Amit Ranjan Rai
Bacardi is almost synonymous with white rum, isn’t it? And why not? For about 130 years, the company with Cuban origins sold nothing but rum. But in 1992, it decided to expand into other categories. That’s when it acquired the Italian vermouth major Martini & Rossi. Since then, Bacardi’s been on an acquisition spree, adding some well-known premium brands — Grey Goose, Bombay Sapphire, Dewar’s, 42 Below, Cazadores and so on — to its kitty. Facundo L Bacardi, chairman of Bacardi International, and the great-great-grandson of the founder of the company, Don Facundo Bacardí, was in Delhi recently. He spoke with Amit Ranjan Rai on his company’s growth strategy and how it manages these brands globally. Excerpts:
Bacardi is quite popular as a rum brand. In the past several years, the company has acquired a number of well-known brands in the vodka, whisky and other categories. What has been your growth strategy globally?
Bacardi is a 145-year-old company. It started in 1862, and between 1862 and 1992 — for 130 years — it was just a rum company. We were selling a dozen varieties of rum; in the mid-1990s, we even introduced flavoured rum. As a single-brand company, Bacardi effectively dominated the rum category. But then we were looking for more growth, and you can only grow a category so far. We thus decided to look at other categories. Martini & Rossi, the Italy-based vermouth major, was the first company we acquired in 1992-93. It was a very large company, dominating the vermouth segment. We not only acquired a great brand, but also took control of Martini & Rossi’s distribution. Until then, Bacardi distributed its products very well in certain markets, but in others, it had to rely on third-party distributors. But Martini & Rossi’s distribution map and that of Bacardi’s had very little overlap. So by buying this company, we effectively gained access to markets in a number of new countries. The synergies were terrific.
And after Martini & Rossi…
Since now we had good control over distribution in a number of new markets, we decided to go for some other brands and put them into our distribution. In 1998, we bought Bombay Sapphire, the gin brand, and Dewar’s Scotch whisky. In 2001 we purchased Cazadores, the tequila brand, which was followed by Grey Goose, the French-made vodka, in 2004. With the exception of Martini & Rossi, we’ve been buying brands and not companies. This means we’ve been acquiring brands and sticking them into our distribution, but not buying people, offices, office spaces and so on. So these have been targeted acquisitions and they have worked incredibly well for us.
So the growth focus has mainly been on acquiring brands…
We have a dual focus. One, the most important, is to grow our brands organically. We invest a lot in each brand and the markets they are in. And obviously, the second leg of growth is external, through acquisitions. If you look at the spirits industry back in the 1980s, there were many spirits companies in the West; today, there aren’t so many. We’ve seen this industry consolidate. Now we have are our eyes open for a good opportunity in the premium category as this makes sense to us.
Most of the brands you’ve acquired — for instance, Grey Goose or Dewar’s Scotch — have certain history and values associated with them. Isn’t there a danger of these brand values getting lost as you integrate them into the larger Bacardi family?
No. While the danger is always there, we are very vigilant in ensuring that each brand has its own special place. We never combine, say, Bacardi with Dewar’s, or Dewar’s with Grey Goose. From the perspective of marketing, imagery and branding, we keep them completely separate. Otherwise, it would be a disaster.
And frankly, as a multinational and multi-brand spirits company, we have the smallest of portfolios. This gives us the ability to focus more sharply on our brands. Diageo, for instance, owns Scotch brands at almost the same price-points. As a result, they end up competing with each other. Our brand portfolio is small and most of them are placed such that they hardly compete with each other.
The brands aren’t really integrated — they sit alone. For instance, 42 Below, Eristoff and Grey Goose are our three vodkas brands, but they have their own history, imagery, price points, and advertising — they are marketed to different types of consumers.
Any particular initiative in this direction?
Yes. For the Bacardi brand we have an initiative called Project Belief, which most people in the company have to go through. It is about understanding what the brand really stands for; employees go through Bacardi’s history, its positioning over the years, association with consumers, the legacy behind it, and so on. While Project Belief is currently associated only with the Bacardi brand, we plan to have similar initiatives for other brands, too. The next level would be to extend such initiatives to the trade — bartenders, wholesalers and distributors. And finally, we would involve consumers, too. Project Belief has been undertaken in the US, the UK and countries in the Asia-Pacific, including India.
How do you go about marketing your brands in a global market?
We have a central marketing function in London, called Bacardi Global Brands (BGB). Its role is to support individual markets worldwide. BGB spends a lot of time with advertising companies and comes up with different advertising campaigns. Then it tries to adapt these campaigns to suit the tastes of individual markets. Look at it this way, if you didn’t have a central function, and every country did its own thing, the campaigns would be very different, and the brands may lose their integrity.
How do we ensure certain brand attributes and values remain the same?
First, you need to define what these values are. Then, in individual markets, your teams need to understand these values. We provide a framework — a very rigid one — within which individual markets play around. An example of this is Bacardi’s large-format parties called B-Live. Well-known international artists are grouped together at these parties to perform to an audience. It is a fun night out. In India, in 1998, we launched what we called Bacardi Blast parties, which were a big rage. When the global marketing team came up with B-Live, we converted Bacardi Blasts into B-Live and integrated it with what’s happening globally. As such, if you go to a B-Live party in Ebiza or Miami, and then one in Delhi, you’ll get a similar kind of look and feel, right from the logos, the décor and so on. That is how you build global brands.
How do you see the market in India and what’s your growth strategy for the country?
India is a terrific market and we see tremendous opportunity not only for the Bacardi brand, but also for other brands. This is a molasses-producing country and we make Bacardi rum from molasses. There is a good market here for rum — domestic rum brands have been doing well. We offer foreign-made, premium, smooth white rum which translates well for this market.
As for other spirits, India is a big whisky market, and we have a strong brand in Dewar’s Scotch whisky — in 12-year-old, 18-year-old, and signature categories. This is the family of whisky we offer for the global market. We are optimistic that in the long term, Dewar’s will be the leading whisky brand in the country.
Vodka is the fastest-growing category in India. We are loking to carve out both premium and super-premium categories with Eristoff and Grey Goose, respectively, over a period of time. India is one market where the company has decided to invest in the long term and allocate appropriate resources to do what is necessary to be the dominating spirits company.
At this time, we are focusing a lot on our Scotch and vodka brands; but we are in no hurry to bring our tequila brands to the Indian market, mainly because we need time to properly build our other brands. At the moment, we don’t have enough people to do it the right way. Brands are like babies; they need a lot of nurturing and care.
6 months ago