EU Rum money evaporating?
Regional rum industry up against spirits with deeper pockets
9/9/2009
By Randy Howard
THE Caribbean rum industry has its work cut when it comes to marketing its product internationally, particularly given the large scale nature of the operations of manufacturers of other spirits.
In an interview with the Barbados Advocate sometime ago, Chairman of the West Indies Rum and Spirits Producers’ Association (WIRSPA), Dr. Frank Ward, stated that rum is quickly becoming one of the more popular spirits on the world market, to the point that it has been described as the next Vodka.
This is in part due to the efforts being made by individual brands themselves, along with the collective efforts of the Association, to increase the presence of products created in the Caribbean in their export markets, particularly Europe, the United States, and Canada.
Maintaining that such efforts require a considerable amount of human and capital resources which, relative to the producers of other spirits created and marketed across the globe, West Indian producers are far behind.
According WIRSPA officials, the value of sales, as well as amount of money dedicated to the marketing efforts of some large multinational producers of spirits, surpasses the Gross Domestic Product (GDP) of a number of the countries in the region that produce rum, far less the budgets of the actual rum producers themselves.
Head of Marketing with WIRSPA, Neil Morris, pointed to two examples of such multinational companies, referred to as Company A and Company B, who’s most recent annual reports showed that they recorded net sales of US$13.5 billion (Bds$27 billion), and $9.4 billion (just over Bds$18 billion) respectively.
Morris compared this to the GDP of 14 rum producing Caribbean countries, with the lowest being Dominica with US$0.7 billion (Bds$1.4 billion), and the highest being the Dominican Republic with $77.4 billion (Bds$$154 billion).
When compared to this list of 14 countries, the net sales of these companies would rank fourth and sixth respectively; while their marketing budgets, which are US$2 billion (Bds$4 billion), and (Bds$1.7 billion), would be higher than the GDP of 5 of the 14 countries listed.
This situation has been highlighted by the Association given their ongoing efforts to solidify the presence of Caribbean branded rums within the markets of the UK, Spain, and Italy, through their Authentic Caribbean Rum “True Rum” marketing campaign, which is currently under threat as a result of rules surrounding the funding support provided by the European Union.
WIRSPA and the governments of the CARIFORUM region have been lobbying to have this issue resolved in the region’s favour, as they are certain that any premature ending to this programme, as a result of no more access to funding, would result in the progress made up to this time being deemed as in vain.
This is so given that all of their plans would not have been implemented, therefore the programme would not have the impact that they had intended because of elements not being executed.
-