Diageo Deal Just Gets Sweeter

August 14, 2009

(Editor’s note: Yet another twist on this sweet deal from one of our readers.)

Well, here we go.  Sugar prices have reached a 28 year high and are forecast to rise further. The main engine for the price increase is a combination of increased demand for sugar (for ethanol production) and decreased production, primarily in India.  These trends will probably get worse in the future. For example Florida based U.S. Sugar Corp., the nation’s largest sugar producer, has agreed to sell 187,000 acres of sugarcane farmland to the State of Florida to bolster Everglades preservation. Naturally, the same market trends impacting sugar prices are also effecting molasses prices.

Of course, the powers that be at Diageo, PLC and their Captain Morgan division are unconcerned about these trends.  They were able to convince the friendly (and somewhat gullible) Government of the Virgin Islands to guarantee them a price of no more than $.16 per gallon for the next 60 years.  Forget everything else Diageo got in the deal (a total of $2.7 billion in benefits, according to the Blooomberg article linked below)  this gift alone makes this a blockbuster deal for the rum makers.

I really hope the 40 Virgin Islanders who get hired because of this arrangement appreciate everything that the people of the Virgin Islands have sacrificed for their jobs

http://news.bbc.co.uk/2/hi/business/8193390.stm

http://www.guardian.co.uk/environment/2008/jun/24/conservation.usa

http://www.business-standard.com/india/news/high-molasses-prices-may-turn-alcohol-costlier/357757/ 

 http://www.mydigitalfc.com/foods-and-drinks/molasses-prices-rise-low-cane-output-289

http://www.bloomberg.com/apps/news?pid=20601109&sid=amp5wXx35fkc

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32 Responses to Diageo Deal Just Gets Sweeter

  1. Anonymous on August 17, 2009 at 4:50 pm

    BFS, excellent point. St. Croix is destined for something else, the cruise ships are for STT.

    That is exactly why STX senators must step up and closely scrutinize any efforts by this government to initiate developments on STX. For example, Standford, now Diageo, and soon to be Alpine Energy Group.

    You know, it appears as though STX is being used as the dumping grounds of this government for bad deals that are destine for failures. The people of STX is who suffer most when these deals either falls through or investors don’t follow through on their promises to hire locally.

    STX senators must do a better job at protecting their constituents interest.

  2. Devil's Advocate on August 18, 2009 at 11:13 am

    STX Senators are also confused. The majority of them voted against the Diageo Deal, while the majority of STT senators voted in favor for it. Do we not get it that there is only one USVI and what happens on STX affects the entire VI? More rum rebate= more $$$ in the VI treasury. What is wrong with cruise ships coming to STX?

    Hovensa generates revenues for the VI, yet most opposition to this company comes from STX. Why? Is there any deal that is ever good enough? Are we going to continue on the divisive path? There is strength in number, that’s why the Diageo Deal is a done deal. Thanks to the STT Senators for looking out for the confused masses on STX.

    If STX Senators can not do the job of looking out for their constituents, let us support the STT senators for undertaking this endeavor. Hail to the STX senators & the Senate President, a naturalized U.S. citizen.

  3. Sojourner Truth on August 18, 2009 at 11:25 am

    You make a good argument for all senators to be at Large

  4. Us and Them on August 18, 2009 at 12:23 pm

    I wonder if the EDC understands that if they forgive those loans to those individuals or businesses that those loans then become revenue to the foregivee? If they foregive those loans they are obligated to send out a 1099 to the individual or company who are being granted the debt foregiveness. I’d love to see the faces on those individuals if they got those and had to pay tax on it! I doubt they have a clue.

  5. Devil's Advocate on August 18, 2009 at 12:36 pm

    All the senators are equal members of the VI Legislature and should look out for all the people. I support sub-district senatorial elections and do not believe the at Large seat is needed. Senators draft laws and it is the responsibility of the administration to execute the laws that are ratified by the Senate.The senators who are crooks look out for themselves.The people who continue to vote for the crooks are misled by these con-artists. The crooks get away with robbing us blind. Who the senatorial crook cap fits,wear it & smile on your way to the bank. We get the government that we deserve!

  6. Anonymous on August 18, 2009 at 3:05 pm

    Anything you say Rodger Morgan.

  7. Us and Them on August 18, 2009 at 5:22 pm

    We’ll never have districting. It would mean that Senator’s would be held accountable.

  8. Districting on August 18, 2009 at 5:58 pm

    US and Them, districting is coming as soon as we get done with some housing cleaning business.

    Thanks CIF for being there for this community and its grass roots.

    Stand Firm CIF, we can only imagine the behind the scenes pressures that your staff receive each day to not publish certain post to your site.

  9. Devil's Advocate on August 18, 2009 at 10:32 pm

    Hold the electorate responsible. They can impose term limits by not re-electing crooks.

    How does CIF protect the community against political corruption? Just asking.

  10. EyesWideOpen on August 19, 2009 at 8:29 am

    Devil’s Advocate,

    Diageo is here to stay whether the “public” likes it or not, and the Public will have its say whether Diageo likes it or not.

    In this regard, the “public” will demand of Diageo that it must employ the local work force; it must utilize local resources; and it must strive to “pump” or “infuse” money into the local economy.

    Diageo has begun on the wrong foot:

    Instead of importing off-island workers and off-island equipment, Diageo should have utilized the on-island heavy equipment and on-island heavy equipment workers currently and amply available in the Virgin Islands.

    Diageo has amp to hire off-island instead of on-island resources, thus funneling money outside the Virgin Islands instead of pumping money into the territory.

    Now, Diageo (after much public discourse) is offering to the remedy the matter by giving the local “crumbs” of what is left at the “Site Clearing Project.”

    St.Croix’s economy may be equated with a hospital patient requiring a blood transfusion, so why is Diageo infusing blood into another patient?

    Is Diageo saying to the Virgin Islands that we are Third World and Third-Rate?

    Diageo’s action is indefensible!

  11. Us and Them on August 19, 2009 at 8:43 am

    What are the fines for a company doing business in the USVI who are not licensed to do business here? Perhaps that would help clarify the “hire local” requirements for Diageo.

  12. T on September 11, 2009 at 3:49 pm

    Construction on the Diageo plant will official start later this fall. They are getting ready to pour concrete for the foundation.

    http://stthomassource.com/content/news/local-news/2009/09/10/diageo-construction-schedule

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