Remember NARFTA ‘ The North American Rum Free Trade Agreement, a controversial pact agreed in the mid-1990s to speed sales in the U.S. of rums from all over the Western Hemisphere that was instrumental in creating today’s boom time for the spirit. You don’t?
Of course, there was no such thing as NARFTA, but looking back, it seems something significant MUST have happened in the 1990s to create the remarkable rise of rum in the past 15 years, something other than simple consumer interest and evolution of taste.
Take a look back: in 1994, rum sales hit bottom, sinking to the lowest level in more than 14 years, achieving less than 12 million cases. But in 1995, the category started adding great pallet-loads of volume rapidly, growing every year since then and never by less than 3%. Altogether, rum as a category doubled in total volume in 14 years to reach almost 25 million cases in 2008, an amount that puts it close the total of all whiskey imported into the U.S. last year, firmly establishing it as the second most popular spirit category.
Driven by the ubiquity of the Mojito cocktail, the boom in flavored rums, the surge of new brands entering the American market and the impact of Latin culture on the U.S. consumer overall, the category also benefited from premiumization: the Distilled Spirits Council of the U.S. reports that premium rums grew 8% last year.
While more than 60% of rum sold today comes from category leaders Bacardi and Captain Morgan, overall rum continues to grow at most levels, last year advancing nearly 650,000 cases (+2.7%) to reach 24.61 million cases. Bacardi is still the biggest seller by far at 9.364 million cases, up 184,000 cases or 2%. Captain Morgan grew the most in sheer volume (up 216,000 cases, or 3.9%, including the Parrot Bay line extensions) to reach 5.453 million cases, and Cruzan shot up as the brand and its range of flavors continued to become a consumer favorite, growing 37,000 cases, or 6.1%, to hit 648,000 cases.
Other brands on the upswing include Admiral Nelson, which added 95,000 cases and 28.8% to hit 425,000, and Sailor Jerry, which jumped 121,000 cases and 61.5% to reach 344,000 cases; both are spiced brands.
Suppliers in general are enthusiastic about the category these days, perhaps none more so than Diageo, which has broken ground in St. Croix, U.S.V.I., for its own distillery where the company plans to produce its first bottle of Captain Morgan in 2011. (The brand is currently produced in Puerto Rico at the Seralles Distillery.) ‘We’re extremely excited about rum in general,’ said Tom Herbst, director of marketing for rum for Diageo. ‘It’s is a very strong category that’s on the rise, and has been getting a lot of attention in the press. We expect it to continue, as we look over the next five years, to grow perhaps as much as 17%.’
Like other brand reps, Herbst points out that rum’s mixability, especially in the iconic rum and cola, fuels most of the growth among traditional and flavored brands, but he also believes that rum is positioned to expand into the ultra-premium space the way tequila and vodka have. However, the current recession is playing havoc with the development of higher-priced brands, says retailer Delon Cunningham, managing partner of Carrollwood Liquors in Tampa, Fl.
‘For years I had many repeat customers who came in again and again for the Ron Zacapa 23, the Ron Diplomatico, Santa Teresa and other high-end rums. But now, many of them are shopping for value, looking for sale brands first.’
Pricier rums are being hit hard, though lower-priced brands and those offering consumers deals are doing well so far in 2009, said Cunningham
This trading down puts new value brands like the recently introduced, Brazilian-made Seagram’s Smooth Brazilian Rum in the sweet spot, said Lisa McCann, senior brand manager for rums at Pernod Ricard USA. ‘Rum is still a growing category and in this economy, that’s something very interesting to us. We wanted to be a bigger part of the rum business.’
Positioned as an off-premise value-premium brand, Seagram’s will be aimed at rum consumers looking for something a little different, with retail promotion and trade advertising support for the standard rum and two flavors, raspberry and citrus.
Flavoring the Pot
Indeed, flavored rums have clearly been significant in growing the rum category in recent times, and the introductions of new types haven’t slowed a bit. In addition to the new Seagram’s flavors, Bacardi followed its Peach with the recently launched strawberry-flavored Dragonberry, while Malibu has just introduced Tropical Melon.
Offering new flavors is important as consumers continue to show serious interest in them, noted Gordon Chisholm, brand director for Bacardi. ‘We need to be innovative in this business; it’s part of being the category leader. People are relying on trusted brands in economic hard times.’ Dragonberry brings together the flavors of strawberry and dragon fruit, the latter said to be high in antioxidants.
While flavors have spurred growth, brands have also been busy developing a better quality reputation with various line extensions. Mount Gay Rum this year released 1703 Old Cask Selection ‘ a high-priced, aged dark rum made from a blend of rums ranging from 10 to 30 years old.
Diageo, for its part, is following up the national roll-out last October of superpremium Zacapa, an aged Guatemalan rum it now co-owns. ‘We see really strong support from consumers and trade so far,’ said Herbst. ‘We’re excited about Zacapa’s potential, and we’ll ramp up marketing in the coming year, focused mostly on gatekeeper and influencer activity. We want to position it as one of finest brown spirits in world.’ Diageo is also currently expanding markets in the country for Oronoco, a superpremium Brazilian rum made from fresh cut sugar cane.
The focus on premium and superpremium brands is a sea change for rum. ‘Rum historically has been the booze cruise, party spirit but it’s grown up a lot,’ said Andrea Bearbower, the Cruzan brand education manager. Many rum brands have a history and heritage like that of Cognac and whiskey, she added, and developing that reputation among trade and consumers may help continue to speed growth. Cruzan Single Barrel is positioned as a whiskey drinker’s rum, for instance.
Flavored rums may create variety in the marketplace, but the more aged and handcrafted rums have a ready-made consumer base in spirit drinkers interested in spending a little more on an aged product. Connecting sipping rums with other high-end spirits is part of the way marketers expect to reshape rum’s imagery at the premium and superpremium end, explained John Pennachio, director of spirits for Kobrand Corporation, importer of Jamaican Appleton rum. ‘Appleton Estate Reserve and Appleton Estate Extra 12 year old remain the focal point of our mission as we address the needs of a transitional consumer, who is attracted to more complex and flavorful rum offerings, especially when they are available from a storied producer with over 250 years of rum-making expertise.’
For the Appleton Estate Range (Appleton Estate Reserve, Estate Extra 12 Year Old, Estate V/X and Estate 21 Year Old, with a 30 Year Old in the offing), that focus includes an outdoor and magazine ad campaign showing how Appleton is handcrafted and in some cases, best consumed without a mixer; trade information communicates how Appleton is produced from estate-grown sugar cane using small copper pots, rather than being a mass-produced spirit.
The ad campaign, using the tagline, ‘The Rum That Needs Nothing. Sip Up,’ is targeted at whiskey drinkers, and looks to establish Appleton Estate as the standard of the premium rum category and to counter stereotypical rum cocktails. One ad reads: ‘The aroma of butterscotch, orange peel and vanilla should enter your nose. Not a cocktail umbrella.’
Numerous high-end brands are angling in these same waters, expanding beyond their cult status through consumer and trade out-reach. Marketers of Pyrat, the luxury Anguillan rum imported by the Patron Spirits Company, have created an interactive website for the three rums, Pyrat Cask 1623, Pyrat XO Reserve, and Pyrat Pistol. The site (www.pyratrum.com) is the first consumer-focused brand campaign to support the high-end spirit. Cocktail recipes, the history of Pyrat, a newsletter opt-in, and a quiz bolsters print advertisements and a trade campaign.
Moet-Hennessy USA’s 10 Cane rum is broadening its range through sampling, off-trade merchandising and increasing consumer pull, according to brand director Sarah Gorvitz. For the third consecutive summer, the brand’s sampling program tours through select major markets where reps press real sugar cane in front of consumers to explain how the brand is made from cane, rather than molasses. They’re offered tastes of Cane & Cola, and a Mojito. The brand is also expanding the 10 Cane pitcher on-premise program directly to consumers, who can purchase a 10 Cane pitcher, monkey stirrer, acrylic Collins glasses and recipes.
Other rums are working hard in this arena as well. Ron Abuelo, an estate grown superpremium rum produced in Panama crafted in Panama by Varela Hermanos, a 100-year-old company, recently signed a deal with Van Gogh Imports for broader U.S. distribution. Already a popular brand in Florida and other states, Abuelo will add to the Anejo and Anejo 7 Year Old already in the market with Anejo 12 year old rum, to be rolled out later this year.
For category leader Bacardi, in addition to the widely supported roll-out of Bacardi Dragon Berry, the rum behemoth plans to introduce a new ad campaign and a consumer education initiative called ‘Project Belief,’ designed to educate both consumers and trade about rums. They have also added another prepared cocktail to their line: Bacardi Classic Cocktail Raspberry Mojito, made with Bacardi Superior, natural lime and mint flavors and raspberries and the second in its ready-to-drink portfolio, and are focusing overall on more consumption of cocktails, promoting home and bar consumption of the Mojito and the original Bacardi Daiquiri.
Bacardi has also developed new packaging to upgrade their eight flavored rums, to be rolled out over the course of 2009.
For Captain Morgan, the brand switched from its long-term ‘Got a Little Captain in You’ ad campaign to a new approach, ‘Calling all Captains,’ with significant investment in television and on-line, said Herbst, focusing on 21 to 25 year old males who spend at least 10 hours per week on line via texting, Twitter and social websites ‘to get Captain Morgan into that occasion when he’s doing this activities.’
Captain Morgan will continue its major off-premise promotional focus on event windows traditionally strong with the brand – Halloween, NCCA Men’s Basketball Tournament, Fourth of July, Memorial Day, Mardi Gras and year end holidays – through in-store displays. The summer features Captain and cola promoted as a casual beverage that can compete with domestic beer, through the introduction of the ‘40 pack’ ‘ a 1.75 bottle of Captain Morgan with a two liter bottle of cola. (A 1.75 liter bottle serves 40 drinks, said Herbst.)
Malibu Multifaceted Approach
Malibu, looking to bounce back from two years of losses, is taking a multi-faceted approach, first by adding melon to their mix that now includes coconut, mango, pineapple, passion fruit and banana. Melon seems to have an open field, said McCann. ‘Nobody’s really leveraged that melon flavor in the past and it’s not overexposed. Also, it fits perfectly with the Malibu tropical island theme ‘ we’re always conscious of what fits within our brand.’
While nearly 85% of Malibu sales come from the coconut variety, giving loyal consumers another option is an important way to build brand loyalty, McCann said. Like with Malibu Tropical Banana, the new flavor is mixed with coconut – in this case, a blend of watermelon and cantaloupe. The tag line – ‘Malibu ‘ grab some melons,’ was meant to convey the casual nature of the brand. ‘So many brands take themself seriously, but Malibu is young and fun and you can do a lot of things with these rums,’ said McCann.
The $3 million launch included advertising on television, in print and online, where the brand is working with sites such as Pandora and to integrate melon imagery. They’ve also developed widgets, viral videos and online apps for the iPhone.
Malibu intends to enhance its fun and sun association through a two-year deal as official spirits sponsor of the Association of Volleyball Professionals (AVP) Crocs Tour. Malibu will be integrated into the nationally televised events through signage, lifestyle shots from the sponsor village and other on-screen exposure. The sponsorship includes extensive on-site signage, a Malibu ‘Get Your Island On’ cabana in the sponsor village where guests can sample Malibu cocktails. Malibu is supporting the program with local advertising and retail display materials.
For Cruzan, the brand will follow up on its recent packaging redesign (meant to create a higher quality image for the brand and to focus more on the rum’s heritage) with a national advertising campaign, creating more awareness of the rum as a spirit that was created and has long been made in St. Croix.
Bearbower’s work as brand education manager includes Cruzan’s ‘Rumology’ program, in which she presents the brand’s story to journalists and works with sales personnel nationally. Developing awareness among consumers of Cruzan as an authentic product with a real story is key. ‘With consumers, it’s about people being aware of what rums are about and get them to think of it as a serious spirit.’ In presentations, she’ll use Cruzan’s barrel samples, types of molasses, even examples of fusel oils to show what actually goes on in the production of rum, and what the raw products and byproducts are like.
Other brands are focusing on reworking or positioning their line extensions better through repackaging or redesign. Mount Gay introduced a new bottle and package design for Mount Gay Extra Old Rum, the first marquee in the portfolio to undergo the packaging change intended for all iterations. ‘We knew it was time to enhance the entire customer presentation and the new packaging had to be sleek, fresh, innovative and sophisticated, ‘ said Eric Maldonado, brand director, Mount Gay Rum for importer RÃ©my Cointreau USA. The brand also launched Mount Gay 1703 Old Cask Selection, made from a blend of rums aged 10 to 30 years, retailing for $99.99.
Mount Gay execs hope the redesign will allow the brand to target an expanded audience of rum drinkers while not alienating the core franchise within the sailing community, Mount Gay’s long-time fan base. Mount Gay plans to complete the repackaging of their entire range of rums by 2010.
Puerto Rican rum Don Q is putting new emphasis on the U.S., and expanding its distribution. More popular in Puerto Rico than Bacardi, the brand takes on new importance for the island community as Captain Morgan plans its move all production from Puerto Rico by 2011.
To build awareness in core markets like New York, Don Q has participated in such events as film premieres, connecting with chefs and bartenders at such events as a cocktail reception at ‘Jazz at Lincoln Center’ in NYC, with drinks by TV mixologist James Menite of the Porterhouse and Esteban Ordonez of Apoteke, two NYC on-premise operations.
The brand is focusing on three iterations: Don Q Grand Anejo, Limon and Coco. Grand Anejo is a superpremium rum aged up to 12 years, Don Q LimÃ³n is made with Puerto Rican limes and aged one to three years, and Don Q Coco is also aged one to three years. All three launched in 2009 with full national distribution by fall 2009.
For some rum brands, lifestyle marketing continues to be the most important aspect of building loyalty. Admiral Nelson, one of the fast growing spiced rums, now offers a flavor (coconut) and both are being promoted through online programs like the Nelson’s Finest photo contest, where participants post pictures of themselves or friends on line, and co-packs like the Admiral Nelson Blue Camo Bucket Hat. The other hot spiced rum, Sailor Jerry Rum, has continued to benefit from the tattoo craze; Sailor Jerry was the nom de tattoo of Norman Collins, considered one of the 20th century’s best-known tattoo artist and designer. Sailor Jerry Clothing, inspired by the original artwork of his tattoos, has evolved from a small line of hand crafted t-shirts to a lifestyle brand that includes lines for men and women, house wares and accessories, as well as rum.
Another major lifestyle branded rum, Tommy Bahama, this year is focusing on the tiki drink phenomenon, introducing collectors edition value added packaging. The packaging embodies a tiki theme through artwork and texture of the packaging as well as with summer party cocktail solutions with signature tiki recipes. The brand has also partnered with the newly opened Yankee Stadium with the opening of Tommy Bahama’s Bar, joining the established range of Tommy Bahama lifestyle products including apparel, accessories, home furnishings, restaurants and retail stores. The bar overlooks the stadium’s Great Hall, which serves as the main entrance for fans.
Co-packaging continues to be important, and for brands like Depaz, a rhum agricole from Martinique, smart selections can get the word out about why such a rum is different from the range of selections. The Depaz co-pack offers a 750 ml of Depaz Blue Cane Rhum Agricole with a 70 cl bottle of Depaz Cane Syrup, a sought-after cocktail ingredient.
Other Martinique rums like Clement, and other high-end rums including Nicaragua’s Flor de Cana, the Domincan Republic’s Matusalem, Venezuela’s Ron Diplomatico and others, have focused their marketing and promotion attentions primarily on building word of mouth with bartenders and on-premise accounts. But as superpremium rums grow in popularity, retailers have many brands to choose from when they think about building a rum reputation
‘We’ve learned a lot from the whiskey world, where people like to try new things from different regions and special bottlings, and to learn about the process,’ said McCann of Pernod Ricard. ‘The rum category may become more like that as people get a chance to try all these different types of rum.’
What About CachaÃ§a?
These days, rum buyers can choose from an embarrassment of riches when stocking their shelves. There are rums made from molasses or from fresh sugar cane, young rums or those aged for many years, rums not only from the Caribbean islands of British and Spanish heritage, but lately from the French islands and Central America.
Also generating excitement is the wave of cachaÃ§as (Brazilian sugar cane rums) entering the market. They’ve already benefited from the latest cocktail craze for the Caipirinha, (KAY-per-EEN-ya), and are starting to make their way onto restaurant chain lists.
Already the most popular spirit in Brazil, the homespun cachaÃ§a (pronounced ka-SHA-suh), like rhum agricole from the French Caribbean, is made from fresh sugar cane rather than molasses. Long considered a cheap, industrial spirit, cachaÃ§a has never had much impact in the U.S., but as interest in South American culture has exploded, some entrepreneurs and producers have been trying to develop smoother and more easily consumed varieties specifically for the U.S. and British markets.
Key to cachaÃ§a’s future success in the U.S. is the Caipirinha, made with limes, sugar and ice in a recipe that somewhat follows the original Daiquiri. But in the Caipirinha, the limes, sugar and spirit are muddled together, the crushed limes releasing essential oils that make the drink more aromatic, flavorful and adult. Packed with more ice and spirit, the resulting shaken cocktail and varieties made with tropical fruits has started to develop fans.
CachaÃ§a as a spirit is more than 400 years old, and Brazil currently produces one billion liters a year through more than 4000 brands. In the U.S., brands like Pitu, Ypioca and 51 have been long available, and have been joined most notably by Leblon, finished in XO Cognac casks for up to 6 months and now part owned by Bacardi; the brand reached 27,000 cases in 2008. Another brand in wide distribution, Agua Luca, is part of the Heaven Hill portfolio, and other brands are being pushed along by entrepreneurs looking to hit the big time. Now spreading their wings, brands like Sagatiba, Beleza Pura, Cabana, Cuca Fresca, Boca Loca, Moleca, Fazenda Mae de Ouro, Weber Haus, Batuque, Velho Barreiro and others are making inroads; even single barrel and aged varieties are now available. Some of the basic brands are seeking top prices ‘ Cabana’s suggested retail price is about $34.99 per 750bottle.
When buying premium cachaÃ§a, look for aromas of fresh sugarcane, cucumber, white flowers and sharp citrus. Some cachaÃ§as get a dose of sugar after distillation, and many of those made expressly for the U.S. have changed recipes over the years, so as the category grows, be attentive to changes.