The Numbers say Rum isn't Keeping Up

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The broad category hasn't participated much in the premiumization trend among spirits;  better cocktails may be key.

 

What’s the matter with rum? Nothing, judging by its perpetual place as one of the world’s best-selling spirits. But rum hasn’t taken much part in the premiumization trend among spirits in the US, despite spurts of interest in tiki cocktails and the presence of long-aged and luxurious rums here.

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According to Nielsen CGA On Premise measurement data (latest 52 weeks ending July 15, 2017), tequila has now overtaken rum as the fourth biggest sub-category within spirits in the US, accounting for 11.7% share of spirits volume sales while rum has declined to 11.4 percent.

According to Scott Elliott, SVP of Nielsen CGA, however, there are dynamics at play that indicate rum is still a category worthy of attention. "As a category, rum has plenty of options to meet the desire for premiumization and experience that on-premise visitors come to expect. Consumers who purchase rum out-of-home should be top of mind to retailers given they are younger, use the on trade more than average, spend more and have a higher preference towards the highest priced cocktails."

Rum volume declined in the last 52-week period by 0.4%, according to the report, while overall spirits grew nearly two percent. While there exist numerous super-premium, aged expressions of rum from virtually every producer and brand, the rum category has a problem in that its most popular styles – white, spiced and flavored – haven’t seemed to be able to create customers who want to step up in price or quality. The attributes of the popular but stagnant types of rums – fresh, mixable, flavored, easy to drink – don’t transfer easily to more aged expressions, though of all aged spirits rum might be the most approachable.

Long dominated by two enormously popular brands (Bacardí and Captain Morgan), the rum category lost ground for the fourth year in a row in 2016, with the latest numbers from Nielsen indicating that’s not going to change when the year is finished.

But the Nielsen report holds out hope. It suggests that a new wave of premiumization is taking shape, driven by ultra-premium brands which are growing about 16%, though from a relatively small base. And flavored, which accounts for 22% of the category, did grow slightly (one percent) in volume year-over-year.

According to a Nielsen CGA On Premise survey, consumers who say they drink rum out-of-home prefer light rum (56%), spiced rum (40%), golden rum (31%) and dark rum (31 percent). And rum's mixability makes it a staple of cocktail menus around the country, with the Mojito, Mai Tai and Daiquiri landing on the top 10 list of the country's most popular cocktails.

"As consumers continue to visit on-premise channels for the experience, bars and restaurants should continue to broaden their rum range in the same way it does other categories,” says Elliot. “There is a portfolio distribution opportunity where, compared to the well-represented Light Rum category (stocked in 90 percent of traditional on premise), 43 percent of bars and restaurants don't stock a dark rum, and 24 percent don't stock a golden rum."

Elliot recommends that operators move rum beyond the confines of generic serve styles like Rum & Cola and place additional focus on premium mixers like ginger beer; offer a larger range of aged sipping rums; and feature interesting takes on classic cocktails like a rum Old Fashioned, if they want to boost their rum sales.

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