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Jamaica rum battle has a French twist

The rumble in the spirits market over the composition and redefinition of Jamaican rum is in part driven by a French company that co-owns National Rums of Jamaica Limited, NRJ, industry sources in Jamaica and Barbados have said.

The division resulted in a face-off among local rum makers last week behind closed doors at the Jamaica Intellectual Property Office, the state-run trademark agency. The meetings occurred on September 25 and September 27.

“We await a decision from JIPO,” said Martha Miller, CEO of National Rums of Jamaica Limited, following the hearings.

“JIPO gave no timeline on issuing a decision. Several matters are being discussed and all the matters being positioned are to ensure the inclusiveness of the GI and all existing players in Jamaica are able to operate,” she said.

The parties at the meeting included National Rums, Spirits Pool Association Limited, which represents the industry, J. Wray & Nephew Limited, JWN, which is European-owned.

The newly named French company said to be central to the debate is Maison Ferrand, which owns a piece of National of Rums of Jamaica through a regional subsidiary. It also owns the Plantation Rum brand.

“This action serves to safeguard the distinct attributes attributable to the spirit’s origin in Jamaica, thereby aiming to capitalise on the resultant enhanced value. This enhanced value will drive the Jamaica Rum industry to become more focused on high value rum brands aged in Jamaica, where most of the value created will accrue to the benefit of our country and our people,” said General Manager of Spirits Pool, Christopher Gentles, in a statement to the Financial Gleaner following the hearings.

How Jamaican rum is defined carries high stakes, especially for the producers of premium or branded rums.

The market is entirely made up of privately held companies, so the size of its turnover is unknown. However, the largest player among them, J. Wray & Nephew Limited, which is said to control a majority share of the market, reported revenue of around $25 billion last year.

Spirits Pool says there are well in excess of 50 rum brands produced in Jamaica. Industrywide, some 28.5 million litres of rum are produced annually, of which 12 million litres is in the form of bulk rum.

“That means approximately 16.5 million litres are manufactured for the branded Jamaica bottled rum business,” he told the Financial Gleaner on Friday.

The limits of the Jamaican rum GI can impact sales going forward within a sector where some operators, such as Worthy Park, sell branded and aged rums, while others sell less expensive bulk rum used for blending or white labelling, including NRJ.

Bulk rums are exported for US$2.50 to US$4.50 per litre; however, after ageing and bottling the value jumps to US$12 to US$20 per litre.

“The Spirits Pool Association recognises that our Jamaica rum industry is currently evolving to an era of the development of brands and premiumisation. Just recently within five years there has been Worthy Park Select, Worthy Park Single Estate, Hampden Great House Limited edition, Long Pond Special Edition 15 year old rum,” Gentles said.

In order to protect the Jamaica rum brand, Spirits Pool Association and local distilleries pushed for Jamaican rum to be granted GI or geographical indication status, which the country achieved in 2016.

A GI is a mark that establishes a product’s specific geographical location or origin.

In recent times there has been a new push by distilleries to add more stringent criteria to the designation regarding the rules that govern the processing and ageing of the rum. But National Rums, which sells branded rum but mainly trades in bulk rum, opposed the changes, according to information from industry sources.

If the rules remain as is, NRJ as well as Maison Ferrand, which produces the Plantation Rum brand, would have fewer future hurdles to source and bottle rum as being Jamaican in origin, according to Gordon Clarke, managing director of Worthy Park Estate.

“For example, now [they] want any type of water to be used to make rum, even sea water; they want ageing in tanks instead of barrels; and ageing overseas, which is up to three times slower and less impactful than exists when aged in Jamaica,” Clarke said. Worthy Park Estate produces the Worthy Park and RumBar brands, which are described as the second best-selling rums after the brands sold by market leader JWN.

In the past, NRJ has spoken about the dispute in general terms. And Miller continued in that vein on Thursday when asked to respond to Clarke’s statements.

“It is a matter that needs to be addressed to ensure the inclusiveness of the industry,” Miller said. “I will not comment on that,” she added.

The limits of the Jamaican rum GI can impact sales going forward within a sector where some operators sell branded and aged rums such as Worthy Park, while others sell less expensive bulk rum used for blending or white labelling, including NRJ.

Efforts to reach Maison Ferrand for comment have not been successful. The facilitation of contact through NRJ did not materialise.

However, Miller asserted that any Plantation Rum labelled as containing Jamaican rum would have single origin and meet the existing GI criteria.

The French company owns West Indies Rum Distillery (Barbados) Limited, WIRD, which in turn owns one-third of National Rums of Jamaica, a company headquartered in Kingston.

NRJ, which controls about half of unbranded bulk rum exports from Jamaica, is also co-owned by the Government of Jamaica through SCJ Holdings, and Demerara Distilleries of Guyana. Each of the three shareholders hold one-third of the business.

“As much as four years ago the rules for the Jamaica GI were being contemplated for adjustment and tightening, and that is when National Rums sought to go in the opposite direction and loosen the rules,” said Clarke, adding that many of the rules we aligned to the pre-existing Jamaica Rum Standard and the Caricom Rum Standard, including the avoidance of adding sugar in the distilling process.

Foursquare, a rum distillery in Barbados, also fingered the French rum investor for foot-dragging in that market.

“In Barbados, our [GI] application was in place in 2016. Through the subsequent actions of WIRD, the process was effectively abandoned,” said Richard Seale, master distiller and blender at Foursquare, in comments to the Financial Gleaner.

Seale said the effort died following the 2017 acquisition of WIRD by Maison Ferrand. Speaking from an industry perspective, he said the French company operates in and outside of Barbados, and as such its interests and that of local distillers diverged at times.

In Jamaica, JWN is owned by Italian company Campari Group, but its operations and the bottling of its rum brands Appleton Estate and Wray & Nephew occurs locally.

“The business model of Appleton, Worthy Park and Hampden is that a Jamaica rum wholly produced within Jamaica has unique characteristics and most notably is more expensive to produce. A GI is the best route to execute this business model so that this product is clearly identified through registration,” said Seale.

“The Plantation brand business model blurs between Jamaica rum that is wholly made on the island or otherwise,” he said.

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