Diageos Captain Morgan accounts for about 30% of the US rum market

Diageo's Captain Morgan accounts for about 30% of the US rum market

Renewed distributor optimism for Diageo's Captain Morgan has added weight to prospects of a US turnaround for the rum brand.

Just over one-third of alcohol wholesalers in the US expect Captain Morgan to grow in the next six months, according to a Morgan Stanley poll released this week. In April, just 18% of respondents to a similar poll believed value would increase.

The change in attitude follows new investment from Diageo, which acted after months of declining sales growth for Captain Morgan dating back to September 2014, according to Nielsen and Morgan Stanley data. 

The company launched new shot variant Cannon Blast last September and has also created a so-called "activation army", a team of Captain Morgan on-premise brand ambassadors operating in 40 US cities. 

In July, Diageo CEO Ivan Menezes said he was working to ensure that price premiums on Captain Morgan were "not too high" after admitting that the brand was dragging down overall US performance.

Data from Morgan Stanley published this week shows that Diageo's work is starting to pay off, with Captain Morgan turning negative US share trends into positives since March this year. The rum is also outperforming Bacardi with a 1% jump in 52-week rolling sales for July compared to a 1% decline for the Bacardi-owned rival brand.

Captain Morgan accounts for 30% of the US rum market by value compared to Bacardi's 32%.

"Given these results, and the continued commercial focus on the brand from Diageo, we expect the positive trends... to continue," Morgan Stanley said.

Meanwhile, US distributors in the survey were increasingly bullish about the overall alcohol industry's prospects. Just over half (53%) of respondents said they were "optimistic" for the next six months of business, compared to 44% in April. More than 80% said they expected volumes growth over the same period, though that number was down from 90% in April.

The Morgan Stanley report is the finance firm's second proprietary survey to directly survey spirits distributors. The company said that because the survey is more forward-looking than tracking monthly data, it hopes to "identify key trends before they appear in Nielsen data and sell-side forecasts".

The first survey was released in April.