Growing rum fears

St. John’s — Under-fire US rum subsidies could wipe out iconic Antiguan rum brands Cavalier and English Harbour for good, industry insiders say.

The allegedly illegal concessions have caused uproar across the region among manufacturers of the staple tipple of the region.

And it seems locally produced liquor is far from immune from the effects of the trade dispute.

“If this thing comes it’s going to bring it all (exports) to naught and if the Antigua Distillery does not export, it will not survive,” Managing Director of Antigua Distillery Anthony Bento said.

Chairman of the West Indies Rum Spirits Producers Association Frank Ward is equally concerned.

“If your export markets are lost you are then going to be constrained by your domestic market which cannot absorb the output of your facility,” Ward said. “Then you will have to downsize and at some point in time, your facility will become uneconomical to operate.”

Ward said the subsidies have already led to CARIFORUM bulk and bottle rum producers losing US market share, adding action is needed urgently before it’s too late.

He added that with the scale and price at which US territories will be able to produce – Bacardi already produces 18 million bottles a year – there will be no room for producers like Antigua Distillery.

Antigua Distillery and other Caribbean rum producers rely on exports for survival because the population of the islands are too small to cover the cost of the industry.

Thirty-five per cent of Antigua Distillery rum sales are exports while in Barbados, Ward says rum exports amount to around 90 per cent of production.

The company remains a small player in the global market with exports still limited to the thousands.

This compares lightly to the million bottles Appleton exports annually or the 450,000 by Mount Gay.

But English Harbour Rum is already being shipped to the Caribbean, US, UK, Australia, Japan and six Western European countries in Germany. And Bento is confident the right foundations are there to thrive in the face of fair competition.

“The fear we have is that as we go down the road trying to build something here, we may get our legs cut off in the process,” Bento said.

The US government remits 98 per cent of all excise taxes paid on rums sold in the US back to the US territories and it is these funds that are being used to support producers. (Antigua Observer)

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