Although rum has largely been left behind in the premiumisation trend that other spirits have capitalised on, product innovation and targeted marketing are now boosting rum’s potential in the UK and France
On the face of it, the numbers look relatively respectable for the rum market: according to the IWSR, the global rum market expanded by nearly 2% in volume and 3% in value last year. However, it is necessary to make the distinction between the sizeable low-end rums sold across Asia and the better quality, more internationally focused rums coming out of South America and the Caribbean. Without Asia, the picture is less positive and volume sales actually fell marginally last year.
Rum has been left behind in the premiumisation trend
Outside of Asia, rum is being outpaced by tequila, gin and whisky, but the standout story the numbers tell, is just how rum has been left behind in the premiumisation trend that has bolstered the fortunes of other spirits categories. In the total spirits category, premium-and-above drinks now account for almost 10% of volumes but in the rum category these segments are as low as 4%.
Historically, rum has always lagged behind more prestigious spirits categories like whisky and brandy in the premium stakes, but the worry for rum stakeholders is how the category has failed to offer premiumisation at anywhere like the same rate as gin and tequila. A decade ago, 5% of all gin consumed outside of Asia fell into the premium-and-above category, but today that figure is nearer 14%.
The lack of a coherent set of rules, notably on the subject of ageing and the relatively diverse range of products and styles, has made it more difficult for consumers to define and understand premium rums. In the US, rum has also failed to benefit from the craft movement, with only a few ‘artisan’ producers turning their hand to producing rum with any success. Despite this, there had still been an expectation that a shift to more deluxe positioned rums would happen at some point.
The UK shows an opportunity for premium, flavoured and spiced rums
One market where there is evidence of consumers upgrading to more expensive rums is the UK. Here, premium-and-above rum segments have seen volumes soar by more than 140% in just five years and these higher end rums now make up just short of 10% of the market. The change in perception of rum from a spirit that is drunk mixed, to one that can be sipped, continues in the UK. This is contributing to its growth, while the evolution of a cocktail culture is also playing a part.
The change in perception of rum from a spirit that is drunk mixed, to one that can be sipped, continues in the UK.
What is really driving UK rum sales though are the flavoured and spiced rums, which have more of an appeal to younger drinkers than traditional white and dark rums. For a category to prosper it needs to have a young core user, something that is illustrated by the rapid headway that Proximo’s Kraken Spiced Rum has made. This premium brand has hit the right note with millennial consumers and has trebled sales in five years to be the number two flavoured rum in the market.
Coca-Cola must be quite optimistic that consumers will continue to upgrade to better rums in the UK, because in June they launched a new premium range of ‘Signature Mixers’ into the market. The range is designed to be mixed with ‘dark spirits’ and that specifically includes Rum. Clearly trying to replicate the success that Fever Tree is enjoying in the gin boom, Coca-Cola’s support for their new mixer range will help to maintain the momentum for premium rums in the UK.
Rum becomes increasingly fashionable in France
If rum is performing well in the UK, then in France the category is positively thriving. The IWSR reports that rum consumption grew by 5% last year. Importantly, premium plus rums are gaining share in France – last year premium-and-above rum volumes went up by an impressive 28%. The interest in premium rums has helped to push the average price of a litre of rum up from $18.79 to $22.16 between 2014 and 2018.
The interest in premium rums has helped to push the average price of a litre of rum up from $18.79 to $22.16 between 2014 and 2018.
Historically, much of the rum sold in France was made up of French Caribbean ‘rhum agricole’, which was sold at very low prices. The ‘stack it high sell it cheap’ nature of the category had, to some extent, tarnished the image of rum in France. However, the introduction of new premium positioned brands that suited the French palate has raised the profile of the category. Rum has been able to reinvent itself and is now a fashionable proposition among young French consumers.
The vibrancy of the rum market in France has not gone unnoticed, and Campari now look poised to buy French firm Rhumantilles SAS in order to strengthen its rum business. The company produce, Rhum, a specific type of rum that is only made in the Caribbean and will equip Campari with two premium brands to market. Campari have a good track record at identifying opportunities and although the move will not be a ‘mega bucks’ deal, it is a solid endorsement for the rum category in general.
Product innovation and targeted marketing drive rum’s potential in the UK and France
The UK and France have exposed the potential of rum to finally be the ‘next big thing’. These markets have shown that with well targeted marketing and new product development it is possible to usher in a younger consumer to the category who will stimulate future demand for rum and accelerate the premiumisation process. Add to this rum’s use in some of the world’s most renowned cocktails, and the IWSR believe that the next five years will be significantly better than the last five years for the rum category.