The Rum Dynasty: Bacardi
Bacardi Breaks with Tradition To Keep the Company and the Family Together
From the Print Edition:
Demi Moore, Autumn 96
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"We're proud of our Cuban heritage," says Reid. Bacardi will soon emphasize that pride with an ad campaign in trade publications that associates its rum with the land that holds the reputation for producing the world's finest cigars. And yes, the two-page ad contains the word 'Cuba'--several times, in fact. "When the great Cuban cigars were born," the ad reads, "they were enjoyed with Cuba's great rum. Bacardi. Founded in Cuba, 1862." In addition, three historical Bacardi rum bottles are shown, all with Santiago de Cuba listed on the label.
If anyone thought that Bacardi was a Puerto Rican rum company, an easy mistake given the fact that "Puerto Rican Rum" appears on most labels, they will soon be reeducated by another association: La Gloria Cubana coronas with a Bacardi bat on the band and a superpremium dark rum, Casa Bacardi, that Bacardi has aged for eight years. This rum is distilled in Nassau, and Bacardi is aiming to penetrate a niche heavily populated by cigar lovers who might drink Cognac with their premium smokes.
"Cigars are so much a part of our culture," says Cuban-born Alfredo Piedra, Bacardi-Martini USA's marketing director, as he sits in his Miami office, drinking Cuban coffee and smoking a robusto. Piedra is enthusiastic about the tie-in with cigars. "We're most happy to see cigars coming back. I've been here 18 years and cigars have always been a part of this corporation and Cuban culture and Bacardi rum."
Alfredo Piedra grew up in Miami and went to college at American University in Washington, D.C. While there, Piedra took a class in marketing during which he was introduced to the company for which he would go to work in 1978. "My professor used Bacardi as an example of the ideal multinational corporation," Piedra recalls. "So here I am, a Cuban immigrant in Washington, D.C., having a professor profess to us what a great global corporation this Bacardi is. They're originally from Cuba and so on and so forth. And I'm in awe. I am Cuban and I was proud to see a successful, globally successful, Cuban corporation."
Eduardo Sardiña, the president of Bacardi-Martini North America and chief executive officer of Bacardi-Martini USA, says of the association of Bacardi with Cuba: "We have always been very proud of our roots and of being Cuban, but not very proud of Mr. Castro. We've gone hot and cold on this issue." Right now, Bacardi is hot on the Cuba association. "First of all, I think the opportunity is there. Cigars are involved; the spotlight is on Cuba," Sardiña adds. He has been with the company 23 years, and is the son-in-law of the Bacardi empire's former patriarch, Eddy Nielsen. "There's clearly an opportunity among cigar smokers for a dark, superpremium rum," Sardiña says. "Whether it's dark or light, there is no superpremium rum. Every other spirit has a superpremium category."
This category is another expansion of Bacardi's menu. In 1995, the company introduced Bacardi Limón, a light, citrus-flavored 70 proof rum that appeals to the clear-spirits crowd. "The overwhelming amount of our volume, well over 50 percent of our volume, is from clear-spirit, primarily vodka, drinkers," Piedra says. "They are good consumers of clear spirits in that they drink something other than Bacardi as their primary category: vodka, gin or tequila. However, they all drink Bacardi. So when they're not drinking their vodka and juices, gin and tonics, or margaritas, they drink Bacardi."
Bacardi Limón, which has had the most successful launch ever of any new spirit (according to Impact and the Distilled Spirits Council of the United States), selling more than 350,000 cases in its first year, represents an effort to have those consumers who prefer the semisweet drinks, 66 percent of the market, drink Bacardi.
Introducing flavored rums is something the Bacardi of five or 10 years ago would not have considered, because such products were not traditional. Thinking at the company has changed. "Change is not only great," offers Piedra, "but essential." In another attempt to reach into a different part of the rum market, Bacardi introduced Bacardi Spice this spring. "Spiced [rum] is 10 percent of the rum category," Piedra says, adding that because the company has invested $21 million in promoting the two new brands, "we probably won't make money on these brands for the next five to 10 years."
Such are the advantages of working for a privately held company. An investment can be made for the long term. This is particularly important because the distilled spirits market in the United States has been down for a number of years. Piedra believes that the trend might continue, but that in 2000 it will start to reverse because of demographic realities and more favorable attitudes toward alcoholic beverage consumption.
"We think the business will bounce back," Piedra told Impact International this year, although "in the next four to five years, we will continue to see modest decreases." After that, Piedra, predicts "many years of at least modest growth."
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