UPDATE: “Hecho En Cuba” Has Value…. Obama Administration Will Help & Accept Certification From Cuba
/Editor's Note: This was an important event, milestone, etc., when first discussed in June 2016. Since that time, additional, and important information became available from the companies involved, from the United States government and from the government of the Republic of Cuba which, in some aspects, contradicts information contained in our previous writings.
The positive is our revised analysis portrays a greater texture and depth... and, most importantly, provides additional reasoning as to the significance of the transaction for United States companies.
“Hecho En Cuba” Has Value….
Obama Administration Will Help & Accept Certification From Cuba
Excerpts......
On 26 June 2016, New York, New York-based Nestle Nespresso USA, Inc., a subsidiary of Vevey, Switzerland-based Nestle SA (2015 revenues approximately US$94 billion), placed a full-page color advertisement featuring its new Cuban Nespresso Grand Cru Cafecito de Cuba capsule on page 24 (the back of the first section) in the national edition of The New York Times. The cost was approximately US$175,110.54 to reach an audited circulation of 1,140,015 readers.
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Nestle Nespresso purchased a container of approximately eighteen (18) tons of green coffee beans through London, United Kingdom-based Cubana Coffee & Roastery (www.cubana.co.uk), the established bar-restaurant and coffee roasting group, and London, United Kingdom-based The Cuba Mountain Coffee Company Ltd (www.almacuba.com).
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The green coffee beans were sourced from the 2015-2016 harvest in the Republic of Cuba; the value was approximately US$5,000.00 per metric ton, or approximately US$90,000.00.
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The beans will be roasted at Nestle Nespresso facilities (valued at US$500 million) in Avenches and nearby Orbe, Switzerland. With approximately 20% lost during the roasting process, the result will be approximately 180,000 capsules per ton- 3,240,000 limited edition Cafecito de Cuba capsules (approximately 5 to 6 grams each or .17 to .21 ounces). The price for a limited edition capsule has been US$1.10, so potential total revenue could be approximately US$3,564,000.00.
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Significant that the advertisement placed in The New York Times was not to promote a service, it was to promote a product. The date of 26 June 2016 commenced a rebranding of the Republic of Cuba- from primarily a visitor destination to an origin of consumer products.
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For any United States-based company, the words "Hecho en Cuba" (Made in Cuba) will have greater perceived marketing value due to the marketing expenditures in the United States by Nestle Nespresso USA, Inc.
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Not lost on management of United States-based companies is a preference by the government of the Republic of Cuba to permit a non-United States-based company to do first what the Obama Administration has authorized a United States-based company to do with respect to the direct importation of agricultural commodities (thus far only coffee) from the Republic of Cuba.
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For the Nestle Nespresso USA transaction, the OFAC accepted letters from the Ministry of Agriculture of the Republic of Cuba; Nestle Nespresso USA; London, United Kingdom-based Cubana Coffee & Roastery; and London, United Kingdom-based The Cuba Mountain Coffee Company Ltd (CMC) certifying that all of the coffee was sourced from private farmers in the Republic of Cuba and the OFAC accepted that for the 18-ton transaction, the exporter of record would be a Republic of Cuba government-operated entity, Cubaexport. For future transactions, CMC expects to also be a Republic of Cuba-authorized exporter.
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The Obama Administration is focused upon creating commercial activity rather than with the immediate and direct impact of that commercial activity upon the individual (independent) actors in the Republic of Cuba.
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This focus is based upon a belief that with 190 days remaining for the Obama Administration, the existence of a [hopefully] bi-bilateral commercial landscape, even if a consequence is acquiescence to more-than-desired involvement by Republic of Cuba government-operated entities, if preferable to nothing.
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This rationale, which the United States business community supports, is based upon a recognition that absent acceptance of the role of the government of the Republic of Cuba in most sectors of the economy, there will be few meaningful commercial opportunities for United States-based companies. The goal is to seek any means to authorize components of President Obama’s legacy initiatives.
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Which transitions to a question: Why is the Obama Administration creating sometimes constrictive regulations if known the regulations will likely be supplanted during the licensing process?
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The Obama Administration determined that generating the first license from the OFAC to a United States-based subsidiary of one of the fifty (50) largest companies in the world (30th largest company in Europe) will result in a ginning up of interest (and advocacy) for greater market access to the Republic of Cuba for United States-based companies. The calculation was correct.
