Smooth sailing for the rum business

Havana Club CEO talks versatility of liquor, the U.S. embargo on Cuba

Step into nearly any beachside resort in Cuba, or most liquor stores in Canada, and you’re sure to find a bottle of Havana Club waiting on the shelves.

Christian Barré, Havana Club’s CEO, travelled to Canada in early November to to review one of its latest offerings — Havana Club Cuban Smoky. The new brand is only available in Canada and Cuba, a move that speaks to Havana Club’s long ties to both countries, as well as its rather unique business model.

Corporación Cuba Ron is a staterun bottler of Havana Club rum, produced through a 50-50 joint venture between French alcohol producer Pernod Ricard and the Cuban government.

The U.S. embargo against Cuba means it is locked out of the biggest individual rum market in the world.

While the decades-long embargo may hamper Havana Club’s reach, the rum business is booming thanks to the COVID-19 pandemic’s ongoing boost to alcohol sales. Havana Club sees Canada, in particular, as one of its most important and deepest markets.

However, there is a darker side to the alcohol industry’s pandemic success. According to Statistics Canada data, of the 21 million or so Canadians who reported drinking alcohol in the previous month, roughly one in five said they had at least five drinks at a time. This proportion was seven percentage points higher than pre-pandemic levels.

Barré spoke to the Star about making lighter bottles, Havana Club’s stance on moderate drinking, and why the rum business is booming.

The ‘cocktailat-home’ craze has been booming. CHRISTIAN BARRÉ HAVANA CLUB’S CEO

What your first alcoholic drink?

Probably a vodka orange when I was at school. One you could easily drink and not one you’re convinced you should drink for the rest of your life.

Havana Club recently launched a new product, Havana Club Cuban Smoky, in Cuba and Canada. Why Canada?

Canada is a big rum market. Historically, Havana Club has always had a very good presence in Canada. There is also a significant whisky market in Canada. In fact, just this morning, we reviewed Havana Club Smoky’s performance. Despite COVID and the fact we couldn’t necessarily promote the product as we would have liked, it has performed very well.

We launched in Canada, but we also sell it in Cuba and in Mexico. It’s also in travel retail. The Cuban Smoky is part of our list of innovation products, and this is the main reason we launched in Canada.

Rum and coke is a very Canadian drink. A lot of people have mixed feelings about it. What are your thoughts?

I think it’s everywhere. It’s not only in Canada. It’s the lazy person’s evolution of the Cuba Libre, right? With the Cuba Libre, you have your lemon twist, so it’s slightly more sophisticated than the basic rum and coke. Having said that, it is a very refreshing and easy-to-prepare drink. That’s why it’s so popular.

You were in the wine business for a while. Are there major differences in terms of how you thought about wine versus Havana Club and the rum business?

When you manage such an operation globally, you cover all segments of business. The approach in terms of managing things like supply is similar. Then you’ve got everything like brand marketing, which is probably similar. One of the key differences, for me, is being in Cuba — we have a joint venture, so we obviously have to work with our Cuban partner. We also have to work in a country in which, I’m sure you’re aware, is subject to a lot of constraints thanks to the U.S. embargo. That creates a lot of differences in the way you operate the company.

How do you work around not selling to the U.S?

The U.S., more or less, represents 35 per cent of the total rum market worldwide. Basically, we sell Havana Club everywhere else. But we also prepare ourselves for the day the market will open. One thing we are certain about is that one day, it will be lifted. The question is when — and that, I cannot answer.

Are you trying to talk to the U.S. government and push that day a little closer?

It’s a very difficult subject, and a political one, so we are not involved in these kinds of discussions.

Climate change, being what it is, means hurricanes in places like Cuba are going to get more disruptive. Is that a concern for Havana Club at the moment?

These consequences are something that we monitor, and we try to do our share by working with the local Cuban authorities. For example, we are now working to implement a program to restore mangroves — not all of the mangroves in Cuba, but in a specific area on the northern coast. Mangroves help protect the shoreline, and if water levels rise, they offer a bit of protection. So this is the kind of project we’re involved in — to make sure that we do our share to protect against these potential changes.

We also work on more indirect impacts. We take numerous initiatives to reduce our carbon footprint. A very concrete example, I would say, are the changes to our bottles — to reduce the weight of our bottles by 12 to 15 per cent. To produce bottles, you need gas and electricity — it’s a very high consuming industry. The lighter the bottle, the less energy you consume, and the less CO2 impact you have.

Total rum sales fell in 2019 and 2020, but are expected to grow significantly in the coming years. Can you explain why that is?

Rum is a category that is very diverse. This is one of the reasons why the rum category is having success today — I would say it answers consumer needs. You can find rum with a very sweet profile, or a super dry one, a Spanish style or an English style, or the rhum agricole from the French islands like Martinique — there is a very wide spectrum of products.

The second reason is that rum is the category that really benefited from the change in alcohol consumption during the COVID-19 pandemic, because it is a very versatile category. You can sip a great rum, or you can use it in cocktails. During this pandemic, the “cocktail-at-home” craze has been booming, and this has really supported rum.

There’s a growing scientific consensus that even moderate consumption of alcohol can be bad for you. How is Havana Club thinking about marketing and advertising, given this scientific understanding?

We’ve been working on moderation campaigns for years. Just to name what we’re doing in the Cuban market — we have a variety of different programs. One of them teaches people not to drink and drive. We’ve been running that one for more than 15 years. We have another program that works with universities to make sure students realize the consumption of alcohol could be dangerous if it isn’t controlled. We have another program around prevention for pregnant women drinking during pregnancy. This is not a question of moderation. If you’re pregnant, don’t drink.

In export markets, we distribute Havana Club through the Pernod Ricard network, and all of the affiliates have their own programs that are totally aligned with the Pernod Ricard moderation guidelines. But we have to be careful in our messages not to say, “Don’t drink at all.” It’s just that moderation is key.

‘‘ Rum is the category that really benefited from the change in alcohol consumption during the COVID-19 pandemic, because it is a very versatile category. You can sip a great rum, or you can use it in cocktails.

CHRISTIAN BARRÉ HAVANA CLUB’S CEO

Back in 2017, the Yukon started putting cancer risk warnings on alcohol. Is that something Havana Club would ever consider?

What we do is follow the Pernod Ricard guidelines. We always lead on moderation or health-related messages. On all our labels now, we will have a QR code — because you usually cannot put everything on the back label of the bottle — that sends you to a page to inform consumers on any risks related to excessive consumption of alcohol, and also associated risk, so long as it is proven.

Is there a market you would love Havana Club to expand into — besides the U.S. — but currently aren’t in at the moment?

It’s a very interesting question because, historically, Havana Club has built its success — apart from Canada — mainly in western Europe. Havana Club is very strong in Germany, France, Italy, Spain, the U.K. Obviously, we want to consolidate these markets, but it is absolutely key for us to diversify our geography. That means growing in markets like China, starting to build the brand in India. Markets like Brazil and Mexico are obviously a bit more mature than China or India. Africa is more of a long-term play for us. These would be the key focus for our long-term growth.