Cuba could send 1M cases of rum to post-embargo US

Cuba ready to export 1M cases of rum to post-embargo US, but legal fight may delay Havana Club

• By Will Weissert, Associated Press Writer
• On 3:19 pm EDT, Wednesday October 21, 2009

HAVANA (AP) -- Cuba is ready to ship 1 million cases of rum to America if Washington eases its 47-year-old embargo, but would hold off exporting its flagship Havana Club brand because of U.S. trademark battles, one of the island's top rum executives said Wednesday.

U.S. trade sanctions have cost Cuba's rum industry $95 million annually in lost sales and additional spending to import production materials including glass bottles and machinery from Europe instead of from its neighbor to the north, said Juan Gonzalez, vice president of Cuba Ron SA, the communist state's rum production monopoly.

Cuban rums can't be sold in the United States, but they are available in more than 120 countries, Gonzalez said, noting that the company sold 4 million cases in 2008. Of that, Havana Club counts for all but about half a million cases.

The global financial crisis should cut into sales this year, but Cuba still hopes sell 5 million cases a year by 2013, Gonzalez said. The government does not release figures on revenue.

Cuba's domestic rum market is its top customer, followed by Spain, France, Greece, Chile and Russia. Gonzalez said the United States accounts for 40 percent of the global rum market.

President Barack Obama has eased restrictions on Cuban-Americans who want to travel or send money to Cuba and both countries have taken tentative steps toward improving long-frigid relations -- though the White House had said it has no plans to push Congress to lift the embargo.

Gonzalez said Cuba has the capacity to produce 6 million cases of rum a year and could export 1 million to the U.S. "in no time" in a post-embargo world.

"We know what sells there and we know what we can produce," he said at a news conference at Havana's Museum of Rum.

Gonzalez said Cuba's rum monopoly has not made contact with U.S. liquor distributors to prepare for a possible opening of the American market, but initially would lean on its contacts in Europe that already export to the United States.

He said that the first wave of Cuban rum to hit the U.S. likely wouldn't include Havana Club due to an fight in U.S. courts with Bermuda-based rum giant Bacardi Ltd., which produces its own Havana Club, made in Puerto Rico and sold in Florida since 2006.

"We understand there could still be some legal problems with Havana Club," Gonzalez said. "What we hope to sell is Cuban rum, and Cuban rum is Cuban rum. We have a lot of brands that aren't Havana Club."

Perhaps, but none of the island's eight other export-quality brands, including Santiago de Cuba, Canay and Varadero, is as prestigious as Havana Club. Most are sold in Cuban hotels, restaurants and bars and are unknown overseas.

The Cuban government has produced rum under the Havana Club label since 1960 -- the year after Fidel Castro came to power. The brand has been sold internationally since 1993, when the government partnered with French beverage company Pernod Ricard SA.

The Cuban government has sued Bacardi for using the name, which Bacardi claims it owns because the original Havana Club was expropriated without compensation by Castro from its Cuban producers, the Arechabala family, who went into exile. Bacardi bought the name and recipe from the Arechabalas in 1997.

Cuba counters that it registered the Havana Club trademark in the U.S. in 1976, after the Arechabalas let their claim on it expire.

So far, U.S. courts have sided with Bacardi, but Cuba has appealed its most recent case to the U.S. District Court of Appeals. Still, Gonzalez said that fight was enough to delay the brand's would-be U.S. exportation.

"The Havana Club brand has not been lost," he said, "but we have to wait for the process to run its course."

Buzz up!