News: Analysis & Commentary: EXECUTIVE SUITE
BACARDI'S NEW CAPTAIN
The family-owned distiller puts an outsider at the helm
When Bacardi Ltd. officials introduced George B. "Chip" Reid Jr. to the workers at its Puerto Rico distillery on Mar. 13 as the next chief executive, the lawyer had a confession to make: He doesn't speak Spanish. But Reid, who will become Bacardi's executive vice-president on Apr. 1 and take over as president and CEO in March, 1997, is undaunted: "I've sent away for the Berlitz foreign-language tapes," he says.
Not only is Reid linguistically challenged, he's not even family. The rum company, founded in 1862 in Cuba by a Spaniard, Don Facundo Bacardi, and now headquartered in Bermuda, is controlled by Facundo's descendants. That this insular company would tap a cigar-chomping gringo from Washington shows just how far it's willing to go to achieve success in a stagnant market.
But Reid, 47, is no stranger to Bacardi. As a partner at Covington & Burling, he brokered a peace accord among warring family factions in the 1980s. He also helped execute a $2 billion purchase of Italy's Martini & Rossi in 1993. All sides in the clan see Reid as neutral. "Chip Reid had the advantage of being an outsider and an insider," says retiring CEO Manuel Jorge Cutillas, 65, a great-great-grandson of the founder.
LEMON-FLAVORED RUM. This support will come in handy. Bacardi's profits, $250 million on sales of $2.5 billion, were flat in 1995. And Bacardi Rum still contributed 32% of revenues. "You can't let your core business decline without doing anything," says Frank Walter, a senior vice-president at New York researcher Shanken Communications. "Bacardi has to become much more aggressive." Reid's goal: to boost sales by 20%, to $3 billion, by 2000. "We firmly believe the industry is not dead," he says. "It will grow again."
Reid's game plan is to move into other drinks such as Scotch and to develop more low-alcohol products. In May, it will introduce Bacardi Spice, a flavor-enhanced rum. A year ago, it unveiled Bacardi Limon, a lemon-flavored rum targeted at vodka drinkers. Reid also is eyeing Eastern Europe, Latin America, and the Far East, where he hopes an emerging middle class is ready for internationally known brands. Bacardi's Martini & Rossi acquisition has already doubled Bacardi's size, adding products such as wine and tequila and expanding its distribution into Italy, France, and Belgium. "We have some great weapons," says Reid. Now, he just has to bone up on Spanish.By Mark Lewyn in Miami, with Maria Bird in San Juan