How Havana Club Runs International Marketing From Cuba
A correction has been appended to this article.
Yves Schladenhaufen, Havana Club's international marketing director, is a rarity: a senior marketer living and working in communist Cuba. The Frenchman has been based in Havana for the last three years.
Havana Club rum is a joint-venture between Pernod Ricard -- the Paris-based owner of brands including Absolut vodka, Jameson whiskey and Jacob's Creek -- and Cuba Ron, a Cuban state-owned company.
Mr. Schladenhaugen draws on Cuba's lively, sultry cultural scene for inspiration for events and a website featuring artists and musicians, and relies on M&C Saatchi's Paris office for ads. M&C Saatchi won the business in 2005 and is behind the current campaign that started last year with the theme "Nothing Compares to Havana." Ads that look like scenes you might see on a Havana street include a beautifully dressed bridal couple on a bicycle, a pair of ballerinas limbering up, and a 1950s era car above the line "When you drink don't drive. This might explain the longevity of our cars."
Agency creatives from Europe spend at least two weeks a year in Havana working on ads that run in 27 countries, excluding the U.S., where the embargo on trade with Cuba continues. M&C Saatchi's latest project, co-financed by Pernod Ricard, is a feature film called "Seven Days in Havana" to be released next summer.
Ad Age : Do you do any marketing or advertising in Cuba?
Mr. Schladenhaufen: We can feature our products at point of sale and in duty free areas -- there are Havana Club ads in the airport -- but on the streets there is no advertising whatsoever. Marketing is about more than just ads, though. We have a local team who work on packaging, on visibility in bars and in stores, and at concerts and events. If you count tourists, Cuba is still a growing market -- every year a million Canadians experience Havana Club when they visit Cuba, and it is no coincidence that Canada is one of our fastest-growing markets.
Ad Age : Are distribution and government price controls big challenges?
Mr. Schladenhaufen: Yes, these are challenges, but there are state monopolies for the distribution of alcohol in Canada and the Nordics, too -- this isn't the only market where managing pricing is not that easy. Price increases have to be submitted to the authorities; sometimes they go through and sometimes they don't.
We have another price leverage, which is encouraging people to trade up by promoting our more premium-quality rums.
We have a Museum of Rum in Havana. It's a proper museum and 140,000 visitors pay to go each year. Inside there is also a small store selling the highest-grade seven-year-old and 15-year-old rums, because when they are in Havana, tourists are keen to discover something special.
Ad Age : How much of your time do you spend in Cuba?
Mr. Schladenhaufen: I spend 50% of my time in Cuba, 25% in Paris, and 25% in the rest of the world. My marketing team is split -- one-third is in Cuba, and the other two-thirds are in Europe, where they can be closer to agencies and markets.
I do live in Cuba. I have a German wife and a 4-year-old daughter there. My daughter goes to the French school in Havana, which is very international. There are about 10 or 15 different nationalities in her class.
As well as being the international marketing director I'm also part of the executive committee of Havana Club, so I'm involved in production, finance and management, which are all based in Cuba. We do a lot of hospitality in Cuba -- trade partners, distributors, bartenders and press all love to come to Cuba.
Ad Age : How do you get reliable internet access?
Mr. Schladenhaufen: It is bad. It's true that it's very slow and very expensive for the company, but there is a light on the horizon -- a new cable connection is joining Cuba to the American continent this summer. We need to have a team in Europe because in Cuba the internet is bad, and because there are no agencies in Cuba, except some partners who do point of sale, and no trade press.
Ad Age : Do other foreigners work at Havana Club in Cuba?
Mr. Schladenhaufen: We have 460 people altogether working at Havana Club International in Cuba. That includes the Havana headquarters, production and all the local offices around the country. There are only 12 non-Cubans. In my team I have two French, one Greek and an Italian. It's difficult to find local people who have experience of marketing because there are no brands in Cuba. The top management is split between Cubans and non-Cubans -- the marketing director and production director are both French, but the commercial director and the finance director are Cuban.
Ad Age : Are there any other Cuban brands besides Havana Club?
Mr. Schladenhaufen: We are the only Cuban brand with global reach. There's also Cohiba, but the market for cigars is more niche. Cohiba don't do big ad campaigns, but they are good marketers, with good management, distribution, packaging and new-product development. It's a very good brand.
The other brand is really Cuba itself. There's a good campaign -- Authentica Cuba -- that promotes the authenticity and spontaneity of the country. Cuba is a very attractive destination because it has beaches like the Caribbean, and it has a big city with cultural activities. The people are really great and society is unspoilt. Tourists are glad to leave their stress behind and have a simple, basic relationship with the Cuban people. The spontaneity is something very strong and nourishing.
Ad Age : What kind of government interference and control do you have to deal with?
Mr. Schladenhaufen: Cuba Ron, which owns 50% of Havana Club, is a state-owned company, but we don't feel it as a huge constraint. All countries have their rules in terms of tax, employment and movement of people.
It doesn't feel restrictive here -- we live differently, in a more simple manner. I live much nearer the creative sources and I go to places where I connect with musicians, artists and actors, so when we do events our relationship with them is direct and unspoiled. In Europe you use agencies as a filter to decode and translate creativity into marketing. It doesn't work like that in Cuba and it's not so easy, but it's inspiring.
Ad Age : How much do you export?
Mr. Schladenhaufen: We export 70% by volume and 85% by value. Cuba is still a top 10 market for us.
In an earlier version of this story, Yves Schladenhaufen's last name was misspelled.