Bacardi and the Long Fight for Cuba

by Gjelten, Tom

  “We don’t make rat poison here,” Lavigne answered curtly. “We make the best rum in Cuba.” He then took Guevara on a tour of the distillery, describing how ethanol alcohol was made through the process of fermentation, boiling, and evaporation, and how the distillates were then processed, aged, and blended to produce rum. Lavigne showed Guevara the factory and the aging warehouse and explained that the rum being bottled that day had actually been produced years earlier. Guevara followed Lavigne’s explanations carefully, but he had come with an idea of his own. Some of the “extra dry” rum produced in the factory was being sold in pharmacies for use by diabetics. Guevara proposed that the production for this purpose could be expanded if the rum were not left so long to age, because the water loss from evaporation would be less. Lavigne dismissed the suggestion out of hand, saying rum produced under his supervision would not be consumed before it was properly aged.

  In his later retelling of the visit, Lavigne said Che in the end was impressed by his commitment to quality in the rum production process. “He put his arm around my shoulders and slapped me on the back,” Lavigne said, “and he went away convinced that this was not some barnyard operation to make rat poison but an enterprise that earned our rum gold medals at international fairs.” Lavigne’s daughter Felicita, in an interview many years after his death, said her father’s troubles with Che Guevara were not so easily resolved, however. She said Guevara pressured Lavigne to set down in writing the Bacardi rum formula. Lavigne resisted, she said, fearing Guevara would commercialize it, but in the end agreed to write a letter outlining what he understood to be the formula. Guevara’s office, however, somehow lost the letter and asked him to write the formula down again. This time, according to his daughter, Lavigne refused. Whatever happened between him and Che Guevara, Lavigne apparently did nothing to get himself in serious trouble with the revolutionary authorities. Under his supervision, Caney rum in 1966 earned a gold medal at the Leipzig Trade Fair in East Germany (competing mostly against products from socialist countries), and a year later Lavigne was sent to Montreal, Canada, to promote Caney rum in Cuba’s pavilion at the Expo 67 world fair.

  In part because of the discipline shown by veteran rum workers like Mariano Lavigne and the skills they acquired during the years when Bacardi rum was the pride of Cuba, the Caney rum factory in Santiago was one of the more successful state-owned enterprises in the country during the early years of the revolution. It made a product for which there was significant demand, and it brought the state much-needed revenue. The enterprise still had major problems and deficiencies, but it proved to be a partial exception to the rule in revolutionary Cuba, where socialist management in case after case brought disastrous results.

  Fidel Castro’s determination to implement Communism was an experiment doomed to failure. Cuba was an underdeveloped country with an undiversified economy built almost entirely around sugar production and a professional and technical class depleted by emigration, conditions that made the adoption of socialism even more difficult than it otherwise would have been. Moreover, the Cuban leadership opted for an extreme version, disregarding lessons Soviet bloc countries had learned through their own experience.

  For ideological reasons, Castro opposed all private enterprise, being determined to put economic activity entirely in the hands of the state. After the nationalization of the largest firms in Cuba, medium-sized companies were expropriated, and in 1968 even family-owned shops and microbusinesses were taken over. The authorities suppressed the operation of free-market forces in favor of centralized economic planning, with the smallest business decisions left to bureaucrats. Most importantly, Castro refused to link wages to proven work skills or performance, thinking that Cubans could be motivated by their solidarity with the revolution rather than by a desire for their own economic betterment. He insisted on maintaining control over the system, involving himself regularly in minor management and investment decisions, which was not exactly helpful to the cause of speed and efficiency. His arbitrary exercise of authority and his rejection of contrary opinions meant there were none of the checks and balances that can restrain bad decision making in democratic systems.

  The flaws in Castro’s thinking soon became apparent. As it turned out, Cuban workers were not inclined to work harder for the simple sake of the revolution, despite the propaganda urging them to do so. The government generously raised workers’ wages at the start of the revolution, but with the reduction in imports and no increased production, there were fewer goods for Cubans to buy. Money lost its purchasing value, and the government was forced to introduce rationing. Many workers showed up at their jobs only long enough to collect their ration coupons. After that, their labor brought no material reward, and they saw no reason to continue working. Absenteeism soared.

  Rather than recognizing that moral incentives were not working as they had intended, Fidel Castro and Che Guevara responded by making loafing a crime. A labor regulation issued at Guevara’s direction in 1964 set severe sanctions for workers who failed to produce in line with the norms established for their positions or did not put in the minimum required hours on the job. Other laws gave the state the power to transfer workers from one place to another, to set the wages they were to receive, and to dictate what jobs they should perform. All workers were required to carry an identity card, and beginning in 1969 their names were registered in a “labor history file” that included their employment history and work evaluations, as well as detailed personal information.

  Many Cubans who had initially been enthusiastic supporters of the revolution turned increasingly cynical as its economic failures became more obvious and promises proved hollow. In 1961 Che Guevara announced a four-year economic plan premised on wildly optimistic annual growth rates of 15 percent, saying the plan would make Cuba self-sufficient in food and agricultural raw material. A year later, Fidel Castro promised that “what is scarce today will abound tomorrow.” When such goals proved unrealistic, Cuban leaders simply made new promises. In 1964 Castro told the Cuban people that within ten years “our production of milk will exceed that of Holland, and our production of cheese will exceed that of France.” Instead, Cuba’s economy stagnated. By 1970, with the labor force fully employed, the country was still producing less than it had in 1958, when 31 percent of Cuban workers were jobless.

  The problems and inefficiencies that plagued Cuba were characteristic of centrally directed socialist systems. With the economy guided by government “planners,” such basic decisions as what products should be made and at what prices they should be sold were made by government bureaucrats sitting in an office somewhere rather than determined by supply and demand pressures in the marketplace. For such a process to be even modestly effective, the government’s economic planners needed timely and accurate information from enterprise managers, suppliers, and customers, but such information was slow in coming and often erroneous. Production supervisors had to estimate their supply and raw material needs weeks or months in advance and send in their requests to the government ministry of which they were a part. When they misjudged their needs, they ended up with too many hammers and not enough nails, or they had to barter with other enterprise directors for what they needed. Lacking bank credits and the freedom to do their own purchasing, enterprise managers sometimes had to halt production because of the shortage of a critical item.

  The situation with prices was even more chaotic. At Castro’s personal direction, government planners were supposed to set the price of a commodity or service in line with its “social function,” i.e., its perceived value to society, rather than the cost of its production. The cost method, Castro said, “reeks too much of capitalism.” With prices set independently of market factors, there was no way to encourage the increased production of goods in short supply or to decrease production of goods for which there was an excess. Prices often remained unchanged all year long, when they normally would have fluctuated according to seasonal factors. Similarly, uniform pricing meant th
ere was no reason to pay attention to quality. If hastily made cigars fetched the same price as those that were carefully made, why would a cigar enterprise put any effort into making them better? An enterprise’s profitability, in fact, became irrelevant, because all expenses were covered out of the central state budget, and all revenues were forwarded to the state treasury. Efficiently run enterprises could not be distinguished from inefficient ones, and no one—from the top administrators to the workers on the plant floor—had any real interest in seeing that an enterprise actually made money. The important objective was to turn out as many units—pairs of shoes, bags of cement, or cases of rum—as the national economic plan established, and even that goal was often missed.

  The centralization of economic decision making in Castro’s Cuba meant that workers, supervisors, and even enterprise managers learned to shift responsibility ever upward, so that even mundane decisions were often left to higher officials. Cubans were so worried about getting into trouble that they were reluctant to take the initiative, even when decisiveness was needed, and a culture of passivity developed within Cuban firms.

  To anyone familiar with the efforts to establish state socialism in Eastern Europe or the Soviet Union, none of the problems that emerged in Cuba came as much of a surprise. Sympathetic foreign visitors urged the Cuban leadership to learn from mistakes made in the Soviet bloc. K. S. Karol, a Polish-born political scientist who had lived for many years in the Soviet Union, visited Cuba four times in the 1960s “in a spirit of solidarity” and met several times with Che Guevara and Fidel Castro. “I have seen the havoc caused by false ideas of how to build socialism,” Karol later wrote. He urged Guevara to develop a way to identify and reward the best-performing state enterprises. But Karol, like other friendly critics, was generally rebuffed. Guevara, he said, “smelled a revisionist rat” in the proposed reforms.

  René Dumont, a left-wing French agronomist who was invited to Cuba several times to consult on development issues, was astonished at how fiercely the Cubans resisted giving more autonomy to the state-run enterprises. “The failure of the non-autonomous production unit is no longer even a matter of discussion in the Soviet Union,” he pointed out. Dumont condemned the U.S. trade embargo on Cuba as “morally indefensible,” but he thought the Cuban authorities were too quick to cite the embargo “to justify the privations imposed on the population.” The Havana port, he pointed out, was consistently full of ships. The Cuban officials with whom he met, Dumont said, were eager to blame their country’s economic problems on its condition of underdevelopment. “This makes it possible,” he noted, “to cover up incompetence, inertia, paralysis of individual initiative, conformism, gigantism, waste, and disorganization.”

  After his six-month stint promoting Caney rum at the Montreal Expo in 1967, Mariano Lavigne was sent on a similar mission to the Soviet Union and Eastern Europe. His job was to sell Russians and Eastern Europeans on the virtues of tropical Cuban rum cocktails. It was a challenge. Cuba had done little trade with the Soviet bloc prior to Castro coming to power, and though the Slavs were heavy drinkers, they generally preferred their vodka, slivovitz brandy, and beer. If rum was drunk at all, Lavigne discovered, it was mostly in the wintertime, in small quantities, mixed with tea or with hot water and sugar as a rum toddy. He and his delegation went first to Moscow, then to Leipzig for the annual trade fair, and on to Berlin, Budapest, and Prague. Lavigne played the role of a flamboyant Latin bartender, bringing Cuban color and energy to the dreary nightclubs and run-down bars of the rapidly aging Soviet bloc.

  While in Czechoslovakia, Lavigne invented a new rum cocktail he called the High Tatras, after the mountain range along the border with Poland. He had gone sightseeing there, admiring the snow-covered pine trees he saw high on the mountain slopes. Back in Prague, he devised a drink with equal parts rum and slivovitz, garnished with an orange slice and a piece of pineapple; it was a concoction meant to represent the cocktails of both countries. But he was missing a slightly bitter taste to contrast with the sweetness of the fruit. Inspired by his trip to the High Tatras, Lavigne fetched a tiny pine sprig, washed it, and sprinkled it with powdered sugar. Perched on the edge of the drink, the sprig evoked the snowy Polish woods. Lavigne’s High Tatras cocktail proved an instant hit in the bars where he served it, though to Lavigne’s horror, the Czechoslovaks actually ate the little sugary pine sprigs. “I thought they were going to kill me,” he said later.

  From Czechoslovakia, Lavigne moved on to Bulgaria, where he spent four months as the guest host of a massive, Soviet-style lounge at the Golden Sands resort on the Black Sea. During the time he was there, the lounge was renamed the Caney Bar and remodeled to promote the Cuban rum of that name. The ceiling was covered with Vietnamese grasses to resemble a Cuban thatched roof, and the lounge was decorated with various trinkets and articles to suggest the African and indigenous features of faraway Cuba. Colored lights were hung from fake calabash trees. “The clients all wanted to buy the stuff and take it home with them,” Lavigne said after returning to Cuba. “I think they thought it was genuine. We put up some masks and wooden swords one day, and the next day they were all gone.”

  Lavigne traveled through Eastern Europe in much the same way that Bacardi rum salesman Juan Prado had moved through Western Europe a few years earlier. Both men found themselves alone in distant lands, promoting a product to which they were deeply attached, but under somewhat disturbing circumstances. Prado was keenly aware of his separation not only from his family but from his native Cuba, a country he could not be sure he would ever see again. Lavigne knew he would return to Cuba, but his trip through the Soviet bloc brought home the reality that his country had now become part of a new and alien world, far removed from the easygoing life Cubans had known before Fidel.

  In 1969 Fidel Castro committed the whole country to a massive—many would say foolish—effort to achieve a ten-million-ton sugar harvest in 1970. The record sugar harvest up to that point had been 7.3 million tons in 1952. A ten-million-ton harvest would bring Cuba an abundance of income at a time when it was financially strained, and Castro presented the target as if it were a sports record to be achieved, saying it involved “the engagement of the nation’s honor.” He made it known that the whole population should contribute, and civil servants, teachers, students, and factory workers all went to “volunteer” in the cane fields. The harvest nonetheless fell about 1.5 million tons short of the target, despite the fact that about half of the 1969 sugarcane crop was left uncut so it could be counted toward the 1970 total. So many resources were redirected from the rest of the economy to the sugar sector that the country’s labor minister, Jorge Risquet, said the total cost of harvesting the sugar crop may have been three times what the crop was actually worth on the world market.

  At his Moncada anniversary commemoration on July 26, 1970, Fidel Castro took responsibility for the failure to achieve the ten-million-ton target, and for the first time he acknowledged that he and other Cuban leaders had made errors in their management of the Cuban economy. “Learning to build the economy is much more difficult for revolutionaries than we imagined [it would be],” he said, “and the problems are much more complex.” Not only had sugar production fallen short of the goal; so had the production of milk, fertilizer, cement, paper, tires, batteries, shoes, textiles, soap, and even bread. Castro said he and other Cuban leaders had been too idealistic in their thinking about how to develop socialism and would now have to be more pragmatic.

  Still, his move toward economic reform was slow, and when it came, it was often haphazard. Some managers found they were suddenly being held accountable for the profitability of their enterprises, even though they did not yet have the authority to set realistic prices for their products, to allocate workers to those areas where they were most needed, or to organize industrial operations in an efficient manner. Part of the problem was Castro himself. His commitment to economic reform was uncertain, and he did not establish an atmosphere in which alternative approa
ches could be freely explored. The French agronomist René Dumont identified the problem: “The man who opposes Castro’s ideas is quickly rejected, and as a result when Castro sets forth a mistaken proposition nobody dares oppose him if he wants to hold on to his job.”

  The former Bacardi factory in Santiago had a special assignment as part of the 1970 ten-million-ton campaign: to supply 40 percent of the rum that was to be distributed across the country at the celebrations due to be held at the conclusion of the sugar harvest. Interviewed about the assignment in April 1970, Mariano Lavigne told a reporter for the newspaper Juventud Rebelde that the enterprise would do its part. “We have some difficulties with the bottling right now,” he said, “but if necessary we will just roll the barrels out into the street and let the people get their drinks straight from the tap.”

  What was perhaps most noteworthy about the rum quota assigned to the Santiago factory, however, was that it was only 40 percent of the total that was to be set aside across the nation. In the decade since the Bacardi enterprise had been taken over by the state, the authorities had gradually deemphasized the Santiago operation relative to other rum-producing facilities in Cuba. The bruising fight with the Bacardi corporation and the loss of the trademark had apparently chastened Castro and his team. In the following years, the state authorities directed only minimal investment toward the former Bacardi properties, choosing instead to concentrate on the Bacardis’ former rival, José Arechabala, S.A., which had produced Havana Club rum in Cárdenas, just east of Havana. Unlike the Bacardis, the Arechabalas had not expanded their firm outside Cuba, and when they left the island after the confiscation of their family properties, they could not keep their rum business going. Sensing perhaps that the Arechabalas were less likely to challenge them, the Cuban authorities chose to develop their new rum industry largely on the Arechabala infrastructure in Cárdenas rather than at the old Bacardi site in Santiago. By 1970, the Cuban government was building a new distillery near the old Arechabala facility. Even more importantly, the Cuban economic authorities chose to use “Havana Club” as their export brand for state-owned rum factories across the island. By 1973, even the quality rum produced at the Bacardis’ old factory in Santiago was being sold overseas under a “Havana Club” label, though the rum produced there for domestic consumption was still sold as “Caney” rum. When “Havana Club” rum from revolutionary Cuba turned up for sale in Canada, Mexico, and some Western European countries, the Arechabala heirs did not immediately object, and the Cuban authorities moved cautiously ahead.