The Globalization of Rum

The case of Bacardi

Course: Globalization Processes

Semester: Spring 2018

Professor: Julie Emontspool

Author:

Mihran Avetisyan
130693-3503
MSc in Economics and Business Administration, 4th semester
Exam ID: 7700472
Mihran Avetisyan Exam ID: 7700472

Table of contents
1. Introduction ......................................................................................................................... 3

2. Theoretical framing ............................................................................................................. 4

2.1. Globalization ............................................................................................................... 4

2.2 The history of rum and Bacardi ................................................................................... 4

3. Analysis ............................................................................................................................... 6

3.1. Globalisation of rum as a product................................................................................ 6

3.2. Rum Production Globalization .................................................................................... 7

3.3. Bacardi brand as a global ideoscape ............................................................................ 8

3.4. Bacardi as a cosmopolitan brand ............................................................................... 10

4. Conclusion ........................................................................................................................ 12

References ................................................................................................................................ 13

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Mihran Avetisyan Exam ID: 7700472

1. Introduction
Rum is nowadays without any doubts a global product with its roots in Caribbean region.
Besides the beverage itself, rum is generally known to carry a several cultural meanings and
symbolism as well. For instance, almost everyone can connect rum with rebellion, piracy or to
the term “Naval Rum” which was used for the rum consumed by the British Navy (Maingot,
2005, str. 238)

The production of the beverage has a long history which dates back to 16th century and from
that time, it made its way to become one of the most know and worldwide spread alcoholic
drinks. With the higher demand for the rum the production of the sugar rose. At certain time,
rum and a sugar became the global commodity n.1 a long time before the crude oil was
introduced to the world (Williams, 2005). This paper will focus on a globalisation processes
behind the production and consumption of rum. As there are a lot of different companies
producing rum, ranging from small family distilleries to multinational companies, this paper,
in order to analyse a specific case, will focus on a traditional, leading and globally well-known
company – Bacardi Corporation. The relevant course theories will be used to describe the
globalization of Bacardi and also to provide a satisfactory answer to the main research question
of this paper:

“How can Bacardi successfully maintain and increase its competitiveness in the global
market?”

In following part of the paper, the theoretical framing will be presented. The purpose will be to
introduce the topic and a general explanation of the globalization according to relevant theories.

The third part of the paper will analyse the globalisation process of Bacardi using the relevant
globalisation theories in order to help to understand the processes. The globalisation of the
product itself and the production will be analysed here. Moreover, the current branding
strategies of the company will be analysed using relevant theories from the thematic lectures of
the course.

The final part of the paper will be composed of the conclusion, where the key findings will be
recapitulated and the research question will be answered.

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Mihran Avetisyan Exam ID: 7700472

2. Theoretical framing
2.1. Globalization
There are several main definitions of globalization from different authors. While delivering a
definition of globalization, Giddens work with space and time factors, which are, in the current
modern world with a technological advancement, not an obstacle in exchange of an information,
goods, services etc. It is also emphasized, that effects take account on all involved actors
(Giddens, 1991). Therefore, Giddens define globalization followingly:

“Globalization can be defined as the intensification of worldwide social relations which link
distant localities in such a way that local happenings are shaped by events occurring many
miles away and vice versa.” (Giddens, 1991, p. 64)

Giddens definition accurately mirrors the fact that in the modern world every non-tangible
“exchange” happens fast or immediately as nowadays we can find an “informational”
connection to the rest of the world even in the most remote areas. Based on that, Waters define
globalization as a “social process in which the constraints on economic, political, social and
cultural arrangements recede, in which people become increasingly aware that they are
receding and in which people act accordingly”. (Waters 2001, 5)

In case of rum, the most fitting definition, according to me, would be the Robertson’s, who
defined globalization as follows:

“Globalization as a concept refers both to the compression of the world and the intensification
of consciousness of the world as a whole...both concrete global interdependence and
consciousness of the global whole”. (R. Robertson, 1992)

Robertson put an accent on the “global interdependence and consciousness” which was, in my
opinion, a key factor during the globalization of the rum.

2.2 The history of rum and Bacardi

Rum is an alcoholic product made by distillation of molasses or the sugarcane juices. The origin
of the rum dates back to the early 16th century. The first rum was distilled on Barbados island
and therefore called “Barbados waters”. Later, the liquid became known as a “comfortable
water” along with a fact that its production become more healthier when a new technologies
and materials were used. With a raising production of rum, British and other Europeans started
to cultivate a sugar cane in Africa. During this period, the rum became the main currency in the
slave trade. However, the real boom of the rum manufacturing came with a global trade and a
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Mihran Avetisyan Exam ID: 7700472

naval warfare when the British Navy discovered the “magic” of the rum that pirates already
knew (Maingot, 2005).

Bacardi was founded in 1862 in city Santiago de Cuba by Don Facundo Bacardí Massó, who’s
successful techniques in rum production brought its effects as the rum got its specific smooth
taste, which was an unusual thing for that time. Company’s rum became quickly successful and
even started to win awards when turbulent times hit Cuba. During the Cuban Independence war
in 1880s and 1890s, Emilio, who was Facundo’s eldest son was imprisoned and exiled due to
the fact that he fought against the Spain. Along with him, the women of the family were exiled
to Jamaica. The things become to be brighter for Bacardi starting in 1912 when the United
States occupied Cuba. The company was even able to expand its facilities and open an bottling
plants in New York and Barcelona. During the Prohibition era in United States, Cuba became
a main holiday place for American tourists thirsty for alcohol. As the popularity of rum
continued to increase, Bacardi moved its headquarters to Havana and also expanded to Mexico,
Porto Rico and the United States. When Fidel Castro took over Cuba, Bacardi moved its
operations to Puerto Rico and Mexico. This step afterwards proved to be a good one since the
Bacardi’s company was confiscated in Cuba. Finally, Bacardi opened its headquarters in Miami
in 1964. Till now, Bacardi expanded its portfolio of alcoholic drinks and nowadays it is one of
the most recognized and consumed rums worldwide (elmesondepepe.com, 2018).

Nowadays, a company is still family owned and it sells its products in more than 170
countries. Beside that, Bacardi has production facilities in 20 countries (Bacardi Limited,
2018).

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3. Analysis
3.1. Globalisation of rum as a product
To describe the factors that helped to globally spread a rum as a product, the Waters’
explanatory theorem will be applied which, in order to explain the concept of globalization,
uses three regions of social life – economy, polity and culture. Furthermore, all these regions
have their own predominant type of exchanges and it is also important to note, that each of these
exchanges have a particular way in which they organize the social relations in space (Waters,
2001).

To start with, economy is characterized by material exchanges like trade, capital flow, land
tenancy or labour. According to Waters these exchanges create a localization effect as all the
exchanges are “limited” to happen in specific time and place, even if the product or service is
traded globally. The polity is characterized as a power exchange which tend to deliver an
internationalization effect. Party membership, election or redistribution of surplus can be used
as an example for a power exchange. Finally, the culture is represented by symbolic exchanges
such as oral communication, propaganda, advertisement, publication, ritual etc. These
exchanges are not bounded to time and space and therefore, they are easy to be spread globally,
and they also often carry universal meaning because of their appeal on human fundamentals
(Waters, 2001).

In case of rum expansion, there were and still are multiple material exchanges that can be easily
identified. Firstly, there is the trade and consumption of the rum itself, which was done on a
local as well as international level. Secondly, the production of rum itself involves a capital
flow, technology, raw materials trade as sugarcane and also a workforce exchange, which was
in history infamous since it was connected with slavery (Williams, 2005).

Power exchanges, which are described as social arrangements to extended territories were also
present, mainly thanks to the strong material processes that were done by the companies
producing rum. In this case, it is better to be more specific so for example, the largest producer
of rum, Bacardi, gained a significant amount of political influence thanks to its economic
strength. Bacardi used its power in 1936, once the prohibition in U.S. was about to end, when
the company successfully litigated its way up to the Supreme Court in order to get an approval
to open its business in Puerto Rico which would bring in another business opportunity. Another
example is when Bacardi moved its trademark from Cuba to the Bahamas in order to use the
advantages provided by British Commonwealth (Williams, 2005).

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Finally, when taking into consideration cultural or symbolic meaning, we can consider a rum
producing company as well as rum as a product generally since the symbolic meanings are
similar. The first thing that automatically comes to mind in connection with rum is the flavour
of rebellion and piracy (Williams, 2005). It can be agreed that these meanings and symbols are
many times depicted in movies, advertisements or on logos of the drink. Another dimension of
meaning was added when the British Navy sailors started, inspired by pirates, to get a shot of
“grog” twice a day, which lead to creation of a term “Naval Rum” as a proper fighting man’s
drink (Maingot, 2005). However, before the rum distillation technologies were improved and
therefore the beverage was spread among pirates and sailors, it was mainly being used among
the poorest inhabitants or slaves in Caribbean region. Thanks to these facts, rum had an image
of lower class product for masses which stayed with it for a long period of time and started to
lose this symbol during the modern times (Maingot, 2005). Nevertheless, nowadays we can say
that the rum is on rise and it is not considered to be a cheap or low-class drink. To certain level,
it associates a chill Caribbean lifestyle with it.

3.2. Rum Production Globalization

One of the most significant conceptualizations was presented by Appadurai (1990). According
to him, the view of the world, where on one side there are centres that expand and on the other
side peripheries which shrink and are threatened with cultural absorption by centres, is no
longer accurate. The theory is based on five cultural global flows: ethnoscapes, mediascapes,
technoscapes, finanscapes and ideoscapes. It is important to note that these “scapes” are fluid
and their meaning can change depending on the subject. The movement of all actors, that play
a role in the globalization processes, is present in these flows (Appadurai, 1990).

Appadurai defines ethnoscapes as a movement of people, which constitute a shift in the world.
This can be basically everyone who is moving from nation to nation (Appadurai, 1990). In case
of Bacardi, it can be a management workers, technicians and other workers that had to move in
1930s to Puerto-Rico, Mexico or in 1910 to Spain where new production facilities were
established. Moreover, we must also count in the tourists from America that largely visited
Cuba during the Prohibition era in United States in order to have their Bacardi rum or rum in
general (Bacardi Limited, 2018).

Technoscapes are defined as a movement of the technology, on informational as well as

mechanical level (Appadurai, 1990). With an expansion to foreign countries, as discussed

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earlier, we can without any doubts say, that along with people there were also transfers of
technologies and know-how.

Finanscapes simply refer to a global capital flows. It can be not only investments but also some
capital movements on stock exchange markets (Appadurai, 1990). Along with expansion to
other countries, Bacardi’s also invest into its global marketing activities as well as to
distribution facilities across 150 countries (Bhasin 2018).

Mediascapes are bit more complicated than the previous three flows. On one side they refer to
movement of “electronic capabilities that produce and distribute the information” and on other
side they refer to the presentation the information itself (Appadurai, 1990). In case of Bacardi,
we can imagine the usage of a whole palette of media channels that are used for a marketing of
the brand. Basically, we can speak about television, newspaper, internet advertisement and of
course a marketing campaigns on the social medias. Nevertheless, we can also see a bottle of
Bacardi in movies as it is one of the most common rum brands.

Finally, ideoscapes are also defined as “concatenations of images”, however, the usually
contain an ideological message inside. The message can refer to politically oriented ideologies
like “freedom”, “sovereignty” and “democracy” (Appadurai, 1990). This is probably the most
important factor in today’s world, as delivering a “higher” ideological meaning to a product or
service is the key element in order to have a success on the global or local market. Ideology that
is trying to be globally spread by Bacardi is quite rich and mostly based around its origin,
tradition and history. Due to the pretty much monopolistic position of Bacardi rum in
Caribbean, caused by strong and long-lasting marketing, it is possible to say that Bacardi is
almost a synonym to rum in a North America. Although, there are a lot of local rums with a
refined taste, Bacardi is the only stocked rum in major hotels in Caribbean (Williams, 2006).
Therefore we can say that Bacardi covers the key ideological and cultural messages that are
represented by rum. Those are nowadays predominantly the rebellion with piracy and the
common known Caribbean lifestyle – music, festivals, fun, sun and an easy-going life.

3.3. Bacardi brand as a global ideoscape

Based on Appadurai’s “scape” theory and Ritzers’s McDonadization theory (1996), Askegaard
builds his theory on “Brand as a global ideoscape” (Askegaard, 2006). According to him, the
brands that represent the first contact between company and its customers are not separated
from the culture and they also formulate a specific cultural meaning. The globalization brings
in more competitors from around the world. On the other hand, it is also easier for companies

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to access new markets and customers and because of that a branding is becoming more and
more critical factor of success. From a historical point of view, brands were just like an “extra
thing” added to the product and the main focus was put on the product itself. Currently, he
argues that this trend is shifting as the brand itself gains on importance. We can often see, that
a consumer is making decision based on the “image” of the brand and not a product itself.
According to Askegaard the significance of business ideoscape is nowadays greater that the
importance of political ideoscape, therefore, brand and branding becomes the key to success
(Askegaard, 2006).

Applied to Bacardi’s branding, we can say that the company has a “strong story” behind the
product. However, the long and touching history is not enough and it becomes “just a tale” to a
young consumer, which confirmed Bacardi’s chief marketing officer for North America and
global lead. According to him, the company was struggling to effectively connect with their
target consumers and new millennials. He also added that the branding cannot be solely based
on history, but it also has to include an idea to which will the consumer be able resonate and
relate to. Consequently, Bacardi then launched a campaign which included modern music,
house parties and musicians. The company’s goal was to create a lifestyle brand (Schultz,
2015).

Another example that proves that the company is working towards “business indeoscape” is the
Bacardi “Good spirited” campaign, which can be studied on their web pages. Interesting
campaign that involved also an “active” participation of customers happened in 2015 in Idaho.
For a specific time period, the company would help to restore the forests of Idaho by planting
a tree for each selected bottle of alcohol that was bought at that time in Idaho (Bacardi Limited,
2018).

Finally, Bacardi UK has recently released a two video spot campaigns. One of them focuses to
promote rum through a typical Caribbean lifestyle which is consisted of music, festivals, parties
and again – rum (Bacardi UK, 2017). The more recent launched campaign put an accent on
premium rums produced by Bacardi, which is also a “new” way how to attract consumer on a
image of the brand (Bacardi UK, 2018).

To sum up, all these examples provided are showing, that the company is focused to create or
improve the brand’s image in a different ways. Some of them focus on creating a brand that
represents a certain lifestyle or status and some of them promotes a company’s corporate social

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responsibility. These aspects help consumer to identify himself with the brand. We can
therefore assume, that business ideoscape is created.

3.4. Bacardi as a cosmopolitan brand

The theory of cosmopolitanism will provide us with the information about the actions and
processes that the brand must complete in order to stay and increase its global market
competitiveness. Therefore, application of cosmopolitanism should help to answer the main
research question of this paper.

There are two viewpoints on this theory. From a consumer’s side of view, cosmopolitanism
presents a possibility to consumer to differentiate himself from the rest of locals by acquiring a
specific knowledge and skills connected with a foreign culture. Nowadays, we can find
cosmopolitans among students that go to study abroad but also among a businessman’s .
According to authors description, these people are usually characterized with openness to
diversity, they search for contrasts as they want to get in touch with the locals. According to
Hannerz, a specific set of skills are important in order to successfully immerse in the foreign
culture (Hannerz, 1990).

From a brand’s point of view, Bookman’s theory provides us with a connection between
cosmopolitanism and brand. The theory defines a “consumerist cosmopolitanism” as
relationship of local consumer with a foreign goods with a non-local cultural meaning. The
crucial part of this theory is the definition of “cosmopolitan cool” which is understood as a
process collectively created by consumers and brands. This process consists of 3 parts – cultural
openness, global awareness and urban style (Bookman, 2013).

The cultural openness of Bacardi is basically given by its wide range spread across the globe.
Although it is a family company, its size and variety logically provides a lot of working places
and the working environment is truly international and culturally open.

We can find a lot of corporate social activities in Bacardi, that helps to create a global
awareness. The company has 5 core pillars of CSR – marketplace, environment, responsible
sourcing, people, philanthropy and community investment (Bacardi Limited, 2018). For
example, it is interesting to mention a “NoStraw” initiative which purpose is to stop use straws
and stirrers in cocktails at company events, in visitor centres and distilleries (Bacardi Limited,
2018). Some of these activities were also described in the earlier in the paper.

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When using the product, the consumer wants to be also associated with a certain amount of
urban sophistication and cultural liveliness which links to the urban style of the cosmopolitan
cool (Bookman, 2013). As the Bacardi is a truly global product with a fame around it, the brand
can successfully maintain its urban and lively image. Being present in most of the bars,
restaurants, clubs, markets and hotels around the globe, there is a specific vibe that it creates.
Also, with having its official distribution all around the world, customers can purchase a variety
of its non-drinkable accessories as well.

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Mihran Avetisyan Exam ID: 7700472

4. Conclusion
The globalization of the rum is a fact, that cannot be doubted. Same thing implies to the leading
brand of this product – Bacardi. The interesting fact about this globalization is, that it took place
a long time before the main wave of the globalization hit the world and therefore makes this
one a special one.

The aim of this paper was to analyse the globalisation processes behind the spread of rum and
behind the globalization of the Bacardi. Answering on the main research question should have
provided possible ways that can lead Bacardi to maintain and increase its global market share.

Bacardi, founded in 1962, has a long-lasting history and therefore a lot of experience with the
international trade. During that time, Bacardi survived several “earthquakes”, however, most of
them were caused by the political powers. Therefore, it is important for Bacardi and other
companies in the field to focus on these political powers as they can be very influential.
Although, as it was with Prohibition and Cuban revolution, some of them cannot be involved
by the company.

Another key factor are the symbolic powers that are presented by the brand and the product.
Bacardi is well aware of these factors and should try to work on not only in the propagation of
its history but also on the development of these symbols. The society is in constant development
and Bacardi overslept it a bit when focusing on its history. One of the greatest advantages that
the company has is the fact that the name of the brand can be perceived as a synonym to rum.
This allow Bacardi to take on a lot of cultural meaning, which has a strong potential to be
transferred into a business ideology. Creating a ideological and symbolical bond between the
brand and consumer should be the way to the successful future.

Corporate social responsibility is also one of the main areas important for a future development
of the brand. CSR activities are crucial in modern world and again, they help to create a bond
between the consumer and brand. In my opinion, Bacardi currently operates in many areas of
CSR so if the brand sustains the same pace and intensity of these activities the company should
stay in the correct direction.

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References
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Caribbean Product." in Teresita Martínez-Vergne and Franklin W. Knight, Contemporary
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