Caribbean Rum threatened by USVI

[Capn Jimbo]

To my fellow rum lovers: we have a problem!

Our wonderful Caribbean rums are now in danger of going out of business.

In general these are small to medium size enterprises and include the hundreds of rums that we together have reviewed and blogged about. I’m talking about Mount Gay, Seales, Appleton, Wray & Nephews, Sangster, Myers, Barbancourt, Brugal, Barcelo, Ron Matusalem, Flor de Cana, the Demeraran Distillers Ltd., Ron del Barilito, and so many more.

What has happened are two things: an exponential growth of rebates to the Big Three (Diageo, Fortune and Bacardi) in the USVI and Puerto Rico. Import taxes from the USVI/PR and surprisingly also from all their small Caribbean competitors, are almost all rebated – to the benefit of the Big Three alone. These rebates were only about $87 Million to the USVI in 2007, but have escalated to about $500 Million annually today to the USVI and Puerto Rico. The pressure on the Caribbean distillers has increased and reached a breaking point in 2012.

Then things got much, much worse when the USVI instituted a “rum war” against Puerto Rico last year. What happened is almost unthinkable. The USVI gave Diageo nearly $3 Billion – not million, billion! – in subsidies. These subsidies were so rich that they amount to more than double the cost of actually producing rum! Diageo is actually being paid to produce rum. The USVI also gifted Fortune Brands (Cruzan) $1 Billion, yes billion – for all manner of free improvements and facilties, including a guarantee that Cruzan can buy molasses for just 16 cents/gallon – far under the market price of $2.00/gallon that the Caribbean producers must pay.

The result threatens all the Caribbean distillers, but especially those in Barbados, Jamaica, the Dominican Republic, and Guyana to name the most important. Still, smaller Caribbean labels everywhere fear for their survival, to no longer be able to produce rum at a competitive price. You see, almost all of them depend on sales of whites, gold and bulk rum to justify the time and expense of producing their far more expensive aged products.

KEY points:

1. This is real and serious, and it is happening right now.

2. Caricom has concluded that these subsidies constitute a violation of WTO (World Trade Organization) rules regarding fair trade. The Dominican Republic has filed a request for an official WTO Opinion, the precursor to an actual Complaint and hearing. This is a very serious and necessary step.

3. We must overlook our personal differences which are petty in comparison, and work together to publicize this impending disaster. We should not wait until we have lost any of these very fine rums which once gone, are gone (or modified) forever.

4. A Formal Petition has been created and continues to grow and garner signatures. The petition is designed in such a fashion to be accepted into official government records, and depending on the agency, is treated in the fashion as actual testimony. Please read, sign if you agree, and aggressively promote it. Adding personal comments is possible and encouraged.

It is here: http://www.gopetition.com/petitions/stop-massive-u-s-rum-subsidies-to-the-usvi-and-puerto.html

5. Last, a background and press kit follows which will illustrate the issues. If you have any questions or disagreement, kindly write me for additional and corroborating detail.

If you do nothing else read the formal petition’s preamble and formal demand for an overview, and assuming you agree, sign it.

Forgive the length of this post, but our beloved Caribbean rums are at great risk. Let me quote Sir Ronald Sanders, a spokesman for the Commonwealth...

"The reduction of sales in the US market, and the EU due to this legislation will have an adverse effect on Caribbean CARICOM distillers financial capacity to survive, let alone continue to manufacture rum at a competitive price.”

[Capn Jimbo]

There are many news items about this rum crisis. Here's a couple:

From Phil Prichard of Prichard Fine Rums (NY Times): “If our own federal government is also letting its taxes subsidise foreign corporations and offshore producers, it makes it harder to survive,” said Philip E. Prichard, whose independent distillery in Tennessee makes rum and bourbon. “It flies in the face of entrepreneurship.” Link: http://www.nytimes.com/2010/10/16/business/16rum.html?pagewanted=all

Sir Ronald Sanders, Commonwealth spokesman: "The reduction of sales in the US market, and the EU due to this legislation will have an adverse effect on Caribbean CARICOM distillers financial capacity to survive, let alone continue to manufacture rum at a competitive price.” Link: http://sirronaldsanders.com/viewarticle.aspx?ID=336

Friends, it's really a matter of survival. We don't want to lose the famous rums of Barbados, Jamaica, Guyana or the Dominican Republic among others. Please read the petition, linked above, and sign it if you agree...

[bostonapothecary]

wow. that is pretty wild. thank you for bringing it to our attention.

i avoid using diageo and fortune brand products at work as best i can and have switched as much as possible to our new local distilleries. switching has been easy and the new local products keep getting better and better.

it would be a big shame to lose products like Ron del Barilito. i've tried for years to make a market for them and i guess i have to step it up and do a little more.

[Hassouni]

If only Diageo didn't produce Caol Ila and Lagavulin and Talisker and Pimms and Bulleit...

[Capn Jimbo]

The petition to Save Caribbean Rum has really taken off, particularly since it was signed by both authors Dave Broom and Davin Kergommeaux. Davin wrote a must read article about this issue...

http://www.canadianwhisky.org/news-vi...

The petition has also been signed by a number of rum webmasters, and other spirits experts who understand this tremendous threat to both Caribbean and US distillers of rum who can simply not compete.

For those who wish to read and perhaps sign the petition, it is in the OP. We must all stick together on this one.

[Hassouni]

Signed

[brinza]

Signed.

The problem for me is that in PA, there are precious few choices for white rum. I haven't bought Bacardi in years, so I usually go for Cruzan . . . until now. The only other options are Don Q Cristal (shudder), Brugal Especial Extra Dry (at last year's Whiskey Festival, the distillers bragged about how this was made to appeal to vodka drinkers--they were right, it had no taste), and a few bottom feeders. I have bought Mount Gay Eclipse Silver in the past and I'd happily switch to that, but it doesn't seem to be available in my area any longer. I'm kinda screwed now as far as white rum goes.

[Capn Jimbo]

Thanks to all who signed the petition to Save Caribbean Rum. Some of the other signers or supporters include the above mentioned authors Dave Broom and David de Kergommeaux, and recently Beachbum Berry. Webmasters include Wayne Curtis, the Bilgemunky, Ina a Kena, Liquorature and many more. The petition now has its own email, Facebook and Twitter and the signatures are mounting at a good pace.

If you love Caribbean rum and their special culture believe me, these people are desperate and the crisis is real. If you do nothing else at least read the petition and if you agree, join Dave Broom and the rest of us:

http://www.gopetition.com/petitions/stop-massive-u-s-rum-subsidies-to-the-usvi-and-puerto.html

[Tri2Cook]

I'm nobody of importance but I signed it last week. I don't know if this will do anything or not but it seems like there's too much to lose to not at least try.