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Last Updated: Friday, 2 May, 2003, 00:00 GMT 01:00 UK
Stormy vote for Bacardi clan

By Mary Gahan
BBC News Online business reporter

A family gathering on the beautiful island of Bermuda sounds like a happy and relaxing occasion.

In the case of the Bacardi clan it is more likely to be an angry and volatile meeting.

The heirs to the world's biggest privately-owned spirits business are converging at its headquarters on the island to take part in a vote that could end the family's domination and prepare the firm for a stock market flotation.

There are 600 shareholders in the business, all but about a dozen of them family members descended from Don Facundo Bacardi, who set up the rum business in Cuba 140 years ago.

Bacardi brands
Bacardi Rum
Bacardi Breezer
Bombay Sapphire gin
Martini
Dewar's Scotch whisky

"Tempers run high, it's truly a Latin culture," says Tom Pirko, president of food and drink consultancy Bevmark.

He should know, he has worked as an adviser to the company.

"It's a family-run business of the type that you might see in France and Italy, where you have a certain type of culture and a certain temperament."

The big question for shareholders is: Should that culture now change?

The need for cash

The Bacardi family are Cuban exiles - they left the country in 1960 when their assets were confiscated.

Bacardi drink
It's a bit of a conflict between the managerial shape of the company and those members of the company who think it's a sacred family heritage
Peter Foster, Author of Bacardi family history

Not only did they succeed in rebuilding the business into a major global player, they fought Fidel Castro for use of their trademark and won.

Nobody expects the family to give up their control of the firm now without a fight.

The push for change is coming from those at the top of the business including chairman Ruben Rodriguez and new chief executive Javier Ferran.

Both have worked for Bacardi for many years, but neither have any family connections.

They think that to survive and compete effectively with the world's drinks giants, Bacardi needs the ability to raise cash from outside through a share offering.

Standing still

"It's a bit of a conflict between the managerial shape of the company and those members of the company who think it's a sacred family heritage which has to be controlled by the family," says Peter Foster, a journalist and author who has written a history of the family.

Bacardi drinks
You don't see the company pulling itself up and making a big decision
Tom Pirko, Bevmark president

"It's very much linked to the Cuban background.

"The strategy they used was that they married daughters off to talented outsiders, which was a brilliant idea, but they came unstuck a couple of times."

Mr Pirko describes Bacardi as quixotic.

"They do things which, on the surface, seem to be fine.

"But what you don't see is the sort of thing that needs to be done now.

"You don't see the company pulling itself up and making a big decision."

He warns that with the drinks giants Allied Domecq and Diageo as rivals Bacardi cannot afford to stand still.

Genetic lottery

In the past the company has had enough funds of its own to buy other businesses and brands, but it is now at the point where it needs to raise more cash to keep expanding.

"They can only go on so long competing against these companies.

"They're going to have to raise money to expand whether they like it or not.

"How hard it is for them remains to be seen - I'm not saying it's easy."

This is not the first time family members have had to confront the difficult issue of opening up the secretive company to the outside world.

Three years ago another non-family chief executive was forced out after disagreements over a possible flotation.

This time round Mr Pirko is expecting a positive vote.

It needs two-thirds of shareholders to vote in favour of changing the structure of the company at the meeting on 6 May and there would have to be another vote before shares could be offered publicly.

And if they vote against, can Bacardi survive as a family-run business?

Mr Foster says there are no guarantees: "It's a genetic lottery - it depends on who crops up in the family."




SEE ALSO:
Heineken heiress remains a mystery
26 Feb 03  |  Business
Gianni Agnelli: A troubled tycoon
24 Jan 03  |  Business
WTO intervenes in Havana rum clash
02 Jan 02  |  Business


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