Gosling Brothers Ltd.

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Gosling Brothers Ltd.

17 Dundonald Street
Hamilton, HM CX
Bermuda
Telephone: 1441 295-1123
Fax: 1441 295-1775
Web site: http://www.goslingsrum.com/

Private Company
Founded: 1806
Employees: 87
Sales: $917.7 million (2002)
NAIC: 312140 Distilleries

Based in Bermuda, Gosling Brothers Ltd. is best known as the distiller of Black Seal rum, a blend of three-year-old rum made from a Gosling family recipe over 150 years old. Gosling also offers a less expensive light product, Gold Bermuda Rum, which combines rums produced from continuous stills and pot stills. The company also produces Family Reserve Old Rum, based on the same blend that produces Black Seal but allowed to mellow in oak barrels for at least 16 years. This upscale product comes in a numbered, hand-labeled bottle dipped in wax with an "Old Rum" seal impressed upon it, and wrapped with a metal band with "Old Rum embossed on it. The bottle is sold in a heavy wooden box with a Plexiglas slide front, resting on a bed of straw. Gosling also packages Black Seal Rum with cans of ginger beer, the ingredients for Bermuda's signature drink, the "Dark'n Stormy." In addition, Gosling has introduced a line of gourmet products inspired by Black Seal Rum, including sauces, preserves, and a hot buttered rum toddy mix. As part of a branding effort, Gosling also sells t-shirts, ties, baseball caps, and other items with the Black Seal logo, featuring a seal balancing a barrel on its nose. These items are sold at the three company-owned stores in Bermuda—two located in Hamilton and another in St. George—which also sell beers, wines, and other spirits. Subsidiary Bermuda Duty Free Limited operates two duty-free stores at Bermuda International Airport. The company is owned and operated by the seventh generation of the Gosling family. It is Bermuda's oldest business and the largest exporter of a Bermuda-made product.

EARLY 19TH CENTURY ROOTS

Gosling traces its history to 1806 when English wine and spirits merchant William Gosling, head of the London concern, Gosling and Sons, decided to set up a business in the United States. He dispatched his eldest son James, along with employee John Till, to establish the outpost. With £10,000 worth of merchandise they set sail from Gravesend, Kent, on the ship Mercury. It proved to be an ironic name for the vessel because the winds were so calm the ship barely crept across the ocean. When the ship's charter expired after 90 days and the crew was short on provisions, the Mercury put into the nearest port, St. Georges, Bermuda. Discovered by the Spanish some 300 years earlier, Bermuda had been colonized in the early 1600s by the English after 150 colonists bound for Virginia had the misfortune of being shipwrecked there. Like those that came before, Gosling and Till decided to make the best of the situa-tion and set up shop in St. Georges in December 1806 to sell their stores of wine and spirits.

A younger brother, Ambrose Gosling, then joined James sometime before 1824 and along with Till they established a partnership, Goslings and Till. With Bermuda's capital moving to Hamilton, the company opened a second outlet in that town, leasing a shop on Front Street for £25 a year, a site on which the company would operate a shop for more than 125 years. Ultimately Till returned to England, leaving the business solely in the hands of Ambrose, who changed the name to Ambrose Gosling and Son. More than just Ambrose's eldest son, William, joined the company, however. Edmund and Charles Gosling became involved, as well. (A fourth brother, named for his father, died at the age of two.) At the age of 70 Ambrose Gosling died in 1857, at which point his sons reorganized the business as a partnership called Gosling Brothers.

Around the time of the reorganization, perhaps as late as 1860, the company began to move beyond the mere distribution of wine and spirits to producing its own rum. The firm imported oak barrels of rum distillate—fermented molasses, a byproduct of sugar cane—and began experimenting with different blends and aging techniques until it developed a recipe for a smooth black rum, which included three independently aged distillates, three to six years in age, which were further aged in once-used charred American oak bourbon casks. The Gosling family simply called it "Old Rum." They did not bottle the product, instead selling it by the barrel or selling it to customers who brought their own bottles to the Gosling shop.

PARTNERSHIP INCORPORATED: 1929

A new generation took charge of the Gosling business by the end of the century. Edmund died in 1885, Charles passed away in 1893, and despite being the oldest, William was the last to go in November 1894. Another Ambrose Gosling, born in 1860, now headed the business. He would eventually be succeeded by his son Ambrose Tucker Gosling, born in 1897. In 1929 the partnership was incorporated.

The bottling of Old Rum and the change of name to Black Seal did not take place until after World War I. Bermuda housed an important base for England's Royal Navy because of its strategic location in the North Atlantic. Some 650 miles east of Newport, Rhode Island, it was a perfect way station between the United States and Great Britain. The rum proved popular at the officer's club, as did champagne. The club produced a considerable number of empty champagne bottles, which Gosling eventually took advantage of, washing and refilling them with Old Rum to sell to tourists who enjoyed the spirit while visiting the islands and were interested in taking some of the product home. Bermuda had been a tourist destination since the late 1800s because it was located close to the Northeast United States. Despite being situated in the North Atlantic, it enjoyed balmy weather due to the Gulf Stream, attracting the winter visits of such notables as Mark Twain, William Dean Howells, and Woodrow Wilson. Gosling corked the bottles of Old Rum and sealed the top with black wax. The distinctive look became a staple of the brand, even after it graduated from reused champagne bottles. People began calling the rum Black Seal, perhaps to distinguish it from other brands that sealed their bottles with red wax. It was not until 1950, long after the rum was commonly known as Black Seal, that Gosling officially adopted the Black Seal name. The company added a logo that was a visual pun: a black seal juggling a small barrel of rum on his nose.

The Royal Naval Officer's Club also played a key role in the creation of the trademark drink called the Dark'n Stormy. The club ran a ginger beer factory as a subsidiary to supply the needs of the officers, and it was not surprising that someone would eventually mix in some of Bermuda's most popular rum to see how it tasted. The resulting concoction received general approval, one that warranted its own name. According to lore, a sailor, whose name has been lost with the passage of time, gazed at his glass of ginger beer and rum held up to the light and pronounced that it was "the colour of a cloud only a fool or dead man would sail under." Hence, the drink took the name Dark'n Stormy.

COMPANY PERSPECTIVES

Gosling's Rum is a Bermuda tradition that goes back seven generations.

Black Seal remained a Bermuda mainstay, a favorite of both tourists and inhabitants of the islands, and a required ingredient in Bermuda's national drink, Dark'n Stormy, a spice to add to the Rum Swizzle, as well as being used in local dishes such as the national dish, Bermuda Fish Chowder. However, Black Seal enjoyed limited outside distribution and the Gosling operation remained two spirit shops and a single brand of rum. In 1975 Gosling formed a subsidiary, Cosmopolitan Liquors, to act as a second distribution operation in Bermuda. It imported wines from California, Chile, New Zealand, Australia, Italy, France, and Germany, as well as beer and such spirits as Jim Beam and Absolut Vodka. The Gosling family also trademarked the Dark'n Stormy name and attempted to branch out in the 1970s by introducing a canned version of Bermuda's signature drink, but it failed to catch on. The company had better luck in 1980 when it began exporting Black Seal to the United States. It soon became Bermuda's largest export.

Around the time Gosling made its entry in the U.S. market, the first female member of the family, seventh generation Nancy Lloyd Gosling, joined the business. Before going to college, she expressed her interest in the family business to her father, Malcolm Gosling, the company's chairman. He urged her to study accounting because the business was in need of a financial person. She then traveled to Canada where she studied accounting at Dalhousie University in Halifax. To gain seasoning she spent three years at Price Waterhouse and then went to work for the American International Insurance Co. Ltd. Offered a promotion 18 months later, she decided to make the transition to Gosling Brothers, rather than make a further commitment to American International. She started out as assistant treasurer in 1981 and over the next decade worked her way up through the ranks. In 1991 she became the firm's president and chief executive officer. She was especially aggressive in expanding the company's local offerings of beer, wine, and other spirits.

Nancy Gosling was joined by other members of her family as the seventh generation assumed greater responsibility. Her cousin Charles Richard Gosling was responsible for local marketing and the two duty-free stores at the airport. Her brother, Edmund Malcolm Gosling, a Boston College graduate with a degree in economics, carved out his own role on the export side of the business. He became a director of Gosling Brothers in 1985 and oversaw domestic product and sales operations, but he also recognized that Black Seal possessed untapped export potential and spent a great deal of his time nurturing overseas markets.

Rum had always suffered from an image in the minds of many consumers as a second class spirit. While vodka made great strides in the 1990s when a number of super-premium brands were introduced to the market, rum continued to be neglected. All that would begin to change at the end of the 20th century. Customers were looking for something different, and interest began to build in the aged rum and premium rum category. To take advantage of this growing interest, Gosling took a number of steps to better position itself as a premiere name in the world market for rum.

NEW CENTURY, NEW RUM PRODUCTS

In 2001 Gosling merged with its Cosmopolitan Liquors subsidiary to operate as a single entity and eliminate costly overlaps in staff and resources. In this way, the company would have more resources to devote to expanding the overseas business. Gosling also sought to develop new products to build the Gosling and Black Seal brand. It began work on a light rum, Gold Bermuda Rum, to appeal especially to the U.S. market, which generally preferred amber rums to dark rums. In addition, Gosling was pursuing a luxury cask-aged rum, which grew out of an earlier long-term experiment in which rum had been placed in oak barrels for a number of years to see what would happen. The company tasters were so pleased with the result that Gosling decided to launch a premium rum, cask aged between 13 and 16 years. As for the packaging, the company looked to its cellars where it stored some of the old black-wax sealed champagne bottles it had used decades earlier to contain Old Rum. As a result the new product, Family Reserve Old Rum, would use a champagne-style heavy green bottle.

KEY DATES

1806:: The Gosling family establishes a wine and spirits shop in Bermuda.
1857:: The Gosling Brothers partnership is formed.
1929:: The Gosling business incorporated.
1950:: Gosling adopts the "Black Seal" name.
1980:: The company begins exporting to the United States.
2003:: Gosling's Export is formed.
2004:: Gold Bermuda Rum and Family Reserve Old Rum are introduced.
2005:: Gosling-Castle Partners Inc. is formed.

While the final touches were being made to the two new products, Gosling formed Gosling's Export (Bermuda) Limited in 2003, with Malcolm Gosling serving as its president. Then in March 2004 Gosling introduced its Family Reserve Old Rum, followed a month later by the unveiling of Gold Bermuda Rum. While Gosling was able to distribute its products in all 50 states and every Canadian province (with the exception of Quebec), the brand still lacked recognition with consumers. To address this concern, Gosling joined forces with its U.S. importer, New York City-based Castle Brands Corp., to create a marketing joint venture, Gosling-Castle Partners Inc., which would hold the global export rights to Gosling rums. It would be headed by Malcolm Gosling. In order to better fulfill this role, he decided to move his family to Boston, a city familiar to him from his college days, and run the operation from there, although he planned to eventually return to Bermuda. Shortly before the joint venture was formalized, Castle Brands had already begun selling Gosling rums in the United Kingdom and would soon begin selling the products in Italy. New markets on the horizon included Germany, France, and Ireland.

The marketing push was supported by a multi-million dollar advertising and marketing program, centered on the theme of "Seven Stubborn Generations," and playing up the historic scarcity of the product to pique consumer interest. One somewhat controversial execution of this idea was a Boston billboard that declared that Gosling Rum was "Almost as hard to find as White Bulger." The reference, familiar to area residents, was to a notorious leader of Boston's so-called Irish Mob, a man who had been eluding the FBI since the 1990s. While billboards were leased throughout the United States, Gosling mostly focused on developing new customers through promotions at bars, where people were willing to give Black Seal a try for a few dollars, rather than spend more money for an entire bottle of an unknown brand.

To support increased sales Gosling added 20,000 square feet to its warehouse, and it also built upon its brand by introducing a line of gourmet cakes, sauces, and preserves, all of which used Black Seal rum as a base. The partnership with Castle appeared to be off to a strong start, as Castle reported a surge in sales of Gosling rum from 400 cases in 2005 to 13,500 cases in 2006. With the rum category growing at a strong clip, Gosling was well positioned to enjoy even greater success as it began its third century in business.