Diageo has signed an agreement to purchase land to build two 100,000 square foot barrel warehouses for maturing Captain Morgan rum in the US Virgin Islands.

The deal has been made through the drinks giant's subsidiary, Diageo USVI, it said today (18 February).

The construction phase of the warehouse project is expected to break ground in July 2009. The property is located at Plot 25 Estate Diamond in St. Croix.

"This warehouse project enables us to distil and mature our rum in close proximity, preserving an efficiency in our rum supply chain," said Kellye Walker, president, Diageo USVI.

The 20-acre light industrial zone site will house barrel warehouses with the capacity to store up to 200,000 barrels of rum distillate for aging.

Last June, Governor John deJongh Jr and Diageo USVI jointly announced a public-private initiative for the construction and operation of a high capacity distillery.

Diageo USVI said it had now selected Tomsa Destil, of Spain, for the design and engineering of the distillery.

Beginning in 2012, the distillery will supply all rum used to make Captain Morgan branded products for the US.