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Caribbean Food and Drink Report Q3 2010
Business Monitor International, May 2010, Pages: 98
Caribbean Food and Drink Report provides industry professionals and strategists, corporate analysts, food and drink associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on the Caribbean's food and drink industry.
The rum sector is one of the Caribbean’s most advanced industries and the region has attracted significant investment from leading players. However, developments over the last three months have highlighted how competitive the industry is with Diageo, Bacardi and Pernod Ricard all battling for market share. In 2008 Diageo, the world’s largest alcoholic beverage company, announced plans to build a high capacity rum facility on the island of St Croix in the US Virgin Islands. The state of the art distillery is set become the primary production centre for Diageo’s Captain Morgan ‘spiced’ rum brand. However, in February 2010, Diageo accused rival producer Bacardi of running a ‘hidden campaign’ to prevent it receiving a package of subsidies for establishing the unit and in a 13-page statement Diageo suggested that Bacardi had been lobbying the US congress to protect its own substantial subsidies and accuses the drinks producer of using ‘front groups’ and Puerto Rican politicians to make unwarranted claims about the US Virgin Islands initiative.
A lot is at stake for both firms, with the construction of Diageo’s new distillery potentially in jeopardy if the US congress decides to amend the current cover-over legislation. In this scenario the authors think that Diageo may have little choice but to choose a new base for Captain Morgan, with the US Virgin Islands unlikely to represent the most attractive location if the ‘cover-over’ subsidies are discounted. Any decision would also have a knock-on impact on Fortune Brands, which, following Diageo’s lead, inked a deal in October 2009 with the governor of the US Virgin Islands.
Another battle-ground in the rum industry centres around the Havana Club label with both Pernod Ricard and Barcardi claiming ownership of the brand. In most territories around the world the Havana Club trademark is marketed by a joint venture called Havana Club International controlled by Pernod Ricard and Cuban firm Cubaexport, owned by the state. This brand has found enormous success on the back a growing global cocktail culture and the cache of being a genuine Cuban product. Havana Club is sold in over 120 countries and Havana Club International reported that that in over 40 of these markets the rate of growth exceeded 10% in 2008. However, the US – the world’s largest rum market – remains a no-go area due to an embargo on Cuban products. In the US, the Havana Club trademark is controlled by Bacardi but the possibility that this embargo could one day be relaxed means that the question of ownership in this market is a heated topic. The matter continues to be debated in the US courts and latest round went to Bacardi in April 2010 with a District Judge ruling that the brand had a right to proclaim its Cuban heritage based on the fact the drink is based on a family recipe first used in Cuba around 1930. The judge also ruled that the drink’s labelling was neither false nor misleading as the product clearly indicated that it has been distilled and made in Puerto Rico.
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Russian Market of Rum
Russian Market for Rum
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