“There is real excitement in the premium rum space,” says Sean Yelle, category director, dark spirits, at Campari Group, whose portfolio includes Appleton Estate and Wray & Nephew.
That’s due to a confluence of factors, says Yelle: better products, wider availability and gatekeeper bartenders who engage customers and drive premium rum. “It’s taken time, but it is past the stage where consumers saw rum as a cheap, fun, poolside drink,” Yelle adds. “Now they are appreciating delicious aged rum.”
The rum category ticks steadily away as a mixed drink mainstay, although whiskey and tequila have lately received the lion’s share of media spotlight, marketing and booze-geekery. That is changing, however, with greater availability of aged, sippable rums and increasing interest by bartenders and consumers in unusual barrel finishes and funky releases.
It may not happen overnight, though.
“The total category is a bit down, as white rums are just battling for share,” notes John Eason, COO and executive vice president of Serralles USA, representing Don Q Rum. “The aged rum space is robust, but still on a small base.”
Consumer excitement here seems focused on top-shelf bottles.
“The super-premium price tier, while still small in relative terms, continues to grow in the high double digits,” says Jason Schladenhauffen, CEO and president of 375 Park Avenue Spirits, whose portfolio includes the Colombian brand Dictador.
Indeed, much of the innovation in the rum category is at the super-premium level, which grew a whopping 28.5% last year to $179 million, according to the Distilled Spirits Council (DISCUS). That’s a greater increase than any other category except Cognac.
High-end rums grew a respectable 5.5% in 2018.
What’s behind these gains? As you might expect, everyone’s favorite trend-bending generation has a hand.
“Millennials are drawn to the cachet of luxury brands, including super-premium spirits,” says DISCUS chief economist David Ozgo.
Taking Market Share
Rum is unusual in its range and diversity. There’s a rum for every palate and consumption occasion. Rum’s variety offers opportunities to take market share from vodka and tequila with white and spiced/flavored rums, and from whiskey and brandy with fine aged rums.
“People are experimenting and seeing the benefits of consuming fine, aged rum,” says Malcolm Gosling Jr., Gosling’s Export Ltd. “With the premiumization of brown spirits especially, it is an easy transition for a whisky drinker to appreciate the qualities of aged rum.”
Agreeing with Gosling is Eason from Serralles.
“Whiskey and tequila are certainly on fire right now, and aged rums absolutely have an excellent chance of stealing some share,” says Eason. The numbers are growing, and consumers are showing their interest, he adds.
That seems to be the prevailing thought among industry insiders: rum’s opportunity is in following the brown spirits boom.
“I’m more inclined to say that dark rum can take market share from whiskey than light rum can take market share from tequila and vodka,” notes Schladenhauffen. There’s more crossover, especially across the cocktail range, between dark rum and whiskey, than there is between light rum and either vodka or tequila, he says.
The same goes for production techniques. “A lot of the rum producers use whiskey barrels for aging,” points out Ricardo March, vice president of sales for Varela Imports, representing Ron Abuelo. This creates nuances that can appeal to whiskey drinkers.
One of the most interesting trends — and where aficionados can really geek out — is with funky expressions.
These rums are also known as having “hogo.” That is slang for the French term haut gout, meaning high taste or gamey. Hogo is variously described as rancid, earthy, nutty and having a sense of place or terroir — with levels ranging from nearly undetectable to intense. Rhum agricole, Jamaican and other rums, plus rum’s Brazilian cousin cachaça, all can exhibit some degree of funk. Appropriately, there is even a Jamaican rum brand called The Funk.
“Funk is being appreciated and embraced by the bartender community,” says Yelle with Campari, who notes that Appleton and Wray & Nephew both display Jamaican funk. “Talking about hogo gets lost on the consumer, but they certainly can taste its unique flavor. They may lack the terminology, but have the appreciation.”
“Agricole rhum is a developing segment,” says William Ploquin-Maurell, international brand manager at La Martiniquaise, which represents Saint James Rhum Agricole. It is a niche, but a growing one. Saint James bears an AOC Martinique, and the rum has a strong vegetal taste specific to the terroir.
“There is a growing interest in cane-juice rums like cachaça, agricole, etc.,” says Peter Nevenglosky, co-founder of Avua Cachaça. “Advanced drinkers and bartenders will begin to adapt these spirits into their cocktails and sipping lists more and more.”
Consumers experiencing hogo on-premise will look for these spirits on retail shelves.
Not everyone is sold on the widening appeal of funk, however.
“Barrel finishes and hogo are catching on with some niche consumers as they explore the rum category,” says Daniel R. Clark, Pernod Ricard brand director for Malibu Rum. “We find that most consumers prefer the familiarity and consistency of more traditional rum products.”
Barrel finishes and hogo are still trending more with bartenders than on the consumer side, says Schladenhauffen. “But it’s these types of trends, as they continue finding their way out into the general public, that will keep changing the headlines for rum and make it more of a treasure-hunt category for consumers.”
Taking a page from Scotch and other brown spirits, more rum producers are experimenting with finishing liquid in various types of casks made from different varieties of wood.
“With recent line extensions, we’ve developed proprietary ways to finish the aging process, either by using a variety of barrels and/or barrels that we have treated to impart our own unique ‘Goslings’ character in the finished product,” says Gosling. The most recent expression was the limited release of Single Barrel Bermuda Rum, Papa Seal.
At Dictador Rum, master blender Hernan Parra partnered with top Cognac, Scotch, Champagne, Armagnac, Bordeaux and Sauternes houses for a pioneering project coined 2 Masters. Parra released decades-old (minimum 40 years) Colombian rum to these distillers and cellar masters and gave them carte blanche to finish the spirit as they deemed best. The results will debut in the U.S. market later this year.
Barrel-aging is also common with cachaça.
“Cachaça has a deep and unique history of wood aging in French oak and a variety of indigenous woods – 28 in all, far more than any other spirit category,” says Nevenglosky. Avua currently offers seven marks, including Prata and still-strength unaged, as well as French oak, Amburana, Bálsamo, Jequitiba Rosa and Tapinhõa aged marks.
Don Q has been successful with its limited-edition single-barrel rum and its vermouth cask expressions, says Eason. He offers a caveat for the category: “Rum’s problem is that there are really no production laws that bind all of us together as rum producers. Aging and blending standards vary from island to island.” That can be confusing for consumers, he says. “People want to know what they are drinking.”
Spiced and Flavored
Spiced and flavored rums are, of course, a major component of the category. Much of the action is driven by specialists such as Malibu, Captain Morgan, Sailor Jerry and Admiral Nelson. Producers like Bacardi, Blue Chair Bay and Cruzan also offer spiced or flavored expressions. The “it” flavor currently seems to be pineapple, with a strong showing by coconut.
“Overall the rum category remains sluggish, with the exception of flavored rums, which are showing strong growth,” says Clark at Pernod Ricard. This growth, he says, is largely driven by the Malibu brand.
Of course, this is a very different demo than for the products mentioned above.
“The spiced rum consumer is different from the flavored rum consumer, and coconut-flavored rum is its own animal,” says Eason. “Drinkers will always like new and delicious flavors, but will they have staying power?”
Still, do not count out spiced and flavored expressions just yet.
“Spiced rum continues to decline but it still commands a dominant share of the rum category,” Schladenhauffen says. “Flavors have begun to rise again after a cycle of flavor fatigue.”
Bartenders Are The Gateway
As mixologists become more enamored of rum, they are sharing that with customers. And, as always, on-premise trends lead to off-premise sales.
“Cocktail culture and the resurgence of tiki are both driving consumer trial,” says Eason. “The on-premise is where aged rum is making its mark.”
Clark, from Pernod Ricard, agrees. “We continue to see a resurgence on-premise for tiki cocktails.” Malibu has long incorporated the tiki trend in cocktails across its portfolio.
It helps that the mixology movement has elevated tiki culture.
“The new wave of tiki bars have moved beyond kitsch and sugary drinks, and are now focused on amazingly delicious drinks,” says Yelle at Campari. “Bartenders are really appreciating the beauty that rum can bring to cocktails.”
Consequently, more cocktail bars are experimenting now with rum variations.
“Classic cocktails, specifically the rise of the Old Fashioned and Manhattan, have opened the door for the super-premium dark rum price tier to burst onto the scene,” with rum variations on these classics, says Schladenhauffen. “The tiki trend also helped the category immensely but dark rums have been the more sizable beneficiary.”
“Rum is perfect for mixology, both white and dark rums,” says Ploquin-Maurell at La Martiniquaise. “The large organoleptic notes of rums offer a wonderful range of possibilities to make cocktails.” To aid in that mixology quest, La Martiniquaise has just released Saint James Bitters. The rum-based bitters were two years in the making.
“For the premium sector we are already seeing a lift at retail,” says Gosling. “People are more willing to try a new product on the rocks or in a cocktail at a bar.”
Mixability At Home
Rum producers are working assiduously to educate consumers about how easy it is to play bartender at home.
“Mixability is one of the most underappreciated assets of rum,” says Schladenhauffen. “Most consumers know how mixable vodka is, but it doesn’t seem to translate at the same rate for rum, which is a bit of a shame. Light rums tend to be a bit more versatile, but dark rums are plenty mixable and are used across many popular classic and tiki cocktails.”
Why are consumers more hesitant right now to mix at home with rum than other spirits?
“We think rum is still early in its lifecycle to ask average consumers to go home and be mixologists,” says Yelle. But he explains that customers who enjoy a Rum Old Fashioned at a bar can easily create a similar experience at home with a fine, aged rum like Appleton Reserve served neat or on the rocks.
For its part, Malibu Rum offers a plethora of easy-to-make recipes for at-home consumption.
“Malibu’s sweet and refreshing flavors lend themselves to exploration and experimentation with cocktail creation,” says Clark. “Our spirits easily lend themselves to seasonal and refreshing cocktails for at-home entertaining, which is a big draw for consumers.”
The Shape of Things to Come
How is the category performing in 2019? The general feeling among producers is a rising tide floats all boats.
“We are waiting for an amazing year in general not only for us, but also for all of the producers of rum today, because if one of us is getting bigger than this only helps all of us,” says March at Varela Imports.
Others concur. While there is no Tito’s of rum, that may represent more opportunity for all rums rather than represent a drag.
“I think that 2019 will be another strong growth year for the category,” says Yelle at Campari. “And all the brands have to be happy about that. There is no breakaway brand right now driving the category.” BD
Thomas Henry Strenk is a Brooklyn-based freelance writer with over 20 years experience covering the beverage and restaurant industries. In his small apartment-turned-alchemist-den, he homebrews beer kombucha, and concocts his own bitters and infusions. Read his recent piece Why Bartenders—and Guests—Are Falling For Brandy.