The Many Lives of Havana Club

Spend any time pondering today’s rum industry, and mysteries start to pile up. Why are there so many brands without a distillery? How is there so much rum aged for multiple decades available at very low prices? What exactly are the Jamaicans doing to make their rum so funky? All great questions, but answering them is modest in scope compared to truly understanding Havana Club, the flagship rum of Cuba.

Havana Club is the third largest Caribbean rum brand, yet in America, the world’s largest market for Caribbean rum, most people have never laid eyes on a Cuban-made rum, much less tasted it. To complicate matters, Americans can buy rum with a Havana Club label, but it wasn’t made in Cuba by Havana Club. Yet travel to Europe or Asia, and Cuban-made Havana Club rum is everywhere. Behind this dichotomy are corporate behemoths with billions of dollars at their disposal, who’ve wrangled in international courts for decades with no clear end in sight.

For most consumers, Havana Club and Cuban rum are synonymous. Yet unlike other rum brands, Havana club offers no simple origin story to fit neatly on the back label of a bottle. The brand has led several lives, some much less documented than others. Connecting the dots from the brand’s origin in 1878 to the present is a formidable challenge. Branding is incredibly important for a company like this to rely on, it is the face of who they are and what will be remembered alongside its contents, so making sure it stands out is essential, that is why as time has gone on and brands have adapted, there has been a need for something like a brand experience agency and other marketing solutions, to step in and help companies become more visible and stronger.

What follows is my telling of the Havana Club story. In reading it, a basic familiarity with Cuban rum topics is very helpful. I move fast because there’s a lot of ground to cover. If you need a primer, I suggest reading my Cuban Rum Cheat Sheet.

The story I tell is not from any single source with a particular agenda, but is pieced together from in-depth research and the occasionally awkward questions to the Havana Club brand people. (They’ve been extremely helpful, I must say.)

Before jumping back in time to the 1800s, let’s set some context with a brief look at Havana Club’s current role within the global rum trade.

Havana Club Snapshot

With sales of more than four million nine-liter cases per year worldwide, Havana Club has seen massive growth since its modern incarnation two decades ago. Today, it’s the number three Caribbean rum by sales, behind Bacardi and Captain Morgan. (The Philippines’ Tanduay and India’s McDowell’s also sell more rum than Havana Club, but they’re primarily consumed within their parent countries.) While Bacardi’s sales dwarf Havana Club’s, Havana Club significantly outsells the next two smaller Caribbean brands – Barcelo and Appleton.

Ownership of the Havana Club brand has, how shall we say…. changed hands over the years. More on that shortly. What’s important now is that the brand is a 50-50 partnership between the Cuban government, in the form of the Cubaron company, and Pernod Ricard, the French spirits conglomerate.

Cubaron owns and operates the entirety of Cuba’s rum industry, distilleries and all. They make every drop of Cuban rum, regardless of which brand it goes into, be it Havana Club, Santiago de Cuba, Cubay, Legendario, or anything else. Making the rum for Havana Club is their part of the 50-50 partnership with Pernod Ricard.

For its part, Pernod Ricard markets and distributes Havana Club worldwide — everything that happens once the finished bottles leave Cuba. Because of their extensive spirits portfolio, they have the wherewithal to position Havana Club on liquor store shelves and backbars all over the world – everywhere but within the United States. It’s certainly not for lack of trying, but that’s a tale for later.

Havana Club’s core portfolio comprises three rums:

Havana Club 3 – A lightly filtered “white” rum with just a touch of color. A minimum of three years of aging.

Havana Club Especial – A “gold” rum with no age statement, but sources indicate rums up to five years.

Havana Club 7 – A “dark” rum with a minimum of seven years of aging. About twenty percent of each batch is held back from bottling and is blended into the unaged rum prior to its seven years of aging. Sort of an inverse solera.

There a few other expressions such as Ritual, but they’re not highlighted on the current Havana Club site.

Hot tip: While you can’t buy these rums in the U.S., you can travel abroad (including Canada and Mexico) and bring back as much as you like (within reason). Prices for the above rums are in the U.S. $20-$30 range.

The high end of Havana Club’s world is the Iconica collection:

The entry level is Selección de Maestros, easily recognizable by its royal blue label. Its blending is a joint effort between all of Cuba’s Maestro Roneros – the eight rum masters charged with preserving the Cuban rum tradition. Although it has no age statement, the Selección de Maestros is significantly more refined than the Havana Club 7 and sells for 40 CuCs, or about $40 U.S. It was previously called “Barrel Proof” prior to 2014. How is it? I brought home three bottles from Cuba, so that’s a hint.

The next level up is Havana Club 15, which retails for around U.S. $150. This bottling carries a minimum of fifteen years of aging, limited to only 58 barrels bottled each year. Jumping way up in price are the Union and Tributo releases at $350 U.S. Union is targeted at cigar smokers, the perfect accompaniment to a Cohiba cigar, perfect marketing speak for a rum-cigar “union.” Tributo is an annual release (each release emphasizes something different) selected by Maestro Ronero Asbel Morales.

The big daddy of Cuban rum is Máximo, described as blend of the very best extremely old rums from Cubaron’s vast inventory. Although the company won’t officially say, the scuttlebutt is that the Maximo may contain some pre-revolution rum, distilled prior to 1959 and presumably very, very old. Limited to just 1,000 bottles/year, it will cost you about U.S. $1500 for a half-liter bottle. I’ve tasted the Maximo, and it’s…. magnífico! (Mrs. Wonk is grateful that this bottle didn’t make the trek home from Cuba as suitcase booze, for want of a mortgage payment.)

Let’s now step back in time and see how this once tiny operation, one of hundreds of distilleries in pre-independence Cuba, grew into one of the world’s largest rum brands.

Havana Club, Part 1 – José Arechabala

The genesis of the Havana Club brand begins in 1878 in Cárdenas, Cuba, an oceanside town on Cuba’s north shore, about seventy miles east of Havana. José Arechabala y Aldama purchases a distillery that he names La Vizcaya, a reference to his hometown in Spain’s Basque region. The enterprise, which encompasses other products besides rum, prospers and grows over the next several decades, surviving both a major hurricane in 1888 and the Cuban War of Independence (1895-1898).

In 1920, U.S. Prohibition began, and Americans flooded into to Cuba to get their drink on. Naturally, rum producers like José’s and Bacardi benefitted handsomely from the massive increase in demand. José’s enterprise was so successful that he became a major benefactor to Cárdenas, funding several parks and a theater. In 1921, the Arechabala business empire expanded, renaming itself José Arechabala S.A., a name that is important later in the story. Nowadays production is a lot more advanced, and they likely make use of onestream technology or similar software to make the process easier.

The Question of Early Cuban Distillation

While the early history of the Arechabala enterprise is documented well enough, what’s unclear is what type of distillation equipment the La Vizcaya distillery was initially equipped with: Pot or column? I’m unable to lay eyes on an authoritative source.

It’s much more than idle curiosity – and here’s why: Cuban rum is famous for its lighter style, due in large part to column distillation. However, it’s unclear exactly when column distillation became a factor in Cuban rum. We know that Bacardi’s original still from 1862 was a pot still. And per Tom Gjelten’s incredibly detailed book, Bacardi and the Long Fight for Cuba:

In 1911 the Bacardis retired the old pot still the company had used for nearly fifty years, replacing it with the latest version of a modern “Coffey” still…

And:

The Bacardis were the first rum makers in Cuba to use a Coffey still.

Bacardi asserts that they invented the Cuban style of rum, with their founding in 1862. However, if there were no column stills in Cuba till 1911, it implies that the first fifty years of Cuban rum (including rum from major players Bacardi and Arechabala) was presumably very different than what it became in the early 1900s, when we know column stills were in use.

By 1878, column distillation had been around for nearly fifty years and was widely used in Europe. One might assume that in outfitting or upgrading a distillery in 1878, column stills might be an obvious choice. However, history suggests that Caribbean column still adoption lagged far behind Europe.

There’s evidence that Barbados installed its first column still in the very late 1800s, and Jamaica may not have had column stills until the mid-1900s. When did Cuban rum distilleries first begin using column stills, then? A photograph of the Arechabala distillery from the 1930s clearly shows column stills. And in Havana today, the Museo del Ron includes distillery equipment, including column stills, which are said to be about one hundred years old. If so, it points to the Arechabala having column stills around 1917.

If anybody can point to evidence to column distillation in Cuba prior to 1911, don’t hesitate to send it my way.

Havana Club, Part 2 – The Havana Club Brand

With the U.S. ending Prohibition in 1933, Arechabala seized the opportunity to sell their rum in the newly reopened U.S. market. This included creating the easily spelled and recognizable Havana Club brand, which debuted in 1934.

In the years that followed, Arechabala continued to expand its enterprise, manufacturing (among other things) candy and alcohol-based fuels crucial to keeping vehicles running during World War II, when gasoline was scarce. By 1956, the La Vizcaya distillery was producing six million liters of spirits, including rum, brandy, gins, and anise. Some evidence points to Arechabala producing more spirits in Cuba in the 1950s than Bacardi. (In fairness, Bacardi had long since expanded its operations to Mexico and Puerto Rico by this point.)

Havana Club, Part 3 – Cuban Revolution & the Aftermath

In the immediate aftermath of the 1959 Cuban revolution, Castro nationalized many of the country’s industries, including sugar and rum. That is, the Cuban government forcibly claimed ownership of the rum factories previously owned by Bacardi, Arechabala, and other families. The vast majority of Arechabala and Bacardi family members went into exile outside of Cuba. Numerous lawsuits regarding compensation for economic losses were filed and continue to the present day.

With the Cuban government running the show, information about rum production in the decades following is sparse. Some of the rum factories continued to operate, albeit with a different top-level management, i.e. Cuban government employees rather than the original family owners. In spite of this change, much of the processes remained the same, including sourcing raw materials locally to maintain the quality of the rum. It’s during this time that the Bacardi and Havana Club story become inextricably enmeshed, as Gjelten’s book describes:

In 1964, the Cuban government finally gave up trying to export any rum under a “Bacardi” label, having been blocked from using the brand in one country after another.

…

In the following years, the state authorities directed only minimal investment toward the former Bacardi properties, choosing instead to concentrate on the Bacardis’ former rival, José Arechabala, S.A. …

Unlike the Bacardis, the Arechabalas had not expanded their firm outside Cuba, and when they left the island after the confiscation of their family properties, they could not keep their rum business going. Sensing perhaps that the Arechabalas were less likely to challenge them, the Cuban authorities chose to develop their new rum industry largely on the Arechabala infrastructure in Cárdenas rather than at the Old Bacardi Site in Santiago.

… the Cuban economic authorities chose to use “Havana Club” as their export brand for state-owned rum factories across the island. By 1973, even the quality rum produced at the Bacardis’ old factory in Santiago was being sold overseas under a “Havana Club” label, though the rum produced there for domestic consumption was still sold as “Caney” rum.

From the late 1960s forward, the Cuban government struggled to rebuild the export market for its rums. With the advent of the 1962 U.S. trade embargo of Cuba, the United States was off the table as a sales destination. Since Cuba was now a communist country with deep support from the Soviet Union and Eastern Europe, this is where most of the Cuban-made Havana Club rum ended up during the 1970s through early 1990s.

With demand increasing in the 1970s, the Cuban government built a modern distillery in Santa Cruz del Norte, on Cuba’s north coast, about thirty miles east of Havana. Generally believed to have opened in 1977, the distillery is still in use today, supplying the high proof destilado de caña that’s blended with lower proof aguardiente to form the bases that make up today’s Havana Club rum. While Cubaron continues to make rum in Cardenas, I’m told it’s not the source of any current day Havana Club rum.

Another key date in the Havana Club story: In 1973, the Arechabala family did not renew their U.S. trademark for Havana Club. In 1976, the Cuban government, sensing an opportunity and perhaps thinking ahead to an eventual end to the U.S. embargo, re-registered the Havana Club trademark in the U.S., despite not being allowed to sell Cuban-made rum there.

Havana Club, Part 4 – Enter Pernod Ricard

With the end of the Cold War and the collapse of communist governments in the late 1980s and early 1990s, the economic hardships in the Soviet Union and Eastern European countries caused Havana Club’s export market to shrink dramatically. New markets needed to be developed to keep the money flowing.

With the U.S. market still out of the picture, the Cuban government chose to partner with France’s Pernod Ricard. Under the terms of the agreement, the Cuban government (in the form of Cubaron) and Pernod Ricard are equal co-owners of the venture: Cubaron makes the rum, Pernod Ricard markets and sells it. As part of the agreement, the Cuban government agreed to not promote its other (non-Havana Club) brands in export markets where Havana Club is sold. It’s reported that Pernod Ricard paid around $50 million U.S. to enter the agreement.

Shortly after the Pernod Ricard deal was struck, the Arechabala family discussed selling their claim to the Havana Club name to Pernod Ricard. In a nutshell, the Cuban government claimed they owned the trademark since the Arechabalas had abandoned it in 1973. The Arechabalas’ counterclaim is that the Havana Club name was stolen from them when the Cuban government nationalized the rum industry. Had the Arechabalas sold their claims to Pernod Ricard, it would have cleared up any lingering ownership issues. But they didn’t.

In 1997, Bacardi paid the Arechabalas $1.25 million U.S. to assign whatever claims they had on the Havana Club name, along with their recipes, to their one-time rival, Bacardi. This sale set up a situation that led to numerous lawsuits in U.S. and international courts — Bacardi lawyers going head to head with Pernod Ricard lawyers, arguing over ownership of the Havana Club name.

In the late 1990s, Bacardi sold a few cases of their rum under a Havana Club label– obviously not made in Cuba. This caused the odd situation where Havana Club labeled rum was for sale in the U.S, but the product in the bottle was not made in Cuba. It also meant that the Havana Club labeled rum for sale in the U.S. was completely different than Havana Club rum purchased anywhere else in the world. Naturally, more legal wrangling arose. Even the U.S. Congress got involved, enacting a law that by most accounts seem crafted to help Bacardi and Bacardi alone. (Bacardi has a large U.S. subsidiary company and has spent around half a million dollars per year on U.S. focused lobbyists over the past decade.)

The entire story of the Havana Club vs. Bacardi legal wrangling is far more complex than can be covered here. A good source for more background is Paul E. Senft’s article for Distiller.com. Another good (if legally wonky) read is the February 2000 decision by the U.S. Court of Appeals, Second Circuit.

Legal gyrations aside, after the 1993 deal was struck, sales of Cuban Havana Club have shown healthy growth nearly every year. Today, annual sales are reported at 4.2 million cases worldwide. Operating on the hope that Cuban rum may someday be imported and distributed in the United States, Pernod Ricard has registered the Havanista trademark for eventual use in the U.S. market, if it has to coexist alongside Bacardi’s Havana Club brand.

To keep up with the ever growing demand for Cuban-made Havana Club rum, the Cubaron/Pernod Ricard partnership built a new distillery in 2007, located in San Jose de las Lajas, about twenty miles southeast of Havana. I was fortunate enough to visit the distillery this past May. Stay tuned for my next post on Havana Club, where we’ll go inside the San Jose distillery to see the actual distillation of Havana Club’s aguardiente, the aging facilities, and learn about the Cuban style of rum blending with Maestro Ronero Asbel Morales.