Havana Club vs. Havana Club - Inside the rum war between Bacardi and Cuba

Havana Club vs. Havana Club: Inside the rum war between Bacardi and Cuba
By David Montgomery July 22 at 6:07 PM

SAN JOSÉ DE LAS LAJAS, Cuba — In a warehouse stacked with casks and
suffused with aromas of old oak and intoxicating spirits, Asbel Morales
is always thinking years ahead. At 48, he's one of eight maestros
roneros, or master rum-makers, on the island. They maintain the quality
and tradition of Cuban rum — a staple of the economy and national
identity that conjures summer daydreams of Ernest Hemingway knocking
back daiquiris in art deco bars, while somewhere the Buena Vista Social
Club band plays forever.

Morales splashes a clear liquid onto his hands. It's potent aguardiente,
the soul of rum, fermented and distilled from the molasses of Cuban
sugar cane. He rubs his wet hands, assessing its viscosity. He waves
scoopfuls of air toward his face, inhaling yeasty traces of cane,
alcohol and subtler notes.

"If the aguardiente isn't right," he says, "even if you age it 100
years, the rum will never turn out well."

But not just any Cuban rum. In three to seven years — sometimes longer,
depending on the flavor Morales is going for — after filtering, aging
and blending, this rum will be bottled as Havana Club, one of the two
most storied brands in the history of Cuba.

The other is Bacardi, no longer made in Cuba since shortly after Fidel
Castro's revolution of 1959. For years, Bacardi and Havana Club rums
were rival spirits, and their founding families — the Bacardis and the
Arechabalas, respectively — were fierce competitors, until both clans
were forced into exile in 1960.

The revolution didn't end the rivalry. In time, a rum called Havana Club
flowed out of Cuba and was eventually exported the world over — except
to the United States. From a new base in Bermuda, Bacardi, too, went
global, and Bacardi brand rum came to dominate the U.S. market.

Now, in a dramatic twist, another Havana Club is poised to make a big
splash. After two decades of lawsuits, lobbying and congressional
hearings, a Havana Club made by Bacardi is rolling out nationwide this
summer and should be available in Washington by September.

It is not to be confused with the Havana Club made in Cuba by Morales
and his colleagues.

Will the real Havana Club please fix us a daiquiri?

Within this splendidly bitter rum war — Havana Club vs. Havana Club — is
a tale of geopolitical jousting that has more turns than a Cuban mambo.
The drama is reaching a climax just as historic changes are taking place
in the fraught relationship between the U.S. and Cuba.

At its emotional core, the rum war is a proxy for an even more epic
struggle over the brand of Cuba and Cuban identity. The saga of
revolution and exile has left unresolved issues. Are some claims on what
it is to be Cuban more legitimate — more authentic — than others?

Americans embrace all things Cuban
Morales's aguardiente has been ripening just fine for Havana Club
International, a joint venture between Cuba Ron, the state-owned rum
enterprise, and the French liquor giant Pernod Ricard. Sales have grown
tenfold since the partnership began in the early 1990s. Cuban Havana
Club is the No. 3 rum in the world, with sales of 4 million cases a year
in more than 120 countries — and that is without access to the U.S.
market, because of the trade embargo imposed in 1962.

The French and Cuban partners were buoyed by the stunning announcement
nearly two years ago that President Obama and Cuban President Raúl
Castro resolved to normalize relations. Embassies re-opened, travel
became easier. Then, earlier this year, the rum partners scored a
surprise victory at the U.S. Patent and Trademark Office, where the U.S.
government reversed a decade of opposition and allowed Cuba to renew its
disputed trademark for Havana Club.

Still, Congress has not heeded Obama's call to lift the embargo. For
now, Cuban Havana Club reaches U.S. shores primarily in the luggage of
travelers.

[How to get your Cuban rum and cigars home with you]

The French and Cuban partners say it's only a matter of time before
trade is allowed to resume and their Havana Club can flow freely across
the land.

"We are ready to face this market, no matter what the date," says André
Leymat, director general of the Havana Club distillery.

The potential is huge — and not just because Americans drink about 40
percent of the world's rum. Fascination with all things Cuban is
intensifying with each small step toward a full embrace of the Cold War
adversary. Americans are visiting in record numbers. Charter cruises
have launched; direct commercial flights are coming shortly. American
movies and TV shows — "Fast 8," "Cuban Chrome" — are rushing to be
produced there for the first time in half a century.

The appeal is bigger than any single product or experience. What's for
sale is the cachet of Cuba itself — once forbidden, now trendy. If only
it could be bottled.

"For us, rum is not just merchandise; it's also the expression of a
culture," rum master Morales says. "It's something inherited from
previous generations, passed down Cuban to Cuban for more than 150
years. You must never betray the rum."

Clash of the liquor giants
It's early June in the posh Faena Hotel in Miami Beach, where Bacardi is
celebrating the national launch of a line of rums with the help of
blue-feathered showgirls, salsa dancers and a 10-piece band playing
Cuban classics.

The bash is meant to evoke what Bacardi calls the "golden age" of
cocktails in Havana, in the middle of the last century, when Americans
flocked to their favorite tropical sin city, until the revolution killed
the party.

Waiters in guayaberas carry bottles of the rums — one clear, one amber —
like icons on mirrored trays.

The name of the brand is printed in big letters on the labels:

"Havana Club."

Almost as big is: "Puerto Rican Rum."

Nowhere on the label is Bacardi cited.

The clear Añejo Blanco is a tweaked version of a white Havana Club that
Bacardi has been selling in a handful of markets. The amber Añejo
Clásico is new — or maybe old. Bacardi says both rums are based on a
recipe the Arechabalas used to make Havana Club until 1960.

It's a rival line of Havana Club for sure.

A "falsa Havana Club," in the words of Morales.

But then, Bacardi's lawyers call the Cuban Havana Club an "ersatz Havana
Club."

Which is the real Havana Club?

The question lies at the heart of this titanic showdown between the
world's fourth-largest spirits company (Bacardi) and the second-largest
(Pernod Ricard).

Bacardi is the top rum-seller in the United States (7 million cases a
year) and in the world (17 million cases). It has evolved into a global
powerhouse in other spirits, too, with such brands as Grey Goose vodka
and Bombay Sapphire gin.

Rum is a comparatively smaller part of Pernod Ricard's lineup. Still,
Havana Club is one of the company's top 10 brands, behind the likes of
Absolut Vodka and Jameson Irish Whiskey.

"For many years, Bacardi played the rum game with one brand, the brand
that carried the name of the family, and that is 'Bacardi,' " Fabio Di
Giammarco, global vice president of rums for Bacardi, says. "We know we
have consumers who are more and more interested in brands that deliver a
story. We think this is a brand that has a very rich story."

One of the names on the guest list at Bacardi's Havana Club party in
Miami Beach is part of that story: Arechabala. Some heirs of the
rum-making family attended.

After the revolution, the Arechabalas let their American trademark for
Havana Club lapse, and they drifted into other lines of work. The label
on the Bacardi Havana Club sketches their story, a kind of
counternarrative to the one Morales tells in his Cuban rum warehouse.

"Our family was disheartened after the forced exile from Cuba, and has
always felt the need for justice for what happened to our ancestors,"
José Arechabala, a great-grandson of the founder, says in a statement
released by Bacardi. "We feel their life's work continues to live on
through this rebranding of Havana Club."

'From now on, I am Pepe'
In the beginning was Facundo Bacardi, who launched his company in 1862.
Rum historians credit him with pioneering Cuban-style rum: lighter than
other types, perfect for cocktails, but also aged and blended into fine
sipping rums.

The Arechabala company, founded in 1878, and other Cuban rum-makers
worked in the shadow of Bacardi.

Americans discovered Cuban rum when veterans of the Spanish-American War
returned home. A plaque in the Army and Navy Club in Washington
commemorates the moment in 1909 when, as the story goes, the daiquiri
was introduced in the club's bar after being invented in Daiquirí, Cuba.

American appreciation of Cuban rum deepened during Prohibition, when
partyers made their way to the island to slake their thirst. Later,
Hemingway wrote about El Floridita, the Havana bar where he refueled on
daiquiris.

The Arechabalas introduced Havana Club with Americans in mind in 1934.
The name of the Cuban capital was spelled in English, rather than the
Spanish "Habana." Soon Havana Club was served in places such as the
Stork Club, a high-society night spot in Manhattan.

Bacardi executives initially supported Fidel Castro, according to
journalist Tom Gjelten's 2008 book "Bacardi and the Long Fight for
Cuba." They toasted brother Raúl Castro's 1959 wedding to a
revolutionary fighter who was the daughter of a Bacardi executive.

The Arechabalas, on the other hand, according to Gjelten, sympathized
with dictator Fulgencio Batista, whom Fidel Castro overthrew.

Soldiers showed up at the Havana Club office on New Year's Day 1960. The
late Ramón Arechabala was a sales manager, while one of the top
executives, his uncle José María Arechabala, or "Pepe," was in Spain.

"From now on, I am Pepe, and you people will do as I say," declared a
military commander, as Ramón Arechabala recalled in court testimony in 1999.

"I say, 'Okay, no problem, whatever you say,' " he testified, "because
he was armed with a machine gun."

The Bacardis' Cuban rum operation was seized nine months later. Their
company already had significant rum facilities abroad.

Ramón Arechabala, on the other hand, went on to sell cars in Miami.

In 1973, he realized that the Havana Club trademark was due for renewal.
He asked his uncle whether they should file the paperwork.

His uncle said no. The family did not have enough money to produce rum
in the U.S. and mistakenly believed they couldn't renew the trademark
without making rum.

"He told me we could not do anything right now with it, because, 'Let's
wait because we might be going back to Cuba any moment,' " Arechabala
testified.

In 1976, a state-owned Cuban enterprise secured the American trademark
for Havana Club. It was a cunning yet hopeful investment in the day when
Cuban rum might once again be poured on the other side of the Florida
Straits.

Much depends on a U.S. trademark
The rum war was declared nearly 20 years later, when two things happened.

In 1993, news broke that Pernod Ricard had struck a deal to become equal
partners in Havana Club. (Pernod Ricard declines to specify terms of the
partnership. Fidel Castro has referred to it this way: "Long live the
peasant-worker alliance and the friendship with Pernod Ricard!")

In 1994, Bacardi filed its own application for the U.S. trademark for
Havana Club. Bacardi paid the Arechabala family $1.25 million for any
rights to Havana Club that the family still possessed, plus a portion of
any sales of Havana Club.

Ever since, Bacardi and Pernod Ricard have battled on legal, regulatory,
political and commercial fronts.

The Arechabalas "were free to maintain the trademark if they wanted to;
they only had to pay a $25 fee," says Ian FitzSimons, general counsel
for Pernod Ricard. "The moment they abandoned the trademark in 1973, the
trademark fell into the public domain."

"At the end of the day, [Pernod Ricard] partnered with the Cuban
government for property that is stolen," says Rick Wilson, Bacardi's
senior vice president for external affairs. The law does not recognize
trademark rights connected with confiscated Cuban property, he adds.

The American trademark was not stolen, FitzSimons counters, because "the
Arechabalas were able to keep their trademark registration up until
1973, 13 years after the Cuban revolution. They chose not to take the
necessary steps to keep it after that."

Nor is Cuban Havana Club being made with seized Arechabala property, he
says. The Cubans built a new distillery in the 1970s. Pernod Ricard
added a state-of-the-art distillery in 2007, where Asbel Morales works.

Wilson argues that what matters in the law is intent and that the
Arechabalas never intended to surrender their trademark. Over the years,
they attempted to find partners with capital to make rum in the United
States. Further, Wilson says, trademarks are founded on actual use, not
mere paperwork.

"The only people to have used the Havana Club trademark in the United
States have been Arechabala and Bacardi," Wilson says.

Bacardi appeared to win the rum war in 2006, when the Cubans and Pernod
Ricard were not allowed to renew the trademark. The reason: New rules
required a license from the Treasury Department to write a check for the
renewal fee of several hundred dollars. Treasury, on advice from the
State Department, refused to grant the license.

The case was still pending in the trademark office early this year —
though Bacardi disputes that the matter was truly alive — when the rum
world turned upside down.

"In light of a number of factors, including ... the landmark shift in
U.S. policy toward bilateral relations with Cuba," the State Department
advised the Treasury Department to give the Cubans and Pernod Ricard
permission to write the check to renew the trademark through 2026, a
State Department official testified before a House subcommittee in February.

Now the dispute is back in U.S. District Court in Washington, where both
sides are seeking a ruling on who owns Havana Club. The case could last
well into 2017. Meanwhile, Bacardi's Havana Club will be sold in the U.S.

If Bacardi prevails, the French-Cuban partnership has a backup plan. It
has registered the name "Havanista." Under one name or another, should
the embargo be lifted, they will be the first to sell Americans a rum
that is actually "made in Cuba."

How much that matters is the last and perhaps most important front in
the rum war. Authenticity is like another flavor note.

"It's not just the juice," says spirits writer Wayne Curtis, author of
"And a Bottle of Rum: A History of the New World in Ten Cocktails"
(2006). "There's a lot of money to be made in selling that Cuban story
to Americans, who want to have that authentic brand."

'If I don't drink Havana Club,
I'm not Cuban'
At sunset on the Malecón, Havana's sea wall, Lazaro Rizo Modochi, 46, a
cook, and his wife, Merlin Fernandez, 42, are strolling and sharing the
remains of a bottle of Havana Club, accompanied by their twin
13-year-old daughters, Yaremi and Yaneisi. It's a Saturday evening
tradition for the family.

"Havana Club of Cuba is richness, it's the sugar cane, it's the African
heritage of the cane-cutters — all that is Havana Club," Rizosays. "If
I'm in Italy or France and I drink Havana Club, I'm in Cuba. If I don't
drink Havana Club, I'm not Cuban."

After Rizo takes his last swig, he kisses the bottle and throws it into
the sea, toward the north.

"A message to Miami," he says.

The logo is ubiquitous in Havana — on bicitaxis, on the tunics of
parking lot attendants ("If you drink, don't drive"), even in the
paintings sold by street artists.

"When there's an opening of the blockade, Havana Club will present to
the United States a symbol of Cuba," says Luis Rodriguez, a barman at
the Bar San Juan in central Havana, where singer Beny Moré is said to
have drunk Cuba libres before the revolution. "It represents traditional
Cuban rum."

Across a plaza from the cathedral, a plaque on what is now the Museum of
Colonial Art notes that the 18th-century mansion used to be the offices
of the Arechabala rum company. Graham Greene, in his novel "Our Man in
Havana," set a fateful checkers match here in the Havana Club bar, where
free drinks were served to tourists in the hope they would buy bottles
to take home.

Several blocks away, the majestic art deco Bacardi Building now contains
travel offices, while its signature bat, wings spread, still presides
atop the tower.

At El Floridita — where a statue of Hemingway occupies a spot at the end
of the bar — the periodic arrival and departure of busloads of tourists
give a tidal rhythm to midday, as a band plays hits from the Buena Vista
Social Club. Veteran bartender Manuel Carbajo Aguiar grabs a bottle of
Havana Club and raises his arm high in a showy pour of a silver stream
into one of four blenders purring simultaneously. In a flash, he fills
two dozen glasses with tangy-sweet and icy daiquiris.

"Havana Club has status," Carbajo says. "If you're relaxing with friends
and on the table is a bottle of Havana Club, it gives the moment more
personality than another rum ... Havana Club is the rum that represents
Cuban-ness."

Two can play the authenticity game.

The labels on Bacardi's Havana Club carry a picture of founder José
Arechabala and the phrase "based on a recipe created in Cuba."

The labels' synopsis of the family's story continues: "Decades later,
this family of rum makers would be forced to flee during the Cuban
Revolution, precious recipe in hand. After years of controversy, this
well-kept treasure has been dusted off once again for crafting this
incomparable rum in Puerto Rico."

Bacardi does not claim to have resurrected the exact Arechabala Havana
Club. The chain of knowledge from rum master to rum master was broken
for too long. Certain ingredients are different. The technology is
modern. A single recipe can yield a variety of flavors.

Still, the result is close, says David Cid, global ambassador of rum for
Bacardi: "We are applying the Arechabalas' techniques and methodologies
along with our yeast with the aim of replicating the aroma and flavor
balance of the original Havana Club."

"What certainly cannot be said is that the other Havana Club has
anything to do with the original," Bacardi's Di Giammarco says.

Indeed, the Cuban Havana Club was created after the revolution, though
the bottles say "Fundada en 1878," the year José Arechabala founded his
rum company.

"The only Havana Club I know comes from Cuba," says Jérôme
Cottin-Bizonne, chief executive of Havana Club International, the Pernod
Ricard-Cuban joint venture. "If the rum is not made in Cuba by a master
of Cuban rum, if it's not made with Cuban sugar cane, you can't make the
same product."

But how does it taste?
The most recent skirmish in the rum war takes place on a Friday
afternoon at Cubano's restaurant in Silver Spring: Four experienced
spirits tasters conduct a blind test at the invitation of The Washington
Post.

It's Havana Club vs. Havana Club: Bacardi's Añejo Blanco and Añejo
Clásico against the Cuban Añejo 3 Años (white) and Añejo 7 Años (dark).
The Bacardi contenders cost about $20 and $22 for a 750-milliliter
bottle, respectively. The Cuban rums sell for about $7 and $18 in Havana.

To confound the tasters, we throw in two more white rums — regular
Bacardi Superior and premium Caña Brava by The 86 Co.

Amid the sounds of slurping and deep inhaling, the four Havana Clubs
quickly distinguish themselves over the other two. Then things get
interesting.

"I love the way that it decays on the palate," says Lukas B. Smith, a
bartender at Dram and Grain who is helping to launch the Cotton & Reed
rum distillery planned for Washington. He's tasting the Bacardi Añejo
Clásico, though he doesn't know it.

"It has this soft heat," says M. Carrie Allan, spirits columnist for The
Post.

"If you still have training wheels on" — if you're not a sophisticated
drinker — "you're not going to like that," says Jarad Slipp, estate
director of RdV Vineyards in Delaplane, Va.

"I love it," says Adolfo Mendez, owner of Cubano's, who left Cuba just
after the revolution when he was 3.

Then they try the Cuban Añejo 7 Años, again without knowing its identity.

"It's definitely a crowd-pleaser," Smith says, calling it "a mouth
bomb." "I think they might have overdone the sugar a little bit."

All the tasters guess that this sweet, brash pleaser is by Bacardi,
while the subtler, "handmade"-tasting rum is from Cuba.

Wrong.

"Wow!" they exclaim.

As for the white Havana Clubs, the tasters are divided. A couple find
that the sweeter Cuban entry is richer and more flavorful than
Bacardi's. To others, the Cuban sweetness is a bid for mass appeal.

"Basically, these are both big fat sweet tourist rums," Smith says of
the Cuban Havana Clubs.

"There's a reason why [the Bacardi Havana Clubs] are in a different
label and not branded under Bacardi proper, which is that people who
typically drink Bacardi wouldn't get it," Slipp says. "Good on [Cuban]
Havana Club, because they're going to be getting a lot more tourists
now, and they're making a tourist-driven product."

"Maybe that's part of the tradition," Allan says. "One of the things
that I thought was interesting here was the idea that 'authenticity' ...
doesn't necessarily mean nuance, subtlety. Something that is authentic
is not necessarily better out of the bottle."

Mendez proposes a compromise. He places the bottle of Bacardi dark
Havana Club and the bottle of Cuban light Havana Club together on the
table — his two favorites.

"These two guys are inseparable," he says. "I support them both."

It's a pleasant vision — perhaps inspired by the warmth of fine spirits
— the idea of a reunited front of great Cuban rums. A Havana Club
all-star team. But for now, in this rum war, you have to choose sides.

Source: Havana Club vs. Havana Club: Inside the rum war between Bacardi
and Cuba - The Washington Post -
https://www.washingtonpost.com/business/havana-club-v-havana-club-inside-the-rum-war-between-bacardi-and-cuba/2016/07/22/57c32a06-2cb4-11e6-9b37-42985f6a265c_story.html