impressive. I know about your Rionegro facility. It’s just a few minutes away from where I live here in Rionegro. Yeah, you know, lovely area. I can tell you, it’s kind of funny. So many times before, when I would travel to Miami, just back to the US, whether it’s on business or whatever, and stopping at the big IKEA there near the airport, and carefully weighing my luggage and being sad because things were too heavy to bring back. I remember just writing the article several years ago when we first heard that IKEA was going to open its first store in Bogotá, and now in Envigado. And just aside from being a journalist, just personally excited. And so really very happy for you all.

 You know, I know that is a company of national pride, but then even for us as consumers, so happy about that. Renewable energy is a big area, as well as the strategic investments that you’ve made in companies like the paper companies, like Familia, which makes consumer packaged goods and things like that.

Beyond commerce, are there bilateral cultural or social initiatives to strengthen the people-to-people ties between the two countries? I know sometimes I’ll talk to people and, you know, it’s a little bit different in English compared to Spanish, but I found people get tripped up pronouncing in Spanish, of course, Sweden, with Switzerland, and things like that. It’s like, no, you know, it’s a quiet country because they don’t make bad news. You know, it’s one of those countries that are, and I know you guys are proud of this, quietly doing good things and have a great reputation.

 But tell me about some of the people-to-people ties that you have and the bilateral initiatives that you guys have on an ongoing basis with Colombia.

Helena Storm: Well, thank you. We have in our embassy here in Bogotá two strategies for development cooperation, one bilateral for Colombia and one regional for the whole Latin American region. We manage both of these strategies from the embassy in Colombia. By the way, the Swiss embassy in Colombia is the second biggest in the region after Washington. So it kind of shows how we prioritize Colombia in our bilateral relations. And these two development cooperation strategies have priorities. For the Colombia strategy, our priorities are climate change and environment, peace building, and the third priority is democracy, human rights, and gender equality. And these are kind of the three main focuses for our work when it comes to development cooperation.

And we have several initiatives that also foster these people-to-people relations, and are also working very much hand-in-hand with the private sector to kind of use the Swedish development cooperation as an engine for economic growth. We have several programs for that. I won’t go into detail here, but I could if you want to.

We also work with education, vocational training for youth, and women, within these programs. And regionally, one program that I want to highlight is our mining program, which promotes sustainable mining in the region. And the Colombian chapter of that program was inaugurated or launched a couple of months ago, in May.

So it’s a recent addition to our efforts when it comes to sustainable mining. And in all our programs, we try to always have a gender equality perspective, because Sweden is a country where we highlight the importance of gender equality in all sectors in everything that we do. So gender equality is one of these priorities that we’ve been working on for the last five years that I’ve been here, and also before. But we’ve had numerous activities with exhibitions in the parliament, the Colombian Congress. We will inaugurate one very soon with the mayor’s office in Bogota, where we also highlight the men’s role when it comes to gender equality.

Another area where we have strengthened our bilateral relations recently is the cultural area. Sweden has, since I came, been twice a partner country for FILBo 2021 and 2022. We were also the invited country for the EuroCine Festival 2024. We’ve financed several documentaries that show the civil society’s engagement in peacebuilding and the role in the conflict, in the Colombian conflict. We’ve done that with various of our partners. ICTJ, which is the International Center for Transitional Justice, has been one of the partners, and UN Women another.

We have also strengthened our cooperation through the Philharmonic Orchestra of Bogotá, where we have a Swedish head director, musical director. And this orchestra went to Sweden during my five years here. I think it was 2023 or 2022. They traveled the whole orchestra to Sweden to showcase the quality of a Latin American Philharmonic Orchestra. And that was a very successful visit. So we are now planning a new visit to the Nordics for this orchestra in 2026. Unfortunately, after I’ve left, but yeah, maybe it will take place in the Autumn of 2025.

But anyway, these are very important areas of people-to-people relations that we’ve been working on. We’ve also brought Swedish artists here, singers, groups. One example that I want to highlight is Jon Henrik Fjällgren, who came and performed during COP16. And he is part of the Swedish native population, the Sami. But he was adopted from Colombia from an indigenous community in Colombia. So he has a double indigenous identity. He was born as an indigenous baby here in Colombia and then adopted by a Sami family in Sweden. And he has been reconnecting with his Colombian roots. And he is a very famous artist in Sweden, and he won our version of Sweden’s Got Talent. So it’s also been very emotional, I would say, the two visits that he made to Colombia during my five years. And to see how he had been fostering also a rapprochement between our indigenous groups, and how we can engage in further dialogue with them and foster further respect for their traditions and cultures.

Finance Colombia: You bring up an interesting point. A lot of times, I know growing up in the US, and I’m from the Midwest, where we do have a significant Nordic population. But it’s easy to forget how integral it is to society. I don’t even know why, but for some reason, we tend to remember the neighbors in Finland, that they have a significant indigenous population. But of course, Sweden does as well. I don’t know why we unfortunately tend to forget that. But that sounds like an amazing, not just collaboration, but just a story, just life history. And that brings me to ask, like you mentioned, your posting is mature here, and I’m sure that you’ll move on soon.

 But during your time as ambassador, what accomplishments and activities are you most proud of? Not when you look at your resume or when you talk to the foreign minister, but when you talk to friends and family, what are you most proud of about the things that you were able to touch during your time here in Colombia?

Helena Storm: Oh, that’s a very difficult question. But I’m very proud of the footprint that Sweden has left in Colombia. I’m very proud of the association many or the majority of the Colombians have when I travel in the territories, because as an ambassador, I’ve prioritized traveling in Colombia, and to visit the territories, not only working from Bogotá. Colombia is not Bogotá. Colombia is an extremely diverse country. And most of the people that I meet in the territories associate Sweden with support for peacebuilding, conflict resolution, human rights, and gender equality. And I think we have been able during these five years to increase that footprint in Colombia. And I think that’s what I’m most proud of.

And also, obviously, the 150 years of bilateral relations were a unique moment to show that we were the first country to support the first verification mission that came to Colombia to support the peace process in 2004, I think it was, with the establishment of MAPP/OEA, the Organization of American States Verification Mission in Colombia. Sweden was the first country to support financially and politically that they came to Colombia. We created MOE with the actual director of MOE now. MOE is the observation of the electoral organization in Colombia. I would say it’s an organization; it’s an NGO in that sense. It’s not a governmental organization, but it is the organization with the most respect from all parties when it comes to reliability in election monitoring.

We also have supported the territorialization or the expansion of La Defensoría, which is kind of the Ombudsman office in Colombia that was introduced in the 1991 Constitution. Ombudsman is a Swedish word. So the whole idea of the Ombudsman’s office is a Swedish invention, so to speak. And I think the Defensoría is maybe the Colombian institution, the government institution with the most presence in the territories all over Colombia. And as we know, much of the conflict that still occurs here in Colombia occurs due to the lack of official representation, the presence of official institutions around the territory. So that’s another example of how we’ve been working very long term to try to contribute to peacebuilding.

Finance Colombia: I understand. And you’ve been very generous with your time. I’m grateful. Last question for you. What will you miss most about your time? You may come back to visit, but I mean, your time here living in Colombia, what will you miss most about it? And maybe, not so much politically, but you know, really speaking as people, what can the people in the two countries maybe learn from each other?

Helena Storm: Well, that’s a super difficult question because there’s so much that I will miss. Colombia is such a rich country in culture, history, and nature. I mean, it’s just amazing. So obviously, all of that, the strength of the Colombian civil society, I think I’ve never experienced such resilience and strength from civil society. But actually, it’s funny that you say that, because this weekend, I was doing kind of my last errands in Bogotá, and I was panicking a bit, because I said, “Oh, my God, I have to fit now all the Colombian artesanía,” as you say it here, “that I can fit in my suitcase.” Since I came, I’ve been buying handcrafted things from all the territories, and I always wear Colombian artesanía.

Today, I’m wearing an earring from Choco, made by a women’s organization in Choco. And you know, this is one small example of how you can create conditions to sustain yourself economically and empower women economically around the world, just a small example. But I have a huge collection of these, and I was like, “How will I be able to maintain this collection when I travel back to Sweden?” So that’s one of the things I will miss to travel around the territories, talking to different people, women in these territories, trying to make a living, trying to change, trying to construct a future for themselves and their communities.

And I think that kind of resumes what I will… You know, something that I’ve noted during these five years it’s the talent of the Colombian people and the talent of the workforce. It’s also one of the explanations why we have such an interest from Swedish companies to come here and establish here, the talent of the Colombian people. And I think when it comes to learning things from each other, I think Swedes maybe should learn to be a little bit more relaxed, not to plan everything, and that things may turn out great, even though you don’t have 100% control over every step and every detail. And maybe Colombians can learn to have a little bit more structure and a planning horizon.

Finance Colombia: Ambassador, thank you so much for your time. It’s been an honor to speak with you. Best of luck on your future postings and the rest of your career. I’ll certainly endeavor to stay in touch. We appreciate it. And I want to make sure that your staff knows that we want to do a better job of covering Sweden’s activity here in Colombia.

 Sometimes, as journalists, we can be lazy and write about what the US is doing, or what Spain is doing, or what happened next door in Venezuela. But we want to be sure, because we know that there are so many countries like Sweden that, aside from trade and commerce, are doing good works and contributing not just to Colombia, but to the region. And we want to make sure to communicate those things that you all are doing. And again, thank you. I’m tremendously grateful.

Helena Storm: Thank you so much. Thank you.

The executive director of ACI Medellín, Cristina Zambrano, said that “in 2024, we achieved milestones that position Medellín as a global leader in innovation and sustainability. We reestablished strategic relationships with countries such as South Korea, Switzerland, and Singapore, and reaffirmed our leadership in networks such as C40, where we promote priority climate and energy projects for the city.”

The technology sector led these achievements with 56% of investment projects, consolidating its position as a driver of development for Medellín. Companies from other parts of the world continue to show their confidence in the city.
Furthermore, companies from countries such as the United States, Germany, Canada, Chile, and Mexico were attracted by its human talent, its articulated ecosystem, and its strategic location.

In international cooperation, $3 million USD was secured to develop 20 projects with Germany and Japan, among others, which focused on sustainability and social and economic development. This commitment was reflected in initiatives such as implementing Urban Protected Air Zones and energy efficiency in public buildings, funded by the C40 Network, with an investment of $250,000 USD.

2024 also marked Medellín’s return to global leadership, with the commitment to the recovery of the Center for the Fourth Industrial Revolution, alongside the World Economic Forum, and the district’s return to the C40 Steering Committee. In addition, the city hosted the World Data Forum, a unique event that attracted more than 3,000 visitors from around the world.

In the educational field, a partnership with Rockwell Automation and the Ministry of Education enabled technology awareness sessions to be held for 3,050 students in Delaware public schools, fostering their interest in the technology industry. On the other hand, the Medellín and its international allies event brought together more than
150 international leaders, business leaders, and industry representatives to learn about the District Development Plan, promoting strategic projects for the city.

With these achievements, Medellín not only strengthens its leadership in innovation and sustainability but also establishes itself as a reliable destination for international cooperation and investment, projecting itself toward growth and social transformation.

Photo credit: City of Medellín.

“Sustainable tourism is a powerful tool for transformation in the territories, generating opportunities and conditions for peace. For this reason, Switzerland supports this chain in Colombia, a country with extraordinary natural and cultural wealth,” said the Swiss ambassador, Eric Mayoraz.

The program impacts 13 destinations in the departments of San Andrés, Providencia and Santa Catalina, Atlántico, Magdalena, La Guajira, Sucre, Cundinamarca, Quindío, Casanare, Antioquia, Huila, Putumayo, Meta, Boyacá, Guaviare and Caquetá, promoting the sustainability and competitiveness of the sector. To date, the achievements have been significant: more than 1,000 jobs generated and retained in four key destinations (Huila, La Guajira, Magdalena, and Quindío), 357 companies with an 81% increase in revenues, and a 400% increase in tourist spending in these territories.

In environmental management, 80 companies have adopted good practices, and 55 people have been trained in methodologies for competitive and sustainable destinations, consolidating an innovative model of cooperation and development. “Swisscontact strengthens tourism in Colombia with a market approach, ensuring that destinations develop an offer aligned with demand and access tools and knowledge that position them as benchmarks in sustainability and competitiveness,” said Claudia Sepúlveda, general coordinator of the Colombia Más Competitiva program.

According to the Ministry of Commerce, Industry, and Tourism, in 2024, Colombia received approximately 6.7 million tourists, 8.5% more than the previous year. A growing percentage of these visitors are looking for ecotourism and responsible tourism experiences, which represents a unique opportunity to strengthen the competitiveness of destinations and incorporate sustainability criteria.

“Tourism in Colombia not only depends on its natural wealth, but also on its ability to generate value in the markets. We are promoting the necessary conditions for regions to transform their potential into real opportunities for growth and international projection,” concluded Enrique Maruri, director of Swisscontact Colombia.
Swisscontact at ANATO 2025: sharing experiences and learnings.

In the ANATO 2025 Tourism Showcase, the Colombia Más Competitiva program will present its main learnings together with local partners, who will share the impact of Swiss cooperation in their territories. One of the most relevant milestones is the strengthening of the Network of Destination Managers, whose official presentation will take place in April.

As part of ANATO’s academic program, Swisscontact, in partnership with the Chamber of Commerce of Santa Marta and Magdalena, organized the panel “Territorial perspectives in the competitive management of sustainable tourism” at the stand of Magdalena, a special guest destination in 2025. Entrepreneurs and members of the Network of Managers will discuss governance, sustainability, and product development.

Swisscontact’s destination management methodology has articulated the private sector around the creation and marketing of highly competitive tourism experiences. As a result, nature and culture products have been developed, such as the Safari Llanero in Casanare, Macondo Natural in Magdalena, and San Agustín Enigmático in Huila, among others. In addition, entrepreneurs and managers have received support to implement strategies aligned with the standards of the Global Sustainable Tourism Council (GSTC).

This impact has been possible thanks to public-private articulation at the local, regional, and national levels. Swisscontact has promoted the creation of networks, cluster strategies, and territorial governance models, making progress in destinations such as La Guajira, Quindío, Choachí-Ubaque in Cundinamarca and Atlántico. In addition, it will facilitate an exchange between representatives of the 13 destinations of the Network of Managers to identify trends and improve the marketing of tourism products.

According to Enrique Maruri, director of Swisscontact Colombia, “Nature tourism is one of the great bets of Swiss cooperation in Colombia, and we believe in its potential to promote sustainable development. At Swisscontact, we continue to work on the structuring of collective management models that strengthen tourism products and services, always in partnership with the private sector. Our goal is to consolidate ourselves as a benchmark in consulting for the competitiveness and sustainability of tourism in the country.”

For Swisscontact, it is also key to continue strengthening responsible tourism through innovative methodologies and strategic alliances with actors such as the GSTC, the Ministry of Commerce, Industry and Tourism (MinCIT), the National Tourism Fund (FONTUR), the Colombian Association of Responsible Tourism (ACOTUR) and Chambers of Commerce throughout the country, said Enrique.

Photo credit: ANATO.

Finance Colombia: So, you gave a really interesting talk today. We’re at the CGS 2024 Colombia Gold Summit, put on every year by Paul Harris and his team. Now, FTI, you guys are known as one of the most important consultants across, I think, the globe, but I know certainly across the Americas. Now, you talked today about the politics of energy transition, and that’s an interesting thing because we go back and forth. There’s like a tug of war between the right and the left everywhere, even down here in Latin America, and specifically in Colombia.

At this mining event, there is a lot of consternation, and I’ve seen the same thing at petroleum events that I’ve attended, and there’s a lot of uncertainty regarding governmental policy and that kind of thing. So, tell me about, when you talk about the politics of energy transition, especially down here in Latin America, what tend to be some of the major obstacles that your corporate clients might come across?

Lucas Marsden: Sure. Well, I mean, it’s a topical time to be talking about this because we’re not just having Colombia Gold Symposium here; we have got COP16 happening in Cali, and we have roadblocks, we’ve had roadblocks across the country from the mining sector, and farmers that are protesting changes that are being made by the government, environmentally related. Some risks exist on all levels, right? From your macro political to your operational. And what I feel like our clients are currently worried about are being able to comply reputationally and legally with all the new encouraging sort of biodiversity carbon targets that are coming out, that are coming out this week, that came out yesterday on biodiversity credits.

How they can do well by that? Because these things can be made into, you know, black and white, simple concepts, but the actual reality of investing in Colombia and investing in a couple of projects in Colombia or biodiversity is incredibly complicated and involves the social element of getting communities inside, it involves local government, anti-bribery and making sure that you’re getting that political stability and getting things to stay.

Finance Colombia: You know, one of the things that you talked about that I think is very important is a lot of companies will do things…I look at heavy manufacturing, for example, and they’ll go, “Look, we’re 100% carbon neutral” or “We’re green,” and they’ll go and do things like purchase carbon credits, which, conceptually, may be a good idea, but there are some dangers there. We find that a lot of those programs are…not only are they not regulated, but not necessarily monitored. So maybe you could touch on that because you gave some interesting case examples of that today.

“So a lot of what we do in FTI is help companies. It’s not just about the investment.” – Lucas Marsden

Lucas Marsden: Yeah, definitely. I mean, first off, just on that point of claims of net zero and nature-positive, which is the kind of biodiversity equivalent, our team in the UK and Europe were advising companies to be very careful about how they’re using these terms, because a general consumer will think, “Oh, net zero, it doesn’t have an impact on the environment.”

No. You know, you’re impacting the environment, but you’re also doing things to benefit it. So, that term “nature-positive”, there have been talks at COP16 to try to change that, to try to change it to “net positive” and more nuanced terms, because no company can be nature-positive, right? So, I think first, there’s that terminology issue and the reputational thing. But you’d like me to talk a bit more about the actual projects that we’re seeing and tracing and investments that-

Finance Colombia: Absolutely. I mean, obviously, don’t give away any client secrets, but we’d really love to hear about some of the ways that companies engage with FTI to kind of navigate this landscape.

Lucas Marsden: Yeah, I mean, the great news is that Latin America is the main receiver of climate-related funds, and there’s a huge amount of money, and this week with COP16 even more money being pumped into some incredible projects in, say, for example in Colombia, in Antioquia, in Vichada, around the Amazon. Some really incredible things are being done. I actually had a talk with one of the ministers of Indigenous Relations in Chile, who was telling me, “Look, all this money is pumping in, but what’s actually happening on the ground? Like, we’re not seeing this on the ground. We’re already protecting the environment.”

Saying, you know, “We’ve invested 20 million, might be great for a sort of top-level headline.” But, when you’re thinking about it actually being implemented, these communities are already doing this; they’re already protecting the oceans, they’re already protecting the landscape. So a lot of what we do in FTI is help companies. It’s not just about the investment, it’s about how do you get in a room with these communities, how do you find out what they’re doing, how do you increase those efforts so we’re not starting from zero and we’re not going in there and making a mess of things, which, unfortunately, has happened.

Finance Colombia: You know, you kind of almost answered my next question for you, and you’ve been generous with your time, and that was: You see a lot of these initiatives that are launched at a global level, or these guys go over there, Davos, Switzerland, and come up with this initiative, and they come on the ground and it’s like, “We’re going to do this or that,” but they don’t have input at the conceptual level or the decision-making level, with the local communities on the ground. You know, I’ve talked to friends in the Wayuu community, for example, here in Colombia. And on one hand, with some companies, they have great relationships because the companies have been very…I guess not presumptuous, or, you know, like, “Look, let’s come and listen to you first before we go and do anything,” or say, “What do you need?”

In other cases, they’ve been in more contentious relationships where some company comes in with some initiative that doesn’t take into account the actual needs on the ground, or not just the needs, but the beliefs and the wishes of those local communities. So, what can companies do and what have you seen that has been successful when companies try to engage, and so not just be environmentally responsible, but also socially responsible, and treat those local communities as equal stakeholders and partners, versus looking at them as, like, little children or something like that?

Lucas Marsden: Yeah, definitely. And I think that is the key to what this COP has been about. It’s called the COP of the people. It’s this idea that you can’t remove the environment from the social aspect and that there are communities that are living there that are making their income, their livings, from living in this kind of highly biodiverse place. So, that’s why there’s been so much encouraging indigenous participation at COP16. The first thing you need to do is actually understand who you’re talking to.

The other side of the business that we have is FCPA investigations, Department of Justice investigations, corruption; when things go wrong, we have an investigative team that goes and finds out what’s happened. A lot of the times what has happened is that you’re speaking to the leader of the community, you think that they represent the wider community, and they say, “Right, there’ll be no problem. We’ll sign all the papers; just help me with the roof of my house over here, and it’ll be okay.” Right? So, make sure that you’re not falling into those traps, that you’re not just saying- It’s not as simple as saying, “Okay, this is the leader of the community.” Unfortunately. You’ve got to have a wider thing and find those good actors, find the ones that are really benefits in the community and make sure you identify that. So, a big part of what we do is stakeholder mapping identification to make sure that that panorama is clear.

Finance Colombia: We have two audiences at Finance Colombia. Basically, either multinational executives that have current or potential operations in Colombia, and then, of course, institutional investors. Now, for those executives, when is the ideal time to engage with FTI Consulting? When should they reach out? When should they look at the services that you offer, like you just mentioned? What kind of due diligence, and that kind of thing. What’s the ideal circumstance and, maybe, the ideal client profile?

Lucas Marsden: Well, we embed ourselves and exist on top of the current situation, right? I mean, you get some consultancies that will come in and just start things from scratch. These companies, they know what they’re doing, they have very good risk profiles, they’ve got good boots on the ground. And that’s the real key part: having boots on the ground. So, I’ve been talking to some investors from some banks that said they wouldn’t invest in climate initiatives unless they have a presence in that country, an office. Not necessarily a risk office, but an office, so at least they understand the culture of it, right? And when it’s getting to that point…I mean, what I said about FTI is as early as possible. Anytime that you need that help with the identification, with understanding the culture. If you’ve got a team on the ground, if you’ve got a risk team, brilliant. If you don’t, we can help from scratch. If you do, then we can sit on top of what already exists, do some kind of external and second opinion, right? And yeah, that’s what we said.

Finance Colombia: It’s like when a large company is going to have in-house counsel, but they also have the law firms that they partner with. They may have risk experts, but it’s leveraging your expertise, and especially global expertise, when you’re going into new markets, maybe where they haven’t operated. Well, Lucas, thanks. You’ve been great with your time and, even more importantly, great with your knowledge here at CGS, and I hope to see you again.

Lucas Marsden: Great. Thank you very much.

A wastewater analysis has indicated that in Europe, cocaine from South America is now being consumed in smaller towns, as well as major urban areas.

Photo: A dismantled cocaine laboratory in Tolima, Colombia. (Credit: Colombian Air Force)

The report, published on March 20 by the European Monitoring Centre for Drugs and Drug Addiction (EMCDDA), is the institution’s latest annual overview of drug residues used to estimate cocaine consumption across participant cities in Europe. This year, the report analyzed results from approximately 90 cities and towns, though several major cities, including London, Madrid, and Berlin, did not participate.

It found that the Belgian city of Antwerp, a vital port for the arrival of drugs from Latin America to Europe, remains the continent’s cocaine consumption capital, while eastern European states — particularly the Czech Republic and Slovakia — continue to dominate in methamphetamine consumption, though that is changing slowly.

The report also looked beyond the European Union for the first time to compare residues at a global level, including cities in the United States and Brazil in its analysis.

Researchers tested the cities’ sewage systems for indications of how much cocaine the population is consuming, which they estimate in milligrams per 1,000 inhabitants per day (mg/1000p/day).

Wastewater studies measure only drugs that have been consumed, not those that were dumped, João Matias, a scientific analyst at the EMCDDA and one of the authors of the study, told InSight Crime.

“Once inside our bodies, the drug is metabolized. Once excreted to the sewage system, researchers can take samples before the water is treated. We look for the metabolites produced after the use of a specific substance,” said Matias.

Here, InSight Crime analyzes the report’s findings on the increasing prevalence of cocaine and methamphetamine outside of major cities in Europe, as well as new data from non-EU cities.

Disparities Between Urban and Non-Urban Consumption Dissolve

This year, researchers noted that differences in residue readings between urban and non-urban settings in Europe no longer exist, suggesting that traffickers have flooded the continent with cocaine, and it is now available almost everywhere.

“Contrary to previous years, in most countries with multiple study locations, no marked differences were found when comparing large cities to smaller locations,” according to the report.

Record coca cultivation and cocaine production in nations on the supply side of the cocaine trade have enabled this spread.

Authorities in Colombia, the world’s largest cocaine producer, seized 739.5 tons of the drug in 2023, an increase from the 659 tons seized in 2022. Peru saw a 4.4% drop in seizures of cocaine but 53% more cocaine base, while Bolivian seizures jumped by 62%.

The Colombian government’s announcement in March that it would reduce eradication efforts to 10,000 hectares, half of 2023’s target, is likely to see coca cultivation increase still further this year.

Even with these record seizures in Latin America, seizures in Europe also continued to climb. Europe’s traditional entry points — Belgium, the Netherlands, and Spain — all increased their seizures. Sweden and Russia, countries not known for receiving cocaine, saw large single seizures of 699 kilograms and 460 kilograms respectively, while Norway made its largest-ever cocaine seizure of 800 kilograms.

The report also found that cocaine residues have doubled since 2011 among the seven cities that have participated in the study each year.

From 2011, the daily value of cocaine residue across Antwerp in Belgium, Zagreb in Croatia, Milan in Italy, Eindhoven and Utrecht in the Netherlands, and Castellón and Santiago in Spain, rose from 341 mg/1,000p/day to 747 mg/1,000p/day in 2023. Last year, the rate in these cities was slightly higher, at 800 mg/1,000p/day.

The increase in consumption is “definitely related to the increased availability [in Europe] and the increased production of cocaine in South America,” Matias said.

Methamphetamine’s Slow Spread

The report also found that methamphetamine use has spread into new areas of the continent, while seizures of the drug both in Latin America and Europe have made the news.

“Methamphetamine use, generally low and historically concentrated in the Czech Republic and Slovakia, now appears to be present also in Belgium, Cyprus, the east of Germany, Spain, the Netherlands, Turkey and several northern European countries,” said the report. However, overall, the study found that the amount of methamphetamine consumed remained stable.

“One of the highlights of last year’s report was that we were seeing an increase in methamphetamine use over most of Europe,” said Matias. “This year we found use in many countries, but we didn’t see the same increase in use we saw in the previous years.”

Methamphetamine, a synthetic drug, has traditionally been supplied to the European market by local actors, including in the consumption heartlands of the Czech Republic and Slovakia.

However, in 2019, multiple arrests of Mexican or other Latin American methamphetamine cooks in the Netherlands and Belgium suggested that the “Mexican method” — the production of methamphetamine used in Mexico which produces a high-quality drug — was being learned by European producers. Since 2019, there have been no other arrests, implying that a transfer of knowledge has taken place.

The vast majority of methamphetamine production in Mexico usually takes place in the northwestern state of Sinaloa, and is then trafficked to the United States. Significant amounts of methamphetamine have arrived to European shores recently, though the majority was intended for onward travel.

In February 2024, Ireland made its largest-ever methamphetamine seizure of 546 kilograms, worth some $35 million. The drugs had come from Mexico and were on their way to Australia, police said. The shipment was traced back to the Sinaloa Cartel.

At the beginning of September, Mexican authorities discovered 20 tons of suspected methamphetamine aboard a ship in Veracruz, on Mexico’s Atlantic coast, according to a press release. The ship was headed for Rotterdam, the Netherlands.

Non-EU Cities Rival European Cocaine Habits

For the first time, the EMCDDA report included wastewater results from non-European Union cities. Cities in the United States, Switzerland, and Brazil “show similar levels of use as the cities in Europe with the highest loads,” found the report.

Seattle in the United States recorded a daily mean of 647 mg/1,000p, while Geneva in Switzerland recorded 812mg/1,000p. The northeastern Brazilian city of Recife had a daily mean of 670 mg/1,000p.

These results are around the same as European cities like Utrecht (744), Paris (616), and Barcelona (619), but still far below the big hitters like Antwerp (1,722), the highest of all participant cities by a distance, or Amsterdam (1,210).

While cocaine consumption may be entrenched in many regions of the world, Oceania remains relatively untouched, according to residue findings. The daily mean of 102 mg/1,000p across Australia’s 55 sites suggests a dearth of the drug, and provides plenty of reasons for organized crime groups to continue, and perhaps even increase, their attempts to move cocaine to this untapped market.

This article, written by Peter Appleby, was originally published by InSight Crime, a Medellín-based foundation dedicated to the investigation and analysis of crime and security in Colombia and Latin America.

The financing has been divided into two disbursements by Blue Earth Capital, an Swiss-based investment fund that focuses sustainable and impact-oriented financing.

The move aligns with Bayport’s mission to promote greater financial and labor inclusion in the Andean nation, where many remain outside of the traditional banking and credit sector.

“Through this transaction, Bayport Colombia reaffirms its unwavering commitment to financial inclusion and comprehensive support for the diverse financial needs of the Colombian population,” said Lilian Perea, CEO of Bayport Colombia.

“In 2023,” she continued, “we raised more than $120 million USD, strengthening our ability to drive our core purpose: to provide financial solutions that enable our clients to chart a new horizon and a future now. With our sights set on 2024, we remain firm in our vision of continuous growth, reaffirming our dedication to actively contributing to the socioeconomic development of the country.”

As expected, President Petro flew to Davos to be upstanding in front of the world. The discourse didn’t deviate from that expected, as Petro promoted Latin America’s capacity to convert to green energy when compared to other regions of the world – Colombia is at the forefront of that. Mining Minister Velez spoke of the urgent need to freeze oil exploration licenses and prioritize tourism and agriculture, which in time will be a good strategy but somewhat at odds with what Finance Minister Ocampo said more recently, never helpful.

Ecopetrol’s (NYSE: EC) Felipe Bayón was also in Davos as the company was invited to join the World Hydrogen Council – the only company in the region who are part of the entity. The stock itself is doing well, trading at levels not seen since before President Petro was elected.

The week started the Real Sector data for November and whilst the Manufacturing Production number (4.5%) was in line with expectations and only moderately lower than 5.3% in October the Retail Sales number was a different issue. Whilst it rose 1.7% on a headline basis, it was below the consensus of 1.9% and more concerningly once all the various elements related to vehicles are stripped out – the number was 0.4%.

On Wednesday we had the Economic Activity reading for November and it fell once again to 3% – it stood at 4.6% in October. To context that, it is the lowest reading since March 2021 when the comparable was with the low point of Covid, a clear reflection of a slowdown.

Another number that slipped under the radar was the Sept-Nov informal employment data. It stood at 58.2% on a national basis and 43.9% when measured in urban areas. Whilst there are years of work ahead to lower the numbers, these were at least lower than the previous time.

The final data of the week was the Import numbers for November – it was down 7.7% YoY but at US$6.04bn it was still a big number. The Trade Deficit of US$1.1bn was also unwelcome, if expected. Manufacturing, which is the dominant sector fell 12% and this dragged the overall number downwards. Sectors such as Vehicles, Pharma and Iron & Steel.

The markets followed those overseas which meant they were tentative. As mentioned above, Ecopetrol fared well due to China and the oil price, although now it is beginning to buttress up against its price targets. Oil also kept the Peso honest, battle has been joined at the ~$4680 resistance level but the currency appears to want to head lower still.

Please find below the LinkedIn Video :

https://www.linkedin.com/posts/rupert-stebbings-927b6316a_colombia-davos2023-economaeda-activity-7022136804069777408-Hqxy?utm_source=share&utm_medium=member_desktop

All in all – a busy week – have a good weekend.

Roops

Almost two-thirds of chief economists believe a global recession is likely in 2023; of which 18% consider it extremely likely – more than twice as many as in the previous survey conducted in September 2022. A third of respondents consider a global recession to be unlikely this year.

There is, however, a strong consensus that the prospects for growth in 2023 are bleak, especially in Europe and the US. All of the chief economists surveyed expect weak or very weak growth in 2023 in Europe, while 91% expect weak or very weak growth in the US. This marks a deterioration in recent months (at the time of the last survey, the corresponding figures were 86% for Europe and 64% for the US).

In China, expectations of growth are polarized, with respondents almost evenly split between those who expect weak or strong growth. Recent moves to unwind the country’s highly restrictive zero-COVID policy are expected to deliver a boost to growth, but it remains to be seen how disruptive the policy shift will be, particularly in terms of its health impacts.

On inflation, the chief economists see significant variation across regions, with the proportion expecting high inflation in 2023, ranging from just 5% for China to 57% for Europe. Following a year of sharp and coordinated central bank tightening, the chief economists said they expect the monetary policy stance to remain constant in most of the world this year. However, a majority expect further tightening in Europe and the US (59% and 55%, respectively). They noted that 2023 is likely to involve a difficult balancing act for policymakers between tightening too much or too little.

“With two-thirds of chief economists expecting a world-wide recession in 2023, the global economy is in a precarious position. The current high inflation, low growth, high debt and high fragmentation environment reduces incentives for the investments needed to get back to growth and raise living standards for the world’s most vulnerable,” said Saadia Zahidi, Managing Director at the World Economic Forum. “Leaders must look beyond today’s crises to invest in food and energy innovation, education and skills development, and in job-creating, high-potential markets of tomorrow. There is no time to lose.”

Multiple headwinds are also expected to exert a drag on business activity in 2023. Nine out of 10 respondents expect both weak demand and high borrowing costs to weight on firms, with more than 60% also pointing to higher input costs. These challenges are expected to lead multinational businesses to cut costs, with many chief economists expecting firms to reduce operational expenses (86%), lay off workers (78%) and optimize supply chains (77%).

More broadly, the chief economists expect the global landscape to remain challenging for businesses – 100% of respondents expect global geopolitical trends to continue redrawing the map of global economic activity along new geopolitical fissures and fault lines. This wider economic shift will likely reverberate through trade, investment, labour and technology flows, creating myriad challenges and opportunities for business.

One positive signal is that supply chain disruptions are not expected to cause a significant drag on business activity in 2023.

While the Forum’s 2023 Global Risks Report recently found the cost-of-living crisis to be among the world’s most urgent risks, the chief economists see the crisis potentially nearing its peak, with a majority (68%) expecting it to have become less severe by the end of 2023. A similar trend is evident in relation to the energy crisis, with 64% expecting some improvement by year end. In addition, survey respondents highlighted a number of potential sources of optimism at the start of 2023, including the strength of household finances, growing signs of easing inflationary pressures and continued labour-market resilience.

Throughout the 20^th century, Colombian rum producers did what one could expect from government monopolies. Produce a pedestrian product, managed to maximize income to the state, produce a “good enough” product, and rely on regulation to keep out competitors. But when Luís Roberto Rivas took over the Manizales-based Industria Licorera de Caldas in 2016, he did what few would expect from a local politician who had served as mayor of Manizales, and in Colombia’s national legislature. He took a company plagued with contracting scandals and corruption, and ran it like a competitive, modern company.

After Colombia (somewhat) modernized its liquor industry in 2016, ILC went to compete, taking over market share in other departments (provinces) of Colombia, most notably Antioquia, where it has dethroned the harsher tasting Ron Medellin from its dominant home-town position. ILC is now an exporter of rum, aguardiente, and other alternative liquor products, and has entered into international production agreements with global liquor giants.

Finance Colombia Executive Editor Loren Moss traveled to Manizales for an exclusive discussion with ILC CEO Luis Roberto Rivas to understand ILC’s secret recipe for success.

Finance Colombia: I am here with Luis Roberto Rivas Montoya, the general manager of the Industria Licorera de Caldas. Now you have grown a lot, you are already the largest rum producer in all of Colombia, right?

Finance Colombia’s Loren Moss listens to ILC CEO Luis Roberto Rivas (photo: Liliana Padierna)

Luis Roberto Rivas: We, let’s see, we are a Colombian government Industrial and Commercial company from the department of Caldas. This is a 100% public company called the Caldas Liquor Industry that operates as an industrial and commercial company of the government, and we are the rum market leaders in Colombia. In fact, as of 2021, we had a market share of 66% according to Nielsen.

In Colombia. We sell per year, we invoice per year, in units, in units sold of rum produced at 750 milliliters, which is how it is measured the category here in Colombia, we sold 32 million bottles, which is more or less, 2 million, almost 2.5 million cases a year.

Finance Colombia: It’s interesting because it wasn’t always like that. Nowadays you have competition from other departments, but you are growing very fast.

Luis Roberto Rivas: We have grown fast; we have grown very well. Let’s say that there was a great opportunity that was offered to a liquor company like this one and that is with the opening of borders generated by the new monopoly legislation, the liquor regime itself, which eliminated the monopoly, we are now able to sell our rum to any territory in Colombia. That is a great advantage because there were regulations in place from the colonial era.

Finance Colombia: Yes, and now you have to compete with quality and not by geography.

Luis Roberto Rivas: And we have had a rum, a high-quality product, well-known in Colombia with a lot of positioning, so we managed to enter important departments like Antioquia.

Antioquia is perhaps the most important department in the rum and aguardiente category as it is the largest consumer per capita. Antioquia has 34% more or less of that market because Antioquia consumes a lot of rum and aguardiente.

Finance Colombia: It’s interesting. And how does this work, because I remember my first time in Colombia, which was around 2004, and I’m curious there is a rum in Bogotá, another rum in Cali and…how does it work, what is the history of that law, how it worked and when changed?

Luis Roberto Rivas: What happens is that historically each liquor company had its own liquors (aguardiente and rum). So, in Cundinamarca, the Cundinamarca Liquor Company has its aguardiente Nectar and its rum Santa Fe; the Valle (del Cauca) company has its aguardiente Blanco and its rum Marqués, Antioquia has its Antioqueño Aguardiente and its Ron (Rum) Medellin, and we, the Caldas Liquor Industry, we have had Aguardiente Cristal and Ron Viejo de Caldas.

What happens is that in Colombia we have positioned ourselves much better than the rest, making us the strongest rum producers in the Colombian market. Now, by signing free trade agreements as well as Colombia’s incorporation into the OECD, the Colombian government had to improve its legislation allowing open competition between private and public companies resulting in a level playing field.

Then in 2016, due to a request from the OECD countries, the Colombian government introduced a bill numbered 1816 of 2016, which came into force on January 1, 2017 that established a new regimen…It does not mention commercial monopoly but rent monopoly that is to say, that the only thing on which there is a monopoly is on rents (excise taxes), the rents that are generated from the sale of a bottle, which has to do specifically with consumption taxes, all those taxes are national revenues that were transferred to the departments. The only remaining monopoly is on those rents.

So, with no commercial monopoly the entire border opens. At that moment, when borders opened, in the past, to sell in the other departments, an introduction agreement had to be signed with each governor, with each department stating that ‘we are going to start selling in Antioquia, so let us sign an agreement to authorize the selling of my products (Aguardiente Cristal and Ron Viejo de Caldas) in exchange I will authorize you to sell your products in my department.’ With that, many departments had closed the borders and protected their liquors.

Now as an active OECD member, there was very strong pressure for foreign products to enter the market, especially whiskeys: low-cost whiskeys, tequilas and gins entered the market resulting in a new, very strong market dynamic. So, another dynamic was generated within the liquor business, and we took advantage of that great opportunity. Why? Because in the past, for instance, we could not sell in Antioquia.

Or if we wanted to sell our products in Cundinamarca, there was this limitation, in which, we could not sell more than so many units, a quota, and those units had to be 20% marked up compared to their similar product, making it impossible for us to compete.

“We have to adapt to those conditions of the private sector and that can be done with knowledge, with technology, with innovation, with inclusion.” – Luis Roberto Rivas

Finance Colombia: This is the reason because before, there were no private companies in the sector. In the rum sector there were only those from the government. Now, I have seen companies with very expensive rum not intended for mass consumption, but I have seen that it seems to me that it is more for export purposes.

Luis Roberto Rivas: Many rums, many liquors have entered. Here, there was a lot of competition because this is an attractive market. That is, the aguardiente market alone was about 100 million bottles. That has obviously fallen, but it has obviously fallen more because of the entry of other products. That is because low-cost whiskeys, tequilas and gins have entered the market which has made the category more dynamic. And now, products have entered, low-cost rums from other countries, hard discount chains that have brought their own rum which moved the market, and also there are private rum companies that are already producing their rum in Colombia. So, there are already products manufactured in Colombia by private companies as a result of the bill reform.

Finance Colombia: But despite all that, although there is more competition and also imports from other countries, your results are very impressive. In the first half of 2022, if I am not mistaken, your revenue shows an increase of 31%, which is an all-time high. I imagine that you might have felt afraid of the opening of the market to international competition and lose the protections, but you have done very well. Why?

Luis Roberto Rivas: Because there was a change, let’s call it a rupture in 2016. On Jan 1, 2016, the way the company was managed changed for good. This is a company that, as a public company, had many difficulties with political management.

Given that the general manager is appointed by the governor and managers are appointed by the board, but the governor is in charge of the board. That had many problems for these companies, because these are companies subjected to politics, clientelism and many other complex issues associated with that. Here you could hire individuals who did not have sufficient knowledge of the business.

In 2016, a governor by the name of Guido Echeverry Piedrahíta won the election, now he is a Senator, and decides to manage the company in an entirely different way. He contacts me and invites me to become the general manager and also gives us the autonomy to appoint management teams, not the ones from the parties that supported him, but of the most qualified personnel we can hire through an external process led by an organizational psychologist.

ILC Boasts modernized production and packing facilities (photo © Loren Moss)

What did that mean? We understood that even though this is a 100% public company but in competition with the private sector, we have to adapt to those conditions of the private sector and that can be done with knowledge, with technology, with innovation, with inclusion, right? With conscious strategies with a lot of cooperative work, with all that then what we started, we started immediately, having very profiles of key management positions.

So, we hired an individual with a track record in multinational mass consumer products industries and he was appointed to be the marketing and sales manager. We hired experts in manufacturing with 10 years of experience in multinational companies, all from Manizales. We also hired a person with extensive cost knowledge to manage the financial and administrative side of the business and then we started to put together key important technical areas for these types of companies. So, we hired a lady to launch an area called Research, Design and Responsible Innovation. She is an expert in Industrial Design and has a master’s degree in consumer psychology. So, we began to change the way we see and manage the business.

In the past, this was a business that was managed with a lot of let’s say, traditions that came down from the colonial era. Then we stopped wholesale distribution and started store to store distribution. We also started to work very hard with brand building.

In addition, work on manufacturing efficiencies started in production units, performing extensive demand and production planning. Then we contacted distributors, because we also have private distributors and with them we proposed a very clear strategy. We said ‘you are our allies. We need to work together with the same strategy. So, let’s sit down, we are not interested in filling your warehouses, what interests our company is that you fill the warehouses and the shelves at the point of sale (retailer).

And that our products rotate quickly, and then we began to change the entire marketing, pricing and sales strategies in conjunction with lots of product innovation. Now, in 2000, this was a company that in 2015, as of December 31 invoiced $119 billion COP (Colombian Pesos), last year we invoiced $358 billion COP. (Using the American definition of billion as 1,000 million)

And this year, we are on track to invoice around $410 billion COP. This was a company that back in 2019 had 34% market share in the rum category. In 2021, according to Nielsen figures, we had 66% of the rum market. We had 7% aguardiente market share and now we have 12%. In this category, the fight is more difficult because we have many departments in which where we cannot sell our product, as this is the only product that has safeguards from the ethnic point of view.

So there we have restrictions. Now, back in 2015, this company produced $2.7 billion COP in profits. Last year, we generated $78 billion COP in profits. A company with an EBITDA of $15 billion COP. Now, we closed with an EBITDA of $90 billion COP. It is a company that has changed a lot, it has become much more dynamic, and we have invested a lot in modernization.

We not only transferred, which is a very important figure, we transferred $532 billion COP in consumption tax to all departments, and to Caldas, we transferred $86 billion COP just to the Department of Caldas. 60% of the profits go to the department and we retain the other 40%.

That meant a whole change in orientation as we began to deliver results…As mentioned, in 2015 we made profits of $2.7 billion COP but in fact those were not operating profits. At that time the company had an operating loss of $75 billion COP. Actually, we received additional income from an insurance policy because of a 2015 fire; we closed with $2.7 billion COP. We closed 2016 with $30 billion COP in profits, so you might ask what happened in those two years?

Lulo Smirnoff: Made in Manizales

We closed 2017 with $40 billion COP, 2018: $50 billion COP, in 2019: $59 billion COP, despite the pandemic we produced $36.5 billion COP, and last year $78 billion COP. So, it has been very interesting because to that extent we have been able to transfer in six years more than $100 billion COP, more than $100 billion COP, around $160 billion COP to the department for social investment purposes, not including consumption tax.

Those funds, once transferred, are discretionary for the governor to use in social programs which include cultural activities, sports, municipal musical bands. So, the change has been very big. We had a presence in 24 departments, now we have presence in 31 departments. We are yet to sell in La Guajira!

And we do not only manufacture our own brands but we also contract manufacture Platinum Aguardiente for Chocó, Putumayo Aguardiente, Aguardiente Extra for Caquetá, Aguardiente Extra for Santander,and we also are the contract manufacturers for a very important multinational company called Diageo, the biggest liquor company in the world. All the Lulo flavored Smirnoff consumed in Colombia, is manufactured by Industria Licorera de Caldas beginning four years ago, and we just renewed the contract.

We have done very well and that has been a very interesting experience. It was something very important for us because for many years Diageo conducted extensive studies of the liquor Industry to identify its partner. They are extremely careful.

Finance Colombia: They protect their brand.

Luis Roberto Rivas: Right. So, in the end they selected us because from the technical standpoint as well as other key matters, we were the most important. So they came here, invested and it is going very well. That has been fundamental because they have helped us to improve our production quality standards because we have to rise to international levels. And that has been a great learning [experience] for our entire technical team.

Finance Colombia: That is a big step for you given that you were already exporting, but becoming a more international company. Because in the past, the industry in Colombia was closed but now with the OECD, it is how the world sees Colombia and Colombia sees the world. Now tell me about the internationalization, how are you doing and what are your plans in that regard?

Delicious in cocktails, the Lulo (aka Naranjilla) is in the nightshade family and distantly related to the tomato. Smirnoff offers Lulo Vodka made in Manizales. (photo © Loren Moss)

Luis Roberto Rivas: For us, accessing international markets is a fundamental strategy. It is not easy for a public company. It is not easy to venture into international markets due to contracting conditions as well as business intricacy. Is much easier to move in the world of private businesses whereas in the public sector is a little more difficult.

However, we have developed a strategy. Let’s say that we have changed the focus. This company has been exporting for several years, mainly to the United States market but had focused a lot on Cristal Aguardiente.

We changed the focus and have oriented towards selling Ron Viejo de Caldas Rum. Why? Because we believe that aguardiente is an ethnic product and when selling abroad it is intended for Colombians only.

Finance Colombia: Right. I have seen aguardiente ads in Miami.

Luis Roberto Rivas: Correct. So, what do we want now? We want to sell rum because it is a product that is consumed by anyone regardless of nationality. So, we are working on that strategy and are in the process of selecting qualified distributors with a lot of knowledge of each region, with experience, expertise, working capital, with everything. Back in 2015-16 we had presence in 4 countries and today, we have presence in 18 countries and hope to reach 22. We are growing very well in Ecuador, Peru, Chile, Bolivia, in the US, Panama, Honduras, Costa Rica, Spain, Italy. Now, we are starting to sell in France and Switzerland. We are selling in Austria and through Austria we are selling in Russia.

Finance Colombia: A month ago, I was in the republic of Georgia and I went to a bar, and to my surprise, the first spirits they offered were rum and pisco!

Luis Roberto Rivas: What kind of rum?

Finance Colombia: To be honest with you, it was Zacapa.

Luis Roberto Rivas: Zacapa. Yes. We are selling good in that area.

Finance Colombia: Yes.

A Tarragon flavored Pisco Sour as served in the Weather Report bar atop the Pullman Tblisi Axis Towers hotel in Georgia (photo: Loren Moss)

Luis Roberto Rivas: We are already selling…it has sold well over there. We are very happy because with this strategy, we are doing well. The issue with that is that it is a long-term scenario. It is mostly a matter of sowing, sowing, sowing.

Finance Colombia: You need to grow the market, the brand. When you arrive to a market with an unknown brand you need to establish a relation with bartenders so later they can offer your brand. If the customer is aware of pisco, someone from Georgia who does not know South America and you offered tarragon pisco, well that was a first time for me. So they can offer to the final consumer the new brand.

Luis Roberto Rivas: The availability of new products in Colombia, new categories and the changes that have taken place in consumer taste are leading to new experiences. What does the consumer want? Consumers today want new cocktails, new flavors, spirits with less alcohol content, longer nights out.

Finance Colombia: You have mentioned aguardiente which is a very Colombian product but one thing that I have noted is that consumption of aguardiente is slowly going down. I guess that is because in Colombia, the Colombian consumer taste is changing. I remember my first time in Colombia there was very little selection in the way of wine. There was Gato Negro and Casillero del Diablo. And now there are a lot of wine offerings. Coffee, the good coffee was all being exported, but today you have high end, artisan coffee shops. I imagine that the Colombian consumer is changing or is it because there is more offering?

Luis Roberto Rivas: Well, yes. I would say that there are several factors. To start, consumer taste has been changing, right? New liquors have entered the market and that has made it much more dynamic. Wine consumption had a drastic increase, record highs in Colombia. Wine have been the winner and with the pandemic they were the big winners.

Whiskeys have also entered strongly to compete with it and all those products including tequila, what we have found is that the category that has been hit the most is the aguardiente category, which used to be the biggest one.

Consumers are switching to other liquors and other experiences. In addition, I have the perception that the aguardiente category was in hibernation mode for a long time. Meaning, no innovation, no big changes, no major improvements for a long time. No presentation improvements and that, in addition to the new offering as well, and consumers having the option with new tequilas, new wines, new whiskeys I believe all of that led consumers to change consumption patterns.

Finance Colombia: Yes. As I have seen, for urban youth drinking aguardiente is not as chic as before.

Luis Roberto Rivas: Right. Right! Exactly! In addition, the consumer is very aspirational. In addition, over time the Colombian market with all those changes has become more aspirational and that is the reason we made an interesting proposal with the yellow aguardiente from Manzanares.

Finance Colombia: Mmmm. Is that a new product, right?

Luis Roberto Rivas: No. It is not a new product. The yellow aguardiente from Manzanares is the pioneer of aguardiente in Colombia. It was launched in 1885. It was the first one. Now, with the yellow aguardiente we did a complete revamp. Lowered its alcohol content from 32° to 24°, which is the alcohol level that is selling the most in Colombia, kept its anise taste, improved the formulation, changed to a prettier bottle, modified the labels and included a new cork cap with a built in measure. Now with all those changes when you put a bottle of yellow aguardiente on the table, you are not lowering your social status. It is actually providing some sort of status to the consumer.

Finance Colombia: Yes. that is important because we are in the social sphere.

Luis Roberto Rivas: Exactly. As a result, the yellow aguardiente has become one of the most important innovation products of the liquor Industry and will be even stronger next year.

Finance Colombia: Talking about other products, you have introduced gin to the market?

Luis Roberto Rivas: Right. We have expanded the rum portfolio including additional brands. We launched a rum called White Oak which is a white rum intended for cocktails.

This was a company that back in 2019 had 34% market share in the rum category. In 2021, according to Nielsen figures, we had 66% of the rum market.

Finance Colombia: OK.

Luis Roberto Rivas: We also launched a rum liqueur with 29° alcohol content instead of 35°.

Finance Colombia: So is that the only difference?

Luis Roberto Rivas: Alcohol content is 29°.

Finance Colombia: OK. Because I contacted Hector (Hector Bernal, ILC Brand Ambassador) and asked him, “is this real rum?” He assured me that it is.

Luis Roberto Rivas: INVIMA states that a liquor to be considered a rum needs to have 35° alcohol level, anything less than that has to be called rum liqueur. We also have a cream of rum called Cheers. It’s spectacular, which included with the Ron Viejo de Caldas brand is obviously a rum-based cream based on non-animal vegetable milk, so it is much more pleasant, much healthier, not that sweetened like the competition’s whiskey cream.

Finance Colombia: Because there are many people into fitness and want to have a cocktail but if there is too much sugar content, they would rather not drink it.

Luis Roberto Rivas: And we decided to access different categories other than aguardiente and rum with our gin. A gin called Bosque de Indias. A gin with a history around the botanical expedition and the importance of botanists in the elaboration of a good gin, and it turned out to be sensational.

Finance Colombia: Interesting.

Luis Roberto Rivas: Later you will taste the gin and Cheers!

Finance Colombia: OK. Thank you! It is intended for customers that do not want that much sugar, into fitness.

Luis Roberto Rivas: The yellow aguardiente from Manzanares has no sugar in it and has a great advantage: It does not give you a hangover! It is great. Drink it cold and put it in the fridge cold. It is selling like crazy. In Bogotá it is selling super well.

Finance Colombia: You mentioned that the yellow aguardiente comes in a very nice bottle, and that is a challenge and a topic for discussion: Bottle supply.

Luis Roberto Rivas: Right. We have faced a hurdle there and that is a national level issue which was generated as a consequence of the lack of supply of raw materials for glass production. For us, this is one of the most serious problems of the pandemic: The breakdown of the supply chain. Quite an issue. The largest glass supplier in Colombia, Peldar, which is Owens Illinois, that supplies us and all those who demand glass, including those who produce coffee.

In fact, there is a factory in Chinchiná called Buen Dia Coffee that also has glass sourcing issues. So, Peldar has had difficulties supplying the entire market as a result of that break in that supply chain so, as a strategy to keep our market position, we had to import glass from China. Last year, we imported 6 million bottles and this year 15 million, and surely next year we will have to import additional bottles. It is obviously a complex issue as our cost does increase thus reducing gross margin.

Finance Colombia: Yes.

Luis Roberto Rivas: That is a must. We need to be available on the shelves. It’s a complicated issue. It hasn’t been easy, but fortunately we were able to find a good supplier. We encourage supplier development and to this date so far, we haven’t had any issues .

Finance Colombia: That is a global issue. Car makers around the world had to stop production due to the lack for electronic circuits.

Luis Roberto Rivas: Exactly. One of the problems is with caustic soda because that is essential for glass production, and it has been depleted worldwide because of the demand for microchip production, batteries and solar equipment.

We also had a problem, last year, or at the beginning of this year, with the cork caps made in a factory located in Ukraine. So, we had to develop a supplier in a different country to solve that matter. No one imagined Ukraine’s importance as a world supplier of lots of raw materials, cereals and fertilizers.

Finance Colombia: Yes. Right. People don’t know. Back in 2016, a company from Ukranie contacted us to assist them setting up operations in Colombia. It’s a big country but not that well known. We are about to finish, I know that you have a company to run! The good thing is that in Colombia, Colombian incomes are on the rise. There are challenges due to inflation and all that but also that Colombians are increasingly international and also premium rums on the market rums that cost more than $200,000 COP per bottle. Is that a challenge for your company? Do you have plans to also compete in that market, not only mass consumption products but also ultra-premium products that cost between $70 USD and $80 USD?

Rum is aged in locally made Colombian oak (Quercus Humboldtii) barrels. Some rums are infused with Algarrobo (Carob). (Photo © Loren Moss)

Luis Roberto Rivas: Yes of course. We have premium rums. It is a category that we have grown a lot. Premium rums is one of the categories that has grown the most. We have Carta de Oro, an 8-year-old rum, Gran Reserva Especial, we have a rum that has been a success in Colombia named Ron León Dormido (Sleeping Lion), a special edition, it is a 21 year old rum. Now, we are going to introduce a new edition finished in sherry barrels which will provide a different touch.

Finance Colombia: Are those barrels coming from Spain?

Luis Roberto Rivas: Correct. We brought Pedro Jiménez barrels from Spain. We put the tafias in those barrels and it is going to be introduced to the market next December. 18 months ago, we imported those barrels, 18 months ago the tafias were incorporated.

So, yes, we continue to release premium rums and we are going to continue expanding the category. Our intention is launch other products, other liquors because the business the is increasingly dynamizing and innovation is required.

Finance Colombia: You previously mentioned that when you arrived, you made many changes to modernize the company. How do you balance tradition? Rum is a traditional product with a history in the Americas, South America and the Caribbean and very traditional but how do you balance that tradition with the intention of modernizing the company, the factories, make the processes more and more efficient? How you define when cost cutting: “Here we are not going to touch the rum?” For instance, rum needs aging, a period of time, time is money. How you balance the need for quality and tradition with being able to modernize and be more and more efficient?

Luis Roberto Rivas: Well. Let’s say that there are several phases concerning modernization. Technology wise, we performed a huge change to be consistent, which generated the possibility of implementing an ERP, an information system, in which the entire company is organized by processes. Nowadays, from my tablet, as well as any member of the board, can check the sales to date. Or check plant efficiency. Now, it is crystal clear for us what is the exact cost to produce one bottle.

Absolutely everything is systematized. We use a very good ERP system provided by Microsoft, Dynamics AX. It is very good. We are also moving forward with Microsoft 365, which is the next step technology-wise. The other part, I must mention is the production plant and it was to adapt the entire plant to good manufacturing practices. Fundamentally, when we arrived we did not have a good manufacturing practices certification.

Finance Colombia: Like ISO and such?

Luis Roberto Rivas: Right. That is a certification required by Invima. So, we quickly got certified. Also, we are constantly investing in improving, updating good manufacturing practices. In here, modernization is focused in four key aspects:

1. 1. 1. First, complying with Good Manufacturing Practices.
      2. Second, prioritize improving safe working conditions for plant workers. For instance, manual activities performed by plant operators that imply an expense should be executed by pneumatic machines.
      3. Third, renew production lines to make lines much faster, efficient, productive, and…
      4. Fourth, that they have an environmental sustainability component.

So, in the company, we strive to reduce carbon footprint, our water consumption footprint, our participation in the circular economy, recovery of containers and packaging. Our electrical substations were revamped, old oil-powered transformers were replaced by new environmentally friendly ones. Our forklifts are electric. Diesel is no longer used. Water consumption in the manufacturing process has been reduced. We have worked on those topics. In addition, we conducted extensive work on rum innovation.

We have a very modern laboratory in that facility in which we check every single liquid that comes in and out of the plant, both aguardiente and rum. We are able to check all the alcohol that gets here and detect absolutely everything. That is key for quality control.

We enforce technical sheets and quality control and are also demanding when buying from suppliers to guarantee that our raw materials are of excellent quality. So, before buying a tafia alcohol, for example, supplier development is required. Our rum masters need to go there and check their distillation and fermentation processes, check how they execute the process to obtain alcohol from sugar cane. So, we include that in a technical sheet and that raw material needs to comply with that technical sheet. We do enforce that.

There has been a lot of innovation here, blended liquors have improved quite a lot despite the fact that we are the only rum makers that use Colombian white oak. One time only use. Other rum makers use second-hand American oak that comes from Tennessee, Kentucky, Jack Daniels, all of that.

We use Colombian white oak. With our rum masters, we have done a lot of innovation and that has allowed us to obtain cheaper blends and additionally, it has allowed us to improve inventories. In 2015, we had around 70,000 aging barrels. Today, we are on track to close the year with 123,000 aging barrels. That is more than 27 million liters of tafia alcohol stored in the barrels in the warehouse.

Tafia is raw alcohol distilled from sugar cane. Like all major distilleries in Colombia, ILC imports tafia for the production of rum and aguardiente. (Photo © Loren Moss)

Finance Colombia: Colombia produces a lot of sugar cane, it is still required to import tafia (raw alcohol)?

Luis Roberto Rivas: All of it.

Finance Colombia: Really?

Luis Roberto Rivas: Yes. We have to import tafia. Just recently, Colombia is starting to produce tafia alcohol in some Cauca Valley sugarcane mills. Despite being a country with lots of sugarcane mills and sugar those facilities only manufacture of alcohol for biofuels.  It is extremely different to manufacture alcohol for gas consumption then to switch over to manufacturing alcohol for human consumption!

Now, we have been working together with some sugarcane mills to develop as a team, with our knowledge and infrastructure, so that they can manufacture tafia alcohol. That is coming up in the next years. All aimed to stop alcohol imports, it does not make any sense. From here we are about two hours from the sugarcane mills!

Finance Colombia: They are on your way when you get to Cali, in Palmira.

Luis Roberto Rivas: The issue is that when the oil price increases all alcohol is directed towards the biogas industry.

Finance Colombia: It is curious how rum manufacturing in Colombia is based out of tafia rather than distilled on site from cane juice or molasses, which is how they manufacture in the Caribbean without using tafia.

Luis Roberto Rivas: We used to manufacture it that way. Virgin molasses was used to produce alcohol for both neutral spirits and tafia. The issue is that none of the liquor industries, all of the factories including the one from Antioquia, which used to manufacture that way, all of them, including us, we had to stop. None of them had a distillery that complied with the environmental regulations for waste disposal.

These containers are made from recycled Ron Viejo de Caldas Tetrapack cartons (photo: ©Liliana Padierna)

We did not comply with any of the regulations. There are no treatment plants efficient enough to remove all that contamination load.

Finance Colombia: I see. It is not a cost-based decision but rather an environmental one, right?

Luis Roberto Rivas: Right. It is an environmental issue.

Finance Colombia: Fascinating. I was not aware of that.

Luis Roberto Rivas: Today, this is related to environmental matters. These days, the Regional Autonomous Corporation does not authorize us to distill alcohol. That is because we do not have a treatment facility that complies with the current regulations. Now, given the fact that there is not a distillation process within the plant, the Manizales creek cleanup is picking up which had a major contamination issue. We no longer pollute. In fact, 2 years ago, we were the first company, with access to the Manizales sewage water interceptor to avoid spilling into the creek. That was key.

Finance Colombia: Right. That is very important.

Luis Roberto Rivas: In addition, we also have something very interesting, Loren. This is a company that has 270 hectares (approximately 667 acres) of protected forest. From here you can see the forest, a humid nature preserve. Over there in Palo Alto there are 68 water springs. Out of those 68 water springs, 3 creeks come out. Water from those creeks come into a treatment plant. A water cleaning procedure takes place in that facility producing the water required for manufacturing purposes as well as any other use within the plant. So, when you drink a bottle of Aguardiente Cristal, Ron Viejo de Caldas or Yellow Aguardiente you are drinking spring water. This is the only rum manufacturing company in the world that has that, no one else has it. The rest use tap water. Not us.

Photo © Loren Moss