Rum for the Money

Most of us would probably rather forget 2009, and though economists (and people still making money on Wall Street) tell us we’re coming out of the “Great Recession,” no one’s breaking out the champagne yet. But you should be breaking out the rum.

Rum weathered the downturn fairly well, in fact. The top ten leading brands, which account for about 80% of category volume, gained close to 1% more in 2009. And the remaining 20% of rum producers grew nearly 6% last year, for a total category gain of about 1.6%. Not bad, considering how tightly closed consumers have been keeping their wallets.

As consumers gain confidence, 2010 could be a better year for spirits in general, and rum in particular. The category has been a strong performer over the past 10 years, posting a volume gain of nearly 38%, to 25 million 9-liter cases last year. In the control states, from 2008 to 2009 alone, the category was up 1.4% to 5.9 million 9-liter cases. Interest in the category continues to grow, and producers are feeding that interest with product innovations and exciting programs.

“Spirits were not in as bad a spot last year as many other industries,” said Margaret McDonnell, brand director for Bacardi traditional rums. “The industry fared pretty well. Volume in the rum category is up this year, and we’re seeing a typical spike in volume as we head into summer.”

In many industries, spirits included, the downturn caused consumers to change their behavior. The recent phenomenon of trading up slowed dramatically, value became a prized product attribute, and dining out turned into an occasional, rather than regular, treat.

“Consumers have changed their drinking patterns,” said Tom Herbst, brand director for Captain Morgan, “and we don’t know if that will hold, but with the warm summer months upon us, we may see consumers go out more.”

Rum, though, unlike perhaps any other spirits category, is really three categories in one, all of which cater to at least one or more consumer trends. It’s as if rum’s unique properties have enabled producers to hedge their bets and take advantage of (excuse the pun) whichever way the wind blows.

The bulk of rum volume comes from clear rum, where it competes with vodka and tequila as a versatile, mixable white spirit. Like vodka producers, rum distillers also have found gold in flavored versions of the base spirit.

Nearly overtaking traditional rum in volume, however, spiced rum has almost become a category in its own right in the past decade. A majority of rum producers have spiced rum in their brand portfolios, and brands like Captain Morgan, Admiral Nelson and Sailor Jerry were built on their own unique spiced rum formulations and brand lore.

Finally, aged and dark rums appeal to the same consumers who seek out single malt scotch, single barrel bourbon, Irish whiskey, fine cognac and, more recently, aged tequila. These above-premium rums are attracting consumers who are still willing to trade up for the unique qualities, heritage and authenticity of products like these.

“Rum is very versatile and mixes well, and it can be served straight,” Herbst said. “People are probably dipping in and out of the white rum segment more. Sipping rums do well because people like the taste of rum and the nuances of those products. Spiced rum is in the middle; consumers love the taste of the rum itself and cocktails made with it.”

“There’s a core consumer in every sub-segment,” said John Eason, vice president of sales for Don Q Rum, “but there’s definitely crossover.”

Along with the broad variety within the category, rum on the whole also offers consumers a terrific value. “Consumers are now recognizing that great products don’t necessarily have to come at great expense,” said Brian Labuda, executive marketing manager and brands director for Admiral Nelson’s at Luxco.

Mojito Mojo

Rum growth also is being fueled by the consumer cocktail craze. Mojitos continue to grow in popularity, and, as mixologists keep experimenting with new flavors and fresh, exotic ingredients, the cocktail culture captures consumers’ imagination.

Traditional and flavored rums are the key beneficiaries of the trend, but the entire category has experienced the rub-off. At Bacardi, traditional rums Bacardi Superior and Bacardi Gold have generated excitement among consumers not only with their push behind popular cocktails like the Mojito and Cuba Libre, but with strong programs.

The brand saw very modest growth of only about 0.5% in 2009, but is poised to take advantage of the rebounding economy with Bacardi Superior’s sponsorship of the Black-Eyed Peas summer “E.N.D.” tour. The unique partnership is exploring new ways to engage consumers such as a cocktail originated by the Black-Eyed Peas themselves.

Coming off its July 4th “60-Second Cocktail” promotion, Superior is looking toward the fall NFL schedule and a Bacardi and Diet Coke push.

Bacardi Gold announced a sponsorship deal with the NBA last spring just before playoff season began. The deal marks the first time in 30 years Gold has struck out on its own to connect with drinkers, who tend to be a little older than Superior consumers. The brand says excitement should start to build in early fall in the run up to the tip-off of the new NBA season.

The deal also gives Bacardi an entrée to Turner Broadcasting and includes a lot of local market opportunities in conjunction with Thursday night games broadcast on TNT. Among them is a scholarship program to recognize leaders in local NBA markets.

Don Q is another clear rum riding the wave of popularity around cocktails in general, and traditional rum cocktails, like rum and cola and Mojtos, in particular. Well known in Puerto Rico where it is distilled, Don Q was relaunched into the U.S. market just a few years ago and has shown significant growth, notching sales of 118,000 9-liter cases overall in 2009, a 61.6% increase.

Already the brand has secured a spot as the official rum partner of Universal Studios, giving it opportunities for product placement and other movie tie-ins. This spring, for example, Don Q raffled off two tickets to the world premiere of “Get Him To The Greek,” and got substantial product placement in the movie.

The brand is active at retail, conducting tastings across the country and offering retailers video loop displays of mixologists preparing cocktails with Don Q. It also plans more promotions like the heavily-supported “MoTeato”-a Don Q Mojito with iced tea-during the New Orleans Jazz Fest this spring, providing retailers POS, displays and a sweepstakes where legal. Through August, the brand is offering a Don Q and soda co-pack to promote Mojitos. For Labor Day, the co-pack shifts to Don Q and cola.

“Rum has seen so much growth in part because of the resurgence in Latin-inspired cocktails like Mojitos and the recent nod to the past in the resurgence of the speak-easy culture,” said Katy Laufer, director of public relations for Sidney Frank, which imports Tommy Bahama rum from Barbados.

Tommy Bahama also does a lot of work with mixologists to create new flavors and cocktails that suit the brand. The brand’s Golden Sun rum won a double-gold award in this year’s San Francisco World Spirits Competition; its White Sands clear rum won a gold medal.

New for the brand this year is an aggressive price repositioning to a suggested retail of $19.99 for a 750 ml bottle, what Laufer called “affordable luxury for consumers.”

Spiced Is New Vice

Ever since Captain Morgan introduced its Original Spiced Rum in 1984, spiced rum has captured consumers’ fancy. Captain Morgan is now the number-two brand in the category, and saw growth of about 2.2% last year to nearly 5.6 million cases overall. Claiming the number two spot for the control states as well, Captain Morgan was up 3.8% to 1.6 million 9-liter cases sold for those states alone. Captain Morgan himself has become a pop culture icon, and the brand continues to leverage his popularity with young drinkers throughout most of its programs.

Brand advertising will keep “calling all Captains” on television. A brand spokesperson dressed as the Captain will make personal appearances at events across the country. And as part of the “Hall of Fame” program that kicked off July 1, the brand will search for four consumers who best represent what the brand and character stand for and induct them into the Captain Morgan Hall of Fame.

Consumer nominees for Captain Tailgate, Captain Toastmaster, Captain Road Trip and Captain Key Master (for best display of personal responsibility) are being posted on Captain Morgan’s Facebook page where fans can vote on their favorites. Off-premise POS material supports the program.

Running through August is the brand’s “First Pitch” program, targeting local markets where the Captain is scheduled to throw out the first pitch at MLB games.

This fall you can look forward to heavy support leading up to Halloween, a huge sales period for the brand. Captain Morgan will be encouraging all his fans and friends to dress up like him for Halloween. And leading into the holidays, the brand will be encouraging consumers to give the gift of the Captain with Captain Morgan themed wrapping paper, ornaments and more.

The success of spiced rum hasn’t been lost on any rum producers, and virtually all make some sort of variation on the theme. One of the brands that has taken off since its introduction less than a decade ago is Admiral Nelson’s. Brand volume was up nearly 26% (25% in the control states) last year to 535,000 cases overall, putting it in the number-seven spot in the top ten, ahead of Ronrico.

“Admiral Nelson’s Premium Spiced Rum was awarded a Growth Brand and continues to perform very well overall,” Labuda said. “We know the success of the brand is due in large part to a combination of quality, award-winning taste, and great value.”

The brand plans to continue to offer fun and exciting POS displays and a variety of value-added packs, but Labuda said the core strategy will still be focused on maintaining the brand’s value pricing.

Sailor Jerry is another spiced rum brand that has seen growth skyrocket in the past few years. Founded as a clothing line to commemorate the tattoo art of Norman “Sailor Jerry” Collins, Sailor Jerry teamed up with Wm. Grant & Sons to launch Sailor Jerry Spiced Rum just a few years ago. Wm. Grant bought out the business in 2008, and sales grew more than 16% last year to 400,000 cases overall. The brand was up 24.5% in the control states.

Recognizing the popularity of both spiced rum and the tiki culture embodied by the resurgence of Trader Vic’s, Bacardi launched the Seven Tiki line last year in Hawaii, Florida and California. The Fijian rum is spreading up and down both coasts this year, expanding distribution to Oregon and Washington in the West and South Carolina, Maryland and New York in the East.

“Coming from Fiji, Seven Tiki has a little different connotation and perception among consumers than Caribbean rum,” said brand director Billy Melnyk. “We’re leveraging surfing culture with a focus on beach communities.”

The brand is sponsoring surfing events to gain exposure and introduce consumers to the brand. Brand efforts are concentrated on educating consumers about how Seven Tiki is made – with Fijian water, vanilla from Madagascar, Chinese cassia, figs, cinnamon and kiwi juice from New Zealand, among other ingredients – and how it differs from other spiced rums.

The brand expects to launch a 1.75 liter bottle on January 1 to accompany the existing 750 ml and 50 ml sizes.

New this year is Blackheart, a high-proof spiced rum from Heaven Hill. Launched in February, the brand is targeting typical spiced rum consumers – males age 21 to 34 – but is appealing to their softer side. Instead of using an edgy character, Blackheart put its namesake, a lady pirate, on the bottle in the style of a ’50s pin-up girl. The product’s tagline is “seduction in a bottle.”

Coming off the launch phase, the brand has been focusing on a consumer awareness program that will hit this summer. In June, the brand started offering a $15 rebate on purchases of 1.75 liter bottles, where legal.

 “We were fortunately able to get wide distribution quickly,” said brand manager Brittany Blevins. “Now we’re excited about the summer rum season.”

Also recently launched is Cruzan 9, adding to the impressive Cruzan portfolio of rums, including a number of different flavor expressions, as well as a few higher-end sipping rums. The brand declined in 2009, yet still hit sales of 538,000 9-liter cases overall, with just over 116,000 of those cases going to control states, making it the sixth best-selling rum in the U.S. The new Cruzan 9 is a spiced rum, featuring a nine-ingredient blend including vanilla, nutmeg, cinnamon, ginger, cloves, mace, allspice, pepper and juniper berry. The 80-proof product is said to have a bold yet smooth taste.

Savor the Flavors

Flavors are another area in which rums have branched out. Like vodka, rum is very adaptable to different flavors. Since it’s made from sugar cane, though, fruit and tropical flavors seem to suit it best.

Malibu, one of the first flavored rums on the market, has risen to the number-three spot in the category over the years on the strength of its original Coconut Rum and subsequent additions to the line. Brand sales were off somewhat last year, down 1.7% to a little more than 1.6 million cases overall. In the control states, Malibu’s drop was a mere 0.2% to 298,450 cases. But the brand had a hit with its Radio Maliboomboom last year, so re-upped its two Jamaican deejays for more humor and music to engage and entertain consumers.

The brand as a whole has heavied up on advertising this summer. A stream of events and promotions is geared toward holding consumer attention, starting with the “Malibu by You” customized bottle program that ran from May to July.

Malibu is the official spirits sponsor of AVP volleyball which gets broadcast coverage on ESPN2 and ABC. The brand gets high visibility with its sponsor tent at tournaments, and ties in local market events as the tour crisscrosses the country.

This summer also marks the first year of a brand partnership with Reef Check, an international non-profit group that helps monitor and maintain the health of ocean reefs worldwide. POS material explains Malibu’s support for two of the organization’s programs, including a Malibu/Reef Check internship. A limited-edition Reef Check-inspired bottle is designed to raise awareness, and the brand will donate a portion of sales to the group.

Category leader Bacardi has had tremendous success with flavors such as Limon (the best-selling citrus-flavored spirit in the U.S.) and Bacardi O. Last year, Bacardi continued that trend with Dragon Berry. In April, it launched Torched Cherry, a rum infused with Barbados cherries and nectar from the Torch Plant aloe found in South Africa. The brand is using a variety of digital media to spread the word, including free drink recipes and a link to a website with more ideas when the word “Torched” is texted to a special number.

“We see the potential to leverage interest in a flavor like this to flip more business in Limon and other flavors,” said Gordon Chilsholm, brand director for Bacardi flavored rums.

Limon, in fact, will have its own push from August through October, pairing it in stores with cola. The promotion will get both print and digital media support.

Coruba, which had a dark rum in the U.S. when Kobrand picked up distribution recently, launched four flavors made with natural ingredients. The Jamaican rum now comes in coconut, spiced, pineapple and mango flavors priced at a sweet spot of around $13.99, according to brand manager Greg Levine.

New and Different

Rum producers really are just beginning to explore the limits of where the product can go in terms of flavors and innovations. Bacardi launched two new flavors in its ready-to-drink Classic Cocktails line in May – Piña Colada and Strawberry Daiquiri. The pre-mixed cocktails are available in both 750 ml and 1.75 liter bottles. McDonnell said consumers and retailers can expect more exciting new products from Bacardi, probably by next April.

Captain Morgan introduced a new flavor in its line last December. Captain Morgan Lime Bite is a silver, lime-flavored spiced rum. This spring, the brand unveiled new television ad spots to support the new product.

Captain Morgan also is launching a 100-proof rum and a ready-to-drink Captain Morgan Long Island Iced Tea flavor.

Malibu introduced new pre-mixed cocktails in early July. Three flavors -Tropical Mojito, Rum Punch and Caribbean Cosmo – all come in an innovative pouch package for use by the pool or at the beach. The launch is being supported with a full program of media support and tastings.

“It’s the perfect category for Malibu to enter,” said brand manager Craig Johnson, “and the perfect product for summer.”

Don Q is launching a spiced rum this month. The product joins Don Q’s line of other rums, which include Cristal, Gold, three flavors (Limon, Mojito and Coco), Añejo, and Grand Añejo.

Save Us a Sip

The latter two, of course, are part of a class of rums that are enjoyed by the same class of consumers who seek out flavorful and unusual brown goods. Estate rums, aged rums, and other unusual or rare rums in their minds are approximating the experience they have when they drink cognac, single-malt Scotch, single-barrel bourbon or other straight whiskies and Irish whiskey.

Here, too, producers have taken notice and are responding with more consumer, retailer and bartender education and new additions to their product lines. Appleton Estate Rum, for example, recently introduced a limited-edition 30-year-old rum to join its line of Reserve, 12-year-old, and 21-year-old Jamaican rums.

“The brand has 260-plus years of heritage behind it,” said senior brand manager Jo-Ann Craner. “When we get people to taste it, they go ‘Wow!'”

The tag for the Appleton Estate line – “the rum that needs nothing” – plays off that experience.

DePaz, another high-end rum represented by Kobrand, has been available in the U.S. for about four years and is starting to turn a corner in terms of building volume and awareness. Produced in Martinique, DePaz is a rhum agricole, distilled from fermented sugar cane juice instead of less expensive molasses, a by-product of the sugar refining process. Only about 4% of the world’s rum production is rhum agricole.

This summer the brand is pushing its Midnight Mojito drink recipe on-pack, and is relaunching its dual pack – a 750 ml bottle of DePaz and a 70 cl bottle of cane syrup, the perfect combination for making Mojitos and other rum cocktails.

Like other sipping rums, Flor de Caña, an ultra-premium rum from Nicaragua, is out there educating retailers, bartenders and consumers. “We devote significant resources to tastings and sampling opportunities,” said Eric Ariyoshi at Skyy Spirits.

The brand is rolling out a program to dispel the notion that cola is the only thing that mixes well with rum and that food and cocktails don’t go together. In select local markets, Flor de Caña is pairing mixologists and chefs. The mixologists will create a “dish in a glass” utilizing culinary ingredients as well as traditional cocktail ingredients. Chefs will pair food with the cocktails.

The list of high-end rums contains dozens of brands that can be enjoyed on their own or mixed in cocktails. Pyrat from Anguilla, Mount Gay from Barbados, Zaya from Guatemala, Matusalem from the Dominican Republic, El Dorado Demerara rum from Guyana, 10 Cane and Angostura from Trinidad and Tobago, and Gosling’s from Bermuda are just a few of the sipping rums you may want to have on hand for your customers.

The weather is warm. Your customers are spending more time relaxing and enjoying time with their friends and family. Summer is the perfect time to merchandise and sell rum.


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