Premium-and-above rum is poised for a bright future in a number of global markets, but challenges still remain for a complex and sometimes confusing category.
Brown-Forman’s move last week to acquire Venezuelan rum brand Diplomático from Spain’s Destillers United Group caps a period of strong growth for the high-end rum category. According to IWSR data, global premium-and-above rum volumes rose by a compound annual growth rate (CAGR) of +8% between 2014 and 2019, with value up by a CAGR of +9% over the same period.
After a strong post-Covid recovery in 2021, premium-plus rum volumes are expected to climb by a CAGR of +6% between 2021 and 2026, with value increasing by a CAGR of +6.5%, the IWSR forecasts.
Consumption is heavily concentrated in the US, but the category is also performing well in a number of other countries, including European markets (France, UK, Germany, Italy, Spain and Belgium/Luxembourg), Canada and Australia.
Growth is being fuelled by the continued spread of cocktail culture, but also by a change of image for rum, which is increasingly being taken seriously as a high-quality spirit to rank alongside Cognac and single malt Scotch whisky.
“The change in perception of rum from a spirit that is drunk mixed to one that can be sipped continues,” says Jose Luis Hermoso, Research Director, IWSR. “Premium-and-above rum is therefore growing at the expense of lower qualities.”
In the US, volumes increased by a CAGR of +2% between 2014 and 2019 – and growth is set to accelerate in the years to come, with the IWSR forecasting a volume CAGR of +7% between 2021 and 2026.
Reflecting the premiumisation of the category, value growth has been even stronger: premium-plus rum grew by a CAGR of +6% between 2014 and 2019, and is forecast to expand by a CAGR of +8% between 2021 and 2026.
Gold rum outperformed white rum in the US during 2021, thanks to strong consumer interest in dark spirits, and many brands have revamped their packaging to reinforce the quality credentials of higher-priced rums.
“The premium-and-above segments will continue to grow into the future, as core consumers know and trust their brands of choice,” says Adam Rogers, Research Director, IWSR. “Leading producers have also committed to changing rum’s perception over the coming years from a clear mixable spirit used in cocktails to a dark, premium spirit of distinction.”
Meanwhile, in France, premium-plus rum consumption has soared in the recent past, reflected in 2014-19 CAGRs of +27% (volume) and +25% (value). Growth is expected to moderate in the coming years, but the IWSR expects both volume and value to rise by a CAGR of +9% between 2021 and 2026.
The French rum market has traditionally been dominated by low-priced French Caribbean rhums agricoles – which enjoy tax advantages – but now there is growing consumer interest in rums from other origins in the Caribbean, Central America and beyond.
This interest was fuelled during 2020 and 2021 by the phenomenon of the “rum cave” among France’s independent caviste retailers – in-store spaces devoted to a wide range of rums from around the world. Now importers and distributors are targeting the on-trade as it recovers from the impact of the Covid-19 pandemic.
Describing rum as “a multi-faceted and relatively inexpensive drink to both embrace and explore”, Jason Holway, Research Analyst at IWSR says: “Rum has attracted aficionados who now seek out vintage and prestige expressions, valuably enhancing a top end that clear spirits lack and which, in whisky, is often considerably more expensive.”
The picture is similar in the UK, where premium-plus rums grew between 2014 and 2019 by CAGRs of +22% (volume) and +17% (value). The IWSR expects growth to slow between 2021 and 2026, but still forecasts CAGRs of +4% for both volume and value over that timescale.
Cocktails have been an important long-term driver of growth in the UK, and rums with a sweeter taste profile are likely to spearhead further gains for super-premium gold rum in particular. Meanwhile, products designed for sipping are set to boost dark rum consumption.
In spite of this overwhelmingly positive picture for premium-and-above rum, challenges remain. Rum’s diversity and versatility, while an inherent strength, can also make it harder for consumers to navigate.
Age statements are often misleading – some brands use a minimum age, others a more nebulous number based on solera ageing methods – and the category sometimes borrows designations from rival categories, such as XO (Cognac) or añejo (Tequila).
“The challenge for rum, compared with malt Scotch, is the wide variety of origins, raw materials, production methods and, ultimately, styles on the market,” says Hermoso. “The lack of a clear geographical indicator makes rum both more flexible and simultaneously harder to market than single malt.”
However, if brand owners can find the right way to educate and stimulate adventurous consumers, this diversity can be converted from a weakness into a strength, Hermoso notes. “There are so many moving parts in rum – rhum agricole, gold/dark, spiced/flavoured, Old World/New World, fresh/barrel-aged/vintage etc – that many consumers remain eager to explore,” he says.
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