Rum has struggled against numerous
challenges in the US and Europe over the past five years, but the category now
has the opportunity to “regain its footing”.
Having been around the rum industry for the past several years, I feel like this is something that has been afoot and just beginning to show its head in the premium and ultra-premium expressions that have been so badly needed by the category.
Analysts predict that rum will return to
growth in Europe and the United States following five years of decline. According to Rabobank’s Spirits
Quarterly Q4 2015report, European rum consumption declined from 175.5 million
liters in 2009 to 174 million liters in 2014, while the category has been
underperforming compared to the broader spirits market in the United States
since 2009. In Europe, the rum category’s
decline has been predominantly attributed to rapidly falling volumes in Spain,
where sales dropped 13 million liters during the period.
Rabobank
analysts believe that this is largely due to Spanish Millennials drinking less,
since they are part of the demographic most impacted by the recession. However,
when these consumers do drink alcohol, they are increasingly favoring shot
formats. Rum still suffers from a lack
of “premium positioning” in Spain and maintains an image as a “party drink”. However, Rabobank reports that suppliers are
witnessing a “notable improvement” in Spanish consumer spending as
super-premium brands become more popular in the market.
“Assuming
a slowdown in rum’s rate of decline in Spain, and ongoing growth in major
markets such as France and Germany, we expect Western European rum sales to
turn positive within three years,”
In
the US, rum is losing market share to both vodka and American whiskey and due
its reputation as a “mixing spirit”, has also been knocked by a slowdown in the
soft drinks market. In 2014, US per
capita consumption of soft drinks fell to levels not seen since 1986. However, Rabobank argues that the US could
receive a boost from the growing popularity of dark super-premium rums that can
be consumed neat or on the rocks.
The
restoration of diplomatic relations in the US and talk of lifting a long-held
trade embargo between the two nations has the potential to “breathe new life”
into the US rum market, but it is “premature” for producers to raise their
hopes. Furthermore, the report states
that even if the trade embargo is lifted, Cuban rum producers will battle
against those in Puerto Rico and the US Virgin Island, which benefit from
subsidies.
If US Congress decides to lift the
embargo, Pernod Ricard could import its Havana Club rum into the US under the
Havanista label. The group is unable to launch the rum under
the Havana Club label in the US as the trademark is owned by Bermuda-based firm
Bacardi, whose rum is produced in Puerto Rico.
I feel like the rum industry is moving in
the right direction with more emphasis on the premium and the ultra-premium
expressions. Gathering the volumes of aged
rum necessary to introduce these much
needed expressions. Most of us that
hang out around the rum category prefer the premium sipping rums. I
feel that with some time, this portion of the category will move it back into
the main stream of the spirits world. I
feel like the days of artificially flavored and contrived young rums trying to
pass themselves off as premium rum is rapidly slipping into the back ground of
the cat
