Sometimes, a spirit category can seem to be heading in many different directions at once. That seems to be the case with rum today: white rum has been losing a bit of its massive attraction, though it’s still responsible for more than half the rum business. Spiced rum sales are going through the roof, with new brands, line extensions and packaging signaling a lively interest among both consumers and suppliers. Flavored rums continue to be a source for innovation, and aged and superpremium rums are developing a fan base among the cocktail cognoscenti.
As with the different subcategories, the results among rum brands were mixed last year; according to numbers gathered by the Beverage Group for 2011; the category overall volume was up a modest 1.3% nationally (up 1.6% in the control states). Malibu showed the largest percentage and volume gain nationally among the leading brands (up 6.6% nationally to 1.74 million cases), while category leader Bacardi added 0.5% nationally to hit 9.45 million cases. Cruzan grew by 11.9% nationally to hit 725,000 cases, while Captain Morgan and Captain Morgan Parrot Bay both stalled, down 0.2% and 1.8% nationally, respectively; two other top ten brands in retreat were Castillo (down 7.4%) and Ronrico (down 0.5%), reflecting a recent de-emphasis on value brands. Spiced rums have been the talk of the category for the last few years, and more activity came from that sector recently, with Bacardi adding OakHeart last September and this past spring Diageo rolling out Captain Morgan Black Spiced Rum, a higher-proof, more molasses-flavored style. Other spiced brands showed great strength last year and were essentially responsible for any volume increase overall, with Admiral Nelson up 3.9% nationally to 725,000 cases and Sailor Jerry up 11.9% nationally to 667,000.
Other fast-growing rum brands include Jack’s Flavored Rums (recently sold by White Rock Distilleries to Beam, along with Pinnacle Vodka), with the brand increasing sales by more than 30% nationally last year to sales of 300,000 cases.
Don Q Rums, from Serralles USA, have also seen impressive sales, growing by more than 15% nationally in 2011, to sales of 219,000 cases. Don Q’s line includes its mid-priced Cristal, Gold and Anejo expressions, flavored versions of Lime, Coconut and Mojito, and the ultra-premium-priced Grand Anejo. Don Q has also just released Caliche, a superpremium white rum aged up to four years, resulting in a smooth, velvety character with flavors of citrus and vanilla. At the same time, the brand has added to its flavor lineup, with the new Don Q Pasion,
With competition intensifying in the spiced segment, it’s still dominated by the 6-million case Captain Morgan. Spiced iterations like Kraken have garnered attention for a combination of packaging, graphics and its intensely dark color. Serralles USA re-branded and re-packaged their BlackBeard Spiced Rum, targeting post-college consumers and the trade with a “Own The Beard, Be The Legend” campaign.
Meanwhile, brand reps speak confidently about the great things expected from premium and superpremium rums as well, with high-end brands up 14.9% nationally to 2.7 million cases last year, according to numbers from the Distilled Spirit Council of the United States. These aged (and more pricey) expressions are finally starting to break through with consumers who are taking their increasing interest in brown spirits like bourbon and rye with them as they learn to appreciate rum.
The Future Beckons
“We are still very excited about the direction of the rum market and its potential for growth,” said Diageo’s Tom Herbst, director of marketing, rums. “It remains a highly accessible category from a consumer perspective.” “The rum market is changing, especially in terms of the recent rejuvenation of brown spirits as a whole,” said Greg Levine, brand manager for Appleton Estate rums for Kobrand. “Consumers are always looking, but now they are starting to look at aged rum in a different way.” Retailers are more routinely offering an expanded range of aged premium rums today, he says, and are looking to brands for educational support to help them sell what are often considered special occasion rums. The fact that rum consumers – traditionally content in the white rum end of the market – now are adopting different types of rums for different occasions is a cause for optimism.
“Consumers are looking around now to expand their taste, looking for quality,” said Nabil Wanna, Cruzan brand manager. “They are shopping at different price points and educating themselves about rum – that’s good for the category and good for us.”
Pyrat is one of those rums at the high end, and Phil Gervasi, executive vice president of sales, North America, for supplier Patrón Spirits, says even in challenging economic times, people are still willing to spend an extra dollar or two for a high-quality cocktail when they go out. “And so consumers continue to discover new and interesting brands on-premise, that they then seek out when shopping off-premise,” he said. As Gervasi points out, cocktail trends are providing a significant opportunity for rum. “Increasingly, when people entertain at home, they want to offer something fun and memorable to their guests – and cocktails are an exciting way to do that.”
Even Captain Morgan Black Spice, a 47.3% alcohol by volume spirit finished with double charred oak and providing a dryer spice profile, was created with its cocktail potential in mind, says Diageo’s Herbst, noting that it works well in twists on classic cocktails like Old-Fashioneds and Manhattans.
The Flavor of Rum
Flavor innovation has continued, with Bacardi leading the pack with creative iterations in their infusions line like the recent Wolf Berry (blueberry rum infused with wolfberry) and Black Razz (raspberry rum infused with black sapote); and Seralles introducing Don Q Pasion, a 60 proof rum flavored with passionfruit.
Toby Whitmoyer, vice president, brand managing director of Bacardi’s rum portfolio, which now offers 12 flavors, says the unusual flavor combinations the brand has launched – the latest follow Dragonberry, Torched Cherry and Rock Coconut, among others – has been well received by consumers and the trade. “These have proven to provide a way to bring new news and a bit more interest to specific flavor extensions,” he said. “Milennials are looking for more dynamic products and flavors and we believe we deliver a great liquid, solid programming and marketing support and that makes it easier for the retailer to meet the needs of their customers.”
There’s also growing interest in better ready-to-serve cocktails and ones with a lighter caloric count, which explains the latest launch of Bacardi’s Light Mojito and Light Pina Colada offerings.
Yet with all the flavor innovation, coconut flavored rums are still the boss of the yard with about half the sub-category’s volume. Pernod-Ricard’s launch last year of Malibu Black – a higher-proof, dark and dryer coconut-flavored rum – has recently been followed by Malibu Sunshine, what brand director Lisa McCann calls a concept flavor meant to build the summer state of mind often associated with rum. With Pineapple, Mango, Passion Fruit, Tropical Banana, Melon and Cranberry Cherry already in the portfolio and joined by recent additions, Malibu has turned things around in the last few years. “The base brand has started to see some growth as well,” said McCann. “We’re really focusing our strategy on the base and the summer state of mind of the Malibu drinker. We’ve spent quite a bit of money supporting the brand and consumer activation, and the launch of Malibu Black, increasing the flavors and launching pre-made cocktails has expanded its presence,” she says. That brand expansion also led to Malibu Red, a blend of rum and tequila launched last spring with an eye to the nightclub and nightlife scene. “This is a new concept – we want to provoke thought about how people consider the category and infuse some newness and excitement to the category as a whole,” said McCann. Significantly, the idea is to take Malibu, thought of as a relaxed daytime occasion spirit, and develop a nighttime presence. Tied in with singer-songwriter Ne-Yo, who worked with brand reps on flavor profile and graphics, according to McCann, the brand has started out focused more on-premise than off- in the short term.
Continuing flavor innovation means being alert to changing consumer tastes. Cruzan last year launched Strawberry, after introducing the spiced Cruzan Nine in 2010. “New flavors do drive interest,” said Cruzan’s Wanna. “And unique flavors will bring in shifts in volume. We’re not going to go out and come up with really obscure ones, but will come out with flavors depending on where we see consumers going.” Cruzan’s Strawberry rum is a good example, as ginger is the secondary flavor component in the extension.
While flavors are important, Cruzan also has Light, Dark, 151, Blackstrap and Single Barrel rums as well as 11 flavors, and their challenge now is to expand consumer awareness and sampling of the brand. They’ve launched a new digital campaign and POS program, highlighting its authentic St. Croix roots, and, while nothing is currently planned, owner Beam might offer additional premium and superpremium extensions in the future as sippable rum becomes more popular.
Spicing It Up
Spiced rum continues to grow rapidly, up to near 30% of total rum volume and growing about 7% last year; William Grant & Sons’ Sailor Jerry keeps outpacing the subcategory in a competitive environment, noted Ken Reilly marketing director for the brand. Sailor Jerry has benefited not only from the imagery connected to tattoo artist Norman Collins but also the increased interest in Tiki drinks and darker spirits, he added.
The lifestyle component is very important for Sailor Jerry, which Grant supports with things like the “Sailor Jerry Presents” music series to differentiate the brand as the market becomes more crowded. “It’s a very competitive segment now and obviously the retailer has a finite amount of shelf space.” To make that space work better for the brand and retailers, new packaging using more tattoo artwork from Norman Collins will be employed to tie the rum to his personality and work.
The competitive spiced environment has been ramped up by the roll out of Bacardi’s OakHeart, the fourth largest spiced rum after only eight months, and Captain Morgan Black.
“For the retailer, we think the most important thing is that when people come into their store, nine out of 10 spiced rum buyers are already interested in buying the Captain,” said Diageo’s Herbst. Expanding the portfolio gives retailers a chance to increase profits by driving a higher register ring and expanding the drinking occasions for the brand itself. “We think there’s continuing opportunity in the spiced rum space as these types of rums expand their foot print into other occasions,” said Herbst, noting that higher-quality spiced rum experimentation is just beginning.
As Bacardi’s Whitmoyer points out, young legal aged male consumers drive the category, so package and label design is important in order to catch their eyes; for OakHeart, Bacardi opted for a quality, weathered look that differentiates the brand from Bacardi’s flavored iterations. But it’s the flavor profile that matters most. “We think it’s a clearly superior liquid, good enough so you can drink it neat or on the rocks,” he says.
Now that Heaven Hill boasts two spiced rum brands – Admiral Nelson’s and Blackheart – the company will look to divide the consumer cohort further, with Blackheart aimed at a younger, edgier crowd interested in a bold, higher-proof style, and Admiral Nelson for consumers in their mid- to late-twenties and others in the forties looking for a high-quality rum at a reasonable price, according to Hannah Venhoff, brand manager, Admiral’s Nelson’s Rum and Blackheart Premium Spiced Rum.
For Admiral Nelson’s, there will be an expansion of flavor offerings that build on spiced rum. “Initially, we have introduced Cherry Spiced flavor. But flavor offerings will not be to the extent that you see with other spirits categories. Rather, we expect flavors that align with the spice flavoring,” she said.’
Most brand reps agree, in the words of McCann at Malibu, “that the premium and super premium sectors will start to see more growth as consumers look for aged and boutique rums.”
For smaller brands like Pyrat, that means relying on word-of-mouth backed by targeted marketing initiatives in key markets and social media outreach.
Even super-premium brands offered by major suppliers – Diageo’s Zacapa, for instance – must drive distribution and engage consumers in sampling opportunities to show how rich and well-crafted they can be, said Herbst.
Appleton’s Levine says the premium category is filled with opportunities to develop consumer interest and that once engaged, they want to discover and explore more. With four iterations – Appleton VX, Reserve, 12 and 21 Year Old rums operating in the premium and above sub-category – educational materials, like a planned interactive kiosk display employing iPads and proprietary software, are key to spurring interest.
“We’ve been saying it for years, but I think the rum category is going to change drastically and we’re all going to benefit from that,” he said, and as if to spur that along, Appleton just marked the 50th anniversary of Jamaican independence with the release of Appleton 50 Year Old rum, a product unusual in the rum world, with only 70 bottles priced at around $5,000 each making it to the U.S.
Rum: Pre-Mixed Cocktails and Liqueurs
As much as any other category, rum lends itself to experimentation, in flavors of course, but also in presentation.
Take Bacardi Classic Cocktails Light, a new line of low-calorie, ready-to-serve beverages. Bacardi has long offered RumRunners, Hurricanes and other rum-based cocktails in ready-to-drink variations, but latching onto the low-calorie drinking option now, the company has joined forces with mom, actress and party host Busy Philipps to promote the drinks.
The new cocktail collection builds off of the original Bacardi Classic Cocktails line, though these are less than 95 calories for a four-ounce serving, and are available in Pina Colada and Mojito flavors.
Light seems to be the new favorite rum enhancement. Malibu Caribbean Cosmo Light was recently introduced to replace the brand’s current Caribbean Cosmo offering, although the other flavors of Malibu cocktails will continue to be sold – Tropical Sea Breeze, Tropical Mojito, Rum Punch and, most recently added to the portfolio, Melon Margarita. These pre-mixed cocktails continue to gain popularity after first being introduced in June of 2010.
Of course, ready-to-drink cocktails are not the only enhanced way to drink rum. Brands like Castries Peanut Rum Crème Liqueur from St. Lucia and RumChata, a cream spirit reminiscent of the Mexican almond-based beverage horchata, have found favor among many consumers as a chilled after-dinner drink, or even cocktail ingredient.
RumChata is bottled from a made-from-scratch cream liqueur recipe that uses Caribbean rum and Wisconsin dairy cream with a touch of natural cinnamon, vanilla, sugar and other flavors. Brand owners recently started promoting summery cocktails including RumChata Iced Coffee, BananaChata and Coconut Cream Pie Martini.