It’s been nearly a hundred years since rum-runners plied the azure waters of the Caribbean between Bimini and Florida. Today, more rum is running than ever – legally now, of course – from various ports of call to the U.S. Last year, more than 25.5 million 9-liter cases of rum were sold in the U.S., a 2.2% increase over 2009. And this year the numbers look even better.
The rum category should see continued steady growth in the foreseeable future for several reasons. The economic recovery, as slow as it’s been, bodes well for both the industry and the rum category. Like many other spirits categories, consumers are becoming more educated about rum and discovering new uses for it. And rum producers are introducing new products and programs designed to boost sales and bring new drinkers to the category.
At the same time, economic and social trends of the past several years have brought changes to the category. Savvy producers are adapting to the shifting winds and meeting the challenges head-on.
“All spirits categories are slowly coming out of the recession,” said Toby Whitmoyer, vice president, brand managing director at Bacardi USA, “giving us cautious optimism. We see sequential improvement this year, but slow. The on-premise market in particular won’t be gangbusters, but it will certainly be better than last year.”
Activity within the rum category, however, is anything but slow. Some segments are experiencing significant growth, though individual brands within segments may be trending up or down depending.
“The big players aren’t moving much,” said Lisa McCann, brand director for Malibu. “The category is really being driven by value brands and the high-end right now.”
“Last year the category was up a couple of points, and we saw less discounting, which is a good sign,” said Greg Levine, brand manager for Coruba at Kobrand. “A lot of the growth that has occurred is in the spiced rum segment.”
Movement within the category toward value brands, premium products and spiced rums is being driven by consumer trends.
“The category is dominated by two brands,” said Levine, “but consumers are latching onto rum, both in the premium and flavored segments. The category was formerly unbranded-consumers would order drinks like daiquiris or rum and cola without knowing what’s in it. They’re open to new things, to trying new things, and they have a lot more knowledge about rum.”
“People are looking for something different in rum,” said John Eason, vice president, national sales manager for Serralles USA. “There’s a clear category leader, but people want flavor variety, and they’re looking for value price points. When the economy is bad, people entertain at home more.”
“Consumer confidence is rising, and the industry is on the upswing,” said Brittany Blevens, brand manager for Blackheart at Heaven Hill Distilleries. “But we see a real shift from premium-priced products to more mid-tier price points, and don’t see that changing soon. Consumers don’t see a need to trade up quickly as the economy recovers.”
Indeed, Heaven Hill just concluded a major deal purchasing the rights to the competitively priced Admiral Nelson Spiced Rum brand from Luxco. Admiral Nelson has been one of the most consistent, fastest-growing spirits brands in the U.S. over the past five years, and last year it reached sales of 698,000 9-liter cases, a 22.5% increase. Terms of the sale have not been released.
Leader of the Pack
Bacardi remains the big boy on the block, accounting for more than a third of all U.S. volume. Sales were flat in 2010 at about 9.4 million cases, but that doesn’t mean the brand is sitting still.
The brand kicked off a new ad campaign, “Bacardi Together,” in May, and is giving it a “significant above-line contribution,” according to Whitmoyer. The campaign features new 15- and 30-second TV spots as well as outdoor in five major markets.
A Facebook promotion, “Like it Live, Like it Together,” plays off the new campaign. The promotion has given consumers the opportunity to vote for favorite “likes” and featured big events on Las Vegas and New York in June.
“It’s all about bringing people together,” said Whitmoyer.
Bacardi also has just come off its second year as official spirits marketing partner of the NBA where it has high visibility. It plans an expanded sponsorship next year with even more focus on its Thurgood Marshall scholarship program.
We plan to energize our leadership position,” Whitmoyer said. “I believe there are bright times ahead for rum.”
Part of the brand’s efforts include the introduction of two new products this year. Arctic Grape flavored rum follows the successful launch of Torch Cherry last year and other flavors like Rock Coconut. And Bacardi has added a hand-shaken daiquiri flavor to its ready-to-serve cocktail line.
To hedge its bets, the brand also continues to support Seven Tiki, a spiced rum from Fiji launched last year, with ties to surfing and the beach community that surrounds it. At around $19 a bottle, Bacardi hopes to “premiumize” the spiced rum segment.
“Legal drinking age consumers find rum a warm entry spirit,” Whitmoyer said, “and the millennial consumer generation is very experiential, driving new product growth.”
Spice Is Nice
The spiced rum segment, of course, is dominated by Diageo’s Captain Morgan. Brand volume last year was up about 1.5% to 5.68 million cases. Like Bacardi, Captain Morgan isn’t sitting on its laurels, but aggressively pursuing additional volume and defending its leadership position in the segment.
“The 21 to 25 year-old consumer has changed,” said Tom Herbst, Captain Morgan brand director, “so we’re changing with them to surprise and delight them.”
The brand also launched a new campaign on Morgan’s birthday, May 14th, which re-imagines the life and legend of Captain Henry Morgan, evolving the consumers’ image of the character and giving it more dimensions and depth. Three film shorts directed by Tom Hooper (of “The King’s Speech” fame) kicked off the campaign, dubbed “To Life, Love and Loot.” The third spot, which will run on TV and the Internet, debuts this month.
Wrapping up this month is a tie-in promotion, “Major League Loot,” that continues to offer consumers chances to win VIP tickets to MLB games in 15 markets. The tickets include perks like special memorabilia and access to batting practice and player autograph sessions.
About 1,500 bar nights, designed to show consumers what it feels like to live like the captain, will keep the brand top of mind with consumers when they consider at-home entertaining, too. And strong Halloween and holiday programs will help you sell the brand long after summer has faded.
Spiced rum’s success hasn’t gone unnoticed by other producers. In addition to Bacardi’s launch of Seven Tiki last year, Heaven Hill introduced Blackheart. The brand doubled its volume projections for this year after its spring 2010 launch.
New this year for the brand is a 1.75-liter package that was introduced with a $15 rebate (where legal) this spring. The rebate will be offered again this fall along with an $8 rebate on a 750-ml. bottle. This summer the brand is offering a plastic, double-walled tumbler as a co-pack item on the 750-ml. bottle, supported by POS, including racks and standees.
Another producer that’s joined the spiced rum fray is Distileria Serralles, the Puerto Rican distillery that makes Don Q, the island’s best-selling rum. After years of supplying rum to Diageo for making Captain Morgan, the distillery now makes its own spiced rum, Blackbeard.
An 86 proof premium rum, Blackbeard has won a number of awards since its introduction about two years ago. Volume was up about 60% last year, and the brand grew another 45% in the first quarter of this year alone. The brand has experienced great success with its “Lady Data” web site where target consumers – males age 21 to 29 – can find out how to approach women. The brand took the pulse of 1,000 women, asking lifestyle questions ranging from which clothing stores they like to whether they would go home with a guy on a first date.
At the value end of the segment, brands like Admiral Nelson and Sailor Jerry have made inroads with edgy brand positioning and attractive pricing. As stated earlier, Admiral Nelson grew about 22.5% in 2010 to 698,000 cases. And Sailor Jerry volume was up 17.5% last year to 470,000 cases. Expect both brands to perform strongly again this year.
Cruzan is another brand that has experienced strong growth since moving to Beam Global Spirits a year or so ago. Brand volume was up 20.4% in 2010 to 648,000 cases. The brand debuted Cruzan 9 Spiced Rum last year, so named because a blend of nine natural spices (including vanilla, nutmeg, cinnamon, ginger, cloves, mace, allspice, pepper and juniper berry) are mixed in with 80 proof, aged Cruzan rum, creating a unique flavor. Cruzan also just released the eleventh flavor in its brand portfolio, Cruzan Strawberry, which combines the taste of ripe strawberries with a touch of ginger, the company says.
Savor The Flavor
Flavored rums also continue to perform well as consumers experiment with cocktails and flavor combinations. Malibu is the leader in the segment and the third best-selling rum in the entire category. Brand volume was up about 1.4% in 2010 to 1.628 million cases, and growth in the past few months has gained speed.
Like competitors Bacardi and Captain Morgan, Malibu has redoubled its efforts on the brand, making it more fun and more relevant to today’s consumers.
“Last year, we thought about our consumers and when and where they’re consuming the product,” said McCann. “We realized they’re into convenience, so we introduced Malibu cocktails in a pouch that they can take to the beach or wherever they want. This year we’re introducing an additional flavor, Sea Breeze.”
The brand also is letting consumers themselves make more of the decisions about what they want from the brand. A Facebook campaign this spring asked consumers to vote on what Malibu’s next flavor should be. They voted for cranberry-cherry, which bowed in May.
“I think their choice largely has to do with convenience again,” McCann said. “Instead of playing with single flavors, they have an interesting flavor combination they can easily mix with cola or soda without pulling together lots of ingredients.”
Now the brand is asking consumers to help devise a media campaign for the new flavor.
To support all its products this summer, the brand is sponsoring a 10-city “Station Invasion” concert tour as part of its Radio Maliboom Boom campaign. In April, the brand announced a search for a consumer to be a correspondent on the tour, updating fans with blog and video postings, photos and more. The winner got a trip to Barbados for “training” and will join artists Taio Cruz, Ciara and others on tour this month.
The program is being supported with retail POS and local market activity such as radio promotions and outdoor. Holidays get heavier support, and POS will feature QR codes which consumers can scan with their smart phones to enter drawings for giveaways. A grand prize Airstream trailer, on tour all summer, will be given away at the end of the promotion.
Malibu also has launched Malibu Black to reach consumers on different drinking occasions. At 70 proof (higher proof than Malibu), and with slightly less sweetness, Malibu Black delivers a different experience for higher energy occasions, according to McCann, such as evenings when target consumers like to have fun and socialize.
Other rum makers are jumping on the flavor bandwagon as well. Don Q introduced its Mojito flavor last year, naturally infusing its rum with mint rather than adding a flavoring ingredient. This June it introduced Passion Fruit in New York, New Jersey, Florida, Massachusetts and Illinois.
To take advantage of consumer interest in experimenting with flavors, the brand will be offering a number of co-packs including Don Q Gold with Coco Lopez, Don Q Limon with Ocean Spray cranberry juice cocktail, and Don Q Cristal with cola. For the holidays later this fall, the brand will feature a Blackbeard gift box co-pack with a special flask.
The brand is working closely with the US Bartending Guild to spread the word and educate consumers about Don Q and Distileria Serralles, the most environmentally sustainable distillery in the Caribbean. At retail, the brand is conducting tastings where legal in as many markets as possible.
Coruba, a Jamaican rum launched last year by way of a New Zealand producer, also is making efforts to sample its products. “The big thing is getting it into consumers’ mouths,” said Levine. “We have to let them taste it.”
The brand has been working hard to get retailers to put up its big displays featuring a lifeguard stand with a tiki umbrella. Promotions this summer feature co-packs of Coruba Coconut with Alizé Gold or Red Passion.
Producers also have taken advantage of consumer interest in both variety and authenticity in spirits with more high-end expressions and a greater focus on education. Like single malt Scotch, small batch bourbon and tequila, consumers are discovering these upper echelon rum brands and sales are soaring.
“Three years ago, no one could name a super-premium rum brand,” said JoAnn Craner, senior brand manager for Appleton Estate, “but the mixology community has really grown and is much more aware of upper end rum.”
New confabs like Rum Renaissance have doubled their attendance each year for the past few years, and the number of rum aficionados are growing.
“We look at brown spirits like single barrel bourbon, single malt Scotch and cognac as where we play,” Craner said. “Consumers who like that flavor profile like Appleton Estate.”
The brand is focused on educating bartenders, waitstaff and retailers about its Reserve and 12-Year-Old rums. Value-added packs, like its Reidel glass co-pack last year, will be offered during the holidays this fall.
Brugal, from Remy Cointreau, has created new packaging this year for all three expressions, Añejo, Extra Viejo and its new Blanco Especial. The brand is supporting the new product and packaging change with a full 360 campaign from radio to social media.
Depaz, a rhum agricole from Martinique, is continuing its big education and sampling program started last year, mostly in the on-premise market but spilling over into off-premise. A “hybrid between a single malt and a 100-percent agave tequila,” according to Kobrand’s Levine, Depaz will again offer a co-pack with a bottle of cane syrup and a mojito recipe to off-premise accounts.
10 Cane Rum, a rhum agricole style product from Trinidad, has changed its formula and packaging this year to make it more approachable. Instead of rum from 100% cane juice, the brand now blends 90% cane juice rum with old Trinidadian rum from other distilleries. The result is a golden rum with a more balanced flavor, making it more mixable.
The new package makes it more bartender- and environmentally-friendly. The product is getting POS support in the form of case cards, 12-bottle bins, beach board and paddle boards among other materials. “We think consumers are rediscovering rum,” said Guillaume Grillon, senior business manager for the brand. “The more they educate themselves, the more they discover in the category.
For its part, Pyrat Rum, which is owned by Patrón Spirits International, saw an impressive 11% worldwide growth rate last year, according to Phil Gervasi, Patrón Spirits’ executive VP of sales. He explained that the high-end Caribbean rum brand continues to draw consumers who are willing to spend a few extra dollars to trade up the quality of their cocktails.
Another upscale rum, Botran, from Guatemala, was reintroduced into select U.S. markets last year, with Botran Reserva and Botran Solera 1893. The rums are made from sugar cane that is pressed into “virgin sugar cane honey,” the company says, then fermented, distilled and aged in a combination of several different barrels.
Even newer to the market is the recently released Banks 5-Island Rum, which is a blend of more than 20 rums of various ages, from Trinidad, Jamaica, Guyana, Barbados and Indonesia.
When it comes to rum, there’s a flavor for every taste, from light-bodied, highly mixable white rums to full-flavored aged sipping rums. Be sure to let your customers know about the wide variety of offerings, especially during these summer months.
Know Your Rum
Unlike an appellation, like Champagne, or a standard of identity like bourbon, there’s no single standard for rum. Countries set their own standards and laws to define rum, and even in the Caribbean where most rum is produced, each island may have its own unique style. In general, though, rum styles can be grouped by language.
Spanish-speaking islands and countries such as Puerto Rico, the Dominican Republic, Nicaragua, Guatemala, Panama, Cuba and Venezuela traditionally produce smooth white and añejo rums. The U.S. Virgin Islands also produce this style of rum.
English-speaking islands and countries are known for darker rums with a fuller taste that retains a greater amount of the underlying molasses flavor. Rums from Jamaica, Bermuda, Barbados, Belize, St. Kitts, Trinidad & Tobago and the Demarara region of Guyana are typical of this style.
French-speaking islands such as Martinique, Guadeloupe and Haiti, make agricultural rums, or rhum agricole. They’re made with sugar cane juice instead of molasses, which is a by-product of sugar refining. They have a much more pronounced sugar cane
flavor and can be more expensive than rums made with molasses.
Typical rum styles include:
Light rum, also known as white, blanco or silver rum. Most light rum comes from Puerto Rico, but is produced around the world. Their milder flavor makes them popular for mixing in cocktails.
Gold rum, also called anejo rum, is usually a medium-bodied rum that been aged for a year or more. More flavorful than light rum, gold rums are still very mixable.
Spiced rum. As their name suggests, these rums get their flavor from spices such as cinnamon, anise seed, rosemary or pepper.
Dark rum is generally aged longer in charred barrels and has a much stronger flavor than either light or gold rum. Typically from Jamaica, Haiti and Martinique, dark rum also comes from several other countries, including award-winning Flor de Caña from Nicaragua, Ron Zacapa Centenario from Guatemala, and Gosling from Bermuda. Some may have a hint of spice along with a strong molasses or caramel flavor. Dark rums are often used in mixed rum drinks for both flavor and color, but can be consumed neat or on the rocks.
Flavored rum. Usually infused with fruit flavors, flavored rums run the gamut from lemon to Passion Fruit. Recent product launches include cranberry-cherry and grape flavors. Also popular is mint and lime infused mojito flavored rum.
Overproof rum is rum distilled to mich higher proofs than the typical 70 or 80 proof. Most of these are around 150 proof.
Sipping rum. Typically consumed straight, these high-end rums are often aged eight years or more, and tend to have a flavor profile more akin to single barrel bourbon, cognac or single malt Scotch. Some are blended in the solara style.