Havana Club CEO: ‘Flavours are of interest’
Havana Club CEO Christian Barré tells The Spirits Business about the brand’s continued focus on premiumisation and ambitious plans for the future.
*This feature was originally published in the June 2019 issue of The Spirits Business
In 1993, Fidel Castro reportedly made the toast: “Long live the peasant-worker alliance and long live the friendship with Pernod Ricard.” Thus, a partnership between the Cuban government and French multinational was struck for the production and global distribution of Havana Club rum. Since the joint venture between Absolut maker Pernod Ricard and state-run Corporación Cuba Ron launched 26 years ago, sales of Havana Club have grown from 300,000 nine-litre cases to 4.6 million in the 2018 calendar year.
According to Christian Barré, the Pernod Ricard veteran who took the reins at Havana Club International as its CEO in 2017, the partnership is a success thanks to the familiarity and cooperation between both parties. He says: “Havana Club is a great brand, [with] a strong history and culture. What attracted me to the role was the fact that it’s not like running a 100%-Pernod Ricard subsidiary because we have a joint venture. It has a certain level of complexity that I found attractive.”
NOT PLAIN SAILING
An additional layer of complexity for Barré, who has held numerous executive positions at Pernod Ricard, is Havana Club’s protracted legal dispute with Bacardi. To understand the feud, it’s necessary to go back to the start: the Havana Club brand was launched by the Arechabala family in Cuba in 1934, shortly after the repeal of Prohibition. Members of the Arechabala family and their great rum rival, the Bacardis, fled the Cuban revolution in the 1950s. While Bacardi set up shop in Puerto Rico, Havana Club was nationalised under the new communist government.
After entering into an agreement with the Arechabala family, Bacardi began selling its own brand of Havana Club rum, made in Puerto Rico, in the US in the mid-1990s. Meanwhile, a long-running trade embargo between the US and Cuba prevents Pernod Ricard and Cuba Ron from launching their brand in the lucrative spirits market. The joint venture owns the Havana Club trademark in all other markets around the world, and has fought off numerous legal challenges from Bacardi.
Things took an interesting turn in 2016 when Cubaexport, the Cuban entity that owns the US trademark for Havana Club, was granted permission to renew its registration in the US. A legal battle swiftly ensued, with Bacardi arguing that Cubaexport’s initial US trademark registration 43 years ago was “illegal” since the brand was “stolen” by the Cuban government. Barré won’t offer much insight on the continuing lawsuit, but says: “We hope that the litigation will be in favour of Havana Club, as it has been in all the other countries. In every single country where we have this kind of legal battle with Bacardi, Havana Club has won. But it’s not in our power to influence.”
However, the trademark dispute could be a moot point if the US-Cuba embargo remains in place. Hopes of the US Congress scrapping the restriction were raised in 2014 after President Obama restored diplomatic relations. The issue has gone quiet under the Trump administration, but according to Barré, it’s a matter of ‘when’ the embargo will be lifted rather than ‘if’.
“It will be lifted one day; that’s the only thing we can bet on. What we need to do on our level is make sure that the day it will be lifted, we will be the first Cuban rum to really enter the US market, which is 40% of the international rum market. Our only responsibility here is to really make sure that we prepare the brand to be launched the day the embargo is lifted.” Barré adds that it is “too early to tell” what impact the repeal would have on Havana Club’s volumes, but, he says: “We expect after a few years of being established in the market, [the US] will represent a significant share of global Havana Club sales.”
In 2015, the introduction of new travel and trade rules was seen as a landmark moment for relations between the US and Cuba. Under the legislation, American travellers are now able to bring home Cuban cigars and rum for personal consumption. According to Barré, Havana Club has benefited from the move, particularly in Cuban duty free channels. Cuba’s tourism ministry recently said it expects more than 5m people to visit the Caribbean island in 2019, offering Havana Club a greater opportunity to capture mindshare.
While Barré and his team are getting ready for lift-off in the US, the CEO also spies a number of opportunities for Havana Club to recruit new drinkers in other markets. Whether it’s the UK, France or Russia, key to the brand’s success will be a continued focus on premiumisation, Barré claims. Havana Club is working to position its seven-year-old rum as a “key strategic product” with “double-digit growth”, while bringing interesting new expressions to market. For Barré, innovation has a dual purpose: to enhance the image of rum through unique high-end expressions, and to recruit consumers through new product development at the “economic” end of the price spectrum.
In 2016, the brand launched the ultra-premium Tributo collection – a limited edition annual release of 2,500 bottles. The sipping rums are made using an extra-aged rum base and are finished in unusual cask types, such as Cognac or peated whisky barrels.
Last year Havana Club once again showed off its experimental streak with the launch of two bottlings exclusively for bartenders – and created in collaboration with them too. Havana Club Professional Edition A is a blend of three aged rum bases and pure aguardiente that has been matured in large oak barrels for up to four years. It is filtered using an “innovative approach that retains the character while lightening the colour and palate”. Havana Club Professional Edition B is a blend that includes one component finished in smoky Islay whisky casks, along with three other Havana Club 7 Year Old rum bases.
Barré confirms that “flavours are of interest” when it comes to future innovation, and that it’s “going to be an interesting year” for new releases, with a launch scheduled ahead of Christmas. He says a throng of new players from various regions have created a new dynamism in rum, spurring established category leaders to innovate. “There’s segmentation now in rum,” observes Barré, “and you have many small players from different origins. This is great news for the category because it creates a snowball effect. The ultra-premium and super-premium segments are so dynamic right now because these small players are pushing the established players to be active, which is great. It generates a lot of interest from bartenders, who then promote the rum category to consumers.”
But with such creativity comes the need for sensible parameters, Barré argues. “It would help the category in the future if there were some clearer rules and regulations, like in whisky and Cognac. We need to innovate but in a well-defined framework to guarantee consumers that when you innovate with super-aged rums you still deliver quality.”
As such, Barré “fully supports” new EU regulations that limit the amount of sugar that can be added to rum. Discussions about regulation and transparency in rum have been bubbling for some time, leading to the creation of a “more harmonious” rum sector, which is in its “early stages”, he says.
The category is vast, covering a multitude of regions and styles. So Barré believes “each origin should make sure it has a clear set of rules”, while also adhering to any “special legislation”, such as that of the EU.
“In the rum market, we should push to make sure transparency for consumers is key,” the CEO says. “At the end of the day, consumers are not fools; they can understand the difference between a good quality product and one that is more commercial. We need basic quality rules.”
In terms of markets, Barré is excited by Havana Club’s strongholds – the UK, Germany, France and Spain – as well as newer markets such as Russia, South Africa and China. “New categories are targeting China and we want to take our share of the growth of super-premium rum in the market,” he says. “We have had great success over the past 25 years, but we need to make sure we keep premiumising the brand, which is absolutely key to recruit the next generation of consumers.”