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Rum Loses Ground In U.S., But $15-And-Up Segment Enjoys Progress, Sees Upside

July 23, 2015

Despite consumer tastes in the U.S. moving in the direction of aged spirits and full-flavored offerings, the rum category has been slow to make meaningful volume advances in recent years. Last year, rum fell by 2% to 23.8 million nine-liter cases in the U.S., according to Impact Databank. That decline followed years of modest growth, leaving rum only about 200,000 cases larger than it was in 2010.

Top sellers Bacardi and Captain Morgan, which together hold a 57% share of the total U.S. category at approximately 13.6 million cases combined, both experienced volume declines last year. Bacardi was down 5.5% to 7.3 million cases in 2014, while Captain Morgan experienced a 1.5% decline to 6.3 million cases after years of modest growth. Third-ranked Malibu also lost ground in 2014, falling by 2.2% to 1.85 million cases, although the Pernod Ricard brand had enjoyed solid growth in the previous few years.

While the biggest sellers struggle, though, smaller rum brands playing in certain segments—especially higher pricing tiers—are enjoying impressive gains. According to DISCUS, rum’s super-premium segment grew nearly 9.9% in volume in 2014 while the high-end premium segment advanced 1.9%. Conversely, value rums were down 1.8% and premium rums fell 2.4%.

Over the past few years, an array of newcomers has added much-needed dynamism—and growth. These include Heaven Hill’s Admiral Nelson’s, William Grant & Sons USA’s Sailor Jerry and Flor de Caña, Proximo Spirits’ The Kraken, Castle Brands’ Gosling’s and E.&J. Distillers’ Shellback, among others. Nearly all of these growing brands are priced above $15 a 750-ml. And there appears to be plenty of upside in this price segment, because while categories such as Bourbon and Tequila are seeing retail prices push ever higher (super-premium Bourbons grew 19.2% last year, according to DISCUS), the rum category is only at the beginning of its upmarket development.

“Rum hasn’t had the same premiumization that every other category in the U.S. has seen,” says Andrew Floor, vice president of marketing, dark spirits, at Campari America, whose Appleton Estate was among the fastest-growing brands in the U.S. priced above $15 last year. “The category is still in the very early stages of understanding and is deeply rooted in that under-$20 segment, but we’re trying to build bridges to the premium rum occasion.”

 

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