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Brands take long view in Cuba

News, 03 June 2016

HAVANA: President Obama's recent visit to Havana highlighted the thaw in US-Cuba relations, and new business opportunities, but brands will have to take the long view if they are to succeed in Cuba, a new report suggests.

In Understanding the Evolving Cuban Consumer, the Boston Consulting Group, a management consulting firm, noted that most Cuban consumers spend most of their income on basic – unbranded – goods. This situation, the report argued, is unlikely to change in the short term.

But as markets are liberalised, Cuba's economy grows and internet access becomes common, there is likely to be greater brand awareness and more disposable income for discretionary spending.

Cuba does not permit direct advertising or marketing to consumers, however, so brands cannot rely on this as way of bringing their products to consumers' attention. "In many cases, the most significant factor in purchasing decisions is product availability," BCG said.

Accordingly, it advises starting to build relationships now with government-approved suppliers, who can navigate official bureaucracy and understand how distribution works, which will be crucial as the economy opens. Brands will also be able to gain knowledge and establish a presence with consumers.

Another step brands can take is to explore indirect marketing and advertising routes by connecting with the expatriate Cuban community – especially in Florida – which is an important source of information and money for friends and family on the island.

BCG noted that Adidas is the most widely recognised brand in Cuba, largely because Fidel Castro wears their tracksuits – not a marketing strategy that can be widely followed.

But bold steps are possible. Heineken, for example, has given refrigerated trucks to the to the Ministry of Trade to use as it sees fit, giving up control of distribution in order to build brand awareness.

The beer brand has also deployed more familiar techniques, including point-of-sale displays – which are allowed – and branded events to help it further establish Heineken among Cuban consumers.

Data sourced from Boston Consulting Group; additional content by Warc staff