Diageo and Bacardi at loggerheads over rum deal

Diageo and Bacardi at loggerheads over rum deal

Diageo has launched a scathing attack on rival drinks group Bacardi, accusing the rum group of conducting a clandestine “campaign of misinformation” against Diageo's plan to move rum operations to the US Virgin Islands.

Bacardi has been working “behind the scenes” to make “spurious claims” about Diageo's decision to build a new distillery for Captain Morgan rum in the US Virgin Islands, Diageo warned.

Diageo has signed a public-private finance deal with the Virgins Islands Government to move rum operations to the country from Puerto Rico. Bacardi has accused its rival of unfairly using US taxpayers' money, given in funding to the Virgin Islands.

In a strongly-worded, 6,000-word statement issued last night (23 February), Diageo accused Bacardi and Puerto Rico politicians of orchestrating a “veiled effort designed to manipulate the US legislative process and upset the agreement”.

Bacardi and Puerto Rico officials stand to lose US Government subsidies for rum, around US$3bn of which will go to the Virgin Islands, if Diageo is allowed to go ahead with the move, said the UK-based drinks giant.

“Enough is enough,” said Diageo executive vice president for North America, Guy Smith.

“We will not stand by while these special interests undermine our corporate reputation and jeopardize the economic future of the U.S. Virgin Islands,” he said.

If the US Government intervenes to break up the Virgin Islands deal, Diageo “will be forced” to move rum production outside of US territory, it said.

Bacardi Corporation, which is based in Puerto Rico, told just-drinks last night: “This issue is about one point - the appropriate use of approximately $2.7bn in taxpayer money. This isn’t about where Diageo receives a free distillery, but about the proper use of federal tax dollars. Diageo has some explaining to do to the US Congress and American people.”

In a separate statement, an organisation named the National Puerto Rican Coalition refuted Diageo's claim that it is a “front” company for Bacardi and Puerto Rico officials.

“Puerto Rico isn’t a ‘special interest’ nor is the National Puerto Rican Coalition (NPRC) a ‘front group’ - but we appreciate Diageo’s recognition of our role in shining public attention on their diversion of $2.7bn US tax dollars to their shareholders,” said NPRC chairman Miguel Lausell.

Diageo said: “This public-private initiative will be the US Virgin Islands' economic engine for the next three decades and beyond.”

“The US Virgin Islands and Diageo are building the most modern, environmentally protective rum distillery in the world, and it is designed to operate with zero discharge into the Caribbean.”