Bundaberg Rum originated because the local sugar mills had a problem with what to do with the waste molasses after the sugar was extracted. Molasses was heavy and difficult to transport, and the costs of converting it to stock feed were rarely worth the effort. Sugar men first began to think of the profits that could be made from distilling. The key meeting was held at the Royal Hotel on 1 August 1885. W. M. C. Hickson served as the chairman, and other notables in attendance included all the big sugar mill owners of that time: W. G. Farquhar, F. L. Nott, T. Austin, J. Gale, S. McDougall, T. Penny, S. H. Bravo and A. H. Young. All became the first directors of the company, which started with a capital of £5,000.
