just the answer – Havana Club International
Already a growth spirits category, the rum sector is unquestionably made all the more interesting for the presence of Havana Club. In this month's just the answer, Olly Wehring spoke with Marc Beuve-Méry, managing director of Havana Club International, about denominations of origin for rum, the US embargo on Cuban rum and the ensuing trademark battle between Pernod Ricard and Bacardi over the Havana Club brand.
just-drinks: You've been managing director of Havana Club for two-and-a-half years. How has the company changed in that time?
Marc Beuve-Méry: When I started at Havana Club, in terms of people it was less than half the size it is now. I arrived in September 2006, and we inaugurated our new factory - in Cuba - in January 2007. Before we opened the facility here, we shipped all of our rums in bulk to Spain for bottling. Now we bottle all our dark rums here. We did the changeover very cautiously on the supply side. We soon realised that things could take a long time, and could be erratic, in part because of the shipping constraints. You become an expert, but at the beginning you are not - it's the learning curve.
j-d: There is a legal definition of Cuban rum, which is represented by a bottle stamp. Why do you not make more of this in your marketing of Havana Club?
Beuve-Méry: I think that is something that will come in time. Cuba makes a specific rum, and is putting a seal on bottles saying that it there is a legal definition of what Cuban rum actually is. They've already done 90% of the job. Would it make sense to have a Denominacion d'Origine, like they do with Tequila, Champagne and Cognac? I think it would.
Provenance is certainly appealing to consumers. I think people have an idea that rum comes from exotic places, but Cuba is the only one to be really specific in the Caribbean.
Marc Beuve-Méry, managing director of Havana Club International
j-d: The West Indies Rum and Spirits Producers Association (WIRSPA) has launched an 'Authentic Caribbean Rum' marque, but the logo doesn't appear on your bottles. Why not?
Beuve-Méry: I think everything that goes towards premiumising the category, and highlighting roots and traditions is great. But on our own, we have something to claim that is rich enough. Besides, we can't be a member of WIRSPA, because it is linked to the ACP [African, Caribbean and Pacific Group of States] economic community of developing countries that does not include Cuba.
The image of Caribbean rum is fragmented, I feel. I understand what they're doing, and I think it's a good idea. But there is no doubt that Cuba's share of voice is incredible, be it cigars, politics, sport, whatever. We've nothing against it, but we have to be cautious that the consumer does not think that rums that carry the marque are authentic Caribbean rums, and all the others are not - that would not be good. We're looking at that very closely. If that was the message of their communication, we would need to react.
j-d: Due north of Cuba is a country which accounts for 40% of the global rum market, and you are not permitted to operate there. How frustrated are you by the ongoing US embargo?
Beuve-Méry: Of course, it's frustrating. It would be great for us to enter the US market. On the other hand, we've already been kept very busy elsewhere. We've been growing 15% year-on-year, so while it's a very nice opportunity that will come in time, we can't plan for it.
j-d: Meanwhile, the latest news on your trademark battle with Bacardi over Havana Club in the US is that there is no news. Is that not also a source of frustration?
Beuve-Méry: It's a pending issue. I don't think my thoughts on the potential outcome are very relevant - not as relevant as the judge's thoughts! I would like to be in his head. I can tell you what I would like, and that's for it to be fine for us. Both sides have a case they think they can win; now it's in the hands of justice.
j-d: If the US embargo were lifted tomorrow, what would you do?
Beuve-Méry: I think what we would do is prepare a plan to be ready when it happens, and we would communicate nothing about that plan. We would not like people to know about that plan.
j-d: Have you got a plan?
j-d: What is it?
Beuve-Méry: I can't tell you. It's not you, it's just that I don't want people to know.
j-d: Have you explored alternative brand names in the US, in the likelihood of a lifting of the embargo?
Beuve-Méry: There is nothing I will tell you about all this.
j-d: Looking domestically, how is Havana Club performing?
Beuve-Méry: We're growing very slightly - by about 3% in volumes. A bit less than a third of Havana Club's volumes are sold domestically. If the standard of living in Cuba rises in the future, then our domestic market will become even bigger. We estimate that we account for around 50% to 60% market share in bottled rum in Cuba.
j-d: Outside of Cuba, where do you expect growth to come from going forward?
Beuve-Méry: We've identified the markets driving our growth, which include Germany, Spain, France, Greece, Russia, Chile and the UK. These are the ones proven to deliver growth, where we know our strategy is working. The economic crisis we are facing now, we hope, will be a parenthesis. So, we can't see any reason why these drivers would change.
We also have other possibilities, in markets where we are much smaller but are growing much faster, like Belgium, Austria, Canada, Mexico - these are growing by around 20%.
Then, there are seeding markets like India and China, but these are currently from very small bases.
j-d: Finally, what trends do you forecast going forward for the rum category?
Beuve-Méry: As a whole, rum is a buoyant category - there is consensus on that. Within rum, in volume terms, it looks like the trend for white rum is not as good as it is for dark rum. We're not concerned by this, because I think that this has less to do with the white rum category than it does with the standard rum category. Most standard rum is white rum, and vice versa. But the trend towards premiumisation means that there is faster growth in dark rum. It's a general trend that you can find everywhere - drink less but drink better.
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