ON-TRADE RUM – Time to Deliver

With a heritage that could match up the story behind Scotch whisky and Cognac, rum is showing modest but persistent growth. It’s not giving the vodka boys too many sleepless nights yet though, says Clinton Cawood

Rum was the spirit that was going to rescue us from vodka’s domination of the spirits market. At least, that was the promise. New products were launched, bartenders showed interest, but a dramatic increase in sales is yet to materialise.

Even so, the rum category is still a healthy one, worth nearly £500 million in the UK, and accounting for about 11.5% of total spirits volume according to ACNielsen (MAT 07/2006). Out of the three sub-divisions in the category, golden rum is most promising, with 3.7% growth in the on-trade.

Victoria Bowstead, brand manager for Mount Gay, believes that this modest growth is better than it first appears. “The spirits category overall is not doing that well. The two categories that stand out are vodka and golden rum” Bowstead believes that while “the vodka category has been attracting a younger consumer, golden rum is now also starting to do that.”

White rum is also still a powerful force in the UK on-trade, however. Bacardi’s ubiquitous white rum, Carta Blanca, is the second largest brand in the UK on-trade, worth £232m (ACNielsen, MAT July ‘06). Bacardi dominates the white rum category, and much of the recent innovation and new launches have been in golden or dark rum.

Gradual growth

“In 1991 everyone said that golden rum was the next greatest thing,” says Dave Smith, global brand director for Cockspur. He believes, though, that there has been a change over the years. “Back then, there were very few golden rums in the market, and now I can name 10 brands,” he says. Two new rum brands were recently launched by 42 Below, the New Zealand vodka producer and soon-to-be Bacardi acquisition (if all goes according to plan). This gives 42 Below’s UK manager Justin Bade a unique perspective on the market. “I think it would be difficult for any spirit to make it big on the vodka market, which is by far the biggest spirit in any on-trade premise,” he says. “There’s a lot of new interest and excitement in rum, but I don’t see it overtaking the vodka category.”

According to David McConnell, Appleton Estates’ MD of global marketing, “rum is only just starting to happen in export, bar share is starting to grow and I believe that this is consumer-driven.” McConnell says that the “category is at its early stages of growth, which began two to three years ago. These things take time.”

And there is no reason why rum will fail to eventually live up to the ambitious predictions of the trade, even if this does not entail taking the number-one spot from vodka. As the spirit’s proponents are quick to point out, rum is a diverse spirit, with a rich history, many countries of origin enjoying solid – and rising – sales around the world. As Charles Marshall, senior marketing manager for Angostura explains, “Rum’s got so much to offer, in terms of island tradition, blending – it shares so much with other premium spirits.”

Aiming high

Joy Spence, master blender at Appleton Estate points out one way to highlight this link. “The age statement for rum is becoming more and more relevant to the consumer,” she explains. “The market is definitely there for premium and superpremium aged rum.”

Rums at the higher end of the spectrum are indeed competing in a different league altogether. Angostura’s 1824 rum, as Marshall, explains, “is definitely not for cocktails”. This is a rum that can be compared to Cognac or premium whisky, he explains, “showing what rum is capable of”.

Bade, referring to 42 Below’s new rums, confirms that this is “the fine end of the scale”. He says, “It takes a while to filter down, and it’s only towards the middle and lower end that you get the volume.” Smith, meanwhile, recognises “an opportunity to get on the after-dinner list, so to speak” with a brand like Cockspur’s VSOR. Meanwhile, Iain Stewart, UK commercial director for Castle Brands (UK distributor for Goslings), maintains that, “If you are looking to launch in the UK you’ve got to start right at the top. If you start cheap, there’s only one way you can go. Even cheaper.”

The ongoing premium and superpremium rum launches at the top end of the on-trade in the UK proves that many brand owners agree. Earlier this year saw the launch of Elements Eight, a range consisting of two aged rums, one white and one golden. “We were the first brand to challenge the traditional, and hopefully bring spirits drinkers from other categories,” explains Carl Stephenson, the company’s managing director. “It’s not a Caribbean-style bottle,” he explains. “An aged rum in elegant packaging is unique.” Emphasising the versatility of the rums, Stephenson explains that, “The golden rum in particular sits as a digestif. The platinum lends itself well to being a sipping rum, but is also good in cocktails.”

The irreverent 42 Below’s new offering consists of a superpremium aged white rum, Seven Tiki, as well as the premium Tahiti Dark. Despite these brands’ positioning at the premium end, Bade is hesitant to suggest either rum for serving neat or mixing. Alluding to 42 Below’s reputation for unconventionality, he says, “Our company would be quite loose about stipulating how people enjoy these rums.”

Most rum drinkers in the UK on-trade probably enjoy their rum with a mixer. “At the top end, cocktail mixing is a prevalent form of drinking, but the top end is niche,” says Dave Smith at Cockspur. “The vast majority is spirit and a mixer. It might change, but it will be like turning a supertanker,” he says.

Education plays an important role, according to McConnell. “There is not much knowledge about rum apart from those who are regular rum drinkers,” he says. “It’s a big step from cocktail drinking to actually understanding what rum is all about.”

Dark horse

A recent trend, as Smith points out, is the: “invigoration of the dark rum sector – brands like Goslings. It’s a bit of a leftfield move. Most people were expecting growth from premium white rums and golden rums.” This segment is traditionally the domain of Diageo’s Captain Morgan, reporting a 33% volume share of the on-trade. Stewart at Castle Brands, Goslings UK distributor, believes, “Dark rum is a sleeping giant in the on-trade.” The success of Goslings Black Seal has been built primarily on the foundation of the Dark ’n’ Stormy cocktail. As Stewart explains, “There are only about five cocktails in the world that are associated with a brand, and the Dark ’n’ Stormy is one of them.”

The popularity of the Mojito, and other rum-based cocktails, is undoubtedly benefiting the category as a whole. Mount Gay’s Bowstead believes that, “While it is about the brand and the heritage, it is also about the mixability.” Carl Stephenson also recognises this importance, saying that, “The bartender community feels that Elements Eight platinum is a bartender’s rum.”

Brand calling

While cocktails help to drive volume, as Cockspur’s Smith puts it, “I’d rather they ask for a Cockspur. We need to get consumer brand-call as opposed to cocktail listings.” The brand-call is, of course, a spirits brand marketeer’s holy grail. “You either ask for a Bacardi or you ask for dark rum. In truth, that’s the way the UK on-premise works,” he says.

Marshall says, “Angostura 1919 is ideally positioned as a bar-call, and we’re creating some signature cocktails that will help with that.” Citing the examples of a Hendrick’s and tonic with a slice of cucumber, and Magners over ice, Marshall maintains that there are “ways of branding a drink”. This may be the way for brands to further benefit from the UK’s cocktail culture. “The UK bar scene is held as one of the finest in the world,” says Marshall.

“Part of the on-trade strategy,” according to Bowstead, “is about including Mount Gay rum in simple long drinks.” She also says, “We’re seeing a migration from the on-trade to the off-trade, which is a very important sector for Mount Gay rum.” She believes that this shift is “driven by the disparity between pricing in the on- and off-trade.”

© db December 2006