Bacardi Downsizes As Sales Lag

This weekend we got two different articles discussing Bacardi’s lagging sales and the company’s announced downsizing.

The Miami Herald reports that though Bacardi has seen consistently good rum sales for decades they saw their overall volume fall by nearly 2% in 2014. Their rum expressions experienced the largest loss with sales falling an estimated 4.5%.

Bacardi reported that sales volumes have only risen slightly over the last six years from $4.6 billion in 2014 compared to $4.5 billion in 2008. Despite this overall downturn, some of Bacardi’s 200 plus brands and labels — including Grey Goose, William Lawson’s Scotch and Bombay gin — have grown recently. At the same time, Bacardi’s competitors — Diageo and Pernod Ricard — also saw declines in 2014. But two other rivals, Brown-Forman and Beam Suntory — recorded volume growth during the same period.

In addition to the volume decline, Bacardi has appointed six “permanent” CEOs since 2000 (two others were interim CEOs), which has given an impression that their are struggling for consistent leadership. When asked about this issue, the company’s Public Relations Office referred the Miami Post to a 2014 interview with Facundo Bacardi in Shanken’s Impact Newsletter, where the Bacardi chairman said the elevation of non-family members to executive posts was “the beginning of a long transition away from simply being a family-run company.” Going forward, the company would like CEOs to serve for 10-15 years, he added.’

Also, The Wall Street Journal reported that in the wake of slowing sales, Bacardi began downsizing their North American sales force this week.

In an effort to restructure and reduce costs, Bermuda-based Bacardi has focused the majority of employment cuts within its sales and field marketing divisions. They are reducing their North American staff by 10% cutting fewer than 80 positions from its 600-person North American staff. Bacardi says that staff shifting and layoffs are part of an evolving spirits market. These layoffs come within six months of Mike Dolan taking over as the company’s permanent chief executive.

Bacardi is privately held and controlled by about 500 Bacardi family members. The company has been challenged in recent years as consumers increasingly shift from such clear spirits as rum and vodka to American whiskeys.

Their U.S. sales volumes of rum fell 1.5% and vodka increased just 1.6%. During that same time, bourbon and Tennessee whiskey volumes increased 7%. Sales volumes of blended Scotch like Bacardi-owned Dewar’s White Label also struggled, falling 3%.

Bacardi’s U.S. market share is estimated to be 9% of the entire spirits market which makes it the country’s 4th largest spirits company behind Diageo PLC, Beam Suntory Inc., and the Sazerac Company Inc.

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