Diageo Plc signed a joint venture deal with state-run Cuba Ron SA on Monday to market Santiago de Cuba Rum, in defiance of U.S. efforts to dissuade investment in the Communist-run country.
The new 50-50 venture, Ron Santiago SA, will have exclusive international rights to the premium brand, considered the best by local residents along with Havana Club, which is marketed by French firm Pernod Ricard under a similar arrangement signed in the 1990s.
The agreement comes at a time when the United States is ramping up sanctions on Cuba and trying to thwart foreign investment there.
The Trump administration in May allowed Title III of the 1996 Helms Burton Act to take effect, enabling U.S. citizens to bring lawsuits against foreign companies profiting from property taken from them after Cuba’s 1959 revolution. It had been suspended by President Donald Trump’s predecessors.
The Santiago distillery and related properties were reportedly nationalised.
Cuban rum is banned in the United States, but popular throughout Europe and other parts of the world.
"Cuban rum represents 9% of retail sales of premium rum worldwide," a news release from the new company said.
Regarding the implementation of the long-dormant section of the Helms-Burton Act, Luca Cesarano, general director of the new joint venture, said he was confident the company would not be affected.
Cesarano said a subsidiary of Diageo with no ties to the United States was the partner and no company personnel who work with or in the United States were involved in the project or would be in the future.
"Neither the subsidiary of Diageo which is the partner, nor the venture, will interact with any Diageo entity or person that interacts with the United States," he said at a Havana news conference.