Local rums threatened by overseas subsidised liquor

Representatives of the regional rum industry met in Barbados last week and elected a new chairman to lead the regional grouping.

The new Chairman is Komal Samaroo, head of regional conglomerate Demerara Distillers (DDL) group of companies, producer of the well-known El Dorado brand of premium rums.

According to the West Indies Rum and Spirits Producers’ Association Inc. (WIRSPA), the body was meeting last week to address a series of challenges being experienced by the industry in both the local and export markets. WIRSPA pointed out that the export-oriented regional rum industry earns in excess of US$550M in foreign exchange every year, but also depends on healthy local markets as its base. According to Samaroo, rum companies rely on the profitability in their local market to be able to finance entry into export markets which are highly competitive and where regional producers are up against global spirits giants.

According to WIRSPA, the regional brands continue to face an uphill battle against these companies, several of whom may be benefiting from substantial subsidies provided through the United States tax system which provides them with ‘CoverOver’ payments.

These payments are tax rebates given back to producers in the US Virgin Islands and Puerto Rico when they sell rum into the US, WIRSPA said.

“Increasingly,” says Samaroo, “we’re seeing brands entering our local markets which benefit from these subsidies and are selling well below what we would consider to be expected costs. So not only are we up against subsidised brands in the export markets, but these brands are now entering local markets as well.” Minister of International Business, Industry and Commerce for Barbados, Donville Inniss, said at a function to taste the authentic rums of the grouping that “it goes against the WTO practices and it is just fundamentally wrong, because you are taxing our rum coming in from the Caribbean at exorbitant rates to subsidise others, and that really and truly does not help our economic growth and development.” In thanking his colleagues for the trust placed in him to lead the group, Samaroo said that it was a mark of maturity for the industry that leadership changes occurred within the context of continuity. He also thanked the previous chairman, Dr. Frank Ward, for his stewardship of the organisation over the last 10 years. DDL rums – the El Dorado line – and Banks DIH have been winning top awards around the world in recent years. (Kaieteur news)