Travel Markets Insider / Oct. 15, 2002
By Larry Luxner
HAVANA -- Trade shows are usually nothing new, but US exporters took note last month when the government held an officially sanctioned event in Cuba. The US Food & Agribusiness Exhibition held Sept. 26-30 at the Pabexpo convention center in Havana, was the largest US expo in Cuba since the 1959 revolution.
The high-profile event -- which could be viewed as one of the most important thaws in US/Cuba relations in four decades -- was attended by dignitaries from Minnesota Gov. Jesse Ventura, who attended the ribbon cutting, to Cuban President Fidel Castro, who attended almost every day of the show, making it a point to meet as many exhibitors as possible.
In addition to promoting basic foodstuffs however, the groundbreaking event allowed several producers of premium products from gourmet wine to piña colada mixes to initiate relationships they hope will lead to important contracts with the island nation in the not-too-distant future.
The Trade Sanctions Reform and Export Enhancement Act of 2000, passed in the wake of Hurricane Michelle, allows Cuba to buy farm commodities on a cash basis to help feed its 11.2 million people. Since November 2001, Cuba has spent $140 million on U.S. food purchases -- a number expected to rise to $250 million by mid-2003.
"Americans have top-quality products, and these products can be bought by the significant part of our population which has access to dollars," said Pedro Alvarez, president of Alimport, the sole Cuban government agency authorized to import U.S. food items.
But some of the products on display at Pabexpo hardly qualify as "food" in the traditional sense: Wrigley's chewing gum, Kentucky burley tobacco and MartÌ Cuban-Style Lime and Mint Rum.
At least half a dozen liquor companies attended the food expo, an unprecedented event that attracted 750 executives representing 288 U.S. companies. Ignacio Melero, the Caribbean and Latin American sales director for Southcorp Wines, was one of them.
On the first day of the event, Melero poured Fidel Castro a glass of Seven Peaks Cabernet Sauvignon from California.
"Fantastico," the Cuban leader purred after tasting the wine. Melero later said that "we don't have great expectations, but the fact that Fidel told us we have fantastic wine" is very important.
"Wine is a food product, a byproduct of the grape," he pointed out. "So anything that's sourced from the land is allowable in this fair" -- and permitted to be sold to Cuba.
Yet Southcorp said products like Seven Peaks -- which would sell here for at least $30 a bottle -- are way beyond the budgets of most ordinary Cubans, who earn the equivalent of $15 to $20 a month in relatively worthless pesos.
Rather, Southcorp's wines would be targeted at Canadian and British tourists.
"Our Penfold's and Rosemount brands are phenomenally successful in Canada and England, and those countries are a big source of tourism in Cuba," said Melero, estimating North American sales at over 5 million cases and European sales at over 7 million cases -- most of it in Great Britain.
"This would be totally tourist-driven, because of the price structure," said Melero. "But if it becomes a mainstay in the tourist industry, it will eventually trickle down to the domestic consumer."
For Laurence D. Pollack, CEO of Caravelle Wine Selections, the Cuba trade show marked the first time his company had ever participated in an overseas food expo.
Pollack, whose firm is based in Avon, Conn., represents two California wineries, Burgess Cellars and Girard; Burgess sells 25,000 cases a year in the United States, and Girard sells 10,000 cases.
"Our prices go from $15 to $40. In Cuba, our wines will probably be sold for the same price points," he said. "Our market is the hotels and fine wine shops. There are 89 hotels in the 4- and 5-star category, and we've been talking with Alimport for quite a long time. This could be an important market for us if Cuba opens up. Even now, we're establishing important relationships."
One key deal thatís already come out of the trade show involves Havana Club rum and Splash Tropical Drinks of Fort Lauderdale, Fla. The deal -- the first ever involving Havana Club and a US company -- calls for Splash to supply piña colada and daiquiri concentrate to a unit of Alimport; the product will then be mixed with Havana Club rum and promoted throughout the island's hotels and resorts.
"We're doing a co-marketing concept with Havana Club," explained Richard N. Waltzer, president of Splash. "They're going to market Havana Club rum with our American product and we, in turn, are going to work together to develop our sales and help Havana Club sell more rum. I'm targeting the tourist industry with these products. The average Cuban isn't drinking piña coladas at home."
Waltzer said he met with Castro during the trade show -- an encounter that later led to the unprecedented contract involving Havana Club Holdings (HCH), a joint venture between the Cuban government and French drinks giant Pernod-Ricard.
The result: a contract that by 2004 could be generating sales of $1 million or more a year. Waltzer said that Splash, whose total revenues are "in the millions," already enjoys strong sales in Puerto Rico and other Caribbean destinations. But Waltzer added that the full results of his company's deal with Havana Club won't be realized until Washington lifts its long-standing travel ban against Cuba.
"That's when things will really take off," he said. "The American people are very curious about Cuba, and tons of people will come here."