Puerto Rico rum industry receives export boost

Following a significant loss of business after Diageo moved production of its Captain Morgan rum to the Virgin Islands, Puerto Rico’s export rum industry has received a boost.

Puerto Rico’s Distileria Serralles has signed a number of contract supply agreements in the US

Puerto Rican rum distillery Distileria Serralles will increase its rum production by eight million proof-gallons over the next three years after reaching a number of contract manufacturing supply agreements in the US.

These agreements are part of the Puerto Rican government’s efforts to invest in and promote the country’s rum industry after Diageo moved production of its Captain Morgan to the island of St Croix in the Virgin Islands.

Diageo was persuaded to make the move by the offer of a new-build distillery, plus other subsidiaries and tax exemptions reportedly worth US$2.7bn if it remained in the country for 30 years.

Distileria Serralles, whose flagship brand is Don Q, is a former contract producer of Captain Morgan rum for Diageo.

The distillery therefore negotiated more lucrative deals of its own with the Puerto Rican government, including increased subsidies.

Private and public sector involvement

The Commonwealth of Puerto Rico and the Puerto Rico Industrial Development Company (PRIDCO) helped Distileria Serralles identify prospective clients in the US through the Rums of Puerto Rico Programme.

“This is validation that our economic development plan is showing positive results,” said Albeto Bacó Bagué, secretary for Puerto Rico’s Economic Development and Commerce Department.

“Our goal is to re-energize our anchor industries and build upon our historic strengths to achieve a more diversified economy. We are promoting a new transformation in Puerto Pico, and this agreement is part of it.”

Distileria Serralles claimed that these new contract supply agreements would secure its workforce of 400 people.

Roberto Serrallés, vice president of Distileria Serralles, said: “The announcement is a result of a joint collaboration between the private sector and the government in favour of our island’s economic development, and strengthen our rum industry.”

The announcement comes two years after a simmering row caused Caribbean nations to threatened to register a full complaint at the World Trade Organization (WTO) against the US over rum subsidies provided to some of the sectors biggest operators.

US territories of Puerto Rico and the US Virgin Islands (USVI) have been seen to offer the biggest incentives to multinational spirits companies to base their operations there.

With incentive amounts linked to the quantity of rum each territory produces, Puerto Rico and the USVI US$5.1 billion and US$1 billion respectively between 1990 and 2008.