Keep Caroni’s rum stocks in TT hands

“We never know the worth of
water till the well is dry.”
Thomas Fuller, Gnomologia, 5451.

Preference for the sale of Caroni (1975) Limited's highly valuable rum stocks should be given to a local investor rather than to foreign capital.

A bid for the rum stocks by a foreign investor, even though it may be higher, and at best marginally higher, than that made by a local investor, would in the medium and long term, be far less beneficial to Trinidad and Tobago than acceptance of a local bid. The reasons are clear. The earnings derived by a domestic company [or investor] are likely to be retained in Trinidad and Tobago to further develop the country, and in the process create more jobs and contribute additional revenues to the Treasury.

Let us assume that the foreign company or investor should bottle the rum here and sell it both on the local market and internationally, then it will follow as the night the day that the net earnings made from the rum stocks will be exported to the country, where the company/investor is based, whether it be the United Kingdom, the QUnited States of America or Timbuctoo. In turn, there is the likelihood that the foreign owner would bulk ship the Caroni rum stocks to a plant overseas to be bottled and labelled, and rum in excess of his home market demand would be re-exported. All of the profits, save for those made by overseas distributors, would remain in the country, where the rum is bottled.

Let us say, for example, that the investor operates out of the United Kingdom, then the British Treasury would earn not only additional corporation taxes, along with additional Value Added Tax and Customs and Excise duties, but increased Personal Income Tax gained from salaries and/or wages flowing from added employment. The converse would hold good for this country. Trinidad and Tobago would lose from a drop in corporation and personal income taxes, as well as Customs and Excise duties and Value Added Tax. There would be a fall off in employment and employment opportunities at the existing Rum Division of Caroni (1975) Limited. And while, there would be an increased turnaround of money within the British economy, there would be a falloff in Trinidad and Tobago's.

In addition, whether there is an export of profits from Trinidad and Tobago or the profits are wholly earned in the United Kingdom  this would represent a loss of needed foreign exchange. I maintain that it would be false economic thinking to give undue weight to a few million dollars [or pounds] more offered by a foreign company/investor for Caroni's rum stocks, while ignoring the clear monetary benefits that can be gained by having the stocks in local hands and developed by local capital.

Should Government go the way of preferential consideration to domestic bidders, then a Trinidad and Tobago company, either with a policy of, or intent on developing a policy of shifting “away from the commodity market to the export of products” would, even as it seeks to optimise earnings for itself, optimise earnings and revenues for the country. All of this would be in the context of the need to develop strategies for dealing, effectively, with World Trade Organisation regulations, with specific reference to the preferential entry quota of sugar to the European Union within the framework of the Convention of Lome. And in much the same way that there is a need to shift from simply the production of raw sugar, [as beneficial as the Lome Convention may appear to be, and incidentally it is not] to that of white or refined sugar, there is also the need to shift from bulk export of rum to branded, bottled rum.

If I may be allowed to stray a bit. The Caribbean's exports of sugar to the United Kingdom, first under the Commonwealth Sugar Agreement, and then when the UK joined the then European Economic Community, was limited to raw sugar. This raw sugar was later refined in the UK, in keeping with the old Imperialist policy that the colonies and/or Third World territories, should be kept as providers at the bottom end of the economic chain for the benefit of the exploitative Imperialists. Today, the European Union (of which the UK is a member) exports some 5,000,000 tonnes of refined sugar annually!

Trinidad and Tobago, along with the rest of CARICOM, is engaged largely in the bulk selling of rum to the UK, where it is either bottled, or used to blend other rums and/or alcoholic beverages and then placed on the product market. The point I make here is this, and it was a point made by Peter Salvary, Executive Director and Corporate Secretary of C L Financial, some time ago, is the need to concentrate on products. This is where the real money lies and clearly not in bulk selling. Trinidad and Tobago produces some of the world's finest rums, several of which have won international awards. For example, Caroni (1975) Limited's Legend 14 Year Old, its Special Old Cask Rum, its Felicite Gold, White Magic and Stallion Puncheon Rum have all won international awards. Other prize winning Trinidad and Tobago rums in annual Rumfest competitions, in which more than 160 of the world's best rums have been judged, have included Angostura's Old Oak White and Fernandes Distillers Vat 19.

If I have emphasised the export of rum products, as opposed to the bulk selling of rum, it is because Trinidad and Tobago is facing, as are other ACP signatories to the Convention of Lome, the end of Lome's preferential entry of sugar by 2006. And the need to move away from raw sugar production and encourage a greater shift to rum products, while at the same time optimising economic returns, is urgent. We need to further develop and market our rums. Already, there is at least one CARICOM rum producer fetching as much as TT$800 per bottle of rum in niche markets in the United States and the United Kingdom. The niche markets are there to explore and develop, and it would be shortsighted to sell Caroni (1975) Limited's rum stocks to foreign investors, when selling the stocks to a Trinidad and Tobago investor will ensure that the nation benefits.