By Erin Thompson • Pacific Daily News • July 15, 2010

Valentino Perez knows first-hand what a tricky art distilling alcohol can be. The owner of Guam’s Own distillery, Perez has spent months perfecting the recipe for rum and whiskey.

“There’s a ton of technical knowledge involved,” says Perez, whose Guam’s Own products have been on retail shelves since March.

A former financial analyst and commercial banker, Perez decided to put business and science skills — he has an undergraduate degree in engineering and a master’s in business — to work.

“I have a good history in chemistry and physics,” says Perez. “And that coupled with the fact that I used to brew beer back in college, made the learning curve extremely short.”

Using a still in an Anigua warehouse, Perez says he worked to perfect the distillation process, which uses fermented carbohydrates and sugar to create a “mash.” If the distillation from the mash isn’t just right, you can end up with a product that’s rough going down, says Perez.

“We’ve had a lot of trial and error with this, we’ve come up with a product that we absolutely adore,” says Perez. “We’re very proud of how smooth our product is.”

But, it’s not just the technical process of making the spirits that Perez had to get the hang of. Like many local entrepreneurs, Perez has had to struggle with how to market the product in a place where more established, off-island brands can actually be cheaper than locally made products.

“It’s extremely hard to be competitive with anything made on this island,” says Perez.

He’s hoping the business will find a niche market for people seeking products made on island, as well as those seeking a smooth shot.

So far, so good.

Irene Mesa, owner of the Hagåtña cafe Barista Blends, decided to switch from her usual brand of rum to Guam’s Own to make the her cafe’s rum cake. The result is a light and fluffy dessert with a edgy rum bite. She says that interest from her customer base increased when she told them she used locally produced rum for her popular rum cake.

“You actually get a lot of people wanting to try it, and get a lot of good feedback about it,” says Mesa. “They have said ‘yeah, this does taste better,’ compared to the one I used before.”

Mesa says despite the rum’s higher cost, she now prefers it to other brands.

“His product is really good so I consider it more of a premium product, compared to the rums I buy,” says Mesa.

While the distillery currently only offers rum and whiskey, Perez says he has experimented with vodka, and hopes to soon roll out a line of aguayente — the name for a traditionally home-brewed local spirit that roughly translates as “moonshine.”

“It’s a matter of going back to tradition,” says Perez.

And although the company faces tough competition on an island where locally made doesn’t necessarily bring an immediate cachet to the minds of consumers, Perez hopes that the quality and unique local stamp of the product will attract locals and tourists alike.

“This is not some off-island company saying ‘Hey, here’s stuff made on Guam,’” says Perez.

“It’s kind of cool when you can say I know the guy that made that.”

Sandals strike rum deal with Demerara Distillers
Al Edwards
Jamaica Observer
Friday, July 23, 2010

SANDALS Resorts International, operators of the largest chain of luxury all-inclusive hotels in the Caribbean, has signed a deal with Demerara Distillers Limited to supply El Dorado aged rums to all its hotels across the region.
This new agreement signals the end of an over 20-year supply agreement with J Wray & Nephew, the producers of the world renown Appleton Rum.
Speaking to Caribbean Business Report from Kingston yesterday, the Chairman of Sandals Resorts International Gordon ‘Butch’ Stewart said: “We have had a phenomenal relationship with J Wray & Nephew for over twenty years, and over that period we have seen both our brands grow and prosper. Anybody anywhere in the world can tell you that Appleton is one of the finest rums in the world and a credit to Jamaica. It is one of our finest exports, and over the years many companies have coveted it. It will continue to prosper and go on to greater things.”
Vice-president International Marketing of Demerara Distillers, Komal Samaroo presents documents for CEO Sandals Resort International, Adam Stewart (centre) to sign at Sandals’ head office in Kingston on Tuesday. Making sure all goes well is Sandals Group Director, Corporate Communications, Rachel Mclarty.

Demerara Distillers is one of the oldest rum producers in the world and has been in existence for over 300 years. Hailing from Guyana it has an extensive range of aged rums to fit all categories. The El Dorado brand with its flagship 15-year-old rum was launched in 1992. The El Dorado brand continues to win acclaim and is heralded as one of the finest rums in the world. All its rums are made at the Diamond Distillery using Guyana’s famous Demerara sugar.
Demerara Distillers Vice-President for International Marketing, Komal Samaroo said: “Demerara Distillers Limited, takes special pleasure in this new relationship with Sandals. Our El Dorado range of aged Demerara rums has a history of delivering excellence and quality to the world for over three centuries. In more recent times, Sandals has similarly packaged the Caribbean experience and delivered it to a global market with equal excellence and quality. So here are two Caribbean companies geographically at the two ends of the region but sharing the same passion for delivering the best of the Caribbean to the world.”
CEO of Sandals Resorts International, Adam Stewart, said that with over 900,000 visitors a year, Sandals will be able to expose El Dorado Rums to a wide international market, giving them a taste of the Caribbean. He went on to say that it was the coming together of two great Caribbean companies and that Sandals has always sought to extend a welcoming hand to other Caribbean businesses in the true spirit of Caricom.
Speaking from the Jamaica Observer’s Food Awards held at Devon House last night, Adam Stewart said: “This partnership with Sandals Resorts International and Demerara Distillers Limited is both timely and symbolic of the members of the Caribbean Community shaking hands as neighbours and pulling the region closer together. I am thrilled about the prospects for growing our brands and building on our own track records of taking quality Caribbean products to the world.”

Charlottetown pub offering unique brand of Island-made rum

AL MACLEOD
The Guardian

The Merchantman Pub in Charlottetown is selling its own unique brand of rum called Merchantman 1897. It is distilled by Prince Edward Island Distillery in Hermanville, near Souris. From left are Julie Shore, master distiller, Donna MacNeill, pub customer, and owner Peter Hyndman. Guardian photo by Brian McInnis

It’s been over 100 years since rum was last distilled legally on P.E.I. but the drought has come to an end with the Merchantman Pub now offering an Island-made rum on its drink menu.
Over 100 guests packed the pub and got a sample of Merchantman 1897, brewed by Prince Edward Distillery in Hermanville, Sunday before it was officially made available to the public today.
The amber rum is barrel-aged, all natural, non-filtered and double distilled to give it a unique flavour of caramel and apricot with a hint of vanilla.
Peter Hyndman, owner of the Merchantman Pub, said he is happy to be the only establishment on P.E.I. to be able to offer the Island-made rum.
“I find it is important to be a leader in the industry to try to introduce a new product to the consumer and celebrate the fact we are the only location on P.E.I. to do this,” Hyndman said.
The rum is a joint venture between the Merchantman Pub and Prince Edward Distillery and the recipe has been modified a few times since the process to create it was started almost three years ago. Merchantman 1897 is exclusive to the Merchantman Pub and an agreement is in place to ensure it will only be available at the location.
He came up with the idea and the name Merchantman 1897 because 1897 was the year his great-grandfather, Charles Hyndman, with the company Hyndman and Morris, stopped producing rum on P.E.I., Hyndman said.
“I thought, ‘Why isn’t there someone producing rum on P.E.I.?’”
He is thankful to the P.E.I. Liquor Commission for licensing the rum and making it possible to have such a unique product available at his pub, Hyndman said.
“They are very supportive of local people on P.E.I. to try to support new products.”
Julie Shore, owner and master distiller of Prince Edward Distillery, said the rum is as natural as possible and a true Island-made product.
“It’s just what we create and what the barrel creates. It’s just a true rum,” Shore said.

West Indies Rum Distillery, producer of Cockspur Rum, hires experienced team to build the 125-year-old brand’s presence in the US.

Cockspur Rum is a solid brand in other parts of the world. We are making a strategic investment to conquer the US and we believe we have the right team in place to make that happen.

Barbados (PRWEB) July 12, 2010

The West Indies Rum Distillery, the historic beachside facility which is the home of Cockspur Rum, has announced major changes to its approach to the US market.

West Indies Rum Distillery has hired David Meyers of MAP Consulting to run Cockspur Rum USA. Meyers will report directly to John Taylor, Chairman of West Indies Rum Distillery Ltd., and will be responsible for sales and marketing in the US.

Meyers, a seasoned professional, has spent 20 years in the spirits industry and has hands-on experience with both rum and the US market. He spent ten years with the Remy Cointreau Group initially as Managing Director for Mount Gay Distilleries in Barbados and subsequently in New York as President and CEO of Remy’s US distribution company. He also spent time at Moet Hennessy UK, a division of LVMH, where he served as Managing Director responsible for such world class brands as Dom Perignon, Veuve Clicquot and Glenmorangie.

West Indies Rum Distillery plans to build Cockspur Rum in the US on the heels of its success in other key markets such as the UK and Bermuda. Among the changes already in place is the appointment of MHW, Ltd., as the importer of record for the brands. Savvy Drinks, a marketing and public relations firm specializing in spirits, has been retained to help build brand awareness with the trade and the consumer.

Another important change is that for the first time in decades Cockspur Rum will be bottled at the distillery in Barbados for the US market. Until now, the rum has been shipped to the US for bottling.

“Our goal is to more than double our sales volume in the US over the next few years. Our initial priority will be in our core markets of Florida, New York and the Pacific Northwest. We look forward to working with all of our distributors across the country to establish Cockspur Rum as the pride of Barbados,” said David Meyers.

John Taylor commented, “Cockspur Rum is a solid brand in other parts of the world. We are making a strategic investment to conquer the US and we believe we have the right team in place to make that happen. ”

More About Cockspur Rum

Barbados is generally considered the birthplace of rum and Cockspur Rum was founded there in 1884. With its proud and colorful rooster icon, Cockspur has been an integral part of island life for over 125 years. Cockspur Rum is distilled from island cane molasses and Barbados’ own coral-filtered water. Using both column-still and pot-still distillation methods, the rum is then aged in American oak bourbon barrels. This combination of aging and blending creates the smooth character for which Cockspur is renowned. Cockspur Fine Rum is a golden amber rum and is the flagship brand. Cockspur 12 Bajan-Crafted rum is made from the oldest rums kept on reserve at the distillery. Cockspur Rum is available in most major US markets and is also distributed in the UK, Bermuda, Western Europe, and Australia.

Rumpundit

Fitch Affirms Virgin Islands Cruzan Matching Fund Bonds at ‘BBB’; Outlook Stable

NEW YORK–(BUSINESS WIRE)–Fitch Ratings assigns the following ratings to the Virgin Islands Public Finance Authority’s (VIPFA) subordinated revenue bonds:

–$42.2 million (Virgin Islands matching fund loan note-Cruzan project) series 2010A ‘BBB’.

The bonds are expected to sell via negotiation the week of July 19.

In addition, Fitch affirms the following rating:

–$39.2 million (Virgin Islands matching fund loan note-Cruzan project) series 2009A at ‘BBB’.

The Rating Outlook is Stable.

RATING RATIONALE:

–Matching funds are an established revenue stream based on federal law; payments made by the U.S. Treasury are transferred to escrow for payment of debt service on matching fund revenue bonds prior to being made available to the U.S. Virgin Islands (USVI) for other purposes.

–A debt service reserve is funded at the lesser of maximum annual debt service (MADS), 10% of principal or 125% of average annual debt service.

–Coverage has been solid over the last decade, benefiting from consumer trends in the U.S. market. Coverage is expected to be boosted by planned expansion of Cruzan production and completion of the Diageo facility over the next two years.

–Payment on the bonds is ultimately dependent on ongoing Cruzan rum production in the territory, which itself is tied to continuation of federal matching fund program, the availability of incentives and production subsidies from the USVI.

–Future revenues may be affected by changes in consumer tastes or purchasing habits.

KEY RATING DRIVERS:

–Uninterrupted rum production and continued U.S. support for the cover over program and the current USVI system of incentives;

–Maintenance of sufficient coverage based on continuation of rum production;

–On-schedule completion of the Diageo facility.

SECURITY:

Special, limited obligations of VIPFA payable from and secured by a pledge of and lien on the Cruzan trust estate, primarily matching fund revenues associated with the Cruzan facility after payment of obligations under the senior indenture.

CREDIT SUMMARY:

The rating on the Cruzan project bonds is based on the strength of the revenue stream supporting bond payments, consisting of matching fund payments made annually by the U.S. government transferred to escrow for payment of debt service prior to being made available to the government of the U.S. Virgin Islands (USVI). Offsetting factors include project and political risks, as well as longer-term risks associated with consumer demand for rum products and ongoing production in the USVI. The Stable Outlook is based on the expected continuation of matching fund payments by the U.S. government.

Cruzan project matching fund bonds are special, limited obligations of the PFA, issued under an indenture (Cruzan indenture) established in 2009 and subordinate to bonds issued under a 1998 senior indenture (1998 indenture). Proceeds of this sale are funding additional facility improvements at the existing Cruzan VIRIL distillery. A total of $105 million in debt is authorized for expansion projects at the Cruzan distillery, part of a broader 30-year incentive agreement that closely mirrors the incentive agreement reached in 2008 between the USVI and Diageo plc (see Fitch’s release of June 19, 2009). Including the current sale, a total of $81.4 million in Cruzan indenture bonds will be outstanding. A debt service reserve funded at MADS provides additional protection.

Matching funds have been paid annually to the USVI by the U.S. government since 1954 based on sales in the U.S. of USVI rum. Funds are paid at a base rate of $10.50 per proof gallon in place since 1954 and with periodic increases in recent years to $13.25 per proof gallon. The $13.25 rate expired Dec. 31, 2009, pending renewal by the U.S. Congress of the higher rate. The higher rate has been repeatedly renewed in the past; should the increase not be extended, the rate would remain at $10.50. The annual payment is calculated from projected sales of USVI-produced rum in the U.S. in the following fiscal year, adjusted by an amount reflecting the difference between estimated and actual sales two fiscal years prior. The bonds include a covenant that if matching fund revenues are replaced with another federal funding stream, the USVI will use its best efforts to use the substitute revenues for bond repayment.

The additional bonds test (ABT) for the Cruzan indenture requires that new issuance meet a three-year historical and two-year prospective MADS coverage test at 1.5 times (x) debt service for senior lien and 1.5x for second lien after payment of senior lien debt service, and two-year prospective MADS coverage at 1.2x combined senior and second liens. All Cruzan issuance to date, including the current bonds, has been on the senior lien. Currently no additional Cruzan bonds are scheduled, although approximately $28 million in authorization would remain. Project completion bonds up to $10.5 million are not subject to the ABT.

Coverage of debt service has been adequate, with fiscal 2009 matching fund receipts covering debt service (to date all on 1998 indenture bonds) at 2.25x. Including the new Cruzan indenture bonds, coverage by 2009 actual revenues of aggregate MADS for Cruzan indenture bonds and all outstanding 1998 indenture bonds (inclusive of a scheduled sale this week of 1998 indenture bonds) would be 1.27x. (Fitch rates the 1998 indenture senior and subordinate lien bonds ‘BBB+’ and ‘BBB’, respectively.)

Future coverage is expected to grow substantially with completion of the Diageo distillery by Diageo plc (rated ‘A-’ by Fitch, with a Stable Outlook) and expansion of the existing Cruzan-VIRIL distillery, owned by Fortune Brands (rated ‘BBB-’ by Fitch, with a Stable Outlook). To finance the two projects, in 2009 VIPFA established separate, subordinate indentures for each; $250 million has been issued under the Diageo-related indenture (Diageo indenture). All matching fund receipts, including those to be generated by the new Diageo distillery, benefit 1998 indenture bonds first. After satisfying requirements under the 1998 indenture, excess receipts from Cruzan and Diageo-generated matching funds are transferred to separate special escrow accounts based on each facility’s production. Receipts from Cruzan VIRIL-related matching funds are not available to Diageo indenture bondholders after payment of 1998 indenture bonds, nor are future Diageo-related matching fund receipts available to Cruzan indenture bondholders. Excess revenue following payment of debt service on all indentures is used to meet various incentives under the USVI’s agreements with the distillers.

Under various alternative scenarios analyzed by Fitch, projected matching fund revenues provide for sufficient annual debt service coverage on outstanding and planned matching fund bonds, including assuming that the $13.25 rate is not renewed and the matching fund rate remains at $10.50. Including issuances under the Diageo and Cruzan indentures, annual coverage likewise remains adequate at either rate assuming timely completion of the Diageo facility. At the lower rate, coverage of MADS on all indentures combined (in 2022) would require revenue growth. Diageo distillery construction is reported to be advancing on schedule, with some associated revenues to be received later in 2010. Other political risks include drafted U.S. legislation questioning the USVI’s use of matching funds for economic development incentives; passage of such legislation in Fitch’s view is remote.

The ABT for the 1998 indenture bonds excludes all matching fund receipts associated with the Diageo and Cruzan projects that are required to meet debt service, debt service reserve and certain other required payments under the Diageo and Cruzan indentures. Both Cruzan and Diageo must consent to 1998 indenture issuance. Issuance on the 1998 indenture senior lien bonds is at the ABT limit (including the sale of 1998 indenture senior and subordinated bonds scheduled this week). There will be approximately $927 million in 1998 indenture bonds following the sale (see Fitch’s release of June 15, 2010).

U.S. consumption of distilled spirits, including rum, has grown steadily in recent years based on shifting consumer tastes and the increasing attractiveness of premium products. Rum consumption in the U.S. is subject to broader shifts in consumer demand; average demand declined by approximately 1.5% annually during the 1985-1995 period but has increased by an average of 5.3% annually since. Despite the recession, rum consumption rose 1.6% in 2009 but is forecast to fall 1.9% in 2010 before resuming growth. Most USVI rum exported to the U.S. is bulk rum, representing approximately 13% of the U.S. market. Growth will be linked to completion of the Diageo facility and expanded shipment of branded rum from both facilities.

Applicable criteria available on Fitch’s web site at www.fitchratings.com:

–’Tax-Supported Rating Criteria’, dated Dec. 21, 2009;

–’U.S. State Government Tax-Supported Rating Criteria’, dated Dec. 28, 2009.

Additional information is available at ‘www.fitchratings.com‘.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY’S PUBLIC WEBSITE ‘WWW.FITCHRATINGS.COM‘. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE ‘CODE OF CONDUCT’ SECTION OF THIS SITE.

Fitch Ratings, New York
Douglas Offerman, 212-908-0889
Alexandra Edwards, 212-908-0181
or
Media Relations:
Cindy Stoller, 212-908-0526
Email: cindy.stoller@fitchratings.com

Media Contact: Amy Federman Burson-Marsteller for Bacardi 441-294-1110 amy.federman@bm.com Patricia M. Neal Bacardi 441-294-1110

BACARDI HARNESSES WIND TO POWER WORLD’S LARGEST PREMIUM RUM DISTILLERY

Largest wind turbines in Puerto Rico; part of broad corporate responsibility renewable energy initiative Cataño, Puerto Rico,

April 21, 2010 /PRNewswire/ — The world’s favorite premium rum — BACARDI — now has the power of wind behind it. Bacardi Corporation, part of the Bacardi Limited group of companies, and home to the largest premium rum distillery in the world, today unveiled the largest wind turbine installation in Puerto Rico designed to harness natural wind energy to help power Bacardi’s top global distillery near San Juan. The 250,000 tourists who flock to the Casa Bacardi Visitor Center each year will not only learn about the history and production of the world’s favorite premium rum and the world’s most awarded rum, but also that natural wind energy powered the center. “While many know Bacardi for great rums and cocktails, Bacardi also has been a leader in corporate responsibility and environmental progress. We’re always looking for ways to help the environment and reduce our carbon footprint,” said Joaquin Bacardi, president and chief executive of Cataño-based Bacardi Corporation. “Our latest innovation with these two specialized wind turbines seizes the power of the wind adding more force to Bacardi’s overall environmental commitment to save energy.” The two Bacardi wind turbine units, which can be seen from miles away, are industrial scale at 250kW each and are owned by Cataño-based Aspenall Energies, which will sell the electricity produced by wind to Bacardi under a power purchased agreement. With their blades, the turbines are 137 feet high and have a rotor diameter of 75 feet. “Puerto Rico relies on fossil fuels for virtually all its energy, so we hope other companies will follow this great leadership by Bacardi to use wind energy and other renewable energy sources,” said Puerto Rico Governor Luis G. Fortuño. “The focus on renewable energies is yet another sign of Bacardi’s social responsibility and commitment to the greater community. This sort of forward-thinking is exactly what we must encourage in Puerto Rico. This is precisely why we are introducing energy reform measures that will establish a better policy and regulatory framework that will enable more investment in renewable energy projects. The Government will serve as a partner through incentives and other support that will result in all individuals and businesses having more opportunities to become part of the energy solution.” The two wind turbines are expected to generate approximately 1,000,000 kWh of electricity per year accounting for three to seven percent of the power used by Bacardi, roughly the consumption of the facilities tourism-related activities at its Casa Bacardi Visitor Center (and equivalent to the consumption of about 100 average households) with an expected carbon offset of more than 900 tons of CO2 per year. 100 percent of the power generated by the wind turbines will be consumed by the Bacardi facility. This project is the first step in utilizing wind power as a renewable energy source for Bacardi and the Company would consider additional wind solutions and other energy saving initiatives. The Bacardi turbine installation will be owned, operated and maintained by Aspenall Energies. “We are proud to be the first company to install and operate an industrial scale wind project on the island of Puerto Rico. We are honored to have done so with Bacardi Corporation, a company that has shown through the years in a myriad ways how small changes, in the aggregate, can make an enormous difference,” said Raoul G. Slavin Juliá, managing director for Aspenall Energies, LLC. “Bacardi has a strong record in environmental stewardship and is known as an innovator globally,” said Jon Grey, vice president of global operations for Bacardi. “In fact, here in Puerto Rico, Bacardi pioneered and patented the anaerobic treatment of distillery wastewater now used by other companies around the world. We use this anaerobic digester technology to treat wastewater which derives energy. In that process, micro-organisms naturally degrade waste materials, creating biogas, or methane, in the process. The biogas is fed into the boilers which power the distillery. This saves about half the energy needed to run them. The creation of the natural biogas reduces the need for imported oil or gas that would otherwise be necessary.” Carbon dioxide is produced as an intermediate product during the fermentation process. This gas is recovered and sold to third parties mostly for carbonated beverages. In the period from June 2008 through February 2009, Bacardi has recovered and sold 10,378,251 lbs—5,189 tons of CO2—avoiding release into the environment. To save water usage at the Cataño site, Bacardi treats wastewater that is then used in cooling towers during the production process. This saves 22,000 gallons of water every day. Other environmental initiatives at the Bacardi facility in Puerto Rico include recycling old ageing barrels by dismantling and chopping them and giving the barrel chips to employees as mulch for their gardens and as well as spread on facility landscaping. As a novel idea to re-purpose promotional banners, Bacardi cuts and sews old banners into reusable shopping bags for employees. Globally, Bacardi was certified in December 2009 to be operating in accordance with the world’s most recognized standards for quality, environment, and health and safety. Bacardi is the only major spirits company to achieve certification under ISO 9001, ISO 14001 and OHSAS 18001 for all its production facilities globally, putting the company among an elite group of the world’s best-run companies. About Bacardi Corporation Bacardi Corporation was founded in San Juan, Puerto Rico, in 1936, and is part of Bacardi Limited, the largest privately held spirits company in the world. The current facility was built in 1958 on 127-acres in the town of Cataño. This Bacardi rum production facility is the largest premium rum distillery in the world, and BACARDI is the largest premium rum brand globally and is the world’s most awarded rum. BACARDI rum has been a registered brand in Puerto Rico since 1909. The facility in Puerto Rico supplies various premium BACARDI products to North America, Europe and other parts of the world. Since 2004, Bacardi Corporation has operated the state-of-the-art Casa Bacardi Visitor Center, the second most-visited venue in Puerto Rico, drawing more than 250,000 visitors a year to learn about the rich history of the Bacardi family and brand, as well as its unique production. Bacardi Corporation employs more than 200 people in sales, marketing, operations, manufacturing and other support roles and plays a significant role in the Puerto Rican economy as it is the leading private contributor to Puerto Rico’s treasury through its annual contributions of income, excise and other taxes. For further information, please visit www.casabacardi.com and www.bacardi.com. To learn more about Corporate Social Responsibility (CSR) best practices at Bacardi, please visit http://www.bacardilimited.com/resp_corp.html or read our Corporate Responsibility Report at http://www.bacardilimited.com/pdf/corp_resp_report.pdf. About Aspenall Energies, LLC Aspenall Energies, LLC is a Puerto Rican renewable energy company founded in 2007. Its origins are in industrial real estate with more than 40 years experience on the island. The company is focused on wind and solar Power Purchase Agreements (PPAs) with industrial-sized clients. For additional information, please visit www.aspenall.com.

‘Extra burden hurting rum’

Minister of Economic Affairs Dr David Estwick (right) and managing director of Foursquare Rum Distillery, Richard Seale, watching bottles of rum roll off the conveyor belt at the factory yesterday. In the background is executive director of the Barbados Manufacturers’ Association, Bobbi McKay. (Picture by Kenmore Bynoe.)

Published on: 4/15/2010
Barbados Nation

HEAVY Government monitoring of the rum industry is proving costly and counterproductive.
This charge was levelled yesterday by managing director of the St Philip-based Foursquare Rum Distillery, Richard Seale.
Seale told reporters that meeting “salaries and incidentals” for customs officers posted at the plant “to make sure that the Excise Tax is collected” was high and could run into $100 000 yearly.
He also complained that having to seek customs permission “with every step” of the operation ran counter to the plant’s efficiency and productivity.
Seale, son of businessman Sir David Seale, raised the issue with Minister of Economic Affairs Dr David Estwick during a tour of the Distillery & Heritage Park yesterday morning.
It was the first stop in Estwick’s tour of distilleries to familiarise himself with rum production, its triumphs and challenges.
Seale told reporters the rum industry was saddled with “an ancient method” of supervision and collection of Excise Tax that the beer and oil industries did not face.
“We don’t need a handout; we just need a level playing field, and one of the problems is that we are stuck with an Excise Tax legislation, or Spirits Act, which basically has the historical anomaly of very heavy supervision,” he told reporters.
“We exist in a modern environment of indirect taxation like VAT (Value Added Tax), and yet we still have an ancient method of supervision and collection for Excise Tax.
No one else
“The irony is that we have one of the most important industries subject to an extra burden that no other industry has to face.”
According to Seale, customs officers had to supervise rum-making “from production in the still right through to the bottle”.
Essentially, what the officers were doing was making sure that the Excise Tax was collected, he explained.
“But the irony is that the VAT on rum is even higher than the Excise Tax, but there is nobody supervising the VAT,” he pointed out.
“There is nobody, for example, supervising the Excise Tax collection on beer. There is nobody supervising the Excise Tax collection on oil and gasoline.
“It is only rum, and the only reason why rum has this historical anomaly is because it is the first industry to collect Excise Tax. So you have this legacy, and therefore you have to pay these extra costs for the supervision.”
According to Seale, “you need customs permission to simply carry out blending of rum”.
It meant that the important rum industry “has to operate with one hand tied behind its back all the time”, Seale complained.
“Our position is: just make us equivalent to the rest of the other industries that are subject to the Excise Tax or explain to us why rum for some reason has a higher risk,” he added.

UPDATE 2-Pernod loses lawsuit on Bacardi’s Havana Club rum

* Bacardi sale in US of Havana Club rum is allowed

* No trademark violation found

* Pernod likely to appeal

By Jonathan Stempel

NEW YORK, April 6 (Reuters) – A U.S. judge rejected a lawsuit by Pernod Ricard SA (PERP.PA) to stop rival Bacardi Ltd from selling “Havana Club” branded rum in the United States.

Pernod is likely to appeal the ruling, the latest legal twist in a decades-long trademark dispute.

Both companies sell rum under the Havana Club name, Pernod outside the United States and Bacardi within it.

Tuesday’s ruling by U.S. District Judge Sue Robinson in Wilmington, Delaware, was the latest in more than 13 years of U.S. litigation between the companies over which company controls the trademarked name.

In its 2006 lawsuit filed federal court in Wilmington, Delaware, Pernod Ricard USA LLC claimed Bacardi USA Inc had no right to use the Havana Club trademark where it had begun in Florida selling rum under that name.

Pernod, which sold 3.4 million cases of Havana Club during its last fiscal year, also accused Bacardi of false advertising by misleading consumers into believing that its rum is made in Cuba, as Pernod’s is, when in fact it is made in Puerto Rico.

But Robinson concluded that Bacardi’s rum has a Cuban heritage, having derived from a family recipe first used in that country around 1930, roughly three decades before Fidel Castro took power.

In her 22-page ruling, Robinson also found that because Bacardi’s labels “truthfully (and prominently)” show that its rum is “distilled and crafted in Puerto Rico,” its labeling is neither false nor misleading.

Pernod showed “no evidence that today’s Havana Club rum product differs from the original pre-revolutionary Cuban rum in any significant respect,” Robinson wrote. “As the expression goes, ‘if it looks like a duck, swims like a duck and quacks like a duck, then it probably is a duck.”

Vincent Palladino, a partner at Ropes & Gray LLP in New York representing Pernod, said: “We are very disappointed in the ruling. We believe the judge committed fundamental errors on the law, and in all likelihood we will be appealing.”

A Bacardi spokeswoman in an emailed statement said the company applauds the decision. “This is yet another Court decision supporting Bacardi’s legitimate and rightful ownership of the Havana Club rum trademark and brand,” she wrote.

According to the ruling, Havana Club rum was developed by the Arechabala family in Cuba, where the family’s assets were seized by Castro’s government in 1960.

By the mid-1990s, a Cuban company had partnered with Pernod to export Cuban-made run under the Havana Club brand, except to the United States because of a U.S. trade embargo.

Bacardi, meanwhile, has said it bought the rights to the Havana Club trademark and remaining rum assets still owned by the Arechabala family in 1997.

The only Havana Club-branded rum sold in the United States is Bacardi’s, Robinson said.

Pernod Ricard USA is based in Purchase, New York, and Bacardi USA in Miami.

The case is Pernod Ricard USA LLC v. Bacardi USA Inc, U.S. District Court, District of Delaware, No. 06-505. (Reporting by Jonathan Stempel, editing by Leslie Gevirtz, Gary Hill)

The rum producers of the Caribbean are protesting the European Commission’s decision to cut off funds to the region’s spirit manufacturers.

The industry employs 50,000 people and is the fourth largest traditional export, bringing in more than US$260 million a year in foreign exchange. Under the Cotonou Agreement, the EU and its ACP partners signed a Joint Declaration on Rum (XXV) that recognises its value in competing in the global economy and the need to develop the industry further, particularly through modernisation and better marketing. The EU committed € 70 million to a rum-specific programme. The deal was that the Rum producers would spend their own money to carry out the upgrades and marketing projects and claim from the EC once the projects were complete.  The funding started 3 years late and was scheduled to end in June 2010 – an unrealistic date according to EC project monitors who recommended an 18 month extension to December 2011. Now the EC is closing down the fund early and refusing to extend it because of a Council regulation, leaving the rum producers in debt. Additionally, the EC is removing tarrifs from Latin American rum and eroding the time they led Caribbean rum producers to believe they had to upgrade their production and become competitive. The EC has formally told the Caribbean that they have already settled liberalised tariffs and quotas with Colombia and Peru and are now talking in similar terms with Central American and Andean countries.

According to Carribean business executive and diplomat, Sir Ronald Saunders, the EU agreed to establish a fund of 70 million euros under the 8th European Development Fund (EDF) to facilitate the adaptation of production facilities by Caribbean rum companies. But to access this fund, companies first had to provide at least matching amounts of money, recovering the EDF grant element only when their upgrading or marketing projects are completed. Many of the companies borrowed money on commercial terms to undertake the projects.  They did so expecting the programme to continue until at least June 2010 when the funding window was scheduled to be closed. However, with about 14 million Euros still in the Fund, the EC is closing in March 2010 on the basis that the rules of the 8th EDF demand it.  This means that the rum companies cannot get reimbursement for the money they’ve invested on projects that cannot be completed by the cut-off date on which the EC has insisted.

Saunders also states that, “Poignantly, the country that will be hardest hit by this EC reversal is Haiti. Its rum producer, Barbancourt, which was devastated by last January’s earthquake, will now have no chance of getting assistance for its recovery from this programme. It will also find it well nigh impossible to regain a place in the EU market by the time it is able to limp back into any semblance of export production.” The West Indies Rum and Spirits Producers Association (WIRSPA) has written to Trade Commissioner, Karel DeGucht, repeating the request for access to the unspent and allocated funds for rum in the 8th EDF and expressing dismay at the dropping of the declaration on rum in the mid-term review of the Cotonou Treaty on March 19. The letter, which is circulating among ACP circles in Brussels, also pointed out that, in the deals the EC has done and is continuing to do with Latin American countries, two things will happen.

First, on low cost and heavy bulk rum, there is a strong risk that European importers will switch to using lower cost suppliers in Central or South America and immediately make full use of any tariff free quotas which are granted. The loss of such major contracts would prove devastating to Caribbean suppliers of bulk rum in Barbados, Guyana, Jamaica and Trinidad and Tobago. And, second, on bottled rum, Central and South American producers will be able to use the reduction in the tariff to further undercut ACP products in the EU market. After facing crisis in the region’s sugar and banana industries, people are hoping that the EU will rethink its decision. If not, they fear that Caribbean rum will end its 300 year trade with Europe.