New York - Coca-Cola Co., one of the world's largest companies, sells its beverages in all but two countries - North Korea and Cuba. That might be one nation soon.
President Barack Obama moved Wednesday to end the isolation of Cuba, proposing to remove trade and travel restrictions that have lasted more than 50 years. The policy change could benefit a raft of companies.
Obama would let U.S. businesses export goods such as building materials, farming equipment and communications infrastructure on the island. The loosening of travel restrictions could aid the cruise and airline industries. U.S. financial institutions will be allowed to open accounts with Cuban banks. The unexpected thaw could mean new business for companies as varied as Carnival, Nike and Wal-Mart Stores.
Normalizing relations with the island nation about 90 miles from Florida would open a market of about 11 million people - about the same size as a state like Ohio - that have been longing for U.S. products for decades, according to John Kavulich, a senior policy adviser at the U.S.-Cuba Trade and Economic Council.
“What's attracted U.S. companies from before the revolution, through the revolution to today is there's an incredibly high awareness for U.S. brand names,” Kavulich said in an interview. That means the cost of entering the market would be lower because not as much marketing is needed, he said.
The steps Obama laid out would loosen an embargo that had been one of the most durable elements of U.S. foreign policy.
Orbitz Worldwide Inc., a longtime critic of the embargo, applauded Obama's moves on Cuba, saying it would hopefully pave the way for travel between the two countries.
“There are numerous economic, social and cultural benefits that will flow from free and open access and our customers are eager to visit Cuba,” said Barney Harford, CEO of Orbitz.
Any excitement over the potential for Cuba to become an outpost for global brands like Nike, McDonald's or Wal-Mart has to be tempered. It's a poor country and its people don't have enough access to credit to spend a lot on discretionary goods. The government in Havana, the nation's capital, also has been known to make moves toward opening up to foreign firms, only to pull back.
The World Bank, citing 2011 data, pegs the island's gross domestic product at more than $68 billion - about what the U.S. produced that year in a day and a half, according to data compiled by Bloomberg.
“No one should be holding their breath for the Havana- Mac,” Kavulich said. “Or investing in McDonald's today in anticipation of the Havana-Mac.”
Coca-Cola would consider re-entering the market “at the appropriate time and in accordance with the relevant laws and regulations governing U.S. relations with Cuba,” Ann Moore, a spokeswoman for Coke, said in an email.
Bloomberg News