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The Secret History of Rum


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Nov 15, 2005
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The Secret History of Rum

byIan Williams

Rum has always tended to favor and flavor rebellion, from the pirates and buccaneers of the seventeenth century to the American Revolution onward. In addition, sugar and rum pretty much introduced globalization to a waiting world, tying together Europe, the Americas, Africa and the Caribbean in a complex alcoholic web of trade and credit. Not until oil was any single commodity so important for world trade. So it is not surprising that the Bacardi Corporation has become one of the world's first transnationals.

Even before Fidel Castro took power, the Bacardi family moved its headquarters from its Cuban home to the Bahamas, allowing it to get British imperial trade preferences, while opening a large distillery in Puerto Rico to allow penetration of the American market. Now its management is mostly living in exile in Florida, monopolizing the local markets across the Caribbean and the world with its bland, branded spirit. Fifty years of marketing have made Bacardi almost synonymous with rum in much of North America, and as Thierry Gard貥, maker of the acclaimed Haitian rum Barbancourt, pointed out with a pained expression to me once, "They always advertise it as mixed with something else."

In Prohibition-era America, lots of thirsty Americans went to Cuba, and what they drank there, in keeping with the ambience, was rum, usually in cocktails and often in bars favored by Fidel's onetime fishing partner, Ernest Hemingway. He made a clear distinction: "My mojito in La Bodeguita, my daiquiri in El Floridita."
Cuba made great rums and had some of the world's most renowned bars. Bacardi had really risen to prominence after the American occupation, or "liberation" (sounds familiar?), of Cuba, at the turn of the twentieth century, when the island became the playground for its northern neighbor. Barcardi built its market position during Prohibition, edging out the old New England rum. When the Eighteenth Amendment took force, Bacardi USA sold 60,000 shares, closed down the company and distributed its assets, coincidentally 60,000 cases of Bacardi rum, to the stockholders.

During the dry years the company's order books would suggest that there were unquenchable thirsts in Shanghai, Bahamas and tiny islands like the French enclave of St. Pierre and Miquelon, off Newfoundland. But of course, shiploads of Bacardi went to rendezvous with the rum-runners just outside American territorial waters. As soon as repeal was in sight, Bacardi litigated all the way up to the Supreme Court to open its business in Puerto Rico, where it was eager to get Caribbean costs combined with American nationality. Its rivals in Puerto Rico used the same style of targeted retrospective legislation that Bacardi later did against Castro's Cuba in an attempt to keep Bacardi out. In the first year after Prohibition, Bacardi sold almost a million bottles to the United States. But soon it was not selling it from Cuba. Despite the family's overt and noisy Cuban patriotism, the company pioneered outsourcing and supplied the United States from Puerto Rico. Cuba's share of American rum imports dropped from 52 percent in 1935 to 7.3 percent in 1940.

In 1955 Bacardi moved its trademark to the Bahamas, perhaps in gratitude for the islands' help in keeping the product moving during Prohibition, and also because that made it eligible for British Commonwealth preferences. Its offshoring from Cuba proved very prescient when Castro nationalized the Cuban operations in 1960, which was as much a shock to Bacardi. The Bacardi building had greeted the arrival of Fidel, Che and the compañeros with a banner saying simply "Gracias, Fidel!" In common with some other rum producers, they had supported the rebels financially. In 1959, Castro's trade delegation to the United States had included Juan Pépin Bosch and Daniel Bacardi, two of the family's heads. Neither side dwells on these happy days any more. The company is still held by 600 descendants of the founder, so it does not have to file financial statements or submit to valuations as if it were listed on stock exchanges, and in any case, with sales in 200 countries adding up to 200 million bottles, no one could be sure which stock exchange it would list on.

As its record shows, Bacardi is the original multinational. Its trademark is now held in Liechtenstein, one of the most secret and secure banking centers in the world, which contrives to be "offshore" in the middle of the Alps. However, while attending to business, the Bacardi family has never missed a chance to get its own back on Castro. Bacardi clan chief Juan P Pépin Bosch brought a touch of the old connection between buccaneering and rum back to life in 1961 by buying a surplus US Air Force B-26 Marauder medium bomber in order to bomb a Cuban oil refinery. Later he was the money behind a plot to assassinate Castro. For many years Bosch was a major financier for the Cuban American Lobby and a major litigator who brought the United States to the verge of trade wars with the rest of the world. The technique has been to lobby legislators to exercise their anti-Cuban prejudices, regardless of general principles of international or indeed domestic law, and then to pay lawyers to implement the resulting legislation.

Bacardi was spurred into action when Castro's government went into partnership with the French liquor giant, Pernod Ricard, to market the renowned Havana Club internationally. Even though excluded from the US market by the embargo, Pernod was able to sell 38 million bottles of Havana Club in the first few years. In anticipation of an end to the Cuban embargo, it was gearing up for big sales in the United States. This was a challenge both political and commercial to Bacardi, which set to firing retaliatory legal broadsides and to the rediscovery of its Cuban roots.

Bacardi, wherever it is made, had for some decades tried to bury its Cuban origins, but in the 1990s it went into reverse. Its labels began to mention prominently that the company was founded in Santiago de Cuba in 1862 while eliding mention of where the rum was actually made currently. In 1998, "rum and Coke" or "Bacardi and Coke" suddenly became known as a Cuba Libre again. To match the myths, various stories were circulated to celebrate Cuba Libre, claiming that it had been invented by an American in 1898 to celebrate the American victory over the Spanish in Cuba.

The original makers of Havana Club, the Arechabala family, had fled the country after the Revolution, leaving the distillery and the brand behind. The family did not renew its trademark, which lapsed in 1973, and in 1976, the Cuban state export company registered the century-old brand with the US Patent and Trademark Office. Twenty years later, Bacardi sought out the Arechabala family members and bought out whatever suing rights they may have had. Reportedly, Bacardi paid them $1.25 million after the family had spurned offers from Pernod Ricard, which was attempting to cover its back. Bacardi, happy to tweak Fidel's beard, began selling a rum with the Havana Club label (made in the Bahamas) in the United States in 1995, and Pernod sued. The case was going in Pernod's favor, as the Manhattan judge initially made her rulings based on existing law. Then the Bacardi family cut the Gordian knot. Using political clout in Florida, it got the law changed by persuading lawmakers to smuggle a clause into a large spending bill specifically to exempt trademarks nationalized by the Cubans from the usual international protections unless the original owner had agreed to hand them over. And of course, the Arechabalas had not.

In the end, the judge broke new legal ground by accepting this retrospective and clearly privileged legislation as binding, since Pernod wanted an injunction against future use of its trademark. Judge Shira Scheindlin decided: "At this point, because plaintiffs can sell no product in this country and may not be so able for a significant length of time, they suffer no impairment of their ability to compete as a result of defendants' actions. Any competitive injury plaintiffs will suffer based upon their intent to enter the U.S. market once the embargo is lifted is simply too remote and uncertain to provide them with standing."

It was yet another case of the United States flouting treaties and international law, and the judgment is not recognized anywhere else in the world--a point emphasized by the World Trade Organization shortly afterward.

Even so, the US patent office threw out Bacardi's attempt to register other names containing Havana, because the company was claiming a spurious connection to Havana, which could have confused drinkers who thought they were buying rum from Cuba.

read the rest at: The Secret History of Rum

This essay is excerpted from Ian Williams's Rum: A Social and Sociable History of the Real Spirit of 1776, published in by Nation Books.
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