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Chapter Two:
Chapter Three:
Chapter Four:
Chapter Five: The Ministry of Rum: Unplugged
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WIRSPA UnpluggedAre you a fan of Caribbean rum? Most people are. A recent survey found that eighty-five per cent of UK respondents stated they would be “more interested” in “trying rum from the Caribbean compared to rum from other parts of the world”, with 38 per cent saying they would be “a lot more interested”. I suspect an American survey would be similar. The point: rum from the Caribbean doesn't need much promotion. Rum sales confirm this. So what's with WIRSPA and their campaign to promote "Authentic Caribbean Rum" - so called "true rum" - and their seals guaranteeing age? Is this simply an attempt to "protect" the consumer, and promote rums from the (entire) Caribbean? Are we being threatened with counterfeit rums from the Caribbean? Not for a second. Following are selected exerpts from a Canadian Senate hearing and testimony by WIRSPA and the Canadian Whiskey Association. Watch power politics in action as WIRSPA and the CWA try to cut a deal. It is lengthy, but well worth the read. Feel free to skip ahead and read my conclusions at the bottom of this page. Here's to WIRSPA! Here's to "true chutzpah"!
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Senate of Canada Hearing:
Senator Oliver: I have two short questions. We received an email from an organization called West Indies Rum and Spirits Producers’ Association, who are concerned about the definition of ‘‘rum’’ presented in the schedule to this bill. They would like to see it changed to read ‘‘made from sugar cane products fermented and distilled in a Commonwealth Caribbean country.’’ Senator Kessler: It may be that the standard for rum has changed in the Caribbean country, but the process to change a trade commitment would be country-to-country negotiations and not negotiations with an industry sector making a representation directly to the federal government. Mr. Easter: We do believe this is a win for all the players involved. It is certainly giving protection to spirit names such as grappa, ouzo, et cetera. It is bringing greater protection and confirming the agreements that have been reached with both the Europeans and the North Americans. Mr. Koestler: Yes, the Europeans will be protecting Canadian whisky and Canadian rye whisky. Canadian rye whisky exports to the European Union in 2003 were $18 million and in 2004 were $16 million. A significant portion is actually exported in bulk. This agreement ensures that when Canadian whisky is exported in bulk and rebottled in the European Union, it must be rebottled to Canadian standards. They cannot dilute it to 25 per cent alcohol or 10 per cent alcohol and still call it Canadian whisky. It has to be made according to Canadian standards. For example, it has to be 40 per cent alcohol. It cannot be diluted more than that. Senator Tkachuk: Why would that be to our advantage? If we did not take part in the agreement, could we make ouzo here and call it ouzo? Could we make grappa and call it grappa? Senator Tkachuk: A company could make a product the same as ouzo, but they could not call it ouzo? Mr. Easter: That is right. There is one exception now being made in the bill that will be protected. Mr. Koestler: Yes. There is a product called ice grappa, which is made in Canada, and there is a provision built into this bill to allow that to continue to be made and sold as ‘‘Ice Grappa’’. Senator Tkachuk: ‘‘Coca-Cola’’ is a brand name. Why is ‘‘Grappa’’ not a brand name? What does grappa have to do with us? Mr. Koestler: If you look at the Canadian spirits industry or the Canadian whisky industry, there are two levels of nomenclature. One level is for the name that is distinctive to the country. It sets out the standard for all producers of Canadian whisky and ensures that there is a certain level of quality, consistency, and recognition for the product that is coming from Canada. Above that, there are specific brand names that are registered as trademarks. There are quite a few well-known Canadian whisky brand names. Senator Mitchell: Just to get a matter on the record for future reference and for any of the people in several areas of the country who might be watching, the names ‘‘Newfoundland Screech’’ and ‘‘Yukon Jack’’ were raised in the Senate, as was the name ‘‘Slivovich’’. I wonder if you could address how those liquors are protected or how they were dealt with. They are not dealt with in this act. What protections do they have? Mr. Koestler: This legislation is for the purpose of protecting foreign spirit drink names that are identified within it, and Canada has agreed to protect them in the context of our international trade agreements. It does not provide protection for Newfoundland Screech or Yukon Jack per se. Both of those names are registered trademarks used in association with rum- and whisky-based liquors. Newfoundland Screech was registered as a trademark in 1982 by the Newfoundland and Labrador Liquor Corporation, and Yukon Jack was registered as a trademark in 1977 by Diageo North America. Both of those names are protected under the Trademarks Act. This act does not provide protection for the term ‘‘Slivovich’’. It has not been the subject of any of our international trade agreements. Senator Mercer: I think we should have samples of these so I understand what we are talking about. Senator Robichaud: You mentioned ice ouzo. Mr. Easter: It was ice grappa. Senator Robichaud: Yes, excuse me. I remember having grappa once. The meeting would not last long if we were to sample that stuff. You said that we produce ice grappa in Canada. Mr. Koestler: Yes, and we sell it too. Senator Robichaud: Do we have to use grappa produced in Italy? Mr. Koestler: No. This is a trademark for a product made in Canada. Senator Robichaud: That is accepted? Mr. Koestler: Yes. Senator Mercer: In Senator Oliver’s previous question, he talked about the email we all received about rum. The wording was something to this effect: ‘‘...made from sugar cane products fermented and distilled in a Commonwealth Caribbean country.’’ As you know, over the past 35 to 40 years Canada has prided itself on the fact that we have had open trade and close relationships with Cuba. Cuba produces rum from its own sugar cane. I am not opposed to changing the definition to allow for the use of sugar cane from other places, but I am concerned about using the definition presented to us, including the words: ‘‘...in a Commonwealth Caribbean country.’’ I am a big supporter of the Commonwealth, but I am also a big supporter of Cuba. I would not want us to trip over ourselves. Senator Mercer: That is a real issue, because we do a great deal of trade with Cuba. Mr. Easter: I do not think we could add anything further than what we have said. It was felt that, if we had put that in the bill, it would be declared ultra vires and should be part of a trade agreement. Senator Tkachuk: Would it mean that people could not sell Cuban rum in Canada? Mr. Koestler: No. Senator Robichaud: Theses are suggestions from the industry. Mr. Koestler: Yes. Some were made by the industry and some by government in the discussions that were held. The Chairman: Colleagues, we have from the Association of Canadian Distillers, Jan Westcott, President and Chief Executive Officer, C.J. Hélie, Executive Vice-President. From West Indies Rum and Spirits Producers’ Association, we have Milan Stolarik. Gentlemen, who would like to begin? Mr. Westcott: The value of our business is tied to the inherent value of our brands. Formal recognition by the EU of Canadian whisky and rye whisky provides the Canadian spirit industry the opportunity to invest and grow our brands secure in the knowledge that our investments will not be undermined by fraudulent products designed to trade unfairly on the image and reputation of Canadian whisky. It is worth noting that this protection for Canadian whisky applies equally across the EU, including the 10 new accession countries as well as all future member states, whether they have a bilateral agreement with Canada or not. In return for the EU recognizing and protecting Canada’s own unique products, Canada has agreed to recognize and protect certain spirit drinks as exclusive products of specific EU member states, namely: Grappa, Ouzo, Jagertee, Pacharán and Korn or Kornbrand. Bill S-38 is intended to provide protection as agreed to in the agreement with the European Union. As an aside, members should be aware that Canadian manufacturers are not producing these five products here in Canada, and therefore, we do not believe there are negative economic implications associated with the decision to recognize them as exclusive products of the EU. Many consumers associate these products with specific EU regions or countries, and therefore it is reasonable to protect these terms so consumers are not confused as to their true nature. The reciprocal recognition of each of our own unique or flagship products as outlined in the agreement is in the best interests of both Canadian consumers and the Canadian industry and has our strong support. The current drafting of the schedule explicitly addresses the continued importation in bulk and bottling in Canada for three of the identified products. In particular, the schedule describes stringent rules for the use of the terms ‘‘Scotch Whisky,’’ ‘‘Irish Whisky’’ and ‘‘Caribbean Rum’’ when imported in bulk and bottled in Canada. In doing so, the schedule implicitly recognizes the practice of importing these products in bulk and bottling them in Canada. However, the schedule does not describe the similarly strict rules for use of the terms ‘‘American Bourbon,’’ ‘‘Tennessee Whisky,’’ ‘‘Tequila’’ or ‘‘Mescal’’ for bulk imports bottled in Canada as currently outlined in the Food and Drug Regulations, which I will refer to as the FDR. This dichotomy of approach may create some confusion as to permitted activities by Canadian bulk importers. We have also been advised that it is the intention of the Government of Canada to eliminate certain provisions currently found within the Food and Drug Regulations that will duplicate provisions in Bill S-38 once it becomes law. That raises two issues: First, it will be important to have consistency between the Spirit Drinks Trade Act and the FDR. For example, without an appropriate amendment to section B.02.033 of the FDR, the provision of Bill S-38 permitting the blending of 1 to 1.5 per cent Canadian rum with Caribbean rum would be inconsistent with the general prohibition of adding Canadian rum to any imported rum. Mr. Milan Stolarik, Advisor, West Indies Rum and Spirits Producers’ Association: I will be very brief. The West Indies Rum and Spirits Producers’ Association is very supportive of this bill, but would like to suggest some minor changes to the schedule of the bill to bring it up to date and to make it accurate. Before I get to the specifics, let me just say that, as you know, Canada and the Commonwealth Caribbean have a special relationship, which they have had for over 200 years. There is also the Canada-CARICOM Trade Act, and Canada has made commitments to the Commonwealth Caribbean by way of the Rum Protocol, signed about 15 years ago. It also has trade legislation, which is called CARIBCAN, which is actually a one-way free trade movement of goods from the Commonwealth Caribbean to Canada. There is a long history to this particular issue. Specifically, the West Indies Rum and Spirits Producers’ Association would like to see two changes to clause 14. (1) (a) of the schedule, which is found on page 7 of Bill S-38. The first change is to take out the words ‘‘of a Commonwealth Caribbean country’’ immediately following the word ‘‘products’’. Second, we recommend that the term ‘‘distilled and fermented’’ be changed to ‘‘fermented and distilled’’. Clause 14. (1)(a) would now read: 14. (1) Caribbean rum may be sold under that name if it has been (a) made from sugar cane products fermented and distilled in a Commonwealth Caribbean country. The reasons for these changes are as follows. The Caribbean community — CARICOM, as it is referred to — has a standard for rum that came into being in 1992. That was subsequent to the Food and Drug Regulations of 1989, which presently govern this matter. The CARICOM rum standard, which I believe was circulated to you, does not lay down any criteria for the source of the raw material used in the distillation process. As a matter of fact, none of the other products from the various countries listed in the schedule specify sources of raw material. Consequently, it would be sensible and logical to amend the language of any new legislation to conform to the CARICOM standard for rum, and to correct some errors that were committed 16 years ago. The reason for the second change is due to the fact that molasses are first fermented and then distilled and not vice versa. Again, we would like to correct a simple error, but it is there in legislation. This happened in 1989, when the regulations under the Food and Drugs Act were implemented. Mr. Stolarik: At the moment, there is not a problem in the Caribbean that we can identify. Two or three years hence there may be some Caribbean countries that will no longer be able to grow the sugar because of economic reasons. They may have to import sugar. They can now import it from perhaps other Commonwealth Caribbean countries, but it is more economical to import it from Venezuela or Brazil, where they grow sugar on a mass-production basis. Senator Tkachuk: With respect to the product that they were making the rum from, which they want to keep as their product, they foresee a time when they would have to import it; it would be like malt and barley from Saskatchewan being replaced by growing it in Ohio. Is that what they are asking for? Mr. Stolarik: I think so. Senator Tkachuk: Can we not import the sugar cane from Brazil and make the Caribbean rum right here? Mr. Stolarik: No, because it specifies that it must be distilled in a Commonwealth Caribbean country. Senator Tkachuk: Are they more worried about Brazil making the rum? Mr. Stolarik: No, they are not worried about anyone making it. They are worried about not having the product from the Commonwealth Caribbean to make the rum to meet the standard. Senator Tkachuk: It is confusing. I have several questions that I want to get to. This bill provides us with an agreement with the European Union. What about South American countries? Do we have an agreement with them for the protection of brands, like Canadian whisky, through NAFTA? Mr. C. J. Hélie, Executive Vice-President, Association of Canadian Distillers: Yes, Chile through the FTA. Mr. Westcott: Not necessarily with other countries. Obviously, we would like to explore these kinds of agreements with other countries to protect the term Canadian whisky. You have to identify your priorities. Europe is an important export priority for us, particularly as it continues to expand. Senator Tkachuk: Help me out. You may have heard me asking the questions earlier of the government on this issue. For the Coca-Cola product, the unprotected part is the cola; another company may make Pepsi-Cola; President’s Club makes President’s Club Cola. The term cola is equivalent to whisky. What you are protecting is Canadian whisky, because you can have bourbon, you can have Jack Daniels, you can have all different kinds of whiskies. Why is that not a copyright issue? Why is the industry out there in Brazil not copyrighting this, or in France? Why have we waited so long? Is that why we are now doing this? Mr. Westcott: I do not think we have waited. There are levels. Clearly, on the trademark front, our companies have been very active. Many countries around the world produce products that have historically come to be recognized as being uniquely from that country. In our particular case, yes, there are a number of whiskies produced around the world. We produce a distinctive product called Canadian whisky. It is different from Scotch and Irish; it is not Tennessee whisky; it is Canadian whisky. People who drink whisky differentiate between our whisky and someone else’s. As you go forward to invest in an export business and also invest back here in Canada to produce goods to export, it is important that, as you go into other markets, you can sell that whisky on the assurance that when someone buys something called Canadian whisky they know they are buying real Canadian whisky. Senator Tkachuk: Do you not have that assurance when you buy Coca-Cola in Saskatchewan, even though it is out of Atlanta? We have a Coca-Cola plant; they have a formula in Prince Albert and they manufacture Coca-Cola. It tastes the same as in North Dakota. Mr. Westcott: I cannot speak for the soft drink industry. In the beverage alcohol business, particularly in the spirits industry, the world has recognized for a long period of time distinctive products. Whether Coca-Cola or the United States was not paying attention or made an error many years ago and did not seek that kind of treatment for that particular product, I cannot say; I cannot answer that. In the case of spirits, that has been something that has been recognized and accepted for a long period of time. We define ourselves very much on the basis of where our products come from and how they are produced. The countries that produce them have laid down pretty strict rules about how they are produced them and what the product is, so that everyone is clear about the provenance of that and what that means when a consumer comes into a store. We have had problems in our industry particularly. The spirits industry has been a victim of ‘‘passing off’’ and fraud in a number of other countries, with people purporting to produce something called ‘‘Canadian Whisky,’’ and some of our colleague whiskies as well, out of other things. We look at this bill as an important continuation of that recognition of our product. Senator Tkachuk: I am trying to understand this. A guy inFrance has a little distillery. He makes a whisky, and makes it the way we make it here. Would he be prevented from calling it ‘‘Canadian Whisky,’’ even though it tastes exactly the same? Mr. Westcott: We would take the position that it would not taste the same and would not be ‘‘Canadian Whisky.’’ Senator Tkachuk: That is true, but you can sue the guy, can you not, for purporting to sell a Canadian whisky and using the Canadian brand, ‘‘Canadian Whisky’’? Mr. Hélie: No, because trademark law is a private right. You can register and protect a brand name, say ‘‘Canadian Club,’’ but ‘‘Canadian Whisky’’ is a mark that is owned communally, across the industry. A company cannot register and protect ‘‘Canadian Whisky’’ on its own. Senator Tkachuk: You are trying to register ‘‘cola.’’ That is what you are trying to do. How is that good for the consumer? Mr. Hélie: They can be assured of the high quality and that everything that says ‘‘Canadian Whisky’’ is actually whisky made in Canada. Senator Mitchell: I appreciate the honourable senator’s wrestling with that concept, because it is difficult. Maybe I can pursue it further. It seems that the difference or the comparison would be Canadian Pepsi-Cola and Canadian Coca-Cola. You would trademark Coca-Cola, but you would protect Canadian cola under a trade agreement, for the very reasons that you are talking about; is that correct? Mr. Westcott: I do not believe Canada invented the rules by which we do business around the world. I think it is important to keep that in mind. The fact is that the Scotch Whisky industry has, for many years, been making and exporting a product called Scotch Whisky, and they have been very diligent about ensuring that no one tries to sell something called Scotch Whisky that has not been made in Scotland to their specifications. The Bourbon industry does the same in the United States, as does the Cognac industry in France. We have seen it for years in the wine business. No one seems to have any problem accepting that a Bordeaux wine is from Bordeaux. Someone mentioned the word Champagne. In my past life, I was the president of the wine institute, and I can tell you that that is the way it is. I am not sure that I understand your concern. These are systems that have been developed over a long period of time, and we are trying to ensure that, as a relatively small country with a unique product that no one else in the world makes and sells but which we are successful in exporting, we continue to have the ability to successfully produce that product and to gain stature for our brands and to attract investment. We use Canadian raw materials, Canadian expertise and Canadian packaging to run our businesses, and we want to ensure that when those products leave Canada everyone understands, when it says ‘‘Canadian Whisky’’ on the bottle, that it is real Canadian whisky in the bottle. Whether you like it is a different issue. You may prefer some other type of whisky or some other type of product, but we want to ensure that it is our whisky and that it is legitimate. Senator Mitchell: Mr. Stolarik, the question of fermented and distilled versus distilled and fermented is strictly an empirical fact that you are referring to, just a chronology of producing rum? Mr. Stolarik: That is right. Senator Mitchell: I would like you to address what I understand to be the government’s concern with redefining ‘‘Caribbean rum’’ for the purposes of this legislation. The government’s response is that it is probably a good idea, but that we are obliged to do that through the Canada’s Caribcan commitments. Senator Mercer: Mr. Stolarik, I earlier asked the government officials a question about rum. I am from Nova Scotia, where rum is the spirit of choice. Some say we were weaned on it. Mr. Stolarik: Caribbean rum, if I may say so, senator. Senator Mercer: Definitely. Why do we restrict our discussion to Commonwealth Caribbean countries? With all due respect to my colleague who will talk about the type of government that exists in Cuba, we have had strong trade relations with Cuba for many years. They produce rum. I have sampled it, as others have, and I find it very comparable to the rum from the rest of the Caribbean. Is there any reason for the exclusion of Cuban rum? Mr. Stolarik: Cuban rum per se is not excluded from the Canadian market. They can sell their product in Canada like anyone else through the liquor control boards. They cannot do what Commonwealth Caribbean countries have been allowed to do, however, which is to bottle in Canada with minimal blending. There is another act, which I hesitate to mention, that governs this business. The Commonwealth Caribbean countries were permitted to export their rum into Canada in bulk and bottle it here with minimal blending as specified in legislation. I believe the blending is 1 per cent to 1.5 per cent. That means that they do not have to ship glass to Canada. They can ship the rum in bulk, bottle it here, and sell it under their respective brand names. I do not believe that Cuba has that right. They have to ship their rum already bottled, but they are free to sell it here like anyone else. Senator Mercer: You would not object if they were added to the list and were given the opportunity to ship their rum in bulk to Canada and have it bottled here? Mr. Stolarik: I would leave it in the hands of the government officials to determine whether it is worthwhile for Canada to do that. Senator Mercer: I point out to my colleagues that Cuba is an active member of the Caribbean Canada Commonwealth Friendship Association. I find it curious that we include them in certain things and exclude them from others. Senator Tkachuk: Under this agreement, the Caribbean countries are able to ship their product here and we bottle it. It is the distillers who have the rights to this product and who ship it, is it not? Mr. Stolarik: That is right. Senator Tkachuk: They are all licensed here, so the Canadian distillers distil the Caribbean products. They have a competitive advantage over Cuba and other countries that are not part of the agreement. Cuba has to ship bottled rum here, which is more expensive for the consumer, about whom we all worry. Mr. Stolarik: That is correct. That is the advantage that was given to the Commonwealth Caribbean countries by the Government of Canada. Senator Oliver: Senator Mitchell asked about the issue with Milan. Before you came, I put your issue, and I will not repeat it, to the government officials. I told them you were aggrieved by the definition of rum as presented and you wanted an amendment. I proposed the amendment. They said they would not do it in this bill because it would be found to be ultra vires, which is a legal and constitutional word. They said it should be done in a trade agreement, not this way. That is what Senator Mitchell was saying to you. Are you aware that the official position of the government is that they will not move an act on the proposed amendment you are making? Mr. Stolarik: I was not aware of the fact that that was their official position, even though I suspected they were having difficulty. Mr. Westcott: In Canada, the legal requirement for aging whisky is three years. If you do not have it in small wood barrels for three years, you cannot call it Canadian Whisky. If it does not contain 40 per cent alcohol, you cannot call it Canadian Whisky. If it is not made in Canada, you cannot call it Canadian Whisky. Most of the countries around the world that produce whisky have standards, not exactly the same but comparable standards, for determining what constitutes products from their country. In order for us to export our whisky, a number of other countries, including the United States, require us to provide them with age-and-origin certificates validated by government in order to be able to export that product as Canadian whisky. That is a long-winded way of saying, ‘‘You are right, and that is how and why.’’ Senator Peterson: It is a marketing issue, then, and it does not have to be in the bill. Mr. Westcott: It does not have to be in this particular bill, but if countries that we try to export to say, ‘‘You cannot bring that product into our coumtry unless you can show an age-and-origin certificate that is validated by government, that is a significant issue for the industry and not simply a marketing issue. Senator Chaput: Mr. Stolarik, you talked about clause 14. (1)(a). Could you repeat the changes you said should be made there? Mr. Stolarik: Yes, in 14. (1)(a), after the words ‘‘made from sugar cane products,’’ just leave out the words ‘‘of a Commonwealth Caribbean country,’’ and then make it read ‘‘fermented and distilled in a Commonwealth Caribbean country.’’ Senator Chaput: Does this mean that their products could be bought from another country? Could you buy it from Cuba, bring it into your country and make the rum, as an example? Mr. Stolarik: You mean the molasses? Senator Chaput: Yes. Mr. Stolarik: You could bring in the molasses, yes. Senator Chaput: If this is changed the way you want it to be changed. Mr. Stolarik: Yes. Senator Chaput: If it is left this way, is that possible? Mr. Stolarik: Anything is possible, yes. Senator Chaput: The change you want made is just on account of the sugar cane versus the molasses? I am sorry that I am not understanding. Mr. Stolarik: I am sorry for not explaining myself properly. Molassses comes from sugar cane. You start with sugar cane. You cut it and make molasses out of it. You ferment it and distil the final product into an alcoholic beverage such as rum. Mr. Hélie: I could try to explain it. You asked whether you could today import sugar cane from a non-Commonwealth Caribbean country like Cuba into a Caribbean country, ferment and distil and call it Caribbean rum. No, you could not do that today. Under the proposed amendment, that would be allowed. That is my understanding. Mr. Stolarik: But only in a Canadian context. Senator Chaput: I understand, yes. Senator Robichaud: That would mean that would change the way things are happening in those countries? Mr. Stolarik: In a way, yes, you are correct. The Caribbean standard does not specify where the input comes from, the input being the sugar cane. In Canadian legislation we specify the input into the rum, which is sugar cane grown in the Commonwealth Caribbean. Senator Robichaud: This is not really our role, is it? Mr. Stolarik: I would not think so, no. Senator Robichaud: We might as well leave it out? Mr. Stolarik: That is what we are recommending. Senator Tkachuk: That way you can sell Caribbean rum, but you do not have to grow anything in the Caribbean. You could buy it cheaper in Venezuela and Brazil. Mr. Stolarik: You could buy the sugar cane in those countries, but you still have to distil it in the Commonwealth Caribbean country.
All amendments passed. A partial reading follows:)
1.(1) A spirit drink may be sold using the name Grappa if it has been produced exclusively in Italy. (2) A spirit drink may be sold using the name Grappa diTicino if it has been produced in the Ticino region of Switzerland. 2. A spirit drink may be sold using the name Jägertee, Jagertee or Jagatee if it has been produced exclusively in Austria. 3. A spirit drink may be sold using the name Korn or Kornbrand if it has been produced exclusively in Germany or Austria. 4. A spirit drink may be sold using the name Ouzo or Ouzo if it has been produced exclusively in Greece. 5. A spirit drink may be sold using the name Pacharán if it has been produced exclusively in Spain. 6. Scotch whisky may be sold under that name if it has been distilled in Scotland as Scotch whisky for domestic consumption in accordance with the laws of the United Kingdom. You may add this "Caribbean rum may be sold under that name if it has been made from sugar cane products fermented and distilled in a Commonwealth Caribbean country". WISPA has managed to capture the generic terms of "Caribbean" and "rum" for a small minority of Caribbean countries. Good grief!
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  Capn Jimbo's meticulously handselected list of the world's rons, rums, rhums and cachaca. Mail me one that isn't there and get special recognition and a prize from moi...
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