E-Malt.com News article: Cuba: In spite of InBev – A-B deal, Cubans don’t expect to see Budweisers soon

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, Reuters published on July 18.

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, president 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.


18 July, 2008