Something for Every Taste

If brown is the new black, then rum is the new vodka. The second largest spirits category behind vodka, rum accounts for north of 11% of the industry’€™s volume and about 13% by dollar sales. Rum has been outpacing industry growth, up more than 5% last year. In fact, the category recently has been demonstrating the same verve and excitement as vodka, mirroring it in many respects. The core of the category ‘€” white rum ‘€” is a very mixable spirit and the base of a large number of classic cocktails especially popular among younger drinkers. Rum makers, like vodka distillers, also have branched out with a slew of flavored products that fit perfectly into the cocktail craze. And while rum has largely been a commodity category driven by the world’€™s top-selling spirit, Bacardi, more recently distillers have realized a tremendous opportunity in the super- and ultra-premium segments of the business.

Rum, however, has an advantage vodka doesn’€™t. Like its cousin tequila, most white rum is barely aged before being bottled. But also like tequila, rums that are aged end up with unique and interesting flavor characteristics that make them worth sipping and savoring.

‘€œRum has a really broad appeal,’€ said Todd Nickodym, director of marketing for Luxco, ‘€œacross income, education, age, race and other demographics.’€

Consumers of all stripes are flocking to rum for a variety of reasons, not least of which is the diversity of products in the category. There’€™s a flavor for every taste, and in today’€™s experimental, experiential cocktail culture, flavors is everything.

Mojito Mojo

Nothing epitomizes the essence of rum’€™s current popularity quite like the Mojito. Like the cocktail that sparked the explosion in vodka sales, the Cosmopolitan ‘€” made famous by television’€™s Sex & The City ‘€” the Mojito has spread like wildfire. The Mojito has exposed consumers who may have thought of rum in no terms other than ‘€œrum and Coke’€ to rum’€™s possibilities.

Perhaps no company has captured the spirit of the Mojito like Bacardi. While the fore ‘€œrummer’€ of the Mojito dates back to 16th Century pirates, the Cuban version we know today was likely first made with Havana Club rum. Bacardi, however, has done an excellent job of leveraging consumer interest in Latin culture and the popularity of the mojito.

‘€œWe’€™re happy to see that rum is on fire,’€ said Margaret McDonnell, brand director for Bacardi USA. ‘€œIt’€™s not a phenomenon of the last year, but the past several years, and one of the hottest drinks is the Mojito. It’€™s not all our doing, but we’€™re taking advantage of the trend.’€

Bacardi, led by Superior, accounts for nearly 40% of rum sales. Brand sales, which include expressions like Bacardi Gold, Bacardi Select and Bacardi 8, rose 5% last year to more than 9.4 million cases.

For about the third year running, Bacardi is making the Mojito the center of its promotional pitch through the summer.

‘€œThe big 360-degree mojito approach, which includes television ads, a web presence, promotions and more, has been very successful in bringing consumers to the brand in the summer,’€ McDonnell said. ‘€œAnd once consumers have a bottle of Bacardi to make mojitos at home, they’€™ll try other cocktails.’€

In the fall, Bacardi will once again leverage the bat on its logo with promotions and POS materials geared for Halloween. During the holidays, Superior will be promoted in the same communications push with more of the brands in the Bacardi family to remind consumers of the range of products Bacardi offers.

And leading off the new year, Bacardi will leverage another consumer trend ‘€” low-carb diets ‘€” with a push behind Bacardi and diet cola.

Bacardi also has had good success so far with its ready-made Bacardi Classic Cocktail Mojito, launched in March. ‘€œWe took our time before introducing a ready-made product,’€ said McDonnell, ‘€œbecause we wanted to get it right. But we’€™ve obviously shown our hand; classic cocktails are not limited to the Mojito. We think there might be an opportunity for a classic Cuban Daiquiri ‘€” the original shaken style ‘€” and there’€™s a great recipe and trademark story behind the Bacardi Cocktail, too.’€

Spice Is Nice

Spiced rum is almost as popular as white rum. Captain Morgan Original Spiced Rum leads the category in dollar share, and continues to grow, up 3.9% last year to 5.75 million cases.

Captain Morgan is launching the ‘€œUltimate Pose Off’€ campaign this summer. From Memorial Day until Labor Day, the promotion will feature the stars from E! Network’€™s hit reality TV series The Girls Next Door, filmed in the Playboy mansion. The campaign will be supported by initiatives, including television, online, off-premise point of sale promotion, on-premise activations, and public relations components. The winner of this year’€™s Ultimate Pose Off will win a trip to the Playboy Mansion’€™s Halloween party with the Girls Next Door

Other brands are happily taking advantage of spiced rum’€™s popularity and the trail blazed by Captain Morgan. Luxco’€™s Admiral Nelson Spiced Rum grew 20% in 2007 to 330,000 cases. While small compared to a brand like Captain Morgan, it has quickly become a real force in the trade, and continues to make inroads with young male drinkers.

‘€œDrinkers are having the spiced rum experience on-premise, but look for value off-premise to replicate that experience in their own homes,’€ said Nickodym.

Value is the brand’€™s watchword. In addition to an attractive retail price, the brand offers additional value in the form of on-pack offers where legal that appeal to the target audience. Past offers have included visors, T-shirts, music downloads and most recently a nylon drawstring tote bag. Another on-pack offer will precede the holidays.

Sailor Jerry, a spiced rum from Wm. Grant & Sons, also is making a big splash with younger male drinkers. The brand saw explosive growth in 2007, up 60% to 200,000 cases, proving its appeal. With its edgy bad-boy image, Sailor Jerry leverages ‘€œflash’€ (tattoo art) and alternative music on its website, gaining new followers every day.

Savor The Flavor

The cocktail craze of the last two decades has been all about flavor. Consumers continue to look for new flavor experiences, and rum mixes well with more exotic fruit flavors. Taking their cue from vodka, rum makers have introduced a steady stream of flavored rums.

Flavored rums are all about creating a sense of fun and relaxation. Coconut-flavored Malibu, first introduced in 1980, quickly set the tone and became a consumer favorite. The brand now includes five flavors, the most recent of which’€”Tropical Banana’€”was introduced last year along with a packaging change. Sales were up 10% last year to more than 1.6 million cases, leading the flavored rum category.

‘€œIf we’€™ve learned anything from watching the vodka category,’€ said Malibu brand manager Lisa McCann, ‘€œit’€™s that flavors are cyclical. So we introduced Pineapple and Mango in 2004 and Passion Fruit in 2005.

‘€œNow we’€™re building on what we did last year. Our focus is on new print, radio and television ads featuring our theme ‘€˜Get Your Island On,’€™ and recruitment and sampling in on-premise accounts. The scale of what we’€™re doing creates lots of awareness, and as consumers become more familiar with the brand, they’€™ll try it at home.’€

Cruzan is another rum brand driving the flavored segment. Up 6.3% in 2007 to 590,000 cases, Cruzan has benefitted from its two-year ownership by Absolut Spirits, and is making inroads with new flavors and new insights into what rum drinkers want.

‘€œConsumers are ready to move on in the rum category,’€ said Peter Wijk, Cruzan brand director. ‘€œThey’€™re ready to both move up and move to flavors. In light rum there’€™s not a lot to move on to, and there’€™s a lot of space between premium and ultra-premium products in the category.’€

Cruzan is positioned to take advantage of all the trends with a broad product line, but flavors are helping the brand make a name for itself. Last year Cruzan successfully launched Black Cherry, and this spring it brought out Guava.

A new campaign is running in key markets such as Florida, New York, New Jersey, Boston, Chicago, Texas and California. A redesigned package for the entire brand is in the works for October, and the campaign will evolve as the new package rolls out.

Bacardi, the big boy on the block, hasn’€™t stood still when it comes to flavored rums. Bacardi Limon, the brand’€™s first, has been one of the fastest-selling flavored spirits of any kind on the market. Bacardi followed that up with ‘€œO,’€ and now has Razz, Big Apple, Coco, Grand Melón and most recently Peach Red. The flavored line gets an updated package in September that reflects consumers’€™ desire to trade up, according to McCann. ‘€œEverything about it is better,’€ she said.

Captain Morgan, of course, has its Parrot Bay line of flavored rums in coconut, mango, passion fruit and pineapple.

Premiums Pay Off

Though a much smaller segment of the category, the high end is where growth is beginning to truly explode.

‘€œThe ultra-premium segment ‘€” bottles $26 and above ‘€” is leading the growth charge, up 50% last year,’€ said Julie Blodgett, brand manager for Flor de Caña, a Nicaraguan rum now distributed by Skyy Spirits. ‘€œConsumers now see that rum is more than Bacardi and Captain Morgan.’€

More discerning and better educated about spirits of all kinds, consumers have sought out premium brands for new taste experiences and as an expression of their own individuality. Premiumization has occurred across categories as consumers trade up to better quality spirits and more cachet, and rum is now seeing the benefits.

There are two facets to the trend. On the one hand, rum makers are giving consumers a more premium base spirit ‘€” white rum ‘€” to incorporate into all their rum drinks, like Mojitos, Daiquiris, and so forth.

‘€œThe idea of spending $25 for a bottle of vodka 25 years ago would have sounded crazy,’€ said Rob Bryans, brand manager for 10 Cane Rum. ‘€œMoet-Hennessy is clearly looking to capture the top end of the category in vodka [with brands like Belvedere and Chopin]. We want to do the same thing with rum.’€

The new silver rums on the market, like premium blanco tequilas, are capturing the fancy and wallets of consumers. Brands like Bacardi’€™s Rubi Rey and 10 Cane are positioned and packaged for consumers who look for image and style. But they also offer ultra-premium rum to go with their high-end pricing.

Education Programs

Each brand takes its own approach, but like distillers of other spirits, rum makers have embarked on education programs as the key to differentiating their products from standard white rum and from each other.

Tommy Bahama, of course, leverages its famous name, licensed from the fashion brand that has spawned not only lines of clothing and accessories, but furnishings, cafes, and now, of course, rum. The diversity of Tommy Bahama products gives the brand a great opportunity to cross-merchandise. More than $5 million in advertising and a slew of special events, charity tie-ins and value added packages like a picnic kit or on-pack Mojito mix have helped spread the word and give the brand an upscale image.

Brands like 10 Cane and Rubi Rey focus even more heavily on the product ‘€” quality ingredients and how they’€™re made ‘€” than on image alone. Rubi Rey, for example, claims to be the only single-barrel finished white spirit on the market. The premium rum is aged in oak barrels for 90 days to give it smoothness.

‘€œOur perfect consumer is a Scotch drinker on training wheels,’€ said Aaron Burns, senior global brand manager, Bacardi. ‘€œWe always show the product on the rocks, letting consumers know that this is a great alternative to Johnnie Walker Black on the rocks.’€

A team of eight brand ambassadors is traveling the country to explain why 10 Cane Rum from Trinidad is better than your standard rum. A ‘€œrhum agricole’€ made from pressed cane juice not molasses, 10 Cane has given the team a show-and-tell presentation that’€™s very convincing to take on the road. Ambassadors use a cane pressing machine to demonstrate how 10 Cane is made, then make cocktails with the brand using fresh ingredients.

‘€œOur challenge at the end of the day is that 10 Cane is another spirits bottle on the bar or shelf,’€ Bryans said. ‘€œLooking good is not enough. We have to educate people as to why luxury rum. The American way of thinking is ‘€˜What’€™s the best? What will make the best cocktail?’€™ What we have to do is tell people if they want the best rum drink, they should drink 10 Cane.’€

Mount Gay, the Barbados rum known for its signature Eclipse Gold and Extra Old expressions, launched Mount Gay Eclipse Silver this spring. Made with a unique double distillation method, the white rum has a more complex nose and flavor than typical white rums. The new 80 proof rum has a suggested retail price of $15.99 for a 750 ml bottle.

Badge of Authenticity

Other distillers are taking the tack that if age doesn’€™t necessarily give them wisdom, it does give their rums more flavor. Rums that have been around a while are making a comeback, (or inroads for those newer to the American market). Well-known brands like Mount Gay, Appleton Estate and Gosling’€™s are taking advantage of the newfound interest in aged and high-end rums. And lesser-known brands from around the Caribbean and Latin America are finding a willing and eager audience among consumers.

‘€œPremium and ultra-premium rum is the next discovery,’€ said Jo-Ann Craner, senior brand manager for Appleton Estate at Kobrand. ‘€œPeople are looking for quality products, and brands like Appleton Estate are poised to take advantage of that. As people’€™s tastes evolve from liquid candies, they’€™re looking for something that holds its own both alone and combined with fresh juices and ingredients in cocktails. The new wave is more about flavor in the glass that can stand on its own in terms of sipability and mixability.’€

Appleton Estate has expressions like VX (a blend of 15 different rums), Reserve (a blend of 20 rums), 12 year-old and 21 year-old in addition to white and Jamaican rums. People looking for heritage and authenticity from aged spirits can find it in brands like Appleton Estate, which has been around since 1749.

Gosling’€™s is another venerable rum brand. The Bermudan company is more than 200 years old, but only in the past five years has it focused on the export market.

‘€œThe cocktail culture continues to flourish, and bartenders are looking for quality spirits and something new and different,’€ said Malcolm Gosling, a seventh-generation member of the family-run company. ‘€œIt has taken a while for some rum producers to get their product out and into the mouths of consumers so they taste the quality of an aged rum.’€ It introduced Family Reserve Old Rum in 2004, which joined Gold Bermuda and the iconic Black Seal in the line.

Depaz, another rum distributed by Kobrand, traces its origins on Martinique back to 1651. A ‘€œrhum agricole,’€ Depaz is made from 100% blue cane, one of the most difficult to grow. The higher sugar content of blue cane, however, gives Depaz a more floral nose and flavor than molasses-based rum, according to the distillery. Depaz Amber Rum is aged in oak for 12 to 18 months and has earned an Appelation d’€™Origine Controlée (AOC) designation.

Available in about 15 markets now, Depaz expects to have distribution in 35 states before the end of the year.

Flor de Caña, from Nicaragua, has several marques, including a 12 year-old, 15 year-old and 21 year-old, giving it something for everyone. Made by one family since 1890, the brand is the only rum in Nicaragua, and the distillery also makes sugar and ethanol. The cane by-products are burned to generate power for the distillery, and excess power is pushed out to the grid in the country, stimulating the economy and helping keep the company ‘€œgreen.’€

The brand plans to refresh its product packaging within the year, and launches its website redesign this month with new cocktail recipes and a new look.

Even tequila makers recognize the parallels between their products and rum. The Patron Spirits Co. recently introduced Pyrat Rums, a line that includes Cask 1623, a fine aged dark amber rum; XO Reserve, a blend of 15 year-old rums; and Pyrat Pistol, a lighter-bodied blend of aged rums.

The big rum producers are sitting up and taking notice. Cruzan is putting more emphasis on its Single Barrel Estate Rum, first introduced here in 1997 and the world’€™s first single-barrel rum, according to the brand. And Bacardi says it has plans to do more with its aged and bolder flavored rums.

‘€œWe’€™re now looking at how to do a better job of leveraging Bacardi’€™s rich heritage, like the bat on the label,’€ McDonnell said, ‘€œand educate consumers about things like the difference between Bacardi Gold and Bacardi Select.’€

Still, one thing’€™s for certain: whichever way the wind blows, rum’€™s continued growth will keep producers sailing all the way to the bank.

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