Cuba Business

When a bottle of rum can call itself Cuban

Posted April 20, 2005 by Cubana in Cuba Business.

The Economist
April 19, 2005

Is it geography or chemistry that gives different rums their distinctive taste? Is it the sugar, the soil and the climate? Or is it closely guarded recipes for distillation?

Those questions are at the core of a lawsuit in a Paris court brought by Pernod Ricard, a French drinks group, against Matusalem, a small Miami company selling rum it claims is “Cuban.”

Since 1993, Pernod has operated a 50-50 joint venture with Cuba’s communist government for the international marketing of Havana Club rum.

Although its sale is banned in the United States under the trade embargo against the island, Havana Club is now the second-biggest-selling rum in the rest of the world. Its suit claims that its hooch is “the only authentically Cuban spirit.”

It is seeking damages from Matusalem for falsely claiming Cuban origin.

Like all disputes involving Cuba, this one is steeped in politics and history. A company named Matusalem was founded in Santiago, in eastern Cuba, in 1873. It produced Cuba’s top añejo, or aged dark rum. “How can anyone claim our rum has no Cuban heritage?” asks Claudio Álvarez, the company’s boss and the great-grandson of its founder.

Like many wealthy Cubans, Álvarez’s family fled Cuba after Fidel Castro’s 1959 revolution. They started making rum in the Bahamas using the formula smuggled out of Cuba, but they struggled to build the brand internationally. Meanwhile, Cuba’s government launched its own version of the Matusalem brand.

After Álvarez, a Miami doctor, took over the firm he shifted production to the Dominican Republic (to a town also called Santiago) and relaunched the brand. The company now produces almost 2 million bottles a year; its Gran Reserva, a 15-year aged dark rum, has proved a hit with connoisseurs in Italy and elsewhere in Europe.

That may be what has alarmed Pernod. The French firm is no stranger to battles over rum with Cuban exiles. Last year it persuaded the U.S. Patent Office to throw out a trademark challenge brought by Bacardi, a spirits firm now based in Bermuda and the maker of the world’s biggest-selling rum. It was seeking to cancel the Havana Club trademark in the United States, to protect its market domination after Castro has gone and the embargo is lifted.

Bacardi also had begun selling its own version of Havana Club in the American market. It was forced to halt production after Pernod successfully argued that this rum could not be marketed as “Cuban.”

Rather than its trademark rights, Pernod contests Matusalem’s slogan, “The Spirit of Cuba,” emblazoned across the bottle. The fine print explains that the product is made in the Dominican Republic. Nobody can dispute Matusalem’s Cuban past.

But given the store that French winemakers set by terroir (roughly, “taste of the soil”), the country’s courts might well decide that only Cuba can make Cuban rum.

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