“From the Caribbean to the World” (and no free samples)
Elie Blumen, BBA2 eblumen@umich.edu
Issue date: 4/16/01 Section: Latin American
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Mr. Torres joined the Bacardi L.C in 1980, serving initially as a company controller. After becoming Vice President of Finance and Operations, as well as Senior Vice President of Sales and Marketing, he assumed the company’s leadership in 1995. Mr. Torres became the first president who was not a member of the Cuban Bacardi family group. He accomplished success in the position following a strategy that he himself described as “work, work, and hard work”.
The company was founded in Santiago de Cuba, Cuba, in 1862 by Facundo Bacardi Masso, a Spanish immigrant who branded the company under his family name. The famous bat logo evolved from the legend of “the rum of the night”; people usually drink rum at night and night is linked to the bats. The bat is also a good luck symbol in some Latin countries, as well as being a Catalonian emblem, which Mr. Bacardi wanted to keep present as a tribute to his former land.
Bacardi started growing very fast immediately after its foundation, becoming very popular in Cuba in the late 19th century. The Spanish-American war gave birth to the traditional “Cuba Libre”, a mix of Coca Cola and the traditional Cuban rum that became very popular among American soldiers and people in the Caribbean island, increasing the popularity of rum in markets abroad. To capitalize on the increasing popularity of rum outside Cuba, the company started building its International Strategy, entering the Mexican and Puerto Rican markets during the mid-1930’s and continuing its expansion to other markets in the Caribbean region.
However, Bacardi’s expansion was slowed down when Fidel Castro and the communist party took over the government of Cuba after the Cuban Revolution in the late 1950s and early 1960s. The communist party confiscated all of the company’s assets, and tried to market the Bacardi brand by themselves, denying the Bacardi family members any license to market the brand abroad.
The Bacardi family then decided to create a new Bacardi company, headquartered in Bermuda Island, and continue the expansion of the company, starting its global expansion in the late 1960s. Bacardi Rum became the best selling premium distilled spirit in the USA in the 1970s. During the 1970s and 80s, the company entered the South American, European and Asian markets, making the brand really global and growing at a very fast pace as new products were introduced to satisfy different consumers’ needs around the world.
The 1990s decade was described by Mr. Torres as the decade of acquisitions and adjustment to the new economy, while maintaining its “old economy company” structure. In 1991, Bacardi became Bacardi Limited Holding Company, but remained private. The firm’s operations were divided into four main regions: North America, Latin America, Europe/Mid-East, and Asia. In 1992, Bacardi L.C acquired Martini-Rossi, a well-known Italian wine company. Positive synergies out of the acquisition were: strengthening the company’s distribution network, adding balance to the portfolio (by diversifying within the alcoholic beverages market), and adding global management expertise. In 1998 Bacardi L.C acquired Dewar’s and Bombay Brands, which were popular in regions where Bacardi L.C needed more operating expertise that was difficult to develop internally in the short term.
According to Mr. Torres, the future of the corporation looks very solid. Bacardi L.C will continue as an independent organization, meaning that it will remain privately (family) owned. The corporation can afford the luxury of implementing their own business strategy without facing the problem of dealing with unpleasant stock-holders and avoiding the risk of a hostile takeover considering that the corporation’s steady cash flows make it a good target for investors. The corporation also holds a good credit reputation that allows it to easily borrow capital if necessary to fund operations or any potential strategic acquisition. The Marketing department works hard in developing core brands in new markets around the world as well as exploring new opportunities to introduce new products to satisfy new niches. The main threats that Bacardi L.C faces are that some important markets are already mature or will mature in the short term. It is also difficult to keep pace with new consumers, and trade barriers could increase, making the product less affordable for consumers in some markets around the world. However, the corporation seems to be in good shape to overcome these threats, and even to capitalize on new opportunities. Bacardi L.C is the rum market leader and sets the pace in that market. It also has a strong brand worldwide, is very active in new product development, and is increasing its presence in developing markets. New products like Bacardi Limon (one of the most popular drinks in Latin America) and Margarita mixers have become very successful in the last five years.
Bacardi L.C bases its success on its brand, its organization and especially on its people. As long as these three elements are kept intact and respected, the Bacardi spirit of “adding value to their consumers’ moments of leisure and entertainment” will remain solid and this “old economy company” will continue setting the pace in the new economy alcoholic beverage market.
Now it’s time for me to get some Bacardi Limon and Sprite at the bar.
Salud y que siga la fiesta!
