US Virgin Islands Governor Proposes Modifications to Cruzan Rum Agreement

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By the Caribbean Journal staff

US Virgin Islands Governor John de Jongh has submitted to the Legislature modifications to the agreement between the government of the Virgin Islands and Cruzan, VIRIL, Ltd, the St Croix producer of Cruzan Rum and other bulk rum products.

The changes aim to assure a greater ability for Cruzan to compete in critical markets for bulk rum.

The government signed its agreement with Cruzan three years ago, and it said that in the interim many of these markets have become substantially more competitive.

De Jongh and Beam, Cruzan’s parent company, have agreed to proposed revisions in their existing agreement which would stabilize the govenrment’s support for bulk rum at levels below current levels.

In exchange, Cruzan has agreed to specific goals for steady increases in aggregate production and for continued investments in products that will bear “Virgin Islands rum” labels.

Cruzan reportedly fears that without the changes it could lose its historically strong competitive position in the bulk rum market.

Until Diageo’s construction of the Captain Morgan distillery, which began production this year, it had been the primary source of rum excise tax revenues generated for the government’s General Fund and capital investment across the USVI.

“These mutually beneficial adjustments will give the Cruzan distillery the tools we need to compete in the important bulk rum market while we continue to invest in and grow the Cruzan Rum brand,” said Gary Nelthropp, president of Cruzan Rum.

Governor de Jongh called the proposed amendments “both timely for our need for revenue stability and corporate community involvement and necessary to sustain and strengthen a company that has been our partner for many years.”

 

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