The Rumasa Saga: part 1

The Rumasa (RUiz MAteos S.A.) story deserves to be written by a skilled potboiler novelist, as it is filled with scandal, corruption, skullduggery - and even humour. It might even make a good film.

The undoubted leading man, or perhaps antihero, in the tale is Jose Maria Ruiz Mateos Jimenez de Tejada, born in Jerez in 1931 whose father, Zoilo Ruiz Mateos Camacho, had a small almacenista business of the same name originally established in Rota in 1857. Jose Maria was the more ambitious and business-like of Zoilo's sons, and from about 1960 quickly started building up the firm, which had by now moved to Jerez. It's consequent growth was quite phenomenal. So phenomenal, in fact, that nobody could quite believe it.

Most of part 1 of this tale took place under the dictatorship of General Franco, who by supporting the Catholic Church received its support in return, especially from ultra-Catholic Opus Dei. This is a group of mostly lay people who believe that ordinary life is a path to sanctity, and do charitable works, but it has been accused of secretiveness, elitism, and support for the right wing, not to mention cronyism. The Franco regime began a liberalisation of the economy in 1959 using many technocratic ideas of Opus Dei such as credit for business, help with export and redevelopment of deprived areas, but this only led to almost inevitable large scale corruption. Strangely, many members of Opus Dei benefited enormously, and our Jose Maria was only one. Rumasa could only have grown the way it did with state help. One of the Ruiz Mateos family was related to the Director of the Institute of Credit; the older sons of the Governor of the Bank of Spain worked for Rumasa.

In 1964, having badgered them for some years, Ruiz Mateos signed a deal with Harveys of Bristol to supply all the wine they needed for 99 years. He went to extraordinary lengths to prove to the Harveys executives that he could meet their needs. At that time Bristol Cream, and other Harveys brands were huge sellers, and RM could never supply all their needs, so another bodega was bought. The Harveys money along with credit was used to buy a bank to finance more bodegas and so on. In 1960 the company was worth 300,000 pesetas, and by 1969 it was worth 2000 million, and by the time of its demise it consisted of around 700 subsidiaries in Spain alone as well as others abroad, including 18 banks (he famously bought three banks in one day), 18 bodegas, construction firms, insurance companies, estate agencies, hotels, food and drinks companies etc etc. worth 111 billion.

The firm´s vineyard division, Viñedos Españoles, planted some 2,000 hectares in Jerez alone (bringing the total to 22,000 ha) and they controlled 33% of the Sherry industry and 25% of the Brandy industry. Rumasa´s hexagonal busy bee logo was to be seen everywhere. Other firms viewed Rumasa with considerable and justified suspicion; this was no longer the gentlemanly Sherry business of old and quality was being sacrificed for quantity. The big firms had an agreement that they would help each other in case of an attack by Rumasa. Its affairs were labyrinthine, and it was beginning to owe the tax man big time.

The global oil crisis of 1973 brought a dramatic reduction in sales and affected the Sherry industry decisively creating a situation of oversupply of some 46%. At that time 400,000 butts were being produced and sales were running at 270,000. This caused a price war which Rumasa was determined to win at any cost and Sherry was sold below cost forcing other firms to try and compete with many going bust and being bought up by Rumasa. When the government offered subsidies to promote exports, Rumasa exported vast quantities of wine, much of it of doubtful quality and whether it was actually sold or not, and stored it in warehouses in the UK. The Augustus Barnett wine retail chain, owned by Rumasa, had huge stocks of Sherry at knockdown prices. Things did not augur well for either Rumasa or the industry itself.

One nail in Rumasa's coffin came in the form of the takeover of Harveys by Showerings in 1965 and the purchase of the old bodega MacKenzie as a base in Jerez. Harveys were already suspicious of Rumasa and the exclusive supply contract was cancelled. Meanwhile International Distillers and Vintners (IDV) built a whole new bodega complex called Rancho Croft, using the name of their long-established Port subsidiary. Gilbeys (the oldest part of IDV already had soleras in Jerez at Gonzalez Byass). It was at Rancho Croft that the first pale cream sherries were produced and they soon provided stiff opposition to Harveys.

In 1983 the Socialist government of a newly democratic Spain decided to get the tax it was due, and expropriated the component companies of Rumasa, going through their books with a fine toothcomb and finding, needless to say, endless tax fiddles and a web of complicated interactions. Jose Maria fled to the UK and was later arrested in Frankfurt. For the next decade or so there was endless litigation - at one court case he appeared dressed as Superman - and he counterclaimed against the Spanish Government, seeking compensation. He was eventually, and controversially, absolved by the Supreme Court, but was refused the compensation he had bitterly contested for Williams & Humbert, which went to the Dutch firm Ahold. This was complicated by the fact that the Ruiz Mateos family owned the Dry Sack brand name while Rumasa owned the rest.

This was, apparently, the end of Rumasa. The component companies had been sold off by the Government back to the private sector, and life in Jerez returned to something like normal, though in fact much had changed. Many of the subsidiary bodegas had by now lost their individual identities, having been swallowed up by bigger concerns within the group, and many famous names disappeared. Names like:

AR Ruiz Hermanos.
Union de Exportadores de Jerez
Palomino & Vergara
Marques de Misa
Varela
Diestro Hermanos
Otaolaurruchi
Diaz Morales
Valderrama
Vergara & Gordon
Bodegas Internacionales


Those which survived more or less intact were:

Williams & Humbert
Garvey
Diez-Merito
Bertola
Pemartin