Bacardi and the Long Fight for Cuba

by Gjelten, Tom

  There could be no room for private wealth or enterprise in Cuba, because it would compete with the power and authority of Fidel’s revolutionary state. There could be no room for aspirations apart from the promise of the revolution. Those Cubans who had their own ideas and dreams had to be pushed out, even if they were fair-minded and generous patriots. Fidel said those who abandoned his Cuba were gusanos (worms), and when Cubans spit on people standing in line for a U.S. visa, it was because he encouraged them to do so. “What do the ones who left signify?” he asked in a 1962 speech to medical students. “It is the same thing as squeezing a boil. Those who have left are the pus, the pus that was expelled when the Cuban revolution squeezed the society. How good the body feels when pus is eliminated!”

  Chapter 17

  Exile

  Twice each day, a white Pan American DC-7B propliner landed in Miami with a full load of grim-faced Cubans who had boarded an hour earlier in Havana. A few of the passengers whooped for joy or shouted, “¡América!” or “¡Viva libertad!” as they stepped off the plane in Florida, but most descended silently onto the tarmac, and some were quietly weeping. The agonizing wait for an exit permit, the surrender of their homes and all their possessions, the prospect of a long, perhaps permanent, separation from family and friends who stayed behind, and the pain of having to flee their native land had made their final days in Cuba emotionally devastating. Then came the indignities and terror at the airport, where sneering customs inspectors rummaged through their luggage for something to confiscate and poked in their pants and down their blouses in one final, deliberately humiliating routine. After all, they were only worms, bound for the gusanera that Miami had become.

  Pepín Bosch had his son Jorge make arrangements for some Bacardi people who arrived with no place to stay or family members to help them. At thirty-five, Jorge had been a brewer in Santiago, a vice president of the Mexican subsidiary, and his father’s representative in overseeing the Puerto Rico operation, so he knew almost everyone in the company at the middle management level or above. He rented several apartments in a part of Miami that was becoming known as Little Havana. If people were able to call ahead to say they were coming on a particular flight, Jorge would be at the airport to meet them and set them up in one of the company apartments, having already stocked it with groceries. Most also needed cash assistance, because the Cuban authorities allowed people leaving the island to take no more than five U.S. dollars with them. For those who showed up unexpectedly in Miami, having been delayed at the last minute in Havana because of a document some airport official didn’t find correctly prepared, some order from a higher authority, or simply the arbitrariness of an inspector, there was always a phone number to call upon arrival; Jorge or someone else would rush to the airport. After helping more than a dozen arriving Bacardi families, he recognized a pattern: The newcomers would be in a semiterrified state for a day or two, numb from exhaustion and anxiety and unable to talk easily about what they had gone through. He would leave them alone—“to decompress,” he explained—and return a day later to check on them, at which time their stories would come pouring out.

  Such assistance put Bacardi people—employees and family members alike—in a privileged category compared to other Cubans who showed up in Miami penniless and helpless. From 1960 through October 1962, when the Cuban missile crisis brought an end to commercial air traffic to and from Havana, an average of about 170 Cuban refugees arrived per day in the United States, the vast majority of them landing in Miami. Although U.S. visas were required, there was no quota for Cubans, and virtually all qualified for refugee status. Local and federal immigration and welfare agencies were overwhelmed by the demand for their services, and many Cuban newcomers were forced to fend for themselves and restart their lives from scratch. The extended Bacardi clan, however, had a support system underneath them from start to finish. At the instruction of Pepín Bosch, lawyer Guillermo Mármol postponed his own departure from Cuba in order to help Bacardi employees and family members get exit permits and reservations on one of the Pan Am flights, which were generally booked six months in advance. Once they made it to Miami, employees who wanted to continue working with Bacardi were put on “salary,” at least temporarily, and Pepín Bosch tried to find them work—if not in Miami, then in Puerto Rico, Mexico, or Brazil.

  The survival and reorganization of the Bacardi rum company following its displacement from Cuba would amount to one of the more notable tales in business history. For a century, the Bacardi family had personally nurtured the business, guiding it through difficult days and imbuing it with a cohesive-ness and internal strength that were the envy of other firms. In exile, the roles were reversed: It was the company that supported the Bacardi family, nonblood members included. This dynamic relationship of family and firm provided the foundation for the Bacardi success in the years that followed, just as it had in the past. The family members and Bacardi employees who came out of Cuba together provided the skills, experience, and personal commitment that enabled the business to prosper beyond what anyone could have foreseen in 1960, and in turn the firm offered them a foundation for their new lives.

  But was Bacardi still a Cuban company? Torn from its roots in Santiago, no longer sponsoring Cuban baseball games or patronizing Cuban culture and excluded from the civic and political life of the island, Bacardi in exile would be a name without a homeland. The corporate headquarters was moved to the Bahamas and then to Bermuda. The family members dispersed across three continents, from Panama to Florida and Spain. Those who remained in south Florida became part of a new Cuban exile community that included former Batista allies, sugar magnates, and the old Havana aristocracy, as well as all those ordinary Cubans who had simply decided they could not live under Castro’s dictatorial rule. The Bacardis, most of them, remained Cuban nationalists and continued to think of their business as a patriotic enterprise, but now those terms meant something different from what they had meant on the island. After 1960, the fight for Cuba was redefined as a battle against Fidel Castro and the regime he put in power. It was waged from a distance, and it was motivated in part by revenge. Castro had seized the Bacardi rum business in Cuba in the name of the Cuban revolution, and the Bacardi family and those who had built and managed the business were determined not to let him get away with it.

  The revolutionary authorities might have renamed it Compañía Ron Bacardi (Nacionalizada), but they did not make clear what exactly they were nationalizing. The buildings and equipment and inventory were now the property of the Cuban state, but what else? Under the nationalization order, the government claimed the Bacardi company in Santiago and “its subsidiary, affiliated, and related enterprises,” but the one-page document signed by Daniel Bacardi and other company executives was a lawyer’s nightmare. No terms were defined and no provisions made clear. The one relevant sentence simply declared that the company had been nationalized pursuant to the law passed a day earlier, and it named a new administrator for the firm. The authorities did not say what they understood Compañía Ron Bacardi, S.A., to comprise, and for a firm with as complex an organization as Pepín Bosch created, that was a fatal mistake.

  The Santiago company was the original Bacardi firm, but it had spawned four other companies, each with a separate structure and legal identity. Though they were owned by the same shareholders who owned Compañía Ron Bacardi, S.A., they were not subsidiaries and were therefore beyond the reach of the authorities in Havana. The Bacardi operations in Mexico and Puerto Rico were independently run. So was New York-based Bacardi Imports, which had the exclusive right to import and sell Bacardi rum in the United States. Finally, Pepín Bosch in 1957 had organized Bacardi International Limited (BIL) in the Bahamas with the rights to manufacture and sell Bacardi rum everywhere outside Cuba with the exception of the United States (including Puerto Rico) and Mexico. At the time he established the company, Bosch had been worried that Fulgencio Batista might make a move against Bacardi assets in Cuba, but as it turned out,
Bacardi International provided a shield against Fidel Castro instead. The nationalized rum company in Cuba would not be able to sell “Bacardi” rum overseas without facing a strong legal challenge from Bacardi International. Even in the preglobalization era, Bosch recognized the benefits of a transnational, globally organized enterprise.

  Bosch was not done, however. While BIL had the right to manufacture and market Bacardi overseas, the actual ownership of the Bacardi trademarks might have been contested by the Cuban government. Almost immediately after the nationalization of Bacardi operations in Cuba, Bosch had his lawyers reconstitute Compañía Ron Bacardi, S.A., in New York as a firm with the same organization and shareholders as were behind the Cuban company. The new company promptly claimed ownership of the various Bacardi trademarks, arguing that as the intellectual assets of the Santiago company, they had not been nationalized by the Cuban government and remained the property of the original owners. Their claim was reinforced by the fact that the Cuban authorities had neglected to mention trademarks or other intangible Bacardi assets in their nationalization order. Pepín Bosch—at the recommendation of his New York lawyers—had already mailed the original trademark certificates out of Cuba, and they were safely in the custody of the new company in New York.

  Bosch and his fellow Bacardi officers were set to do battle with the Castro regime on all fronts. On October 17, just three days after the Santiago nationalization, Bacardi Imports president Bartolo Estrada wrote an open letter to “all importers and dealers in alcoholic beverages in the United States,” advising them that his company would take legal action against any “person, firm or corporation” in the United States that attempted on its own to import so-called Bacardi rum from Cuba. Major U.S. liquor dealers, having well-established contacts with the old family management, would have been highly unlikely to do business with the new, nationalized operation in Communist Cuba, but the Bacardis were taking no chances. The sharply worded announcement sent a message that the firm intended to take an aggressive approach in defense of its interests. Indeed, the fight over Bacardi assets moved almost immediately to the courts. The first case involved an account the Santiago company had in the Bank of Nova Scotia, one of just two private banks (the other being the Royal Bank of Canada) still doing business in Cuba. When the Cuban authorities attempted to access the funds in the old Bacardi company account—which was held in a New York branch—the reconstituted Compañía Ron Bacardi S.A., sued the Canadian bank and the nationalized “Bacardi” company in U.S. district court and won. The court said the United States had made clear with prior actions that it had a “national policy” against recognizing the Cuban government’s confiscation of property, including bank accounts, outside Cuba.

  That court decision was on U.S. territory, however, where the Castro government had little standing. If the Bacardi rum company was going to survive as a player in the international market, it would need to defend its exclusive use of the “Bacardi” brand around the world and establish once and for all that the newly nationalized, government-owned rum company in Santiago had no right to sell a product it called “Bacardi” rum, even if it was made by the same workers who had been making Bacardi rum for years, by the same old methods with the same old ingredients, at the site of the Santiago factory that Don Facundo had opened a century earlier. To make that case, Pepín Bosch and the Bacardi family needed good lawyers, but also a good salesman.

  Juan Prado arranged to leave Havana three days ahead of his wife and their two small children, half expecting the authorities at the airport to block his departure. He made it to Miami, however, and Pepín Bosch himself was there to meet him. Bosch had big plans for his young sales manager. He booked Prado in a hotel room and gave him a few hundred dollars to buy a used car and rent a cheap house where he could get his family situated. Then he laid out the assignment.

  “We have to reestablish our international sales,” Bosch said. He feared that liquor importers outside the United States were less aware of what had happened to the Bacardis in Cuba and therefore might be more inclined to continue buying rum from the nationalized enterprise in Santiago. “I need you to go visit our distributors in Europe and tell them that our factory in Cuba has been confiscated by the government, but that we can still supply them from our other plants,” he told Prado. “Your job is to go on the road for us, wherever you need to go. Camine el mundo.” Prado was barely thirty years old, without a penny to his name, and he had a young wife who would have to find her own way in an unfamiliar city with two children under the age of two. He had been to London once as a tourist, but that was the extent of his overseas travel. And here he was, being asked by Pepín Bosch to go off on his own and rebuild his company’s global sales network, to “walk the world” for Bacardi.

  On December 7, barely two weeks after arriving from Havana, Prado left for London. He brought only a handwritten list of Bacardi distributors. All the files on rum sales had been left behind in Cuba, and Prado had no idea who had outstanding orders, nor for how many cases. His first meeting, at the Hedges & Butler spirits firm in London, did not go well, and Prado left thinking that the distributor was likely to stick with the Santiago product, no matter who made it. He moved on to Amsterdam, discouraged. Bosch had put him on a tight expense limit, and he was spending his nights alone in a shabby hotel room or walking the streets. His first Amsterdam meeting, however, cheered him up considerably. Rather than make a sales pitch, Prado just told his personal story about fleeing from Fidel Castro’s island prison. It worked like a charm. “You just got out of Cuba?” the Dutch distributor said, his eyes widening. “Wow! Tell me about it.” Within fifteen minutes, the distributor was sold. “Of course I’ll stick with the Bacardi family,” he said. “How could I not?”

  It was only the first morning of his first day in Amsterdam, and Prado had nothing else to do. When the distributor said he generally moved only about two hundred cases of rum per year—about what Prado sold to a single bar back in Havana—it occurred to Prado that he had more to achieve in Europe than just getting distributors to reconfirm prior Bacardi orders. “Look,” he told the distributor. “I’ve got three days here, and I can’t be a tourist. Would you mind if I went out with one of your salesmen?”

  The distributor immediately set him up with an English speaker, and Prado spent the next two days with him visiting liquor wholesalers. “This is Mr. Prado,” the salesman would say. “He works for Bacardi, and he’s just come from Cuba.” It was all the opening Prado needed. He related whatever he could remember about Castro as a university student, about the time when as a Procter & Gamble salesman he had sold Fidel’s father five hundred candles for his company store, and about the day the militiamen came to take possession of the Bacardi office in downtown Havana. “I told twenty stories that were true and at least ten that were not,” Prado recalled later, “and by the end of the day we had orders for another twenty cases.”

  Prado’s schedule had him visiting two European countries per week until he had covered most of the continent. In each country, he had the same experience, quickly persuading the distributor to stay with the Bacardi family and its reorganized network and then asking whether he could accompany a sales agent on his rounds. Prado had been a salesman all his life, and his warm, appealing manner suited him perfectly for the calling. At each stop, promoting his product personally, Prado managed to boost Bacardi orders.

  On December 23, Prado arrived in Hamburg. The country was shutting down for Christmas Eve celebrations, and the local distributor was stunned when Prado called for an appointment. “You realize it’s Christmas, don’t you?” he said. The distributor told Prado he would have invited him to spend the holiday with his German family had they not all been going out of town. As a consolation for not meeting him, he sent a bottle of Bacardi añejo over to Prado at his hotel.

  The next day, Prado ate lunch alone in the hotel restaurant, which was packed with holiday diners. The restaurant closed after lunch, however, and the hotel soon empti
ed of all the guests except for Prado and an airline crew. Hours later, when he asked at the reception desk where he might find dinner, the clerk said he was out of luck. Every restaurant in the city was closed for Christmas Eve. Prado returned to his room, finished off the courtesy basket of crackers the hotel had left on his dresser and drank half the bottle of añejo. Soon he was shivering. With the hotel nearly empty, the management had lowered the heat, and his room was becoming inhospitable. So Prado took off walking.

  The streets of Hamburg were cold and empty, but every house Prado passed was ablaze with light, and people inside were noisily celebrating. The contrast with his own sharp loneliness could not have been more painful. Three months’ worth of anxiety and loss swept over him, and tears ran down his cheeks. Here he was, walking strange streets in a city in Germany, late on Christmas Eve, separated from his wife and little children, and exiled from his beloved Cuba. The brightly lit German houses all around him and the half bottle of rum he had drunk on a nearly empty stomach pushed him over the brink into a sadness he had not until then allowed himself to feel. He could not stop weeping.

  Prado returned from his trip convinced that the European market for Bacardi rum was not being exploited to the limits of its potential, and he wrote Bosch a letter to that effect. Years passed, however, before his recommendations were acted on. Bosch’s goal in sending Prado to Europe had been less to promote Bacardi sales than to defend the Bacardi brand. He wanted to block Fidel Castro from establishing any presence on the continent with his socialist version of “Bacardi” rum. If a single European distributor switched orders from the Bacardi family’s product to the “Bacardi” rum being shipped from the nationalized plant in Santiago, Bosch feared, it would raise the question of which was the real thing.