It’s a nice time to be at the top end of the rum market. The IWSR put growth of the premium and above segment at 10% between 2021 and 2022, with ultra-premium experiencing 15% growth in that period. At the end of 2022 and beginning of 2023, several high-profile and high-price acquisitions of premium-plus brands indicated that the wider spirits industry echoed that enthusiasm.
Havana Club wasn’t one of those brands. It’s been a joint venture between Pernod Ricard and the state-owned Corporación Cuba Ron since 1993 but that stability gives the brand an advantage in the fast-growing luxury rum space.
“The premiumisation trend started before Covid,” says Havana Club chief executive Christian Barré.
“Now it’s expanding, and it’s consolidating in the most mature markets. We have quite an extensive range of products, but that includes a comprehensive range of ultra-premium.
“There’s a long rum tradition in Cuba. Last year Cuban rum masters’ tradition was declared UNESCO cultural heritage, and we’re not a new brand so through the years we have been able to build an inventory of exceptional aged rum. All of these pieces give us the legitimacy to play in this growing ultra-premium brand category and we have the inventories to do so.”
Market polarisation
But while premiumisation marches on, so does inflation and many people in Havana Club’s key markets in the EU and UK are finding themselves with less money in their pockets. But Barré is confident that it won’t put an end to consumers trading up in quality.
“We’re noticing a polarisation in markets,” he says. “Whatever the conditions, people with disposable income are still dedicating a sufficient part of their income to buying better products – that’s continuing.
“But due to recent changes in economic conditions, inflation and so on, we have another part of the population looking for better deals, buying more on promos. In the UK market, for example, people buy a lot of their products on promo so it's very important for every brand to be active on that front.
“All our strategy is around expanding geographically, to not only sell in historical markets but also at the same time to make sure that we premiumise the range in the new markets.”
In 2022 Havana Club launched in India, one of the top two rum markets by volume in the world according to the IWSR, so a market which represents enormous potential for the brand.
“We’ve just started seeding in India,” says Barré. “India is a complex sum of different countries. Each different state has its own rules. So when we say we are launching in India, we are launching in the six states most important for rum consumption.
“The existing rum market in India is big, but it’s a very cheap, local rum market, we’re entering in the super-premium part.
“In terms of pricing, it’s much higher, targeting the middle and upper classes, but that still means more than 100 million people. So it’s a massive market and we have great hopes in India, but it’s a longer-term play.”
It’s interesting to see a brand the size of Havana Club put such an emphasis on its luxury range.
According to the Drinks International Millionaires’ Club 2023, the brand sold 4.6 million nine-litre cases in 2022, so the higher price limited-releases must account for a drop in the ocean in terms of revenue for the company.
“There’s a comparison with the fashion industry,” explains Barré. “On one side there is haute couture, on the other prêt-à-porter. The big houses have got tradition and heritage and still produce amazing haute couture pieces which are exclusive by definition but they also justify the quality of the core range. The two go together – if you don’t have the upper part, then over the years you will dilute the quality image that you’ve built up.”
And for Havana Club, it’s not just about presenting the right image, but also as an important space for innovation and creativity.
“In our portfolio, Tributo 2023, Don Navarro, and Havana Club Vintage 2007 are ultra-premium products but they can be used for the benefit of the rest of the range. A few years ago, we launched a small batch of Tributo which had a smoky signature from which the maestros decided the same signature could work with a base of Havana Club Seven Year Old, which they began testing by finishing in Islay malt casks. That became Cuban Smoky, which is now part of our permanent range and has more commercial impact than the releases at the top of the range. But the top of the range creates our heritage, tradition, quality credentials that cascade down and impact everything.”
