Cuban rum

How to Invest in Cuban Rum Production

Few things symbolizes Cuba’s special place in the world more than rum. It all started nearly 200 years ago when Facundo Bacardí Massó came to Cuba from Spain in 1830 and began to experiment with ways to refine rum.

Today, Bacardi is no longer in Cuba, and a trademark dispute makes Bacardi’s future in Cuba uncertain.

It is possible to invest in Cuban rum production – although the Cuban embargo makes it illegal for US persons to do so today. The question remains whether it is desirable. In any case, the embargo is likely to be repealed at some point soon, so now is the time to plan to invest in Cuba.

Every year Cuba’s Ministry of Foreign Trade and Investment prepares a tome of investment opportunities available to foreign investors. The recently published 2015 Portfolio of Opportunities for Foreign Investment offers insights into the priorities and limitations for foreign investment from Cuba’s point of view.

The document identifies two rum companies in search of investment – and that means partnership with a Cuban government entity. You can obtain a copy of the document here:

As centrally planned documents go, this one is an improvement over last years’ and can be a helpful guide to investing in Cuba even for projects not listed in the document. One thing is for certain: Cuba will remain a state-driven economy with large government holding companies dominating the scene. Foreign ventures will require majority Cuban ownership – although this appears to be a flexible condition based on a recent deal with Unilever Plc, the European consumer goods product company.

On the demand side, rum is doing ok. According to the IWSR, in 2014 eight of rum’s top 10 markets faced volume declines – only France and Cuba produced growth in rum demand.

Bacardi cuba libre
Source: Wikimedia

In terms of total alcohol demand, analysts forecast the Global Alcoholic Drinks market to grow at a CAGR of 1.49% in terms of volume and 3.16% in terms of revenue over the period 2013-2018. According to the report, growth in the Global Alcoholic Drinks market is mainly driven by the increased demand for premium alcoholic beverages. Premium brands are currently at a high demand when compared to economically priced products because of the increase in disposable income of consumers, the use of alcohol as a status-symbol, the need for luxury, and the association of the “premium” label with beverage quality and taste.

How to Invest in Cuban Rum Production was last modified: February 25th, 2016 by Simons Chase