Bacardi Company Analysis

Introduction

Bacardi Limited is among the globe’s largest privately-owned spirit entities. Initially recognized for its exclusive white rum by the same name, Bacardi currently boasts a range of over 200 different products and labels (Bacardi, 2023). Bacardi Limited was established in Cuba in 1862 and has been owned by one family for several decades. Bacardi Limited has provided job opportunities to over 7,000 people and conducts business in almost 170 nations (Bacardi, 2023). It is essential to note that Bacardi Limited is a cluster of entities as a unit that entails Bacardi International Limited. The spirit company’s headquarters are in Hamilton, Bermuda, with Facundo L. Bacardi, the initiator’s great-great grandchild, as the chairman.

Facundo Bacardi Masso, the company’s founder place of birth in Sitges, Catalonia, Spain, in 1814. In 1830, Facundo relocated to Cuba. Facundo was a wine merchant. Rum, during that period, was not regarded as a sophisticated beverage in its production, was made inexpensively, and was scarcely bought by the island’s expanding middle class or served in upscale bars (Nag, 2014). Through segregating a special kind of yeast obtained from nearby sugar cane that continues to be utilized in Bacardi production currently, Facundo started his efforts to benign rum. It is worth noting that this yeast creates the flavor characteristic of Bacardi rum. After nearly a decade of testing with various methods, Facundo invented the charcoal rum filtration process, which purified his rum of contaminants (Bacardi, 2023). Facundo established the ideal blend after conducting numerous combinations and experiments. The result was the globe’s pure, lamp-bodied, and mixable initial “white” rum.

Major Brands/Market Portfolio

Bacardi Limited boasts more than 200 brands and labels under its label. Bacardi rum, Sapphire gin, Grey Goose Vodka, and Dewar’s scotch are the company’s most well-known brands. Further, some of these brands are best-selling worldwide; for instance, Dewar’s Scotch is the most celebrated worldwide, and Bacardi rum is the most famous. Also, the most famous Italian sparkling wine is Martini, a brand of Bacardi Limited. Other notable brands include Liqueur (Martini Spirito, St-Germain, and Nassau Royale), Cognac (Gaston De LaGrange, D’usse Cognac, and Otard), Bourbon (Black Bourbon, Stillhouse, and Angel’s Envy), Tequila (Corzo, Camino Real, and Patron), and American Whiskey such as Stillhouse (Bacardi, 2023).

The company has made several acquisitions that are pivotal to its current success. In 1998, Bacardi Limited purchased Dewar Scotch, encompassing Bombay Sapphire gin and Royal Brackla, for 2 billion dollars (Bacardi, 2023). The scotch brand has been integral to the current significant profits of Bacardi Limited. Moreover, in 2002, Bacardi Limited also purchased the Cazadores tequila brand, and Grey Goose Volka Company was purchased in 2004. 42BELOW, a New Zealand vodka brand, was also bought by Bacardi in 2006, and Patron, a tequila manufacturer, purchased it in 2018 (Reuters, 2018). In addition, Bacardi Limited also merged with the Italian maker of Martini vermouth and Sparkling wines, Martini & Rossi, establishing the Barcadi-Martini group. It is essential to note that the acquisitions were made primarily for diversification away from the self-titled Bacardi Rum brand. On the other hand, merging with Martini & Rossi provided the company with significant advantages, such as access to a new market and an increased competitive edge.

Even though Bacardi Limited drinks continue receiving positive reviews and ratings from consumers, I am yet to consume any of the company’s beverages. Bacardi Limited predominantly produces alcoholic brands; thus, an alcohol abstainer like me does not subscribe to its products. While the company has evolved to produce non-alcoholic “spirits,” these are usually used as cocktails and not alone. For instance, the recent introduction of drinks such as palette, which I thought was aimed at non-drinkers consumers, was made to “inspire creativity in cocktail making among bartenders,” as per a statement by Bacardi (Bacardi, 2023).

Production: Global & Domestic

Bacardi has several production facilities in both its motherland and other nations. With over 7000 employees, the corporation has 36 locations worldwide producing spirits, including sites for packaging, distilling, production, and research and development (Bacardi, 2023). For instance, it runs five malt breweries in Scotland. Beverages from Martini are made in Italy and then packaged at facilities in Spain, the United States, Germany, Brazil, Canada, Uruguay, and Chile (Inamete, 2014). Internationally, Bacardi-Martini produces more than 200 million beverage bottles annually across its 36 facilities (Lexicon, 2023). Further, three plants, notably Grey Goose and Benedictine, are grown in France. The business additionally operates a bottling facility in China.

However, the primary production facilities are in Puerto Rico and Mexico. It is worth noting that Mexico is the first nation where the company’s main drink, Bacardi rum, is created in its origin country, Cuba. The Catano, Puerto Rico plant produces the bulk of rum distillery globally. It accounts for up to 85% of the company’s rum production worldwide, equivalent to 100,000 liters daily (Nag, 2014). The other 15% is produced from distilleries in India and Mexico, and in an interview with FDI Intelligence, Joaquin Bacardi, the company’s CEO, noted that such production rates result in approximately “17 million cases, or 100 million bottles, of Puerto Rican rum annually” (Thuermer, 2022).

Consumption: Global & Domestic

While alcohol consumption rates slightly decreased in 2022, arguably because of the Corona Virus Pandemic, these rates remain relatively high. According to Statista (2023), the global volume in the alcoholic beverage market, which was 11.26 Billion in 2021, is expected to increase to 24.3 Billion by 2027 progressively. The rising consumer demand for upscale items is expected to fuel the alcohol sector expansion on a global scale. According to Grand View Research (2020), consumption of alcoholic drinks, such as rum, is expected to cause this figure to upsurge, with the youngsters’ growing interest being distinctive and uncommon. Rum is among the most widely consumed alcoholic drinks in the spirits industry.

Further, the demand for high-quality spirits drinks continues to upsurge worldwide due to increasing per capita income in growing and unindustrialized nations. Bacardi is a critical player in this industry and has consistently recorded significant revenues. For instance, in 2021, Bacardi rum attained upwards of 19 million 9 liter cases volume sales globally (Statista, 2023). These trends have been relatively consistent is 2009, as depicted in Table 1.1 below

Source: Statista 2023

Around $ 180 million in dollar purchases were attained by the Bacardi rum company in America in 2019, enlisting it among the leading ten spirits brands for that year. The most popular alcoholic beverages in the nation include vodka, Smirnoff vodka, and American whiskey. Sales for each of these spirits exceeded 300 million dollars. In terms of rum, the United States has recorded consistent consumption rates in the years before the pandemic. From 2018 to 2020, the consumption rates progressively increased, as depicted in the graph below. 2018 recorded 23.85k, 2019 recorded 23.77k, and 2020 24.77k.

Source: Business Information Group

Then again, the consumption of Bacardi’s rum or other products in Cuba is comparatively lesser than that of Havana, a rival of Bacardi. In recent years, campaigns against Bacardi’s drinks have continuously emerged, with sources championing the consumption of beverages from rival rum companies (Cuba Solidarity Campaign, 2023). However, with 33% of men and 5% of women in Cuba consuming alcohol regularly (Oxford Population Health, 2021), the consumption rate in the company’s native country is also significant.

Marketing Information

Bacardi, which has reached the maturity stage of the life cycle of a product, is continuing to revitalize the company’s image via a variety of marketing strategies in order to make up for revenue losses and keep striving to link with and reverberate with consumers in order to rebuild its reputation in the competitive environment. Bacardi implemented a revitalization approach to resurrect the brand in the competitive environment.

As an initial move, Bacardi only partially disregarded the conventional press, one of the older outlets for brand equity. However, the company did generate fresh avenues to expand its equity of the company. This was accomplished by spending significantly more money on advertising channels and online advertising. The company used social media and additional channels effectively to reach youths and other prospective clients to better connect with them. To foster loyalty among its target audience of 18 to 25-year-olds, the corporation launched a $ 12 million campaign in 2018 (Flemming, 2018).

Despite realizing that the historical messaging cannot function as the brand’s foundation or the sole source of important messaging, Bacardi did not entirely relinquish the heritage strategy that contributed to establishing the Bacardi community and family. Bacardi Limited realized it had to accomplish more to remain competitive and forge connections with the younger demographic. To appeal to their intended audience and connect with these individuals to create a relationship that will ultimately culminate in consumer trust and devotion, the company must fit into the contemporary culture of the evolving customers’ requirements, desires, and preferences.

Bacardi focused on enhancing the brand’s perception in customers’ minds by rendering it more appealing and distinctive. An explicit instance is in Vergara’s endeavor and goal to transform the Bacardi brand’s identity into a lifestyle brand that is enjoyable year-round, including during all seasons. By engaging in various enjoyable promotional activities and advertising, like the “There’s nothing in the way” initiative, Bacardi is reintroducing the company into younger generations of society and cementing its status in customers’ minds.

With promotions like the “Bacardi House Party Tour,” in which they showcase an invite-only house partying truck that starts on the eastern shore while employing slogans to generate a buzz of the same kind on social networks, Bacardi has additionally rendered the company more distinct via numerous connections with the brand. Thus, young people will be enabled to connect with the company much more strongly than they previously could with these innovative initiatives. The brand realized how crucial it is to interact with the right clients at an opportune moment via the appropriate media channels. Typically, a brand could efficiently and effectively contact its youthful prospective consumers if the right combination of media and an identical pitch is chosen.

Bacardi focused on creating additional connections for the brand as well. The sponsored content collaboration with Vice Media, which features the “passion projects” of numerous musicians as well as hip-hop musicians, is a prime example. With young people predominantly listening to the hip-hop music genre, including hip-hop stars in the approach may assist Bacardi in establishing a new connection with being youthful, untamed, and accessible. This could attract younger consumers to Bacardi and create a novel environment for prospective clients. Further, the first alcoholic company to employ the “immersive canvas” technique in its marketing was Bacardi. Through collaborating with OMD, Bacardi also entered the programmatic advertising space in an effort to provide more particular advertisements.

To expand its internet-based cocktail recipe offerings to the mobile platform and draw in new prospective clients, the Bacardi worldwide brand recently released an iPhone application called Mix Master. Customers can use this program, which represents an expansion of the rum company experience, to look up drink recipes by title, components, or flavor. Moreover, the company Bacardi is working to win back lost clients and keep current and prospective clients. Since youth are so dependent on social media nowadays, Bacardi can effectively capitalize on this via their major expenditures in digital marketing, publicity, and networking sites like Facebook, Instagram, and Twitter.

Bacardi Limited also cares to be noticed at all stages of contact with consumers, such as ensuring that the company is well-known each evening. The vast canvas is accessible to users when they open the Facebook application to organize their evening. Customers may proceed while celebrating with peers and taking images using the accessible Bacardi Snapchat filter. The customer will afterward use buzzwords to circulate and upload those images on social networks, which would spread the word about Bacardi. On Bacardi’s turntables, consumers could additionally schedule a time to groove or mention DJ, which aids in raising the company’s broad appeal and publicity.

Social/Legal/Sponsorship/Environmental/Controversy

Further, Bacardi has often been involved in charity works in Cuba, the United States, and worldwide. During the coronavirus pandemic, the company joined to help healthcare providers with a $ 3 million donation. Furthermore, Bacardi backed debilitated bars during the pandemic with a $ 3 million donation. The company also engaged in creating sanitizers to increase their availability worldwide. Bacardi also offers contributions to numerous organizations worldwide.

Bacardi continues to implement appropriate measures for environmental preservation. Since 2014, the company has tried reducing water and energy usage, strengthening responsible drinking and adverts, and attaining 100% certified sustainable sugarcane. Further, it is still the only large spirits producer whose facilities have been certified using globally renowned quality, environmental, wellness, and safety management procedures.

Bacardi has had fewer scandals in its existence. In 2019, it was sued by Stillhouse Spirits CEO for fraud, Extortion, and Breach of Contract. The company was accused of making false representations and promises to Stillhouse to make its CEO, Beckerman, relinquish majority ownership of the spirit company. In 2004, the company was also linked to charges of death plots and terror, with the company denying these allegations.

Bacardi continues to lead the way in alcoholic beverage production. A notable unknown fact is that Amalia Moreau, the founder’s wife, funded the company’s creation. Another interesting fact is that earthquakes almost destroyed Bacardi in 1852 following its creation. Also, before Bacardi existed, rum was an unwanted beverage dumped into oceans.

How does/will the company to maintain (or grow) its market share

A company’s market share must increase alongside the marketspace to stay prosperous and competitive. Attaining more of the market than an organization holds is essential for success. This would suggest that the business is growing faster than usual and outpacing its rivals.

First, Bacardi should consider acquiring more of its rivals to gain market share and control a sector. A move like that would combine several techniques for growing market share. Bacardi will eliminate its rival and take over its market share through acquisition. Additionally, the business will record consumer loyalty. Diageo, Brown-Forman, Suntory, Beam Suntory, and Pernod Ricard are Bacardi Limited’s main rivals. A further factor in Bacardi’s success and rising revenue is its capacity to buy other, comparably smaller alcoholic beverage businesses. In 2022, it generated $ 4.6 billion in revenue (Bacardi, 2023). However, buying its rivals would revolutionize the market and significantly increase Bacardi’s stake. Bacardi may also start using the goods, offerings, and additional prospective advantages created by its acquisition right away.

Secondly, Bacardi should be more innovative and increase the rapidness of its transformation from an established company to a contemporary one. While the company has shown signs of innovativeness in recent years, it still requires significant advancement. Innovation that attracts customers may appear in a variety of forms. One is a new, cutting-edge technology that Bacardi may create, launch, and keep developing before rivals have a grip. Examples include highly advanced, interactive applications. Customers who are enthusiastic about the technology purchase it and become regular consumers. With the company’s target consumers being the youth, advanced technology may be the key to attracting this group and establishing loyalty. Using cutting-edge technology, Bacardi may attract current consumers in the sector and potential clients that opt for its brand. Beverage novelty, manufacturing expansions, and promotion strategies are further advances that Bacardi may pursue to increase its market share.

Thirdly, cutting pricing is a wise move that might aid a business in gaining market share. Although the company’s name has given it some measure of market power over prices in the rum sector, decreasing prices and making them more enticing can win over customers’ interest and loyalty. For instance, lowering the cost of its regular rum to match its rivals could boost revenues. Bacardi should consider special offers, discounts, freebies, and more client perquisites in addition to depressing product prices. Examples of incentives that augment customer purchases include referral schemes and free delivery.

Price of standard rum in the US for Captain Morgan, Kraken, Havana Club, and Bacardi

Another clever tactic to increase market share is strengthening client ties by rewarding loyalty. Bacardi has recently carried out some of these projects, but they have needed to be more extensive. When new items are released, existing customer loyalty may assist in keeping customers from switching to other brands. Bacardi can increase its market share through recommendation-based advertising that pleased, satisfied consumers frequently offer. Another benefit is that this organic opportunity to gain a share of the market and clientele typically arises without similar spikes in a company’s marketing costs. Further, loyal clients sometimes propose making the drinks they enjoy better.

References

Bacardi (2023) Bacardi Limited. https://www.bacardilimited.com/our-company/about-us/

Cuba Solidarity Campaign (2023). Boycott Bacardi. https://cuba-solidarity.org.uk/get-involved/bacardi/

Flemming, M (2018) Bacardi’s £12m marketing push to launch its brand purpose. https://www.marketingweek.com/bacardi-creates-brand-purpose-in-12m-marketing-push/

Grand View Research (2020) Rum Market Size, Share & Trends Analysis Report By Product Type (Dark & Golden Rum, White Rum, Flavored & Spiced Rum), By Distribution Channel (Offline Trading, Online Trading), By Region, And Segment Forecasts, 2022 – 2028. https://www.grandviewresearch.com/industry-analysis/rum-market-report

Full Portfolio

Inamete, U. B. (2014). Strategic Management and multinational corporations: A case study of Bacardi Limited. Global Business Review, 15(2), 397–417. https://doi.org/10.1177/0972150914523601

Kieley, M (2020) Bacardi backs ‘debilitated’ bars with $3m donation https://www.thespiritsbusiness.com/2020/03/bacardi-backs-debilitated-bars-with-3m-donation/

Lexicon (2023) Bacardi Martini Limited. https://glossary.wein.plus/bacardi-martini-limited

Nag, T (2014) Strategic Management and Multinational Corporations: A Case Study Analysis of Bacardi Limited DOI: 10.1177/0972150914529048

Oxford Population Health (2021) Alcohol Consumption in Cuba. https://www.ndph.ox.ac.uk/news/alcohol-consumption-in-cuba

Reuters (2023) Bacardi to buy premium tequila maker Patron in $5.1 billion deal https://www.reuters.com/article/patron-ma-bacardi-idUKL4N1PH5AV

Statista (2023) Sales Volumes of Bacardi Rum Worldwide from 2009-2021

Thuermer, K (2022) View from the C-suite: Bacardi Corporation president and CEO Joaquin Bacardi https://www.fdiintelligence.com/content/feature/view-from-the-csuite-bacardi-corporation-president-and-ceo-joaquin-bacardi-29045