Bahamas News

New trade arrangements that have evolved in the past few years have erased the hefty duties Bacardi & Company had to pay to import rum from Puerto Rico to Europe; that means the company no longer needs The Bahamas as a middleman, according to a company official.

Added to that, industry-wide consolidation has cranked up the competition in the spirits business.

Bacardi Vice President of Corporate Communications Patricia Neal cited these two factors as among the main reasons Bacardi will be shutting down its Nassau operations by April 2009.

Ms. Neal stressed the fact that Bacardi is a large, internationally dynamic company – it’s the third largest spirits company in the world, and operates in 180 countries around the world – and that the company is always on the lookout for better “economies of scale.”

“We have our largest premium rum distillery in Catano, Puerto Rico, and this distillery happens to be the largest premium rum distillery in the world for anyone, and so what we have is that that facility can absorb the volume that was produced in Nassau without any significant increased impact or change in essential employment status there,” she said.

Ms. Neal explained that along with the fact that the volume of rum produced in Nassau can be absorbed by Catano with no real change, it is also important to understand that Bacardi has “several rum distilleries in the Americas and we feel that it is best to consolidate primarily into the one which is the largest.”

“One of the things that attracted us to Nassau, one of the many things, was the fact that we were looking to do our business in Europe, and we would have at the time tried to have this production concentrated in Puerto Rico because Puerto Rico is our largest distillery, and it’s some six times larger than the distillery in Nassau,” she said.

She reiterated that there had been hefty duties imposed upon imports into Europe from Puerto Rico, which didn’t exist when exporting from The Bahamas.

“In the last few years, new trading agreements have been put in place and now those duties no longer exist for us to have to ship our product from Puerto Rico – our main, central, principal rum distillery – to Europe, so that was another factor involved in our decision,” she said.

The corporate spokeswoman also elaborated on the consolidation question.

“In the past five to six, seven years, there has been vast consolidation in the industry that has made the industry far more competitive, and like any company that has international operations – in virtually any company that I know of – every day people are looking at what is best for the long term growth and competitiveness of the company,” Ms. Neal said.

She said it was partially this industry-wide consolidation that has made it in Bacardi’s best interest to prepare to cease operations in Nassau by April 2009.

Questioned about whether The Bahamas’ non-participation in an Economic Partnership Agreement (EPA) with Europe played a role, Ms. Neal pointed out that Bacardi made its decision for its own reasons.

“Our company made our decision based on our business, and the way our business is, and we feel like this is the best decision for our company for the long-term productivity and growth of our company,” she insisted.

Bacardi – which sells 20 million cases of rum a year – has promised to find work for the company’s 114 Nassau employees before its doors here are closed in a year and a half.

Bottling operations will cease first, followed by distillation and then aging.

Source: Bahama Journal