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Puerto Rico rum excise-tax rebates up 7.5%
Impact International / November 15, 1996

By Larry Luxner

WASHINGTON -- Excise-tax receipts on U.S. mainland sales of Puerto Rican rum rose by 7.5% in fiscal 1996, reaching a total of $202 million -- marking the second consecutive increase in rum tax revenue since receipts began dropping in the 1980s.

Pedro Pou, who heads the government's Rums of Puerto Rico program, credits new rum products and advertising for the turnaround.

"New flavored rums like Bacardi Limón, which has been a hit on the market, have affected growth very positively," Pou said in an interview from San Juan. "We see that trend moving along with spiced rums, which have become so popular among younger, legal drinking-age consumers that Bacardi has just released a spiced version too."

The federal government returns tax receipts on all U.S. rum sales -- Puerto Rican and other Caribbean rums -- to the Puerto Rican and Virgin Islands governments. In fiscal 1995, Puerto Rico received $187.9 million in rum excise rebates, and $179.9 million in fiscal 1994. That's way down from fiscal 1984, when stateside rum sales earned the Caribbean island $386.6 million in excise taxes.

According to Pou, Bacardi alone accounts for 80% of U.S. rum sales, and the lion's share of Puerto Rican rum production. Other island rum manufacturers include Destilería Serralles, Barrilito and Ron Llave.

"We're very happy with the results that Puerto Rican rums have had, and their contribution to the Puerto Rico Treasury," said Pou, whose office is responsible for coordinating a $9.5 million annual publicity campaign by Martí Flores Prieto entitled "Only the Finest Rums Come From Puerto Rico." In addition to that campaign, which is entering its fourth year, Pou's office is also spending $2 million a year on point-of-sale, on-premise promotional support and other marketing programs. The Rums of Puerto Rico budget is based on 10% of the federal tax rebate on bulk-rum sales in any given fiscal year.

In contrast to previous campaigns, the present advertising strategy highlights the island's specific rum brands, which Pou said has been very effective.

Bacardi's five different rums, as well as Destilerías Serrallés' Don Q, Palo Viejo, Ronrico and Captain Morgan, each have their own ads, linking the rums with the concept of a Caribbean vacation and romance.

Mario S. Belaval, executive vice-president of Bacardi, told The San Juan Star that up until the last few years, U.S. rum sales had consistently declined, but that rum has now stabilized. "The hard-liquor market has been going down at an average of 2% a year, but rum sales have been going down at a significantly lower rate compared to other liquores such as vodka and gin," he said.

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