Diageo’s Caribbean rum dispute

17th August, 2012 by Phoebe Brookes

West Indies’ Rum and Spirits Producers’ Association (WIRSPA) has put out a £4 million brief for an agency to promote Caribbean rum in the US and Europe.

The announcement comes amid increasing tensions between the WIRSPA and the US, after the latter was accused of damaging the Caribbean region by offering subsidies to multinational rum producers.

Drinks company Diageo is in dispute with the WIRSPA after the Caribbean Community Secretariat (CARICOM), said authorities in the US Virgin Islands had given Diageo incentives to build a new distillery that would produce Captain Morgan Rum for the US at far cheaper rates, making it impossible for Caribbean producers to compete. Any such incentive would be in breach of the World’s Trade Organisation’s rules.

Diageo said any dispute is unnecessary and costly. A spokesperson for the company said, “Diageo has excellent relationships in Jamaica, and no present plans to modify our rum operations during the current contracts term. We are actively seeking support from Clarendon to help us access some of the WIRSPA’s leadership to understand their issues.”

The spokesperson continued, “Diageo’s premium rum does not compete with, much less displace, the bulk rum produced by WIRSPA members, and none of Diageo’s USVI rum is sold outside of the United States.”

Diageo confirmed that its recent move from Puerto Rico to the US Virgin Islands is the only change made to its rum production and the move specifically concerned premium rum consumption in the US.

According to the 2012 import statistics from the Geneva-based International Trade Centre, CARICOM rum exports to the US have increased by more than 39% in the first four months of the year.

Diageo said it currently sources the same amount of rum from the Caribbean that the WIRSPA reports that its members export to the US market.

The WIRSPA expects to choose between four and eight candidates for a formal pitch on work that is expected to start in early 2013. In the brief, the WIRSPA asks agencies to focus on promoting Caribbean rum in America and Europe, in particular Italy, Spain and the UK.

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