Diageo accuses Bacardi of rum behaviour

Diageo has launched a blistering attack on rival Bacardi, accusing it of leading a "hidden campaign" for commercial gain that would "kill" off a series of lucrative tax excises that the maker of Captain Morgan rum would receive by shifting production from Puerto Rico to the US Virgin Islands.

Diageo said that Bacardi officials have been lobbying US congressional leaders to force the London-based drinks giant to move production outside the US. This would not only protect Bacardi's "own huge government rum subsidies", but it would also prevent the maker of Johnnie Walker whisky from raking in huge annual tax incentives from producing and selling rum on American soil.

Diageo argues that Bacardi, the maker of the eponymous spirit, fears it will use the direct and indirect tax incentives – equal to $2.7bn over 30 years – to invest heavily in the Captain Morgan brand, a direct competitor, such as through marketing and beefing up production at the fully owned facility in the US Virgin Islands. Diageo has stated that Captain Morgan is one of its eight "global priority brands". Bacardi is the world's second biggest-selling spirit by volume.

Guy Smith, Diageo North America's executive vice-president, said: "The company [Bacardi] has been working behind the scenes in collaboration with other self-interested constituents and corporations and has used front groups and Puerto Rico politicians to make spurious claims about the US Virgin Islands initiative."

He added that the move to "kill the US Virgin Islands initiative" would "devastate" the economy of the US Virgin Islands. The dispute centres on Diageo's decision in 2008 to build its own distillery on the US Virgin Islands and move production away from a facility run by a third party, Serralles, in Puerto Rico. This followed a landmark 30-year public-private initiative between the UK company and the US Virgin Islands.

Diageo also hit back at accusations that it was responsible for the loss of 400 jobs in Puerto Rico by stressing it did not own the distillery in the country and had served notice on Serralles three years ago. Mr Smith said that Bacardi receives "tens of millions of dollars a year" from annual government rum subsidies.

However, a Bacardi spokeswoman hit back at the "13-page attack by Diageo". She said: "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."

For more than 50 years, the US Congress has provided "rum cover-over" revenues to help the US Virgin Islands attain economic stability, but until the 2008 initiative it had failed to attract substantial rum production.

Suggested Topics
News
Destructive discourse: Jewish boys look at anti-Semitic graffiti sprayed on to the walls of the synagogue in March 2006, near Tel Aviv
news

As anti-Semitic attacks rise, Grant Feller re-evaluates his identity

Life and Style
food and drink

Savoury patisserie is a thing now

News
news

Meet the primary school where every day is National Poetry Day

News
people Biographer says cinema’s enduring sex symbol led a secret troubled life
PROMOTED VIDEO
News
newsGlobal index has ranked the quality of life for OAPs - but the UK didn't even make it into the top 10
News
people

Kirstie Allsopp has waded into the female fertility debate again

News
In 2006, Pluto was reclassified as a 'dwarf planet'
scienceBut will it be reinstated?
News
The moon observed in visible light, topography and the GRAIL gravity gradients
science

...and it wasn't caused by an asteroid crash, as first thought

News
people
News
Researchers say a diet of fatty foods could impede smell abilities
scienceMeasuring the sense may predict a person's lifespan
Sport
footballArsenal 4 Galatasaray 1: Wenger celebrates 18th anniversary in style
News
peopleStella McCartney apologises over controversial Instagram picture
News
Gillian Anderson was paid less than her male co-star David Duchovny for three years while she was in the The X-Files until she protested and was given the same salary
people

Gillian Anderson lays into gender disparity in Hollywood

Life and Style
Laid bare: the Good2Go app ensures people have a chance to make their intentions clear about having sex
techCould Good2Go end disputes about sexual consent - without being a passion-killer?
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Richard Burr remains the baker to beat on the Great British Bake Off
tvRichard remains the baker to beat as Chetna begins to flake
Life and Style
fashionThe Secret Angels all take home huge sums - but who earns the most?
Sport
football

Striker ignored Brendan Rodger's request to applaud audience

News
i100
Arts and Entertainment
Amazon has added a cautionary warning to Tom and Jerry cartoons on its streaming service
tv
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Trust Accountant - Kent

NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

Law Costs

Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

Day In a Page

Italian couples fake UK divorce scam on an ‘industrial scale’

Welcome to Maidenhead, the divorce capital of... Italy

A look at the the legal tourists who exploited our liberal dissolution rules
Tom and Jerry cartoons now carry a 'racial prejudice' warning on Amazon

Tom and Jerry cartoons now carry a 'racial prejudice' warning on Amazon

The vintage series has often been criticised for racial stereotyping
An app for the amorous: Could Good2Go end disputes about sexual consent - without being a passion-killer?

An app for the amorous

Could Good2Go end disputes about sexual consent - without being a passion-killer?
Llansanffraid is now Llansantffraid. Welsh town changes its name, but can you spot the difference?

Llansanffraid is now Llansantffraid

Welsh town changes its name, but can you spot the difference?
Charlotte Riley: At the peak of her powers

Charlotte Riley: At the peak of her powers

After a few early missteps with Chekhov, her acting career has taken her to Hollywood. Next up is a role in the BBC’s gangster drama ‘Peaky Blinders’
She's having a laugh: Britain's female comedians have never had it so good

She's having a laugh

Britain's female comedians have never had it so good, says stand-up Natalie Haynes
Sistine Chapel to ‘sing’ with new LED lights designed to bring Michelangelo’s masterpiece out of the shadows

Let there be light

Sistine Chapel to ‘sing’ with new LEDs designed to bring Michelangelo’s masterpiece out of the shadows
Great British Bake Off, semi-final, review: Richard remains the baker to beat

Tensions rise in Bake Off's pastry week

Richard remains the baker to beat as Chetna begins to flake
Paris Fashion Week, spring/summer 2015: Time travel fashion at Louis Vuitton in Paris

A look to the future

It's time travel fashion at Louis Vuitton in Paris
The 10 best bedspreads

The 10 best bedspreads

Before you up the tog count on your duvet, add an extra layer and a room-changing piece to your bed this autumn
Arsenal vs Galatasaray: Five things we learnt from the Emirates

Arsenal vs Galatasaray

Five things we learnt from the Gunners' Champions League victory at the Emirates
Stuart Lancaster’s long-term deal makes sense – a rarity for a decision taken by the RFU

Lancaster’s long-term deal makes sense – a rarity for a decision taken by the RFU

This deal gives England a head-start to prepare for 2019 World Cup, says Chris Hewett
Ebola outbreak: The children orphaned by the virus – then rejected by surviving relatives over fear of infection

The children orphaned by Ebola...

... then rejected by surviving relatives over fear of infection
Pride: Are censors pandering to homophobia?

Are censors pandering to homophobia?

US film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence
The magic of roundabouts

Lords of the rings

Just who are the Roundabout Appreciation Society?