Bacardi Limited
Address:
65 Pitts Bay Road, P.O. Box #HM720
Pembroke HM08
Bermuda
Telephone: (441) 295-4345
Fax: (441) 292-0562
http://www.bacardi.com
Statistics:
Private Company
Incorporated: 1919 as Compania Ron Bacardi, S.A.
Employees: 2,500
Sales: $800 million (est. 1996)
SICs: 2085 Distilled and Blended Liquors; 5182 Wines and Distilled Beverages
Company Perspectives:
BACARDI rum, no matter where it is made or where it is served, is always the same: a pure, high-quality rum with a distinctively fine, dry taste. Product standards were set more than a century ago, when there was only one Bacardi plant, but they are still uniformly maintained today in the many Bacardi plants in different parts of the world by a comprehensive system of quality control.
Company History:
Just say "Bacardi" and several images immediately spring to mind: Daiquiris and Rum & Cokes, tropical breezes, palm trees, and even fruit bats. Family-owned and operated since 1862, Bacardi Limited turned rum consumption from "Yo, ho, ho and a bottle of rum" to a sophisticated spirit sipped straight or on the rocks. Shipping upwards of 25 million cases of rum blends annually to 180 countries worldwide, Bacardi eyed greater market domination with the introduction of Bacardi Breezers, Bacardi Limón, and other new products in the mid-1990s. The first to produce a smooth, light-colored rum in the mid-1800s, Don Facundo Bacardi turned his blending process, called the "marriage of rums," into a reported billion-dollar empire.
From Rum Sales to Manufacturing, 1830 to 1875
Bacardi, the giant liquor conglomerate, began with the emigration of Facundo Bacardi y Maso from Spain in 1830. Born in Sitges, Catalonia, Bacardi arrived in the Caribbean port city of Santiago de Cuba, then a Spanish colony populated by many fellow Catalans. There the 14-year-old Bacardi began importing and selling wine. While working for an Englishman named John Nunes, who owned a local distillery, Facundo started tinkering with ways to upgrade the quality of aguardiente (fire water). Also known as rumbullion (then shortened to "rum"), Facundo hoped to "civilize" the dark liquor from its early incarnations as a coarse, harsh liquid swilled by buccaneers. As rum production had changed little in the last 200 or so years, Facundo decided it was time to elevate the spirit into something smoother and more refined.
In 1843 Facundo married a young woman named Amalia, the daughter of a French Bonapartist fighter, and soon began a family. Around this time his rum experiments had paid off and he offered samples of his newfangled light rum to relatives and friends. Facundo's secret formula enabled him to ferment, distill, and blend from molasses a rum one could drink straight, almost like wine, without mixers or additives. Since molasses was a byproduct of processing sugarcane, Cuba's largest export, there were ample quantities around the island. On February 4, 1862, Facundo, his brother Jose, and a French wine merchant joined forces to buy Nunes' tin-roofed distillery for $3,500, which had the necessities (a still of cast-iron, fermenting tanks, and aging barrels) for creating and selling a Bacardi brand of rum. Buying the old distillery lock, stock, and barrel, Facundo also received an added bonus in the deal--a colony of fruit bats--who later came to represent the Bacardi name.
The Bacardi enterprise was a family affair, and Facundo's three sons--Emilio, Facundo (Jr.), and Jose--joined the company when they came of age and learned their father's secret formula for making what was fast becoming the Caribbean's finest rum. Emilio, the oldest, worked in the office; Facundo Jr. worked in the distillery; and Jose, the youngest, eventually worked in selling and promoting his father's products. Facundo Jr., in honor of his father and to celebrate the new family business, planted a coconut palm tree just outside the distillery. As the Bacardi boys learned their father's trade, another young man named Enrique Schueg y Chassin, who had been born the same year Don Facundo purchased the Santiago distillery, was maturing and would soon join both the business and the family. In the ensuing years, as the business thrived, young Facundo's coconut palm did, too, and became an enduring symbol of the Bacardi family and its spirits operation.
Just before Don Facundo and his partners bought the Nunes distillery, an Australian named T. S. Mort perfected the first machine-chilled cold storage unit. Three years after Bacardi was established, Thaddeus Lowe debuted the world's first ice machine. Though these two inventions seemed completely unrelated to Don Facundo's premium rum, they later helped Bacardi conquer the social drinking marketplace by making ice and cold mixers commonplace. Yet such thoughts were far from Don Facundo and his family's minds, for they had no idea how widespread the appeal of their smooth, fine rum would one day become. Instead, they greeted Bacardi's increasing popularity in Santiago and the neighboring villages as a pleasant surprise.
As was proper in the day, customers brought their own jugs and bottles to the distillery, which Bacardi family members promptly filled and returned. With business booming, Don Facundo decided the current method of distribution wasn't good enough and set out to find an alternative. Meanwhile, back in Spain, Queen Isabella, who ascended the throne in 1843 at the age of 13, was deposed. For Bacardi and his family, as with most Catalans living on the Spanish-controlled colony, the insurrection mirrored their own growing unrest. As civil war raged in Spain in 1872, Emilio, who had become a Cuban freedom fighter, was caught and exiled to an island off the coast of Morocco. During his absence, in 1875, hostilities grew and a rebellion swept through Cuba, though the family business was untouched. Four years after his capture, Emilio returned to Cuba and learned Bacardi rum had earned a gold medal at the Philadelphia Exposition of 1876.
A Changing Landscape, 1877 to 1931
As the 1880s dawned, Don Facundo retired and turned Bacardi over to Emilio, Facundo Jr., Jose, and Enrique, who was now his son-in-law. The company's distribution problems had been solved with a suggestion from Dona Amalia, to provide Bacardi products with a distinctive, easily recognized label. As many of Santiago's residents couldn't read, Dona Amalia recommended using a symbol to represent Bacardi. The Bacardi logo was then born, sporting a most unlikely mascot, the fruit bat.
Before the turn of the century, as Bacardi flourished, Cuba was again engaged in battle to gain its independence from Spain. Emilio, fighting for his country, was banished a second time and Enrique went with him into exile. The United States joined the fray after a mysterious explosion on the U.S. battleship Maine sparked the Spanish-American War in 1898. After defeating the Spanish fleet at Manila, the U.S. and Spain signed the Treaty of Paris, which ceded Cuba, Guam, the Philippines, and Puerto Rico to the U.S. for $20 million. In 1901 Cuba became an independent republic, and Emilio returned home to the Bacardi family and business.
Emilio was elected mayor of Santiago while Bacardi continued buying sugarcane fields and expanding its operations through several bottling facilities. In 1906 Emilio was elected to the Cuban Senate and the next year Jose, the youngest Bacardi son who had represented the company's interests in Havana, died. Though the family mourned his loss, the business continued to prosper and in 1910 Emilio returned to his father's homeland to begin Bacardi's first international venture: a new bottling facility in Barcelona, Spain. By the end of the next decade on May 2, 1919, Compania Ron Bacardi, S.A. was incorporated with Emilio as president, and Facundo Jr. and Enrique as vice presidents.
As Bacardi set out to conquer the world--especially the United States--with its premium rum, a roadblock called Prohibition stood in its way. Though temperance had been gaining ground for the last several years, the Prohibition amendment was officially ratified less than four months earlier on January 16, 1919. If the Bacardis could not sell their spirits to the U.S., nothing stopped Americans from coming to Cuba for liquor. Havana soon became known as "the unofficial U.S. saloon" and Bacardi rum was one of its biggest attractions. Bacardi's international sales were also strong in a world whose population topped 1.8 billion by 1922. This same year, both the family and the business suffered the loss of patriarch Emilio, followed two years later by Facundo Jr. Enrique, though not a family member by blood, took the reins of the burgeoning company and served as its president.
The dawn of the 1930s brought further international expansion for Bacardi as its bottling operation in Spain was a huge success. Realizing Bacardi rum could be distilled and sold from any facility with the appropriate equipment, Enrique began to open what soon became a network of distribution points. First came the establishment of a new subsidiary in Mexico in 1931, which was nearly bankrupt through a severe recession. Enrique's son-in-law, Jose Bosch, intervened and kept the operation afloat until the economy improved and the small company turned profitable.
After Prohibition, 1933-59
When Prohibition was repealed in December 1933 Bacardi was ready to fill the gap. Enrique promptly sent his son-in-law Jose to New York City to pave the way for Bacardi's distribution in the United States. Back in Cuba the political climate was once again boiling as Fulgencio Batista y Zaldivar, the country's army chief of staff, became Cuba's de facto ruler after a military coup. Unfettered by its tropical roots, Bacardi entered the U.S. marketplace in a bang--selling over 80,000 cases in 1934. To save the company the United States' expensive import duty tax (nearly $1 per bottle), Jose Bosch decided to open another Bacardi facility in Old San Juan, Puerto Rico. Under American control since the Treaty of Paris in 1901, Puerto Rico was considered U.S. soil and its exports duty free. Under the name Bacardi Corporation, the new company soon moved to larger accommodations across the bay in Catano.
The 1940s brought several milestones for Bacardi, both in expansion and brand recognition. Much of the company's U.S. business had begun through word-of-mouth praise from visitors to the Caribbean, especially those flying Pan American Airways, which used Bacardi in some of its ads, "Fly Pan Am to Cuba and you can be bathing in Bacardi in hours." To capitalize on Bacardi's growing reputation and enhance its brand at the same time, Enrique and Jose initiated advertising on Bacardi's excellent qualities as a mixer. Two of the more popular variations were the Daiquiri, named after a Cuban village where an American mining engineer mixed Bacardi, crushed ice, and lime juice in 1896; and the Cuba Libre or Rum & Coke, created by an American army lieutenant in honor of Cuba's new independence. The latter concoction gained widespread attention when the Andrews Sisters made "Rum & Coca-Cola" a hit in 1944.
The same year "Rum & Coca-Cola" sailed up the charts, Bacardi Imports was established in New York City to coordinate the increasing demand for Bacardi, and both Cuba and the United States joined the Allied war effort. By the end of the decade, dark clouds loomed on the horizon for Bacardi. In 1947, with the reintroduction of whiskey in the United States, rum sales plummeted 47 percent in a one-year period. Next came the death of Enrique Schueg in 1950, at which time Jose Bosch assumed the role of CEO. In 1953 when drinkers had become concerned over the caloric content of liquor, Bosch introduced a new advertising tact comparing the calories of a Daiquiri with those in a glass of milk. This successful spin was soon followed by ad campaigns directed to blacks and Hispanics, and in 1956 the company broke barriers by using a woman in its ads, who advised homemakers to serve a Daiquiri with the evening meal.
It was around this time (there were two dissenting versions) that the first Pina Colada was mixed in Puerto Rico, using Bacardi rum, varied fruit juices, and coconut milk. As the 1950s came to an end, Cuba was once again seized by revolution--this time to unseat Batista, who had returned to power in 1952. Regarded by many as a puppet of the United States, whose continued interference in Cuban affairs spawned guerrilla uprisings, Batista ruled until 1959 when rebels led by Fidel Castro and his brother Che Guevara overthrew his dictatorship.
The New Bacardi, 1960-89
Bosch, no fan of Batista, was shocked when the new Castro government seized Bacardi's assets, valued at $76 million, in 1960. Luckily for Bacardi, it not only had its Mexican, Puerto Rican, New York, and recently established Brazilian operations to fall back on, but its registered trademark (which Castro tried to seize, to no avail). Bacardi's shareholders, all descendants of Don Facundo, reconstituted the company in 1960 as Bacardi & Company Limited, headquartered in Nassau, the Bahamas. Another company, Bacardi International Limited, was also formed and headquartered in Bermuda. In 1962 the company sold 10 percent of its shares in an IPO (initial public offering).
Trying to stave off competitors with Bacardi's reputation as a mixer, the company launched a new advertising campaign once again expounding its rum's versatility. "Enjoyable always and all ways" was supposed to be taken literally, to use Bacardi's light-colored rum as a substitute for anything, even vodka in heavyweight drinks like highballs. The formula worked and Bacardi's sales grew by 10 percent annually throughout the 1960s, when the company finally broke into the top ten of distilled spirits brands. In 1964 Bacardi sold over one million cases of rum; this figure doubled by 1968.
By the end of 1970, 2.6 million cases of Bacardi were sold. Aiming to further dominate the U.S. spirits market, Bacardi aggressively campaigned its rum as the mixer of choice, featured in joint promotions with Coca-Cola, Canada Dry Ginger Ale, Dr. Pepper, 7Up, Pepsi, Perrier, and Schweppes' tonic water. In a well-played game of one-upmanship, Bacardi won the battle against Smirnoff vodka as the nation's biggest-selling distilled spirit. In 1976 after a dispute with the Bacardi family, Jose Bosch resigned as president of the company. The following year Bosch and a group of his supporters sold their company stock (amounting to 12 percent or so) to an outsider, Hiram Walker. Unfortunately, this break with family tradition was the first in a series of squabbles that rocked the Bacardi empire over the next decade-and-a-half.
Bacardi's rums sold just shy of 8 million cases in 1978 and by 1980 reigned as the number-one liquor brand in the United States. During this period, consumers were once again weight-conscious and accordingly, Bacardi relaunched its status as a low calorie diet drink mixer. By 1985 Bacardi was selling over 18 million cases a year, with old rival Smirnoff selling less than 14 million. In 1986, three years after Bacardi Capital was created to manage and invest company funds, a group of inexperienced brokers lost $50 million speculating in the bond market. Regrouping, Bacardi chairman Alfred O'Hara and president Manuel Luis Del Valle (nonfamily members brought in to run the company in the 1970s) commenced a controversial stock buyback, which divided the company and inspired a storm of controversy. Many of the 500 family shareholders cried foul, several Bacardi family members were ousted, and O'Hara and Del Valle--despite the ruckus--succeeded. Spending more than $241 million, they bought back or converted shares from Bacardi's IPO in 1962 as well as those sold to Hiram Walker in 1977.
The Bacardi of the Future, 1990 and Beyond
When the 1990s began Bacardi was once again a private company. Having weathered the Bacardi Capital scandal and increasing family discord, the company was faced by falling market share and sales. In an effort to jazz up its image Bacardi Frozen Tropical Fruit Mixers and Bacardi Breezers were introduced to wide acclaim. Two years later came Rum & Coke in a can, and a majority interest in Martini & Rossi for $1.4 billion. Bacardi hoped the diversification would help its European operations; as a result of the purchase, Bacardi became the fifth largest wine-and-spirits company in the world. Before the Martini & Rossi acquisition, Bacardi was bringing in close to $500 million annually, yet was nowhere near complacent. Its next new product launch, Bacardi Limón, was aimed at younger drinkers of flavored liquors like Absolut's Citron and Stoli's Limonaya. Introduced in 1995 with an $11 million advertising campaign, Bacardi Limón took off and was considered one of the hottest high-proof new brands of the year.
By the mid-1990s Bacardi had bottling facilities located in Australia, Austria, France, Germany, New Zealand, Switzerland, the United Kingdom, and the United States, while its spirits were still manufactured in the Bahamas, Mexico, Puerto Rico, and Spain--with Brazil, Canada, Martinique, Panama, and Trinidad added to the list. The company's brands, of which Bacardi Breezers and Bacardi Limón were the latest newcomers, had grown to accommodate virtually all tastes. First and foremost was Bacardi's four premium rum blends: Bacardi Light, the original, comparative to gin and vodka as a mixer; Bacardi Dark (full-bodied, its amber color achieved by blackening the inside of wooden aging barrels) and Bacardi Black (charcoal-filtered just once before elongated aging; later renamed Bacardi Select), which competed with whiskey and bourbon; Bacardi Añejo, a golden rum blend named for the Castillian word meaning "aged" that appealed to upscale brown spirits-drinkers; and Bacardi Reserve, a twice-filtered blend for brandy and cognac drinkers.
By 1996 all of Bacardi's products were given a more hip look with updated labels and bottle caps as Bacardi Spice (to compete with Seagram's Captain Morgan) made its way to the market with several more prototypes in the works. As the company headed into the 21st century it was once again a family-run empire, with Don Facundo's heirs calling the shots. Manuel Jorge Cutillas and brother Eduardo occupied the top posts, while the company created alliances with partners in Hong Kong, Japan, Malaysia, the Philippines, Russia, Taiwan, and Thailand to introduce its products. Another global project was the debut of Club Bacardi, the company's web site. Well-positioned for the future, the name Bacardi conjured up far more than a refined, dry rum; Bacardi was not just a premium spirit but an institution here to stay.
Principal Subsidiaries: Bacardi & Co. (Bahamas); Bacardi Corp. (Puerto Rico); Bacardi-Martini, U.S.A. Inc.; Bacardi International (Bermuda); Bacardi y Compania (Mexico).
Further Reading:
"Bacardi Has Long-Term Plans for Spice Market," Grocer, August 12, 1995, p. 25.
"A Bat, with a Coat of Arms," Financial World, November 22, 1994, p. 80.
Behar, Richard, "Hangover," Forbes, July 14, 1986, p. 33.
Holleran, Joan, "Bacardi Breakthrough," Beverage Industry, July 1996, p. 32.
Hornik, Richard, "Rum Deal in an Old Family Farm; the Bacardis Tussle Over Taking Their Liquor Company Private," Time, May 25, 1987, p. 56.
Khermouch, Gerry, "Bacardi's Proof Positive," Brandweek, March 11, 1996, p. 30.
Simley, John, "Bacardi," Encyclopedia of Consumer Brands, edited by Janice Jorgensen, Detroit, St. James Press, 1993, pp. 24-26.
Whitefield, Mimi, "A Renovated Bacardi Plans New Generation of Snappy Niche Beverages," Knight-Ridder/Tribune Business News, March 26, 1995.
Source: International Directory of Company Histories, Vol. 18. St. James Press, 1997.
