Note: If you are smart you'll go to the last reply below for the quick and dirty summary. Anal retentives can start here.
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Most of us are aware or at least have heard of "caramel coloring". Many acquaint "caramel" with burnt sugar and rather assume that adding this substance will add a sweet "caramel" flavor and coloring. Nope.
Let's start here.
The use of trace caramel is perfectly legal in "rum" as defined in the US, UK and the ACS (Association of Caribbean States), although no other flavors or additives whatever are allowed. So what is "caramel" anyway?
Some of us assume it is simply a browned or burnt sugar (sucrose) which is then added to the rum to adjust color. The FDA defines caramel as "...the dark brown liquid or solid material resulting from the heat treatment of food grade carbohydrates: dextrose, invert sugar, malt syrup, molasses, starch hydrolysates (like fructose or glucose) or sucrose."
"Caramel" as defined is used in rum to adjust color from light yellow, to amber to a deep mahogany or brown. "Caramels" vary in hue and are often graded as to their red index. "Caramel" is considered inexpensive and relatively stable after (but not before) use.
"Caramel coloring" is very different than the taste of caramel candies (which are perceived as thick, buttery, syrupy and sweet). "Caramel" used for coloring is actually has an aroma of burnt (not sweet) sugar and a bitter taste. The idea that distillers use "extra" caramel to create a sweet taste is false (this is widely misunderstood).
Here's why...
There are actually four classes of caramel (plain, caustic or spirit caramel E150a (no ammonium/sulfite); caustic sulfite type E150b; ammonia, bakers or beer type E150c; and sulfite soft-drink type E150d). Baker's caramel is different than "spirit caramel" (which is most frequently made from corn or wheat).
According to the Huntly Centre (Australia):
Some of you who have allergic reactions to rum (Sue Sea is one) should understand that "spirit caramel" may be the culprit. Surreptitiously added spices may be another. There are more surprises."This (caramel coloring) is not caramel, the soft, chewy, caramel-flavoured sweet made by boiling together milk, sugar, butter, oil, syrup, vanilla essence, water and glucose syrup. Milk is a vital ingredient in Caramels, giving them a creamy texture. The colour and flavour of caramels, the sweet, are not due to caramelisation but to the Maillard-reaction, which occurs between an amino (ammonium-containing) acid and a reducing sugar. Flavoured caramels are increasingly popular. For example, vanilla caramel or rum butter caramel."
Despite common belief rums whose color is "adjusted" by spirit caramel is subject to fading, particularly in clear bottles and when exposed to sunlight. This is certainly a reason for distillers to use darker bottles, but marketing, not color preservation is the primary motivation.
In closing, it should be noted that the Germans and Danes - with the goal of purity - are lobbying the EU to eliminate the use of spirit caramel (E150) coloring as has already been done by distillers of bourbon in the United States.
In sum:
1. Caramel used for coloring is spirit caramel. Only trace amounts are needed.
2. It is less likely to be made from sugar (rather from corn, wheat and occasionally from molasses).
3. It smells burnt and tastes bitter. Only very small amounts are needed to color spirits. Enough spirit caramel coloring to be tasted would turn the rum very, very dark.
4. It may cause allergic reactions.
Thus we can assume that trace caramel is indeed used for color; as used is unlikely to alter aroma or taste. This should be distinguished from the mild toasting of oak aging barrels (legal) which will release natural caramel/sugars and vanillan in wood over much time.