Diageo to close USVI rum ageing sites

22nd November, 2016 by Amy Hopkins

Diageo has confirmed that it will move all maturation and warehousing for its Captain Morgan rum brand from the US Virgin Islands to Maryland in the US by the end of next year.

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Captain Morgan’s ageing operations will move from the US Virgin Islands to the US state of Maryland

The UK-based drinks group said the move would enable “more operational efficiency” in its supply chain and provide “cost savings as a result of improved logistics”.

Closure of the St Croix-based facilities will take place over the coming months, with all of Diageo’s rum ageing moved off the island before the end of 2017.

The group’s large facility in Relay, Maryland, will take over maturation and warehousing operations.

A Diageo spokesperson said the company will endeavour to ensure there are no job losses.

“The maturation employees currently working in the USVI will continue in their existing roles supporting the transition which will take place throughout the year,” the spokesperson said. “Everyone currently working in maturation and warehousing who wants to continue working at DUSVI [Diageo US Virgin Islands] will have an opportunity to apply for other roles within DUSVI.”

Diageo receives subsidies from the Government of the US Virgin Islands, including a substantial income tax break, to produce Captain Morgan on the island of St Croix as part of a 30-year deal.

The group said the relocation of its maturation facilities will not impact the deal, since Captain Morgan will continue to be distilled on St Croix and shipped to the US for sale.

“We will continue to comply with our agreement with the USVI government to distill rum on St Croix, which helps deliver much needed cover over revenue to the USVI economy,” the spokesperson added.

In November last year, Diageo was forced to defend a trial production method for Captain Morgan after it was questioned by VI Department of Justice officials.

The group tested a new distilling process using a “sugar cane intermediate” that was imported from outside the USVI, prompting concerns that it may have breached its agreement with the government.

Diageo said it had previously informed the government of it intention to run the trial, which was “compliant” with regulations according to the US Alcohol and Tobacco Tax and Trade Bureau (TTB).

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