The big interview: Mahesh Madhavan, Bacardi

Having piloted Bacardi through the storms of the Covid-19 pandemic, CEO Mahesh Madhavan is steering the family-owned company towards an exciting future, with quality and growth in his sights.

*This feature was originally published in the May 2024 issue of The Spirits Business magazine.

For 162 years and seven generations Bacardi has been a family-owned affair. “Not many companies can claim that,” says Mahesh Madhavan, CEO of Bacardi. “It’s part of what makes us different and what gives us this opportunity to really focus on the long-term of our brands, rather than on short-term targets.”

It was August 2018 when The Spirits Business last spoke to Madhavan for ‘the big interview’, nearly a year after he took the helm at Bacardi. “When I first joined the company more than 20 years ago, I never imagined I would have the honour of leading it,” he says. “It has been, and continues to be a wonderful journey. I certainly never envisioned leading teams during a global pandemic, however I did know that no matter what came our way we would come out the other side of it even stronger. I will probably look back at those years as the hardest of my career, but also the most rewarding because of how we managed and came together.”

Cultural shift

A key message from Madhavan in the last interview was his goal to implement a “cultural shift” at Bacardi. He is a staunch believer in nurturing employees, which he is certain will help the company reach his high expectations. After more than five years, has this cultural shift been successful?

“From the beginning, I firmly believed that culture was critical to delivering on our business objectives and that the unique Bacardi culture could be our superpower. As a long-time veteran of the company, I saw how a strong culture united us in times of adversity,” he explains. “I also saw how, when culture lost its way or took a back seat, that it impacted how successful we could be. That’s why before launching our long-term strategy, we focused on reigniting culture. It’s built on the same pillars that guided generations before us: fearless, family, and founders. Ask any person at Bacardi about our three ‘Fs’ and I am confident they will recite them to you. It’s become our way of thinking – our way of approaching the business and each other.”

Over the years, Bacardi has continued to develop its stable of spirits brands. Shortly after taking the CEO role, the company completed its acquisition of Patrón Spirits International, which was valued at US$5.1 billion. The brand has been on a continuous growth trajectory since 2018, and enjoyed a 10.1% volume increase from 2022 to 2023, as reported in SB’s The Brand Champions 2023. In 2022, Patrón sold 3.5 million nine-litre cases, a 1m-case increase on the 2.5m sold five years earlier, in 2018. This came even with the removal of Patrón XO Café, the much-loved coffee-flavoured variant that was discontinued in 2021 to allow the Tequila maker to focus on its core, super-premium and ultra-premium expressions (although fans were this year treated to a one-time limited edition run in the US).

“Patrón Tequila not only established the super-premium Tequila category, but we have been at the forefront of the category’s impressive growth overall, both in the US and internationally,” Madhavan says. “Our brand has thrived as consumers increasingly seek out the quality of premium spirits, a trend that has propelled Tequila to overtake American whiskey as the second largest spirit category by value Stateside, according to last year’s IWSR Drinks Market Analysis.”

The US remains the biggest market for Tequila – but the latest IWSR/Discus (Distilled Spirits Council of the US) data showed all price points of Tequila were in growth in the US in 2023, apart from the top ultra-premium end. But it’s a small segment, and Madhavan is optimistic about Tequila’s performance.

“During the pandemic, we saw exceptional growth and increased preference for higher-quality Tequilas in the category,” he says. “While that surge may not persist, we will see the market stabilise, and growth for premium and super-premium segments continue, a category where Patrón is positioned firmly thanks to the craftsmanship and quality of our Tequila. We are uniquely placed where we are because Patrón is one of the few additive-free Tequilas in the category.

“That growth can be credited to the trend towards quality; the rising movement for more sophisticated sipping experiences and prestige Tequilas, like Patrón El Alto and El Cielo that we introduced over the past year. With premiumisation at an all-time high, and this focus on quality, the prestige segment is forecast to double in size by 2025.”

Last year was an active acquisition year for Bacardi, which expanded its reach in the agave spirits category further with the purchase of Ilegal Mezcal for an undisclosed sum. Bacardi had held a minority stake in the mezcal brand since February 2017. “We’ve had our eye on the category for some time,” explains Madhavan. “The super-premium-plus mezcal category is growing at a fast pace and now has the momentum to expand, both in the US and internationally. By bringing the brand in house, we can help take it to new heights, as we believe that Ilegal Mezcal has the credentials to own the super-premium mezcal category at a global level.”

Mezcal is next

Madhavan references the Bacardi Limited Cocktail Trends Report 2024, in which mezcal was cited as the serve of choice to be elevated next, ranked at the top by almost 40% of all global brand ambassador respondents. “It’s been exciting to see the trade embrace this as the next big thing. Ilegal Mezcal will continue to lead and build mezcal as a super-premium category. Our role is to continue educating consumers on the virtue of the category, including its incredible versatility,” Madhavan adds.

Ilegal wasn’t the only purchase Bacardi made in 2023; the company also upped its stake in Irish whiskey producer Teeling, six years after investing in the Dublin-based distiller. Teeling founders and brothers Jack and Stephen Teeling continue to own part of the business, and run day-to-day operations. It’s no secret that Irish whiskey has been one of the fastest-growing spirits categories in recent years, and was the fastest-growing super-premium major spirits category between 2020 and 2022, Madhavan says. “We expect this to be a lasting trend for years to come, as more consumers discover the breadth of Irish whiskey,” he adds.

“Bacardi has long-admired what Teeling has done in driving an innovative approach to Irish whiskey that has propelled it to be a top-three whiskey globally in this category. We’re excited to drive the business forward as the brand taps into our expertise, resources and network to ensure more consumers can enjoy this incredible range of whiskeys. We are honoured that the founders of Teeling trust us to take the brand to the next level and are excited to continue working together to grow the brand’s reputation for craft and quality to fuel future success.”

In terms of future acquisitions, Madhavan says he will “always keep an eye out for brands that complement our premium portfolio and tap into new consumer preferences”. But he is satisfied there are no significant category gaps in the collection of brands Bacardi has curated. “We have been building a solid portfolio over the past few years, and now have a leading brand in every international, premium category,” he assures.

Perfect fit

2023 was also a big year for the company’s namesake rum, Bacardí. Among its notable achievements last year, Madhavan highlights Bacardí’s sponsorship of the MTV Video Music Awards, and Paramount, which celebrated 50 years of hip hop. “For Bacardí, it was a perfect fit,” he says. “Music has been part of the brand’s DNA for decades, including within this music genre. 2024 is geared up to be an even bigger year in music for the Bacardí brand.”

New product development was also high on Bacardí’s agenda. From Bacardí Caribbean Spiced Rum to Bacardí Mango Chile flavoured rum, the brand tapped into a number of growing trends in the rum sector. The launch of Mango Chile delivered “wildly successful” sales in Mexico, something Madhavan hopes to replicate Stateside as the rollout continues in the US.

“In the past five years, we’ve seen strong demand in many international markets [for flavoured rum] including Germany, Netherlands, India, Mexico, the UK, Australia, and Canada,” Madhavan notes. “Of course, consumer interests fluctuate over time, but overall, the flavoured rum category has grown from 20.5m nine-litre cases in 2018 to 26.3m nine-litre cases in 2022 [according to IWSR]. We are excited about this sector specifically as evidenced by our investment and commitment to adding new flavours and premium variations to our rum portfolio.”

RTDs (ready-to-drink) have also been key for the rum brand. The RTD sector exploded after lockdowns during the pandemic, and Bacardí was quick to pivot into this space. In 2020, it launched its Real Rum Canned Cocktails range, including Bacardí Lime & Soda, Limon & Lemonade, and Rum Punch.

On-trade focus

That same year, Bacardi took 100% ownership of pre-bottled cocktail brand Tails for an undisclosed sum. Founded by Nick Wall in London in 2010, Tails is made from Bacardi’s portfolio, including Bacardí rum, Bombay Sapphire gin, and St-Germain elderflower liqueur. The brand differs from other pre-mixed products on the market, though, in that its target audience is more on-trade-focused. “Tails has been embraced by many bars and restaurants as a solution that works well as a showcase for best-selling, classic cocktails made with the Bacardi portfolio of spirits – cocktails like the Bacardí Mojito and the Passion Fruit Martini cocktail with 42 Below vodka – and we will be adding to the professional Tails range in the coming months,” Madhavan reveals. He notes the particular rise in demand for vodka-based ready-to-serve cocktails.

“We also found that people feel too intimidated to make classic Martinis at home because they think they can’t make them up to ‘bartender quality’,” he continues. “These insights led us to launch the Grey Goose Classic Martini Cocktail, a ready-to-serve bottled Martini we introduced in April 2023 in the US market, unlocking a new possibility to have bar-quality Martini cocktails at home.”

For the remainder of this year, Madhavan says Bacardi will remain committed to providing for consumers looking for premium products. He refers back to the Bacardi Cocktail Trends Report 2024, which reveals that more than 40% of younger legal-drinking-age consumers in the US said they would be seeking more premium spirits this year. Despite the squeeze that rising costs are putting on disposable incomes, Madhavan remains confident consumers will be loath to sacrifice premium serves.

“We continue to watch the economic headwinds, and watch consumer behaviour closely,” he says. “We do see that people continue to want to treat themselves and not sacrifice treats like a deliciously crafted cocktail or bottle of their favourite spirit. In the largest spirits market, the United States, we see data indicating that consumers plan to spend more in the on-premise over the next 12 months. So, while there may be some volatility in consumer confidence, we see upward trends in people still wanting to treat themselves and enjoy affordable luxuries – with a premium drink in hand.”