Bacardi and the Long Fight for Cuba

by Gjelten, Tom

  The Bacardis’ interwoven political views, business interests, and cultural heritage meant their relationship with the United States in the 1950s was a bit complicated. Because of their deep French and Spanish roots, some Bacardis felt closer to Europe than to North America. But many Bacardi sons and daughters were sent to the United States for schooling, and some settled there. More Bacardi rum was sold in the United States than anywhere else, and the company had an important subsidiary—Bacardi Imports—headquartered there. Most of the Bacardis were Cuban nationalists, however, and by the middle to late 1950s, family members sometimes found that they and their U.S. friends were on opposite sides politically. When the CIA and the FBI helped Fulgencio Batista track his domestic opponents, the Bacardis may have been among those monitored. While the U.S. government shipped arms, ammunition, airplanes, and artillery to Batista’s military forces, some of the Bacardis were funneling cash to Batista’s rebel enemies. In Cuba the Bacardis advocated generous social welfare policies, agrarian reform, and trade union rights; in the United States such positions could have marked them as left-wingers.

  In truth, the Bacardis stood in the center of the political spectrum in Cuba, but they represented something in short supply: enlightened business leadership. The Bacardi directors saw a social and political role for private enterprises in Cuba, and they were able to articulate it better than any other Cuban firm. One such statement came in a newspaper ad the company took out in February 1954, on the occasion of its ninety-second anniversary. Under the words “With a Head Held High,” the ad showed a smiling young Cuban man making a toast, with pictures of Bacardi workers and factory installations and the following commentary:In the early days of our company, when Cuba was crying out for a valiant contribution from her sons, the managers and workers of this very Cuban company answered, Here we are! Later, when the young Republic needed an economic push from its domestic industries, the Bacardi Rum Company cooperated enthusiastically, creating jobs that sustained hundreds and hundreds of Cuban families.

  Today, upon celebrating 92 years of unending labor and thanks to the Cuban people’s demand for our products, the Bacardi Rum Company has become one of the biggest industrial enterprises in the world, able through its tax payments to contribute to the funds needed to plan, construct, and educate the nation.

  The Bacardi Rum Company also believes it has contributed to the glorification of its homeland on the international scene. Because of its unsurpassed quality, Bacardi has established itself around the world, becoming a prestigious ambassador. It is with genuine pride that we hear the name of our country joined with that of our company on the lips of men in all languages and latitudes. The natural product of our sugarcane and our climate has become the chosen drink of all continents!

  For all these reasons, we stand today before the Cuban people with our head held high.

  Bacardi. Healthful, Delicious, and Cuban.

  The ad made no reference to the current Cuban government, to Batista, or to those who opposed him. The message was simple, expressed in the platitudinous language of the 1950s. Nevertheless, it reflected a coherent idea: that a private firm plays a useful and even patriotic role in a nation by providing employment and economic stimulus and by identifying with its homeland and the national cause. A healthy state needs a strong economic foundation, and that foundation is built in part through successful private enterprise. This core tenet of liberal democratic capitalism was buttressed in the Bacardi case by the company’s civic record. Whether it was the legacy of Emilio Bacardi or the result of being entirely owned by a single Cuban family, the Bacardi Rum Company had earned the right to say it contributed to the national good simply by being a responsible and well-managed private business.

  Cuba’s misfortune was that there were not more successful companies. A World Bank team that visited the island in 1950 concluded that too many private employers were “static” or “defensive” in their business approach, seeking immediate profits rather than investing for the long term. Bacardi was an exception. Under the leadership of Enrique Schueg and Pepín Bosch, the company had aggressively developed export markets and plowed profits into new ventures. The move into beer production had been especially foresighted. The Hatuey breweries in Santiago and Havana provided a steady flow of cash and made possible the financing of further expansion at a time when the capital market in Cuba was thin at best.

  In part, the company was motivated by the need to stay ahead of its Cuban competitors. Rum production in general was a bright spot in the Cuban economy. Don Facundo and his successors had not been the only businessmen to recognize the good sense of building an enterprise around a raw material Cuba possessed in abundance, molasses, adding value through the application of technology and skilled labor. While the World Bank team had harsh criticism for the management of most Cuban industries, the island’s rum companies were a notable exception. “After detailed investigation,” the team reported, “the Mission is happy to report that it can suggest no improvement in production of Cuban rum.”

  The domestic market in Cuba was split between rones superiores, premium rums, and rones corrientes, or common rums, which were cheap and produced for mass consumption. There were dozens of brands in the corriente category, but the Bacardi directors worried mainly about their premium competitors. Two were serious rivals: Matusalem, made in Santiago by the Álvarez Camp company, and Havana Club, made in Cárdenas by the Arechabala company. Matusalem, named for the Old Testament patriarch Methuselah, specialized in aged rums, with its top product a fifteen-year-old sipping rum. Havana Club, like Bacardi, produced lighter rums. The companies tried to keep their operations, and especially their best wholesale prices, secret from each other. When a Bacardi executive got hold of a Havana Club invoice that showed the Arechabala company was beating Bacardi prices, he complained to his Bacardi colleagues that the Arechabalas were “discrediting” their own rum brands by pricing them too low. For its part, Matusalem was found to be undercutting Bacardi prices at the bars on the U.S. naval base at Guantánamo. When Bosch heard of the Matusalem discount, he arranged to have Bacardi rum sold on the base by the barrel. “With a little good fortune, we’ll soon have that competitor eliminated,” Bosch assured the sales agent who had alerted him to the problem.

  He was one tough businessman. “Pepín Bosch never misses an opportunity to strike a blow against a competitor, be it a high one or a low one,” observed the weekly Havana magazine Gente in May 1956. His calculating and occasionally ruthless style made Bosch stand out among Cuban businessmen, most of whom fit a more easygoing Latin style that emphasized personal relations and friendships over strategic maneuvering. The traditional way of doing business in Cuba, criticized as old-fashioned by the World Bank experts, involved much backroom dealing and favor trading, habits that Pepín Bosch disdained. Indeed, he operated at the other extreme, discouraging friends and family members from expecting automatic Bacardi employment.

  There were few Cuban businessmen in his day who were less Cuban in personality and style. In Havana, Bosch was almost always dressed in a dark suit. He was slightly more relaxed in his native Santiago and usually wore white linen there, though not without a bow tie. Unlike Daniel Bacardi, Bosch did not frequent the bars and clubs in Santiago and seemed uncomfortable with back slapping and banter. He may have thought it put him at a disadvantage as a rum merchant, however, because one day he asked Daniel and José Argamasilla, the Bacardi public relations chief, to take him out.

  “You know everybody in town,” Bosch said. “Show me around.” In Daniel and Argamasilla, after all, he had the perfect guides. The two men were at home in virtually every Santiago establishment, from the classiest to those known for cheap drinks and loose women. They kept Bosch entertained and drinking for hours and did not send him home until about four o’clock the next morning, by which time he was quite drunk. The outing was so unusual that Daniel and Argamasilla could not imagine what Bosch would say the next time they saw him. Knowing how serious he
was about his Bacardi business, they figured that Bosch would show up for work as usual when the Bacardi offices opened at 7 A.M. and that they should be there when he arrived.

  The layout of the Bacardi office area was open, with no cubicles or walls separating one desk from another. Bosch’s desk was on the main floor, in a central location so he could keep an eye on almost everyone in the company. Daniel sat nearby. José Argamasilla was on the mezzanine level, overlooking the open area below. On the morning following their Santiago bar adventure, Daniel and José arrived at opening time and went straight to their desks, waiting nervously for Bosch to come through the door. To their surprise, he had not shown up by 8 A.M. After nine o’clock, they began to wonder if he was all right. Finally, about 10 A.M., Bosch came in, heading straight to his desk without a word to anyone. After a few minutes, he wrote something on a piece of paper and motioned to his secretary, saying, “Take this to Daniel.” The note said, “¡Tú me jodiste, cabrón!” (You fucked me up, you bastard!)

  The story of his one outing with Daniel Bacardi and José Argamasilla became legendary within the family, precisely because it was so out of character for Bosch. If anything, the baby-faced man was seen as a bit prudish. He was devoted to his wife, Enriqueta Schueg, to his fishing boat, and to his car, a yellow Buick convertible with red leather seats. His quiet but precise management style allowed him to get the most out of the people who worked for him, though sometimes only by scaring the wits out of them. A superb judge of talent, he often identified promising young employees in the company and then gave them assignments that other managers (and often the employees themselves) would have considered beyond their expertise. The employees would be thrilled that Bosch had the confidence in their abilities to trust them with such a large responsibility, but they were also unnerved by the realization that if they failed to meet his expectations, they would probably not get another chance. He was continually testing his subordinates to see how they measured up. Shortly after he went to work for Bacardi in 1950 as a chemical engineer, Juan Grau got a call from Bosch, who was then in Havana serving as finance minister under Carlos Prío. Bosch had authorized Grau’s hiring but had not spoken to him since he joined the company.

  “Juan, could you come see me here in Havana?” Bosch asked, in his soft little voice that sounded even squeakier over the long distance phone line.

  “Of course, Mr. Bosch,” Grau quickly answered. “Should I bring anything?”

  “No,” Bosch said, “just meet me at the side entrance to the Finance Ministry tomorrow at 7 A.M.” Grau immediately booked a flight for the six-hundred-mile trip to the other end of the island. He was at the Ministry door the next morning when Bosch pulled up in his chauffeured car, and Bosch led him upstairs to his office. Grau, who was just twenty-three years old at the time, was trembling with fear. Bosch was not only the Bacardi boss; he was Cuba’s minister of finance. What could he possibly want with a lowly chemical engineer?

  When Bosch was settled behind his desk, he turned to Grau with his famous twinkling smile and piercing eyes. “Juan, what are nitrites in the water?”

  Grau figured the question was just a way for Bosch to start a conversation. “You know, Mr. Bosch, nitrites are ...” He found himself stammering. “They come from the deterioration of organic matter. They indicate contamination in the water.”

  “OK, Juan,” Bosch said. “Thank you very much.” He smiled at Grau but said nothing else. The young man sat there, frozen, not knowing what else to say or do and without a clue what was coming next. In fact, the session was over. “You can go now,” Bosch said finally. It had been a test, no more. Had Grau not been able to tell Bosch what nitrites were, he could well have been out of a job.

  The anxiety Grau experienced when he faced Bosch as a young engineer never quite disappeared. In Bosch’s view, employees should be prepared to do their job, whatever the assignment, without asking questions or making excuses. He usually left his employees alone once he gave them an assignment, but even so, he earned only the grudging respect of his subordinates, without much affection for him personally. He was an authoritarian corporate leader who did not tolerate anyone second-guessing his decisions, and he sometimes offended experienced Bacardi managers who had confidence in their own judgment. “I felt it my whole life,” Grau said, decades later. “He would say, ‘Would you like to be the manager of this thing?’ But with that very same little voice he could just as easily say, ‘You know, I don’t think you can work for this company any more.’ And those eyes, they would look straight through you.”

  As an employer, Pepín Bosch was despised by some Bacardi workers, admired by others. He made regular rounds of the Bacardi facilities, taking careful note of jobs well done but also scolding anyone whose performance did not meet his standards. Whether such evaluations mattered for much was debatable; there was little job turnover in the Bacardi company. Union contracts and labor law made it difficult to fire a worker for any but the most egregious offense, and relatively few workers left the company on their own, so advancement opportunities were limited. A position at Bacardi—whether in the distillery, the rum factory, the Hatuey brewery, or the administrative offices—was seen in Santiago as providing better-than-average wages and benefits and good job security. Once young Santiago men or women got a foot in the door at the Bacardi Rum Company, they generally stayed and often did all they could to get family members hired there as well.

  Pepín Hernández, for example, went to work for the Bacardis in 1954 at the age of nineteen, following in the steps of his father, a foreman in the Hatuey beer-bottling facility. The job was only a temporary position, but his father was determined that Pepín get off to a good start with the company. “He was a big believer in the Bacardis,” Hernández recalled in a 2002 interview in Santiago. Hernández was by then serving as director of the Museum of Rum after working forty years in the Cuban rum industry, first for the Bacardi company and then for its socialist successors. He recalled that Joaquín Bacardi, the Harvard-educated master brewer at Hatuey, befriended his father, taking him fishing on his yacht, and Bosch himself on more than one occasion told the elder Hernández how highly he regarded his job performance. “My father said that when Bosch believed in someone, he always gave him the opportunity to develop himself,” the son recalled.

  That was also the experience of Raimundo Cobo, who worked at the Bacardi company for nearly twenty years when it was still under family ownership. Cobo had been a part-time worker in the company foundry until Pepín Bosch came by the metal shop one day and asked him to make a bronze cast. Bosch returned a few days later and was so pleased by Cobo’s work that he immediately secured a full-time position for him. Interviewed in Santiago at the age of eighty-six, long since retired, Cobo recalled Pepín Bosch as afectuoso y respetuoso, a friendly and respectful employer. He worked for the Bacardis in an era when personal attention and two free cases of beer and a bottle of rum añejo at Christmastime helped ensure employee loyalty, before socialism made workers suspicious about bosses’ intentions.

  For Pepín Hernández, a gentle and scholarly man who made the study of Bacardi history his avocation, fishing trips and Christmas gift packages were evidence of an attitude of “paternalism” on the Bacardis’ part toward their workers. Hernández readily acknowledged that the company paid well and respected worker rights, but he also insisted that the Bacardi executives in the end were, like other capitalists, mainly interested in “money and commerce.” Like other Bacardi employees, he recalled the “cold and steely” side of Pepín Bosch and the autocratic ways that did not always go over well with workers who were confident enough in their character and position to demand that they be treated with dignity.

  One such worker was a tall black man named Pablo Rivas Betancourt, employed at the rum company as a distiller. Pepín Hernández, who worked at his side as a young man, remembered Rivas as “a gentleman with nineteenth-century manners” who put a high premium on honor and chivalry and did not hesitate to chal
lenge another man to a duel if he felt his courage and character were questioned. A cultured man, he read poetry and carried himself with elegance. “At the distillery he was just Pablo,” Hernández said, “coming to work in scruffy pants, a T-shirt, and a baseball hat. But around town, he was Don Pablo Rivas Betancourt, dressed in a panama hat, a fine linen guayabera, and perfectly pressed cotton drill trousers.” Hernández recalled one night at the Bacardi distillery when he was in his early twenties, working as a watchman, and Rivas was the distiller on duty. Pepín Bosch unexpectedly showed up that night for one of his surprise inspections. At their stations on the second floor, Hernández and other Bacardi workers could always tell when it was Bosch who was coming to see them, because after his 1946 boating accident he walked with a limp, and dragging himself up the distillery stairs was a slow and arduous task.

  Hearing Bosch approach, Hernández rapped a key on one of the distillery columns, the signal to alert his colleagues that the boss was coming. Most of the workers scrambled to look busy, but Rivas, sitting on a stool with his back against the distilling tank, did not move a muscle. When he saw Rivas, Bosch came over to him and in a slightly sarcastic tone of voice said, “Be careful you don’t fall asleep.”

  Rivas did not appreciate the comment. He raised the brim of his hat and stared hard back at Bosch. “So, that’s the ‘Good evening’ you have,” he said, “for a worker who’s doing a hard night shift for you, so you can get rich?” Without answering, Bosch turned and walked away as briskly as he could. On his way to the stairs, he asked another distillery worker, “What’s his name, the guy in the hat?” Before his colleague could respond, Rivas answered Bosch himself, loudly, making sure the boss heard him. “Pablo Rivas Betancourt!”