Bacardi's Banks Buy: Are Big Spirits Companies Failing to Innovate? - Comment

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Earlier this month, Bacardi announced its purchase of Banks, a Mauritius-based range of rums. Why would a company whose name is synonymous with the rum category - almost transcends it - buy a rum brand? Richard Woodard investigates.

Why did Bacardi buy Banks Rum?

Why did Bacardi buy Banks Rum?

My initial reaction on hearing of Bacardi’s acquisition of Banks Rum was that, in rum terms, the company had bought its polar opposite. One brand sells 18m cases, the other 6,000; one is so category-dominant as to have left its rum origins well behind, the other uses provenance as its chief marketing weapon; one is viewed with suspicion or hostility by hipster bartenders, the other is their darling, the must-have product that has reinvigorated premium white rum.

In other words, one is 'Big Rum'; the other is cool and boutique.

Or, as Banks founder & master blender Arnaud de Trabuc puts it: "Banks today is a brand whose image is bigger than its volume. What we achieved was a good placement for the brand, particularly in the on-premise sector in the US. That’s what really appealed to [Bacardi], the way bartenders and mixologists looked at it."

Casting Banks in the role of the anti-Bacardi also makes sense when looking at the spirits giant’s recent trail of purchases. Starting with St-Germain liqueur in early-2013, these have been consistently small-scale and value-focused: Compass Box (minority stake), Angel Envy Bourbon, Leblon cachaça.

NPD from within the company has followed a broadly similar track: the Facundo rum range, premium white rum Gran Reserva Maestro de Ron – itself a response to the success of Banks 5 Island. It’s a sound enough strategy: buy relatively small, fast-growing brands with potential and submit them to the full weight of the Bacardi distribution machine.

It’s also a strategy that even the Bacardi name – especially the Bacardi name, I’d argue – cannot pursue with any degree of success. Bartenders may happily pour gallons of Carta Blanca down their punters’ throats, but a lot of them are not devoted Bacardi fans, to say the least. Put the Banks liquid in a bottle with a bat logo on it and you’d kill its credibility – with a certain audience – overnight.

But, that only partly answers the question of "why Banks?" There’s nothing to stop Bacardi from innovating in rum and creating ‘a new Banks’, if you will, under another name. After all, it’s just done something rather similar. Single Cane – unveiled just three days after the Banks buy was announced – is a two-strong single estate rum range destined, for the moment, exclusively for Travel Retail. The launch smacks of the experimental – the metaphorical dipping of a toe in the waters of a fresh concept – but there’s nothing to stop it from expanding and becoming successful, especially in the significantly under-premiumised rum category.

So, to return to our central question, why Banks? "I think it’s a syndrome of every large company," says de Trabuc. "They are all saying the same thing: it’s very difficult for them to develop new products.

"They have to commit funding – and normally they will spend more than entrepreneurial-type ventures – and whatever they do is scrutinised by their board or executive committee. It’s probably better for them to buy a brand that has some roots and has already established itself. None of the major players in this business have created a new brand in the last six or seven years – all the brands that are growing today and gaining visibility have been developed by people such as myself."

It’s an argument strengthened by the fact that Bacardi wasn’t the only prospective buyer for Banks. I understand that another drinks industry heavyweight was in talks to buy the brand before Bacardi entered the fray – although the rum giant had been tracking Banks for some 18 months before knocking on de Trabuc’s door.

If de Trabuc is correct - and the biggest players in the industry are really incapable of creating, building and maintaining successful, high-end spirits brands – then it’s a very sorry state of affairs.

Perhaps it’s just brands of a certain type that the big guys struggle to replicate. Bartenders, in particular, like to feel that they’ve discovered a cool, new product, that they’ve picked up on something operating under the radar – that’s partly the secret to Banks’ success.

How’s that ever going to happen with all the multimedia fanfare and wall-to-wall marketing fluff that surrounds product launches from the multi-nationals? Whatever the logic of it, wittingly or not, the almost simultaneous acquisition of Banks and launch of Single Cane has left Bacardi with a promising rum double act in its portfolio.

Charles Marshall, of Banks’ UK distributor Spirits Cartel, dubs Banks 5 Island the "Johnnie Walker Blue Label of rum". Bacardi itself likens Single Cane to single malt Scotch whisky.

A luxury blend and provenance-heavy ‘single cane’ range in its premium rum portfolio? They may not feature the Bacardi name, but they can take the company to places its core range may never be able to penetrate.

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