Analysis

Today's Market Trends - Rum Essentials, Part II

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just-drinks, in association with The IWSR, presents this seven-part review of the global rum category. In part two, we consider the sector's performance on a by-market basis.

  • Europe

Trends are mixed for rum in Europe, epitomised by the German market, where there is a continued slow decline characterised by the possible peaking of spiced rum along with white rum resilience.

Signs of recovery are rife in the Spanish on-trade, but rum faces stiff competition from Scotch and gin; more lucrative returns are offered for international players in France, despite the preferential tariff status afforded to rhums agricoles there.

Growth in white rum and continued dynamism for spiced drove the UK market upward in 2015, while the Czech Republic was buoyant, thanks to the trendy status in the country of dark, sipping rums.

  • The Americas

Rum's declines continued in the US: spiced lost ground thanks to the Sazerac Fireball phenomenon, and white rum was also down. Only premium-plus rums posted sales gains, but the segment remains insignificant to date.

Spiced rum helped boost volumes in Canada, but the core market of local white and gold rums fell back, thanks to an ageing consumer base.

In the Caribbean, the Dominican Republic recorded slight gains on the back of premiumisation, with some evidence of trading-up among white rums in Cuba, despite the market's reputation for low prices.

In Latin America, unhelpful economic trends led to a double-digit sales decline in Brazil and trends elsewhere were mixed: Mexico flat, Colombia up slightly, Venezuela and Chile down.

  • Asia-Pacific

The huge Indian rum market continued its decline in 2015, both in the dominant dark segment and in white rum. The expectation is that volumes will continue to fall, with value rising as consumers trade up.

Australia's rum volumes dipped below 1m cases last year, thanks to declines for local rum Bundaberg; owner Diageo has unveiled a new strategy to revive the brand.

  • CIS/Russia

As Russia's economic woes continued, rum bore the brunt, with dark and white segments both suffering double-digit sales declines in 2015. However, spiced rum withstood the difficult trading environment to post healthy increases, albeit off a small base.

  • Travel Retail

Traditionally a bit-part player in the Duty Free channel, rum's sales fell back 2.3% in 2015 to 1.6m cases. However, brand owners are increasingly tapping into Travel Retail's potential for premiumisation.

This is exhibited by activity behind the likes of Diageo's Zacapa Edición Negra, Bacardi's reserve rum range and Berry Bros & Rudd's Penny Blue XO.

Top 10 markets for rum, 2009-2013 ('000s nine-litre cases)

Source: The IWSR

Market Key Views

  • Review

Rum's recent global performance has been characterised by a gentle decline, with a slight fall in volumes in 2015 and less-than-dynamic growth since 2010.

  • Insight

The category remains one dominated by low-priced and value products, which account for three-fifths of global sales despite the premiumisation strategy adopted by a number of major players in the spirits industry.

  • Forecast

Rum's future success may depend on the ability of brand owners to exploit its versatility. Rum can be clear and cocktail-friendly, or mellow, aged and complex like a Scotch whisky or Cognac, opening up a range of possibilities for growth.

  • Strategy

Brand owners may also wish to play more on rum's undoubted provenance, whether it comes from the Caribbean or Latin America. But, in doing so, they will need to focus on the vital US market, which has been a recent disappointment for the category.

To continue to part III of the report, click here.

For the just-drinks Rum Essentials content page, click here

All data has been sourced from just-drinks' joint report with The IWSR, Global Rum Insights.


Sectors: Spirits

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