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Bacardi Limited Analysis

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Mallory Haynes

on 27 November 2012

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Transcript of Bacardi Limited Analysis

Strong brand awareness
High quality products
Well-known products that end-customers are looking for
With the economy growing, customers will have more purchasing power asdf Mission Our mission is to reinforce our values as a global business through our "global principles" Values Trust
Caring
Passion
Excellence The values of Bacardi Limited are visible within the 8 core principles All Bacardi companies and employees must comply with the laws, regulations, and the self-regulatory codes applicable to their marketing and promotional practices Principle #1 All marketing and promotional practices will present the responsible enjoyment of alcoholic beverages and will not encourage the misuse of alcohol through the presentation of excessive consumption or situations where irresponsible consumption is accepted. Principle #2 All Bacardi products will provide clear information on alcohol content. A message of responsible enjoyment will be included on all commercial communications as well as all Bacardi products. Principle #3 The content and placement of all marketing and promotional practices will be directed towards consumers of the required legal age to purchase alcoholic beverages in the relevant markets, and will avoid associations with images and music that would primarily appeal to underage individuals. Principle #4 All marketing and promotional practices will support the safe consumption of alcoholic beverages and will not associate with the consumption of alcoholic beverages with any potentially dangerous activity such as driving motorized vehicles, operating machinery, or performing hazardous athletic activities. Principle #5 Corporate communications may recognize reputable evidence of the physical benefits from moderate alcohol consumption, but marketing activities will not claim medicinal or performance properties for Bacardi products. Principle #6 Marketing and promotional practices will not be associated with any individual or group behavior that is anti-social, violent, or destructive. Principle #7 All marketing and promotional practices must be in good taste and must not contain indecent, demeaning, or insulting materials. Principle #8 Board and Chairman President and CEO Bacardi senior leadership team Corporate Responsibility team Five areas of focus Global
functions Operating
companies Substitutes Strong Threat of Substitutes Non-alcoholic beverages
Wine & Cider
Healthier Drinks
Energy Drinks
Soft Drinks
Traditional Drinks Bargaining Power of Suppliers Relatively Small Bargaining Power There are substitutes for what supplier groups supply.
Fully owned production
27 production facilities includes bottling, distilling, and manufacturing
17 different countries RIVALRY AMoung competing sellers Bacardi Timeline Don Facundo Bacardi Masso Created the first light-bodied rum
Purchased a small tin-roofed distillery Dona Amalia Bacardi Masso Created an identifiable symbol Don Facundo Bacardi Masso Continued to perfect blends and trying different techniques
Innovations New Management Don Facundos sons, Emilio and Facundo took over the company
Emilio owned the company
Facundo continued the perfection of the run formula and created
new blends Expansion Jose, D. Facundos third son, opened a sales office in Havana
Emilio expanded to Spain (1910), United States (1915), new distillery in Santiago de Cuba (1922) Prohibition and Innovation Enriwue Schueg (Emilios brother-in-law) was forced to close the bottling company in NYC
Art Deco Edificio Bacardi de la Habana
Henri Schueg diversified the company in Hatuey beer and expanded into Mexico (1931), Puerto Rico (1936), and the United States (1944) An Unbelievable Loss Cuba's totalitarian regime illegally seized the assets of Bacardi in Cuba
Loss of $76 million dollars and 90 percent of the Company's volume Continued Growth
Started new factories in Mexico, Puerto Rico, Brazil, and built new facilities and offices in United States (1964 and 1976), Bahamas (1965), Canada (1972), Bermuda (1972), and Spain (1974) Bacardi Limited Under the direction of Edwin Nielson, Bacardi rum had become one of the largest selling spirits
Bacardi had been operating under five separate companies
In 1992, Emilio's great-great grandson, Manual Jorge Cutillas, consolidated and reorganized under a new holding company, Bacardi Limited. Spirits Company After consolidation, Bacardi Limited acquired the remaining stake in the Martini & Rossi group of companies from General Beverage
Bacardi Limited doubled in size and gained powerful organization in Europe
Transformed the company from a "Rum Company" to a "Spirits Company" Acquisitions Launched Bacardi Limon
Acquired Dewars Blended Scotch Whisky and Combay Sapphire in 1998
Ruben Rodriguez (the first non-family Chairman of the company) expanded its portfolio through acquisition of Cazadores Blue Agave tequila in 2002, and super premium Grey Goose vodka in 2004
In 2005, Facundo L. Bacardi, a fifth generation family member, succeeded Rodriquez and continues the expansion of the Bacardi Limited portfolio Marketplace Environment,
Health, and Safety Responsible Sourcing People Philanthropy,
and Community Involvement Bacardi is among the top ten of the biggest spirits company and is the third largest international company behind Diageo and Pernod Ricard
in 2012, Bacardi has a 3.7% increase in global sales
Other competitors has had larger increase, while Bacardi achieved growth of 15% from 2002-2007, Diageo grew 22% and Pernod Ricard grew 84%
The companys poor performance companred to competitors has increase the drive to grow internationally Highly Competitive Barriers to Entry Often new entrants into the market
inexpensive
new innovations
Established companies make it difficult for smaller companies to succeed within the market place Which companies are in the strongest/weakest positions? What strategic moves are rivals likely to make next? What are the key success factors for the industry? Strengths Public Image
Well Established
Brand Recognition and Loyalty
Marketing
Lower Cost Producer
Popular within core demographics
Environmental Awareness
Growing Product Line
Distribution Channels
Employee base of over 6000 and 27 facilities in 17 countries
Sells an average of 200 million bottles per year globally Weaknesses Heavily Driven on Consumer Preference
Taste Preference
Overly reliant on rum
Too reliant on North America and Western Europe Regions
Strong Competition from other brands and local products means market share growth restricted
Government rules and policies on drinking affects performance and sales Opportunities Non-alcoholic Bacardi branded beverages
Bacardi Branded food items
More penetration into International markets
New ways of distilling
Innovating marketing and branding
Grow a large presence in the wine market, single malt whisky market, and cognac and liqueur markets.
Continue growth of healthy beverages (low-cal, low carb, low sugar, etc) Threats Stringent advertising regulations
Criticism of irresponsible portrayal of alcohol
Intense Competition
Limited Brand Loyalty
Low Calorie Drinks
Rising cost of goods and services Bacardi Limited Strategy BACARDI LIMITED VALUE CHAIN There are many stages in the production of our premium spirits before they reach the end consumer. We know that many of the envrionmental and social impacts associated with our business are in our supply chain and we aim to reduce our impacts at all stages of our product lifecycle. Strategy Issues Agricultural
Raw Materials Increasingly, the suppliers are registering with the Sedex database to share their ethical performance data, and Bacardi is actively participating with Bonsucro.The first Bonsucro certified sugarcane was harvested in mid-2011. They still have a long way to go in building sustainability into their supply chain, so that it underpins their future growth and protects the environment. Collaborative Strategies Agricultural products, raw materials, are used to create products
Responsible Sourcing program Vertical integration? Manufacturing Ingredients are extracted or fermented at manufacturing sites
Establish projects that deliver continual improvement in our environmental performance
Safety Culture OUTSOURCE? OFFENSIVE
OR
DEFENSIVE? INTERNET IN THE VALUE CHAIN RUM • Facebook
• Pinterest
• Twitter
• Linkedin used heavily with consumers Bacardi: $15-21
Captain Morgan: $18
Cruzan Rum: $15-20
Appleton Rum: $19 Vodka Grey Goose: $30-40
Smirnoff: $20
Skyy: $19
Absolut: $25 Packaging and Distribution FIRST MOVER ADVANTAGES Aging and bottling take place at sites around the world
Shipped to customers through distribution channels
Packaging consists mainly of glass and cardboard, with small amounts of plastic.
50% of carbon emissions
Reducing weight GIN bacardi
in foreign markets Bombay: $20-22
Tanqueray: $17
Van Gogh Gin: $25
Sloane's Gin: $40 Retail and Consumers Off-Trade: Customers are retailers
On-Trade: Bars, restaurants, and other hospitality operations
Our customers sell our products to the end customer, who enjoys our brands
Vast majority drink responsibly and in moderation
Reduce issues of irresponsible or excessive consumption by adhering to responsible marketing codes and raise awareness of responsible drinking Broad differentiation Strategy Recycling and Reuse Reduce impact of our packaging by recycling
All packaging is recyclable
Build sustainable considerations into all future packaging
Recycle the majority of manufacturing waste
Waste by-products from agricultural raw materials are used as animal feed or fertilizers -Many brands and types of alcohol

-Small Amount of Buyer Loyalty

-Premium
Products and Pricing

-Global vision "ONE Bacardi" Global People Strategy "outstanding people will
deliver excellent results" Five Key areas Culture -growth
-development
-70/20/10 framework


-One of China's Top
Employers Potential New Entrants Bargaining Power of Buyers Bacardi has strong power over retailers Bacardi Limited Kelcee' Brown
Louis DiPaolo
Mallory Haynes
Andrew Parenti Preview History
Governance Structure
Competitive Analysis
Strategic Group Map
Key Success Factors
SWOT Analysis
Value Chain
Price Comparison
Strategy Issues
One Bacardi
Feedback
Conclusion
Price Comparison WEIGHTED COMPETITIVE STRENGTH ASSESSMENT wORRY LIST -Intense competition
-Spirit Market shows little
brand loyalty
-"Health Movement"
-Advertising Regulations
-Criticism of irresponsible
portrayal of alcohol
-Increase of production by
rivals Conclusion History
Governance Structure
Competitive Analysis
Strategic Group Map
Key Success Factors
SWOT Analysis
Value Chain
Price Comparison
Strategy Issues
One Bacardi
Feedback
Feedback Solid management
Good strategy
Continue expanding into international markets
Introduce new products
Try to progress towards healthier options Questions and Answers Session Thank You!
Full transcript