Competitive Process in Bacardi

Nolan Arnold

MIS 373-002

10/5/15

Capacity Planning (Bacardi Limited)

Bacardi Limited is the largest privately held, family owned liquor company in the world.  The company is mostly known for its white rum; whilst being the creator of the category of purified rum itself. Bacardi began with a Spanish wine merchant that immigrated to Cuba in 1830 and began refining the rum process to create a purified brand.  The brand has survived through seven generations of family, that now hold over 200brands.  The company fell in the U.S during the prohibition era but conversely grew as a popular tourism spot at the time.

After prohibition Bacardi moved operations to Puerto Rico, Mexico, and U.S so it could be sold tariff free while being credited as the “King of Rums”. In recent years the company has purchased high performing liquor brands across most markets such as Bombay Gin and Grey Goose Vodka. Additionally Bacardi has been pouring millions of dollars in market research to find which industries are growing the fastest. As of now scotch/whiskey malt produced liquors have shown the most upward mobility.  Bacardi has planned its capacity accordingly to accounts for a massive aging inventory compensated by its other brands.

Capacity Planning

  Strategic capacity planning begins with forecasting the demand of a product to determine the necessary decisions to be made. Bacardi put large amounts of time and money into demand forecasting to better predict the movement of various markets to plan brand acquisitions. The greatest trend in travelling retail markets was malt based scotch/whiskey. Bacardi has spent several years procuring these brands so it could amount a large storage inventory to barrel age the liquor.

Bacardi’s entry into various spirit markets is fairly recent in terms of the company’s long history.  However, within the last twenty years, Bacardi has strategically procured the highest growing and most popular top shelf brands in vodka, gin and scotch through Grey Goose, Bombay, and Dewar’s with an additional business merger with Martini Prosecco as the top producer of vermouth and sparkling wines. These purchases allowed the company to also acquire the various distilleries internationally allowing the company to serve its products more efficiently globally.

Flexibility  

One of the most important aspects in developing strategies is designing flexibility into systems. These capacity decisions typically inhibit market forecasts due to their long term nature. Flexible strategies can be seen throughout multiple events inside Bacardi’s history. One of the first examples of this is during the brief time before prohibition when Bacardi opened a distillery that was inevitably shut down. However, due to the flexibility of the company, Baradin was able to use prohibition as marketing strategy by spreading its Cuban product as a popular vacation spot to purchase alcohol.