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Rum’s Top Players Launch Wave Of New Products To Revitalize The Category

July 14, 2014

After expanding by more than 50% from 2000-2010, the U.S. rum market has struggled to achieve consistent growth in recent years. In 2013, the top 10 rum brands (which collectively comprise more than 80% of the category’s volume) saw depletions drop by an aggregate 1.9%, according to Impact Databank. Rum marketers are now looking to revitalize the category with an emphasis on premiumization and innovation.

A major part of that effort is focused on expanding awareness of the category’s versatility. New flavor offerings, high-proof and super-premium rums have led the innovation charge, with the latter two segments showing positive gains. “Rum is one of the most versatile spirits categories,” says Dima Ivanov, senior global rum category director at Bacardi Ltd. “Its usage spans from neat consumption to the most sophisticated cocktails. It can be white, dark, flavored or aged.”

Diageo recently leveraged rum’s versatility by extending its Captain Morgan franchise with Captain Morgan White, an 80-proof white rum retailing at around $16 a 750-ml. “As we looked across the category, we saw white rum as an obvious opportunity,” says Tom Herbst, vice president, rum category, at Diageo North America. “It’s dominated by one brand, so we think there is space in the U.S.”

Captain Morgan White’s launch comes just a few years after Bacardi invaded Captain Morgan’s turf with spiced offering Bacardi OakHeart. OakHeart has been a growth engine for Bacardi, advancing by 8% to 185,000 cases last year. Both Bacardi and Captain Morgan have also targeted the high end with a variety of upscale new products, including Bacardi Gran Reserva Maestro de Ron and Captain Morgan Sherry Oak Finish. Together, the Bacardi and Captain Morgan franchises comprise more than 60% of the U.S. rum market.

When it comes to innovation, few spirits brands in any category can compete with Malibu, the U.S. market’s third-leading rum brand. In 2012, Pernod rolled out Malibu Red, a rum-Tequila hybrid. And earlier this year, tapping into the popularity of sparkling wine, the company launched Malibu Rum Sparkler, a combination of Malibu rum and coconut water that’s infused with bubbles and bottled under cork. Available in Coconut and Peach flavors, the new line extension retails at roughly $17 a 750-ml.

A few rungs down the pricing ladder, Admiral Nelson’s ($10) has been one of the category’s biggest recent success stories. When Heaven Hill Distilleries acquired Admiral Nelson’s from Luxco in mid-2011, the brand had been the recipient of five consecutive Impact “Hot Brand” awards, and industry observers wondered how much upside remained. However, after Admiral Nelson’s growth slowed a bit in 2011 amid the ownership transition, the brand is again enjoying outstanding progress, having added 75,000 cases in each of the past two years, including a 9.4% increase to 875,000 cases in 2013.

For more on the rum category and its top players, see the July 1 edition of Impact.

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