Leveraging Premium End, Rum Category Eyes A Rebound
July 11, 2023Rum is ready for a rebound, focused on its higher pricing tiers. Many of the top rum players in the U.S. posted single-digit volume declines last year, according to Impact Databank, with No.-1 brand Bacardi down 2.9%, No.-2 Captain Morgan decreasing 1%, No.-3 Malibu declining 7.7%, No.-4 Admiral Nelson’s falling 3%, and No.-5 Cruzan slipping 9%. Thankfully, the super-premium end of the rum segment offers a different outlook, showing a category poised for future growth.
“While most volume in the rum category is under $25, we’re seeing a shift to super-premium,” says Sam Salameh, vice president of Breakout Growth Brands for Diageo, whose rum portfolio includes Captain Morgan, super-premium label Zacapa rum from Guatemala and, most recently, Don Papa, a super-premium rum from the Philippines that the company purchased earlier this year. Captain Morgan may have slipped in volume last year, but Zacapa was up 11.5% to 73,000 cases, indicating that the super-premium end is indeed where action is happening, even if these brands still make up less than a quarter of the overall rum pie. “We find ourselves in prime positioning to capture that consumer mindshare and desire,” Salameh adds.
“We’re witnessing a rising trend of premiumization in the U.S. market where consumers are consistently gravitating towards high-quality aged rums,” says Lisa Pfenning, vice president Americas for the Bacardi rum portfolio. “The Bacardi Premium Cask Series has been a great way to introduce new, limited-edition premium marks to both new premium rum drinkers and our biggest brand fans.”
In October, Brown-Forman acquired the Venezuelan aged rum Diplomático, which according to Impact Databank was up 2% in 2022 to 56,000 cases. “Diplomático is part of our Emerging Brands Group, and as such we’ll focus on broadening its distribution and reach within the U.S. and enhancing our marketing support,” says brand global marketing director Edouard Beaslay, who notes that Diplomático has been growing at a 22% annual compound growth rate between 2019 and 2022, with growth particularly strong in Florida, the brand’s top market, and Georgia, which has strong potential, in addition to California, Texas, and New York.
“Consumers are noticing super-premium rum for its enhanced quality and diversity, and this is reflected in double-digit sales growth,” Beasley adds. “They’re looking for products that have an interesting story to tell in terms of provenance, quality, craft credentials, and complete transparency in terms of good practices with the environment.”
At the Northern Florida retailer Wine World, the best-selling rum brands include Malibu Coconut ($15 a 750-ml.; $28 a 1.75-liter), Bacardi Superior ($14; $23), Captain Morgan Spiced ($15; $24), Sailor Jerry ($17; $24), and Blue Chair Coconut ($22 a 750-ml.), and these labels account for just under 50% of all rum volume at the chain. However, there are several premium and super-premium labels that also do well and fall within the store’s top 30 best-selling rum SKUs, including Papa’s Pilar ($45), Wray & Nephew Overproof ($25), Diplomático Reserva Exclusiva ($33), and Bumbu ($39).
“The majority of our rum sales are with the big brands in the $14-$28 range, but we do tremendous volume at the top of this price range with a Panamanian rum called Navigator, which is priced at $27; since we began carrying it in the fall of 2022 it’s become one of our top sellers,” notes director of sales Shaun Brown. “In a few more months I think it will surely be in our top ten because since October it’s only behind Captain Morgan in terms of dollars generated for rum. This is a small brand closer to the premium space than everything else in that top 50%, and we believe that its emergence in our stores is a strong indicator that the future growth of the rum category lies in the premium space.” Market Watch has more.
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