October 1, 2015
October 1, 2015
By Suzanne McGee | April 4, 2012 | Food & Drink
A Bacardi rum promotion in Havana, circa 1920s
Bacardi company headquarters in Santiago de Cuba, 1930s
Party at Edificio Bacardi in Havana, circa 1930s
Bacardi employees in Santiago de Cuba, circa 1940s
Rafael “Pappy” Valiente and guests at the Edificio Bacardi de La Habana bar in the 1930s
Facundito Bacardi Gaillard (Don Facundo Bacardi Massó’s grandson) pours rum from a blending tank, circa 1920s
The iconic Bacardi building in downtown Miami served as the company’s US headquarters from 1963 to 2010
Gloria Estefan at the Bacardi anniversary party
Ryan Phillippe was among the celebrity guests mingling with family members at Bacardi’s 150th anniversary party in Miami
Bacardi employees in Santiago de Cuba, circa 1940s
To reach the front doors of the “Cathedral of Rum”—the Puerto Rican distillery where Bacardi Corp. manufactures about 85 percent of the rum it produces each year—you have to walk or drive around a circle of grass surrounded by flowers. At its center stands a head-and-shoulders bust of a middle-aged man, sculpted in bronze; behind that is a fragile sapling, barely recognizable as a tiny coconut palm. Those two items are what some 600 members of the Bacardi clan left behind after their three-day gathering in San Juan in early February to celebrate the 150th anniversary of their family-owned company’s founding in the port community of Santiago de Cuba, 675 miles away as the crow flies. The bust is of the founder of both their family and the business in which they all still have a stake. It was crafted by one of those descendants, Helena Kiely Bacardi, in the image of Don Facundo Bacardi Massó, the Catalan businessman who revolutionized the global spirits industry by transforming rum from a rough beverage suitable for serving to sailors as “grog” into a lighter-tasting, clear spirit. The coconut palm sapling? Family members planted it in memory of another coconut palm put into the ground at the time Don Facundo opened his first distillery a century and a half ago, and around which later premises were carefully constructed. “El Coco” died at the same time Cuban dictator Fidel Castro nationalized the Bacardi operations, a year after seizing power, and triggered an exodus of family members into exile around the world.
By the time they fled Cuba and ended up in some 18 different countries, the Bacardi clan had owned their rum business for nearly a century, watching it grow from a tiny distillery in a tinroofed building into a company employing about 6,000 people and shipping 1.7 million cases of rum around the world annually. In the years after leaving Cuba, both the company and family who owned it were forced to regroup and move forward. Ironically, Facundo L. Bacardi, the company’s chairman since 2005 and great-great-grandson of its founder, attributes much of Bacardi’s successful transformation from a single-product business to a global player that can compete with the likes of publicly traded entities like Diageo and Pernod Ricard USA to the very fact of its exile.
“The drive and endurance to survive and overcome such adversity that would have caused others to give up is in our DNA—the family’s and company’s,” says the 45-year-old Bacardi. Going into exile “really enabled us to accelerate the expansion of Bacardi,” to the point where the single- brand rum company has become a global spirits player with top gin, vodka, whiskey, vermouth, and tequila brands in its portfolio of 200-plus labels. At the same time, exile has only reinforced the family’s shared Cuban heritage. Although the number of family members may have doubled in the last 60-plus years and many Bacardis have never set foot on the island where the business was born, they all “have this common thread, that Cuba is where we started and where we want to go back to,” Bacardi explains. “In our souls, we are all owners of a Cuban company in exile.”
The family’s ability to survive and thrive in today’s ruthlessly competitive global spirits business may well have its roots in the company’s history and the constant high-wire act of its family members and managers—a history that Tom Gjelten masterfully chronicled in his comprehensive account of the ties between the Bacardis and their homeland, Bacardi and the Long Fight for Cuba: The Biography of a Cause, first published in 2008. When the Bacardi clan first arrived in Cuba, it was a Spanish colony, with rigid class lines that put the Spanish rulers in the elite. The Bacardis, originally a Catalan family, quickly came to identify themselves as Cuban rather than Spanish and to support reformist causes. Even as the Bacardi family’s rum became popular in Spain—the company won the right to provide its liquor to the Spanish royal family— Don Facundo’s eldest son and heir, Emilio, a member of Santiago’s town council, was imprisoned twice for supporting Cuban revolutionaries.
When the Americans showed up after the sinking of the USS Maine in Havana’s harbor during the Spanish-American War in 1898, the Bacardis originally welcomed them as liberators. But idealism didn’t blind them to a great business opportunity even then. When a Cuban bartender decided to add some light Bacardi rum to a favorite drink of the American soldiers—Coca-Cola—the resulting cocktail became known as the Cuba libre—“free Cuba.”
The Bacardis quickly lost some of their enthusiasm for the American interlopers after their adopted homeland was entrusted temporarily to the United States to govern. But they loved American tourists, who flocked to Cuba in ever-growing numbers throughout the first half of the 20th century, with the biggest spurt in growth coming as Prohibition shuttered bars and made drinking alcoholic beverages illegal across the US. That ill-conceived policy simply spelled opportunity for Bacardi and the nascent cocktail culture: “Fly with us to Havana, and you can bathe in Bacardi rum two hours from now,” suggested an ad by Pan American Airways, promoting its flights linking Miami with Cuba.
By 1928, some 90,000 tourists a year were doing just that, double the number who had made the trip a decade or so earlier, and bartenders able to mix some of the new cocktails—the daiquiri, pioneered by American mining engineers near the town of Daiquiri, Cuba, and the mojito, a Bacardi version of a 16th-century drink with light rum replacing the heavy aguardiente of old—became celebrities. A bartender at Havana nightspot La Floridita was famed for his ability to prepare six cocktails at once, filling each glass to the brim without spilling a drop or having a drop left over. Ernest Hemingway quaffed daiquiris at a steady clip and mentioned Bacardi by name in his work; when the author won the Nobel Prize, the Bacardi family threw a party in his honor.
When Fidel Castro arrived on the scene, he seemed more of a savior than a threat. Much like the Americans had at the beginning of the century, Castro promised reform and democracy and an end to repression, in the form this time of a domestic dictatorship by Fulgencio Batista rather than Spanish colonials. The Bacardis, now under the leadership of Pepin Bosch, the grandson-in-law of Don Emilio, feared Batista more than Castro, and even supported Castro’s revolutionary forces financially, funneling cash to the uprising’s “treasurers” in Santiago. As Bacardi workers took off to join Castro in the final months of the struggle, family members promised their jobs would be held until their return; for their part, the revolutionary forces deliberately spared Bacardi’s facilities from damage and even ensured that Bacardi’s brewery was able to make scheduled shipments. The alliance between the new regime and the Bacardis went further still: The daughter of a Bacardi executive, Vilma Espín, married Raúl Castro and became unofficial first lady of Cuba until her death in 2007.
Wary of Batista, Bosch had sent Bacardi’s trademarks and patents out to the Bahamas in the late 1950s. That move would form the basis of the company’s survival when Castro decided he no longer wanted or needed capitalists—even former supporters like the Bacardis—and nationalized the firm’s Cuban assets in fall of 1960. Within two years, a majority of family members had left the island; the company’s current chairman, Facundo L. Bacardi, was born in Chicago.
Irate at the seizure of the family’s assets, Bosch became as fervent an opponent of Castro’s new regime as he had been a supporter of the former’s revolutionary movement before it swept into power. Castro, he concluded, had taken a progressive ideal of Cuban political identity and distorted it by adding Communism to the mix. Bosch became a leader of the anti-Castro resistance. As the years passed, his activism waned, but the iniquities of the Castro regime remained his primary focus.
In another piece of serendipity, Bosch oversaw the construction of distilling operations in Puerto Rico from the late 1930s to the late 1950s in order to get Bacardi rum into the United States on a tax-advantaged basis. Now that facility began producing the majority of the company’s rum, even as its head office was still in Santiago de Cuba.
“When they were exporting from Cuba prior to 1960, they were a small player,” says Ray Herrmann, chairman emeritus of Charmer-Sunbelt, a major distributor of spirits. “But over the last 40 or 50 years, Bacardi and rum became synonymous; for most restaurants, buying Bacardi goes along with having a liquor license. It’s the default decision.”
Still, navigating its way through the consolidating global spirits industry has been anything but simple, and the question became how to balance its heritage as a rum producer with the need to compete with bigger and more diversified players that had more clout with distributors. “The Bacardi brand would have prospered, whatever happened,” insists Robert Furniss-Roe, president of the company’s North American operations. “But in order to survive as an independent company, you had to have scale.” That was a tradeoff that Bacardi was finally ready to embrace by 1993, when it made its first acquisition, buying Martini & Rossi, an Italian family-owned company. “It was the mirror image of our own business,” says Facundo L. Bacardi. “We understand what running a family business is about, and so the transition went well.”
To industry analysts, this move is seen as a pivotal point in the company’s history. Had Bacardi not branched out the way it did, the brand name might have survived, but the family likely would have been forced to see it take a back seat to other global brands, or to sell out, as the owners of Martini & Rossi were doing. In 1998 came the purchase of Dewar’s Scotch and Bombay Sapphire gin; in 2002, it was the premium tequila brand Cazadores tequila. The most recent (and quite costly) acquisition was Grey Goose vodka in 2004. “When we bring in a new product that has nothing to do with rum, it’s all about making sure that we understand the culture of the brand and its heritage,” Bacardi says. All these transactions were executed without the company having to resort to an initial public offering of stock, although Bacardi has come to rely on investment bankers to drum up outside debt financing of some transactions.
Of course, the game goes on. While Bacardi has navigated its way through political storms and economic crises, it is firmly in fourth place in the global spirits business, behind Diageo and Pernod Ricard USA as well as India’s United Spirits. Facundo L. Bacardi insists, “The industry will likely further consolidate, and Bacardi will be a key player.”
A big part of growth is keeping customers excited about Bacardi products: No buzz, no sales. The revived interest in classical cocktails—many of which feature Bacardi rum—is a boon. “But people like to experiment,” says Furniss-Roe, recalling a time that he sampled a cocktail in San Francisco containing Bacardi and 132 other ingredients.
For now, there are no new acquisitions on the horizon; Bacardi will have to wait until a brand it considers iconic enough to join its roster becomes available to purchase. The onus will be on the company to find internal sources of growth in a business in which standing still spells trouble. Facundo Bacardi says the fact that the business remains in family hands is an advantage, enabling the company to “act quickly and efficiently as soon as we identify opportunities” rather than being confined by “an unwieldy operating system or quarterly dividends.” That also means taking a long-term view and setting up a governance structure and financial controls that are “best of breed.”
Having that kind of system in place means keeping family members happy. As the generations have passed and the ranks of those family members have grown, the proportion of them involved in the business has shrunk. Only 19 work for the company in any capacity today, including Facundo Bacardi, who describes his own situation as a bit of an exception. While most Bacardis join the family business after beginning their careers elsewhere, Facundo did so on the death of his father, when he was only in his 20s, after inheriting a stake in the company that made him one of its largest shareholders. He went on to play a major role in some of the company’s largest and most significant recent acquisitions, including Dewar’s and Grey Goose.
Still, Bacardi is surrounded by non-family members, like Furniss-Roe, who are focused not just on preserving the company’s rum-making traditions but finding new ways to expand. “There are many possibilities in terms of geographic markets, market segments by product, and flavors that I’m very optimistic,” says Furniss- Roe. He cites that Bacardi has become an in-demand brand in Russia and is now the top-selling white spirits brand in India.
Bacardi’s new markets may be increasingly far-flung, but since fleeing Castro, the family has relied on three locations from which to run its businesses. While Cuba is its spiritual home, Bermuda remains the company’s legal headquarters, and Puerto Rico the site of its main production facility. Miami has always served as an important corporate and familial nexus. At the center of it all are the company’s former office buildings on Biscayne Boulevard (most of the operations once headquartered there have shifted to a new Coral Gables edifice) that the city has designated historic landmarks. The complex, including a tower block built in 1963 in the iconic Miami Modernist style and featuring two massive ceramic tile murals on its reinforced concrete exterior, long has been a gathering spot for exiled members of the Bacardi clan. In the late 1960s, a dapper 90-year-old Emilito Bacardi, grandson of the company’s founder and former guerilla fighter for Cuban independence, would show up and insist on taking his younger relatives for a drink in the building’s bar.
The Bacardi name well-known in the city. A number of family members still live here, several of whom are employed by Bacardi USA. The late Tito Argamasilla Bacardi, who died last October, hosted the annual Bacardi Cup that concludes Miami’s weeklong regatta every March; he also founded the Bacardi museum. Casa Bacardi is part of the center for Cuban Studies at the University of Miami, and is funded by the family’s foundation.
Every February 4 is Founder’s Day, when local employees and any Bacardi family members in the area gather at the Miami office to hold a mini version of the more family-oriented festivities that took place in San Juan for the 150th anniversary. This year, more than 500 gathered a week earlier than usual to celebrate, followed by a big-name event at the historic downtown office building, which had been transformed into a tropical lounge for the evening. “It was quite a show,” says Charmer-Sunbelt’s Ray Herrmann, “particularly when the extended family arrived, some several hundred members strong.” Family members and top executives mingled with celebrities (actors Minka Kelly and Ryan Phillippe, singer Gloria Estefan, and New York Yankee Alex Rodriguez) as well as local leaders (Miami-Dade County Commission Chairman Joe A. Martinez) to ogle the display of rum barrels and vintage Bacardi ads from the early 1900s, as well as quaff mojitos and daiquiris made from the inexhaustible supply of rum. “It was a tribute to this company’s history and its soul,” says Furniss-Roe.
photograph courtesy of Bacardi archive (black and white); bill kearney (bacardi building); seth browarnik/worldredeye.com (estefan, phillippe)
August 6, 2015