Havana I believe this ongoing war between Havana Club

                                                Havana Club: The Fighting Spirit of Cuba

This analysis focuses on the
revitalized war between the rum brands Havana Club (Cuban) and Havana Club
(Bacardi/Puerto Rican) in the wake of the possible lifting of the US trade
embargo on Cuba and the effects this is likely to have on the Cuban economy in
terms of new revenues and employment creation. I chose this topic on the
engaging war between the original Havana club vs Bacardi because since the
Cuban revolution in 1959, Havana club and Bacardi have been rivals, specifically
the Bacardi’s and Arechabalas. The rivalry has changed the landscape in the rum
market with Bacardi being the top rum seller in the U.S. and Havana Club being
the top five best-selling rum in the world with excluding the United States
because of the trade embargo and not having any distilleries in the U.S. As a
student being half Puerto Rican and sharing bottles of Bacardi with my past
family generations, I was also interested in this topic because I believe this
ongoing war between Havana Club and Bacardi has affected the way tourists can
get a hold of Havana club in the U.S. considering its not sold there and with
the rum being one of the top sellers. Also, I see self-employment being affected
by the war between the two rum companies in terms of how Cubans can be able to
sell Havana clubs and make profit for themselves. Concisely, the renewed sale
of Havana Club in the United States has the potential to boost tourism, raise
Cuba’s foreign revenue, and create new employment opportunities for thousands
of jobless Cubans thus address the slowdown that characterizes the country’s
economy.

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History and Production between
Havana club and Bacardi

The
history of the Havana and Bacardi as discussed in this section is one
characterized with unending deep rivalry and controversies. The section seeks
to look into the origin of the current state affairs for the two brands and
what possible implications this has on the current business situation. The
Havana Club brand was created in 1934 by the Arechabala S.A Company and sold in
Cuba and United States. For years before the Fidel Castro’s revolution in 1959,
the two-family companies were fierce rivals in the Cuban rum market. The Bacardi
family with the Bacardi and the Arechabalas with the Havana Club were in 1960
both forced into exile (Alfonsi n.p).

However,
this disruption did not end the rivalry which has continued to this date.
Thereafter, Havana Club was nationalized by Castro’s government in 1960, produced
in Cuba, and exported across the world apart from the US following the trade
embargo. Likewise, Bacardi was equally produced from Bermuda and became global
except that unlike its competitor, it also dominated the US market. The
Arechabala family left to settle in Spain and U.S and abandoned the rum
business which thus the Cuban government was free to continue using the brand
name. Thus, in 1994 Bacardi acquired a recipe from the Arechabala family and begun
to produce rum under the Havana Club name in Puerto Rico. Production was then
expanded to some states in the US and later national wide (Montgomery n.p).

This
short history not only explains into origin of the current rivalry but also
sheds some light into the current standing of each of the two rival sides. It
is clear that the Cuban Havana being a global leader stands an excellent chance
of penetrating and making a footprint in the US market thus bring the historic
rivalry to the doorstep of the Bacardi Company but this time not only in terms
of the legal battles but in terms of its competition for market share. This is
likely to largely change the rum market in the US and production and employment
for employees of both companies.

 

Pernod Ricard and Bacardi Trademark
Conflict

This
section indulges into the trade conflict between the two firms. The two competitors
have since engaged in a trademark litigation and battles in Spain, the US, and
WTO (World Trade Organization). Following the nationalization of their company,
the Arechabala family allowed the registration of the US trademark for Havana
Club to lapse in 1973. The Cuban government took advantage of the lapse to
register the trade mark in 1976 in the US and assigned to Pernod Ricard in 1993
(Alfonsi n.p). However, the production of Havana Club by Bacardi after
acquiring the remaining rights from the Arechabala family attracted litigation
by Pernod Ricard. The first three holdings of the litigation were successful, However;
intense lobbying by Bacardi resulted in the passing of the Bacardi Act in 1998
protecting trademarks to expropriated Cuban companies thus eliminating Pernod
Ricard’s standing (Montgomery n.p). A second line of litigation focused on the
alleged deceptive nature of Havana use and lasted 3 years since 2009. Bacardi
carried the day. In Spain, the ownership of the trade mark by Pernod Ricard has
been upheld three times. Following freshened relations between the US and Cuba,
the trademark was in January 2016 awarded to the Cuban government, a move
anticipated to revitalize the rivalry between Bacardi and the Cuban government.
This year, Bacardi has appealed the decision and Florida Parliament requested
President Donald Trump to reverse the earlier decision (Field 3).

What
exactly does the trade conflicts mean for the two companies and more so for the
Cuban government. If the decision to grant the Cuban government the brand name
is upheld by the Trump administration, then it opens a new door for the Cuban
brand to expand its market into the US. This is particularly an unexplored
territory by Havana Club and holds considerable potential to boost trade and
revenue for the Cuban government and create new employment opportunities for
the Cuban people.

 

The sales and Marketing of Havana
club and Bacardi

Despite
using similar brand names, the two firms seem to be using very similar
marketing strategies as illustrated in this section.  While Bacardi’s Havana takes the largest
share of rum in the US and capitalizes heavily on Cuban themes such as ‘The Rum
of Cuba’ in its marketing and happens to be the most favorite item brought back
by tourists returning from Cuba. Pernod Ricard Havana takes the largest world
rum market share. Following the defeat by Bacardi through litigation in 2012,
Pernod Ricard went ahead and to register the name “Harvanista” to be used in marketing
the product in the US as the rum from Puerto Rico. On the other hand, Bacardi
plans to expand the sale of their version of Havana throughout the US (Field 3).
Clearly, there is a need for the two firms to exercise differentiation
especially in marketing to avoid further conflicts and steer away possible
business. 

 

Effects of the rivalry between
Havana club and Bacardi and the Lifting of the Embargo on Tourism

Many
people across the world enjoy the uniquely blended Cuban Havana Club. Indeed,
President Obama’s announcement of the possible lifting of the restrictions by
the US on travel and trade with Cuba was received with high enthusiasm by rum
drinkers and leisure travelers. Cuba’s close proximity to the US made it a favorite
holiday destination among wealthy Americans. Rum, horse racing and golfing, and
gambling were some of the major attractions. Indeed, the Cabaret Quarterly, a
tourism magazine described Havana as “the mistress of pleasure and opulent
goddess of delights”. Havana is likened to the current day Las Vegas. Before
the revolution, Fulgencio Batista had great plans to develop Havana walkway by
the water with casinos to attract even more tourists (Montgomery n.p). These
descriptions illustrate the amount of the potential that exists for Cuba. The
continued legal battles between the two rum firms only acts to hurt the already
bruised tourism sector between the two countries. As such, lifting of the
embargo will make the consumers happier and economies better. There will be free
movement of people and products across the two countries thus boosting tourism
and trade.

 

Ways in which the rivalry between
Havana club and Bacardi affects self-employment for Cubans

Cuba
has been described as the liquor legend. This section seeks to discuss the possible
effects of the rivalry and lifting of the embargo on self-employment in Cuba. The
country’s major partner in foreign trade before the revolution, the US, played
a major role in this standing. However, the embargo changed all this and
affected Cuba’s economy significantly (Gordon 476). This situation could change
in the near future. However, the rivalry between Havana Club and Bacardi threatens
the potential gains that could come out of the lifting of the embargo. This
implies that if Bacardi wins the legal battles to retain the Havana Club trade
name, Cuba would be forced to use a different name to market its Havana Club.
This would also affect the popularity of Cuba’s liquor in the US and
consequently cause a decline in the anticipated rise in job opportunities in
the industry.

 

How selling the original Havana
club in the U.S. can help Cuba with its debts

Every
business requires a conducive business environment if it is to thrive. This is
no different for the case between the US and Cuba if the embargo is to be
lifted as illustrated in this section. Business environment implies the
economic, political, legal, social, and cultural issues that define the
operations of the private firms within a country’s economic space. The lifting
of the embargo would allow free movement of products across the two countries.
It is also going to impact the political and legal spaces in Cuba. Currently, Cuba’s
public debt is at a staggering 34.6 percent of the GDP. The US, on the other
hand, happens to be the 40 percent consumers of the world’s rum, a massive
market for any serious company (Usborne n.p). However, in order for the sale of
Havana to make an impact in Cuba’s economy, it is necessary for the prevailing
economic systems in the country in terms of the manner in which production,
exchange, and distribution of products and services is organized and to be
reviewed. This requires significant changes in the country’s legal system and
policy change. Cuba upholds a macroeconomic management of the major industries
and corporations including Havana. There are, however, some notable changes and
shifts towards democracy in the largely socialist state. For instance,
self-employment has been authorized in more occupations. A study undertaken by
International Trade Commission found out that the trade between Cuba and US if
the sanctions were not initiated would stands at about $1billion (Francis n.p). This can be taken as the
current trade potential between the two countries if the embargo is lifted. Rum
sale forms the bulk of this estimate and as it would be effective to point out
that the sale of Havana Club in US would help significantly in the repayment of
debts by Cuba.

In
a nutshell, the rivalry between Pernod Ricard’s Havana Club and Bacardi’s
Havana Club runs down history to the current day. It is a war of control and
dominance with each of the sides seeking to dominate over the other. The
anticipated lifting of the trade embargo on Cuba by the US has largely shifted
cards in the favor of Pernod Ricard; the side that was recently seen as the
losing side. This has in turn reignited the rivalry with what can be described
as a do or die chance to make a notable footprint in the world’s largest rum
market. If Pernod Ricard succeeds in taking control of the brand name, it is
anticipated that it would be a major milestone for the Cuban government to
revitalize its ailing economy by means of increased revenues and employment
opportunities. 

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