Rum Becomes Contentious Issue in USVI Gubernatorial Race

FILED SEPTEMBER 17, 2018

Leading up to this year's gubernatorial election in the US Virgin Islands, rum cover-over funds have become a hot topic for debate.

REFRESHER. The US government issues a $13.25 tax refund per gallon to Puerto Rico and the USVI when spirits are produced there and exported to the US. This is called the rum cover-over subsidy. Millions of dollars in subsidies are then passed on to multinational spirits producers.

This year the cover-over funds increased by $24 million for the USVI to $251 million. Of that $24 million, $20 million goes to the rum companies and $4 million goes to the general fund.

The issue gained steam last week when current USVI Governor Kenneth Mapp said he refused to do business with two rum companies interested in setting up shop in the territory because they wanted a deal similar to what Diageo set up with its Cruzan Rum, per the Virgin Islands Consortium. The governor contends the local government got the short end of the stick in its deal with Diageo.

"We don't have any interest because we're not in the business of giving away the revenues of the treasury and then putting the burden on the citizens that live and work in the Virgin Islands and conduct business here," he said.

The democratic gubernatorial candidate Albert Bryan believes they're not in a place to turn down business. "If we're saying that the governor had three offers to build distilleries here that's shame on him. We had offers to build three distilleries in the Virgin Islands; that would have fixed our retirement system overnight," he said.

FRENCH IMPORTER BCI LOOKS TO TAP INTO AMERICAN CURIOSITY

French wine has been a leading export category in the US for decades, but it isn't the same category it was even a few years ago. Consumer drink trends such as premiumization, sparkling wine and rose trends have played right into the country's wheelhouse. In Q3, French wine imports were up 18% by volume and 22% by value, according to Rabobank's quarterly report.

DEMOCRATIZING FRENCH WINE. But the French wine category continues to evolve as it always has. Jean-Francois Bonnete, industry veteran and founder of French wine & spirits importer BCI, is on a quest to make French wines "more approachable and more fun for American consumers."

To that end, one of the focus brands for BCI is the result of a partnership with French wine producer Badet Clement on a label called Liberation de Paris. The brand has lighthearted messaging, and at $10-$15 per bottle, is positioned as an everyday sort of wine. "This is where we need to position our brands to bring people... to the French wine category. Pricing is important. We do not want to be an occasion wine. We want to be the daily wine."

FRENCH SPIRITS TO WATCH. BCI has also built a solid portfolio of French spirits including: Bache-Gabrielsen Cognac, Trois Rivieres agricole rum, and New Grove rum.

Consumer curiosity is increasing "dramatically," says Jean-Francois, and the palate for spirits is transitioning away from neutral to more flavorful. With that in mind, he believes French brandy, whisky and rum agricole are the categories to watch. French whisky is in very early stages of development with "tremendous work to be done," but it could trigger interest from US consumers, he says.

IN IT FOR THE LONG HAUL. The alcohol industry is full of 20-year overnight successes, says Jean-Francois, so BCI feels strongly that its partners need to understand brand building. "Organic growth is a strategy that a lot of people talk about, but in reality, very few implement in the US market."

Instead of targeting specific demographics to market its brands to, BCI believes what its consumers have in common is the same mind frame. They are curious and they want to learn. "Younger consumers are coming very conscious and very curious. And that is going to reshape the type of brands in the spirits industry in the next 10, 20 and 30 years."

OLCC FILES COMPLAINT OVER COPPER CANE WINE LABELS

Napa Valley-based Copper Cane Wines may be in hot water in Oregon over labeling. The Oregon Liquor Control Commission said Copper Cane "may not be in compliance with federal and Oregon wine labeling and advertising regulations," in a complaint to the TTB filed last week, per Wine Business.

Copper Cane's labels Elouan and The Willametter reference Willamette Valley, Umpqua Valley and Rogue Valley AVAs in Oregon. The issue is whether or not the wine is fully finished in the state, thus allowed to include the AVAs on the label, per the complaint.

The OLCC is looking into the issue because the Oregon Winegrowers Association sent a letter to the commission last month saying that Copper Cane may be purchasing bulk wine produced in Oregon but then vints and bottles that wine at its winery in Rutherford.

Under current state law, to claim a wine is from an Oregon AVA, it must contain 100% Oregon fruit and 95% from the named AVA and the TTB requires the wine be fully finished in the state where the AVA is located.

"We're very proud of the Oregon wine industry and we're also very protective of it," says David Gomberg, a state house representative and chairman of the House Committee on Economic Development and Trade, which is set to discuss wine labeling laws at a hearing on September 24.

WSD BRIEFS:

ABSOLUT LAUNCHES "STOP THE SUGARCOATING" CAMPAIGN. Pernod Ricard has launched the #NoSugarCoating campaign for Absolut as part of its latest launch of Absolut Grapefruit, which is made with no added sugar. With the help of actor Jesse Tyler Ferguson, Absolut will release a series of seven social videos featuring a mix of 10-30 second spots that remove the "sugarcoated filter" and offer a new perspective on everyday life, per a release. Absolut Grapefruit is bottled at 80 proof and will be available nationwide with a suggested retail price of $20 a 750ml.

WILSON DANIELS NAMED US IMPORTER FOR EDMUND DE ROTHSCHILD HERITAGE WINES. Wilson Daniels has become the sole US importer of Bordeaux wines of Edmund de Rothschild Heritage. This partnership will allow Wilson Daniels to add Chateau Clarke, Chateau Malmaison and Chateau des Laurets to their portfolio and will distribute them throughout the US.

BLACK INFUSIONS RELEASES GOLD APRICOT VODKA. Black Infusions has released Gold Apricot, vodka infused with dried California apricots. It is a 100% natural, gluten-free spirit made with real fruit and is bottled at 60 proof. It will be available in 13 states at a suggested retail price of $33 a 750 ml.

CONOR MCGREGOR LAUNCHES PROPER NO. TWELVE IRISH WHISKEY. Eire Born Spirits, founded by Irish Mixed Martial Arts champion Conor McGregor, has released Proper No. Twelve Irish Whiskey. Conor didn't want to just endorse an Irish whiskey, he wanted to create his own whiskey inspired by his pride for Ireland and his love for Irish whiskey, per a release. The whiskey was made by master distiller David Elder, who created close to 100 whiskey blends before deciding on the one proper whiskey blend and bottled it at 80 proof. Proximo Spirits has been named the global distributor and Proper No. Twelve will be available in Ireland and the US.

Until tomorrow,
Your Editors

Emily Pennington - emily@winespiritsdaily.com
Sarah Barrett - sarah@winespiritsdaily.com

"A neurosis is a secret that you don't know you are keeping." - Kenneth Tynan

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