Cuban-American Developers Want a Say in Ambitious Havana Restoration
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Vol. 11, No. 12 December 2003 www.cubanews.com In the News Despite Bacardi threat, Havana Club J-V GDP inches up enjoys booming rum sales in W. Europe Cuban officials say the island’s economy BY LARRY LUXNER 100 premium distilled spirits. “Demand has been exploding in Europe,” he grew by 2% in 2003 ........................Page 4 ’m just a humble rum merchant,” protests Alexandre Sirech as he sits in his cheerful, said, noting that total sales in the first 10 months Isunny office decorated with posters of 1950s of 2003 were 11% higher than the comparable Washington briefs Havana and shelves lined with liquor bottles of period in 2002. “If we keep up with this momen- OFAC devotes 17.5% of staff to embargo; every size, shape and brand imaginable. tum, we should rank in the top 40 very soon.” What makes this achievement really impres- Dennis Hays has new job .............Page 5 Of course, Sirech is joking. As director-general of Havana Club Interna- sive is that Havana Club has been able to score tional S.A., the 37-year-old Frenchman from Bor- these gains without selling a drop of rum in the Daiquiri diplomacy deaux — who speaks English like a Londoner United States, the world’s largest rum market. Florida-based Splash wins $500,000 deal and Spanish like a madrileño — presides over Sirech said that in order to prevent his bosses for frozen cocktail mixes ..............Page 7 what may be the biggest, most successful joint from violating the 1996 Helms-Burton Act and venture ever launched between foreign in- lesser manifestations of Washington’s 40-year- vestors and Cuba’s communist government. old trade embargo against Cuba, “we don’t com- Newsmakers In 2003, the company — a 10-year-old part- municate with Pernod Ricard, we don’t speak on Arizona lawmaker Jeff Flake leads efforts nership between French drinks giant Pernod the phone, we don’t exchange e-mails. We want in Congress to change Republican think- Ricard and a division of Cuba’s Ministry of Food to avoid any problems.” Industries — expects to sell 1.92 million 9-liter Sirech, interviewed for two hours at Havana ing on U.S. Cuba policy ................Page 8 cases of Havana Club rum. That’s up from 1.73 Club’s small but lavishly decorated headquar- million cases in 2002, when the brand ranked ters in the residential Havana suburb of Vedado, Better luck in 2004 53rd in Impact Databank’s list of the world’s top See Havana Club, page 2 Despite low prices, officials hope for big- ger sugar crop next season ........Page 10 Cuban-American developers want a say New hotel chain? U.K. growth fund to develop 8 boutique in ambitious Havana restoration efforts hotels throughout Cuba ..............Page 11 BY VITO ECHEVARRÍA ments in Havana’s ritzy Miramar district. These s anyone who’s visited Cuba knows, most experts want a say in Havana’s future develop- buildings in Havana are crumbling and ment efforts — especially if and when there’s a Business briefs significant improvement in U.S.-Cuba relations. Corruption denied in Cubanacán scandal; A haven’t had a lick of paint in over 40 years. Thanks to Cuba’s tourist boom, however, a William Delgado, executive vice-president of BNDES to fund new buses .........Page 13 limited but growing number of structures in Old the Latin Builders Association (LBA), is among Havana have been restored; these include the those Cuban-Americans hoping to shape Helping Haiti Plaza de San Francisco church, built in 1738, Havana’s future skyline. and the Lonja de Comercio, a 1903 building “In our mind, the first priority will be to build Cuba sends 705 doctors, teachers to des- restored with Spanish funds. homes, at least a million of them, so that people perate Caribbean neighor............Page 14 Such restoration efforts have been made to who are living in crowded apartments — as enhance Old Havana — a UNESCO World Heri- many as two, three or four families together — Bookshelf tage Site — as a destination for tourists drawn to will be able to enjoy what we have here, with the city’s rich architectural history. Some of each family in its own home,” he said during an Falcoff, Evenson offer contrasting views these buildings such have been converted into interview in Miami. At an average cost of of realities of life in Cuba ............Page 15 elegant hotels such as the 25-room Hotel Raquel $20,000 apiece, he estimated, the price tag could (see CubaNews, November 2003, page 7). well exceed $20 billion. CubaNews (ISSN 1073-7715) is published monthly Across the Florida Straits, Cuban-American “The No. 2 priority will be rebuilding Old by Luxner News Inc. © 2003. All rights reserved. architects, developers and scholars have taken Havana to the standards of Mexico City, Santo Subscriptions: $429/year. For subscription or edito- note of the Castro government’s promotion of Domingo or Old San Juan [Puerto Rico],” he rial inquiries, call toll-free (800) 365-1997, send a fax said. “If you plan it and you do it with taste, you to (301) 365-1829 or e-mail us at [email protected]. Old Havana as a “living time capsule,” as well as various residential and commercial develop- See Developers, page 6 2 CubaNews ❖ December 2003 French. After a one-year stint in Miami with a — FROM PAGE 1 Havana Club French software company, he moved to was reluctant to give us actual production fig- Scotland in 1990 and joined Pernod Ricard in ures or say how much Pernod Ricard has the whiskey division. invested in the venture. LARRY LUXNER Sirech was sent to Cuba four years ago to That’s not so much because of the U.S. head the Havana Club venture, and said he’s embargo, but because of ongoing litigation been amazed at the results. between his company and Bacardi-Martini “We’re in a venture with a Cuban company over rights to the Havana Club trademark. controlled by the government. As such, “You have to be paranoid,” he told Cuba- employees are paid in pesos rather than in News. We need to be extremely cautious, dollars, though we can offer our people incen- because we know we are being listened to.” tives. This is legal under the Investment Law With fears of Bacardi spies ever-present in of 1997,” he said. his mind, Sirech refuses to say exactly how “I’m a demanding boss, and when I arrived, many distilleries Havana Club operates, how I thought it would be impossible to have this big they are or even where they’re located, level of quality.” But even without monetary outside of the large bottling plant in Santa incentives, he said, “many of these people Cruz del Norte, along Cuba’s northern coast believe that what’s good for Havana Club is just east of Havana. good for the country.” Sirech also doesn’t discuss sales, although Sirech oversees 203 employees, of which Havana Club’s annual revenues are believed 136 work in the local division; the rest are in to exceed $300 million (last year the Pernod Alexandre Sirech at Havana Club headquarters. exports, marketing and finance. That doesn’t include another 800 distillery workers, with Ricard conglomerate reported revenues of Bacardi declined to comment for this story, 4.836 billion euros, or around $5.3 billion). whom Sirech has little or no contact. And despite repeated attempts to reach company fewer than five Havana Club employees know Havana Club’s profits are estimated to be officials in Bermuda, Miami and the Baha- around $20 million, or just under 3% of Pernod the brand’s proprietary formula, he said. mas, where various subsidiaries of the “Because of our legal battles with Bacardi, Ricard’s 2002 profits of 750 million euros. Bacardi empire all have offices. “We are a fully decentralized, autonomous we keep our production process extremely The issue is an emotional one, particularly secret. There’s a typical process for a Cuban entity,” Sirech said proudly. “Outside of pro- for patriotic Cubans who believe that Havana duction, everything’s actually done here in rum, which is very different from the way Club rum — along with Cohiba cigars and the people do rum in the Dominican Republic or this little building — strategy, pricing, adver- famous Tropicana nightclub — lend great tising and promotions.” Puerto Rico. On top of that, there’s a very spe- prestige to a country whose traditional sugar- cial process for Havana Club which was based economy is rapidly crumbling, at least developed by the Cubans in the 1970s. If the SIRECH: BACARDI ABANDONED TRADEMARK partly due to the U.S. embargo. Havana Club was born in 1993, producing way we do light rum is ever imitated, we “We’re suffering a lot at the moment from would lose a big competitive advantage.” 300,000 cases of rum in its first year. Most of our absence in the American market. The that was exported to Russia via barter deals. United States is half of the world rum market, INCREDIBLE SUCCESS IN ITALY “Bacardi was the leader in the local market, and we can’t sell there,” said Sirech. “But but they left the island several years before we’re patient. We’ll wait to see what evolves At present, Havana Club ranks as Pernod Castro took over,” he explained. “They were before embarking on anything. The Cuban Ricard’s sixth-biggest spirit brand in volume in big trouble with Batista. Legally, the Arich- government wouldn’t have any problem with after Ricard, Seagram’s Gin, Chivas Regal, ebala family more or less abandoned the us doing business with the U.S., but any U.S.