How is Rum Dealing with the Sales Decline in the United States?

Rum's Future is Premium and Ultra-Premium Aged Rums

     2016 found the rum category in decline, 1.2% or 22.1 million nine-liter cases.  This is believed to be because of consumer interest shifting in the US to whiskey and tequila.  A decade ago the rum category added 2 million cases between 2006 and 2011.  This was its highest annual volume growth of all time.   Unfortunately, the last five years have brought on a reversing of that trend and the rum category has lost 0.9 million cases between 2011 and 2016.  This translates to a -0.8% compound annual growth rate.   The biggest losers are the front running brands like Bacardi and Captain Morgan with a 57% share of category volume are the biggest cause of this negative overall growth with a compound annual growth rate of -3.4% and -0.7% respectively.  If Bacardi and Captain Morgan were taken out of the rum category figures, rum would have grown at 1.2% compound annual growth rate between 2011 and 2016, which would translate last year to an increase of 2.5% last year.

     Smaller rum brands are thriving, this is thought to be driven by the strong interest in Tiki cocktails as well as the many classic rum cocktails that remain so popular in the bars and home cocktailers.  The mojito, daiquiri, Cuba-libre and other popular tropical cocktails aren’t showing any signs of slowing down, which further helps drive this cocktail demand.  This growth as appeared mostly among artisanal imports and domestic craft brands.    

  

     The biggest issue for the rum category is seasonality.  People on vacation find themselves enjoying tropical drinks that seem to be forgotten once they head home and the fall and winter set in.   Florida followed by California lead the United States for rum consumption.  This is believed to be thanks to their year-round summery climates and reputation as a year-round vacation destination.  

Both Bacardi and Captain Morgan have had difficulty remaining the sales giants they once were and caused category drag in the standard and value price quality segments.  The good news is that there is a big rum category, consumer interest in premium and ultra-premium expressions.   Rum premiumization is growing rapidly and is seen to be the segment to be the area where rum will see its biggest gains in the future.   Premium and ultra-premium rum segments are small, but drinkers are finding that high end rums are just as appealing and flavorful like the other dark spirits and a lot of growth is coming in this area.   The premium and ultra-premium expressions have gained a 3.3% sales gain since 2011, reaching 9% of total category sales volume.  This is ahead of the global pace, which could show well for the higher quality rum expressions in the United States in the coming years.