Despite deal, Cubans may not crack open Budweisers soon
Posted by: Martinne Geller
Anheuser-Busch's "Cuba defense" against a takeover by Belgium-based
InBev may have gone flat after the Budweiser folks agreed to be bought
out, but don't expect to see America's top-selling beers in Havana bars
any time soon.
InBev brews and sells Beck's, Bucanero, Cristal and Mayabe beers in Cuba
through a 50/50 joint venture with the Cuban government. Could Cubans
now be one mambo step closer to cracking open a cold Bud on a hot Havana
night?
Not so fast, says Uncle Sam.
According to a U.S. embargo against Cuba "no products, technology, or
services may be exported from the United States to Cuba, either directly
or through third countries. This prohibition includes dealing in or
assisting the sale of goods or commodities to or from Cuba, even if done
entirely offshore."
Exceptions include things like medicine, food, agricultural products,
works of art or publications.
"There will not be any Bud in Cuba. That's a business that doesn't exist
now and it will not exist in the future until the regime changes," said
Todd Malan, presidecorona2.jpgnt and chief executive of the Organization
for International Investment, a lobbying group that represents U.S.
subsidiaries of foreign companies.
But talk to enough people in Cuba and someone will remember when
Budweiser was sold there. A waiter at Havana's landmark Hotel Nacional
recently said the last time he saw it was in the early 1990s – right
about the time the Soviet Union collapsed and Cuba's economy, heavily
subsidized by Moscow, went south.
But Corona, whose brewer Grupo Modelo is half-owned by Anheuser, is
generally sold in hotels, restaurants and some stores that cater to
foreigners.
Average Cubans tend to know Corona's name and some say they have seen it
occassionally, but it is not their everyday choice. That would be one of
InBev's beers.
A can of Cristal or Bucanero at stores costs at least 1 CUC - the Cuban
hard currency worth slightly less than a dollar. Given that the average
Cuban makes about $18/month, beer is a luxury.
Bottles of Cuban rum — which include Pernod Ricard's Havana Club — start
at around $3 and go up from there.
A DEAL OBSTACLE?
Before a higher bid lured Anheuser into negotiations, the Budweiser
maker sued InBev, saying the maker of Stella Artois and Becks may be
lying when it promised to manage the combined company's North American
business from its hometown of St. Louis, since its Cuban business would
make that impossible.
But InBev could take a cue from France-based Pernod, which also owns
Wild Turkey bourbon, made in the United States. It does not sell Havana
Club in the U.S. or Wild Turkey in Cuba. Its business in Cuba is
completely separate from the U.S., according to Mark Orr, Pernod Ricard
USA's vice president for North American affairs.
He guessed that if regulators hassled InBev over its Cuban ties, the
maker of Stella Artois and Beck's could save itself by making sure that
the Cuban venture was managed separately from anything going on in the U.S.
"I have no personal knowledge about how their business is currently
structured, but I think they could do it fairly easily because everybody
else has managed to do it in the appropriate way," Orr said. "They are
smart people and I'm certain they'll do the necessary thing to comply
with the law."
InBev sells less than half a percent of its total beer volume in Cuba,
according to a spokeswoman. Therefore, lawyers have said, it's likely
that InBev would swiftly sell it rather than have it impede its $52
billion takeover of Anheuser-Busch.
And if the Castro dynasty were to end? Expect the "King of Beers" to be
paraded through the streets of Havana, Clydesdales and all.
(Additional reporting by Jeff Franks in Havana)
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