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).
Source: International Directory of Company Histories, Vol. 18. St. James Press, 1997.
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