Diageo forms Cuban rum joint venture

Diageo's European subsidiary has formed a joint venture with the state-run Cuban distiller that produces Pernod Ricard's Havana Club brand for the worldwide distribution of Santiago de Cuba rum.

With regard to the USA economic embargo against Cuba and the implementation of additional sanctions in recent months, Luca Cesarano, general director of the new joint venture, said Diageo takes all measures to ensure that the applicable regulations are not violated.

"This new company is in line with our strategy of investing behind growth opportunities in premium and higher brands".

Santiago de Cuba will join Diageo Europe's portfolio of Reserve luxury spirits with its four core variants (Carta Blanca, Anejo, 11-year old and 12-year old).

The signing occurred in the 1930 Hall of Cuba's Hotel Nacional, between Diageo's President of Global Production and Purchasing, David Cutter, and the head of the Cuba Ron Corporation, Juan Gonzalez. The rum is made in the province of Santiago de Cuba, and holds the protected Designation of Origin Cuba.

Cuban rum brands account for nine per cent of the retail sales value of this growing segment globally.

Diageo said the premium plus rum segment in Europe, the key market for the development of the Santiago de Cuba brand, is growing at 16%, ahead of luxury spirits, at 9%.

The government-run producer has partnered with Diageo's main rival, Pernod Ricard, on the global distribution of Havana Club rum since 1993. The brand will not be distributed in the US.

Under a 1996 law, USA citizens can bring legal action against foreign companies profiting from their former property nationalised by the Cuban government after the 1959 revolution.

Diageo is confident it will not be liable because the joint venture involves one of its European subsidiaries.

Luca Cesarano, general director of the new joint venture, told a press conference in a Havana: "Neither the subsidiary of Diageo which is the partner, nor the venture, will interact with any Diageo entity or person that interacts with the United States", Reuters reports.

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