Diageo continues its foray into the rum category with the news it is to build a new distillery as part of a public-private deal on the Virgin Islands.

The distillery, on the Island of St Croix, will begin to produce rum in 2011 and from 2012 will supply rum for Diageo's Captain Morgan spiced rum brand.

"We are always looking for ways to secure long term high-quality production for all our brands," said David Gosnell, managing director global supply and procurement.

"The investment in this project continues the tradition of Captain Morgan sourcing from the best rum stocks in the Caribbean and enhances Diageo's position on the global rum market."

Diageo is currently rolling out Captain Morgan across England and Wales following huge success in Scotland. It is also trialling Venezuelan rum brand Pampero in the UK and added premium rum Zacapa to its portfolio earlier in the year, in a bid to tap into the popularity of golden rum.