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The Rum Dynasty: Bacardi

Bacardi Breaks with Tradition To Keep the Company and the Family Together
Alejandro Benes
From the Print Edition:
Demi Moore, Autumn 96

(continued from page 6)

Not everyone in the distilled spirits business agrees, but Bacardi is betting that it can persuade the first-time drinker to consume its products. This is a global pursuit, and as evidence of that and the further consolidation and centralization of the company, Bacardi will set up a global marketing office in New York, which will be operational next January. The company's leaders believe it will give Bacardi an advantage in an increasingly competitive world market. Look for more acquisitions, more brands, new packaging and a greater association with Cuba and cigars.

Despite its public "hot and cold" attitude toward the island, no one at Bacardi forgets that the company is Cuban. And no one forgets that the company had $76 million in assets confiscated by Fidel Castro. Castro even tried to appropriate the Bacardi trademark, but the company has doggedly and successfully defended and retained it. Bacardi anticipates another trademark fight, should it ever begin doing business in Cuba again, involving Hatuey beer, which Bacardi began brewing in Cuba in 1926 and is again marketing in the United States.

"If the United States recognizes Cuba," theorizes Sardiña, "then Bacardi would seriously consider returning, assuming the business conditions are favorable. If Fidel is not there, it's a no-brainer. It's an emotional issue. It's personal and it's trust." But if Castro remained in power, he adds, odds are Bacardi would stay away. "They got burned once and they could get burned again. The same players are there."

Cutillas, who lives in the Bahamas, will not buy Cuban cigars and is happy to point out that the quality of Cuban cigars suffers greatly from inconsistency. That's what happens under Communism, he says. Cutillas has been involved in efforts to hasten the demise of the Castro regime, serving as a trustee of the Cuban-American National Foundation and as the first president of the U.S.-Cuba Business Council, of which the Bacardi company is a member. Three years ago, when the Castro government was trying to attract foreign investment in Cuban properties, Cutillas sent a letter to most of the distilled spirits companies worldwide warning them away from trying to use the old Bacardi distilleries or Hatuey breweries and trademarks in Cuba.

"Since Bacardi has reason to believe that its properties are among those being offered by the Castro regime to prospective purchasers, Bacardi is sending this letter to you and others in the industry," Cutillas' missive said, explaining the position that the properties had been illegally taken from the company and that Bacardi would do what it could to recover its assets. Further on, the 1993 letter advised: "Thus, if any person or entity thinks it possible to acquire confiscated properties at fire-sale prices and make a short-term profit on his investment, even if he expects to lose the properties when Castro falls, he may be unpleasantly surprised by the outcome of such a gamble."

A similar argument is made in the controversial Helms-Burton law enacted this year by the U.S. Congress, and supported by the Cuban-American National Foundation and the U.S.-Cuba Business Council, that allows those who owned property in Cuba prior to Castro's takeover to take legal action in U.S. courts against companies from third countries using their properties. The point was made again on March 15 of this year in Bermuda's newspaper, The Royal Gazette. The paper ran a full-page advertisement, "submitted by Ana Maria Cutillas," the wife of Manuel Jorge's brother, Eduardo, who is Bacardi Ltd.'s chief financial officer. Placed in response to Cuba's downing of "two unarmed civilian planes," the text read: "Investments in Cuba by foreigners will be as safe as the Cuban Government wants. As laws, rules and regulations can be changed overnight and without due process of law. Also the Cuban exile community holds the position that the original owners retain legal right to all illegally seized properties. Foreigners who invest in Cuba or traffic in stolen property outside of Cuba including trademarks should understand that they stand to lose their investments and subject themselves to legal proceedings." Under the headline, The Real Side of Cuba: Your Paradise. Their Hell, is a photo of a Cuban family behind bars looking out at a happy father and two children playing with a beach ball in the surf. Under the photo, readers are urged, "End the Suffering. Don't Visit Cuba."

The larger purpose of all these efforts is to rid Cuba of Castro. Manuel Cutillas is outwardly optimistic about that possibility and practical precondition for the company's return to its home. "We would love one day to be back in there," he says. "You know, I believe that perhaps I will even see that."

What is abundantly clear from talking to anyone at Bacardi is that employees take great pride in working for a company that cares about quality and treats its employees like a family. In a move to increase an already high degree of loyalty, the company is for the first time adding what is essentially a stock option plan for senior executives. That is part of the company's value system.

Part of the company's reality is that Bacardi family matters have sometimes made conducting Bacardi's business somewhat difficult. In 1990, concerns by a group of family members--known as the dissidents--that the company was becoming too diversified and that it might be sold were resolved. Cutillas credits Reid and Reid credits Cutillas with smoothing things over. The divestiture of non-core holdings and the adoption of a philosophy to diversify only within the spirits business reassured the dissidents. And the purchase of Martini & Rossi in 1992 and the restructuring of the company over the past four years have helped the family get along ever since. For the most part, anyway.

On occasion, there is still some discord that bubbles up and into the press. That was the case this spring when Bacardi family laundry was aired in The New York Times. One of the great-great-granddaughters of Don Facundo, along with her second husband, is claiming in a lawsuit that her mother and Cutillas have joined other family members to deny the great-great-granddaughter her fair share of her grandmother's estate. The whole matter is, as the Cubans say, enredado (entangled). It is also, Cutillas asserts, something that has nothing to do with the Bacardi company, explaining that he is involved because he is a trustee of a trust in which the money in question resides.

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