Thursday, July 20, 2017

Angostura to Reduces its Bulk Rum Distilling

     The world largest supplier of aged rum is cutting back on it production of bulk rum.  This will be a blow to a number of rum producers that do not have distilling capabilities on their premise.  There has been a trend for many of the smaller and even some of the larger islands in the Caribbean to abandon distilling for sourcing of their rum from suppliers like Angostura.

     Angostura has reduced its “third party” rum production after a project to upgrade its wastewater facilities “didn’t work out as well as they had hoped”, according to the group’s Genevieve Jodhan, the new CEO.  In an interview with The Spirits Business, Genevieve Jodhan confirmed that Trinidad and Tobago-based Angostura made a “strategic decision” in the third quarter of 2016 to reduce bulk rum distilling after work on its wastewater treatment plant ran into difficulty.   We started to scope out and ask, how can we produce our products responsibly? We realized that we needed to cut back production and make some changes,” according to Jodhan.    “That led us to look at the entire business model to see where we want to be, then reposition the company for the future.”  Angostura has maintained some key supply contracts, but will reserve greater distilling capacity for its own brands.       This change in production strategy has also allowed Angostura to speed up its premium trajectory, by focusing more on value than volume.  The industry-wide premiumization trend in rum: “We don’t just think it will happen, we intend to make it happen.”

 “The future of rum lies in all categories, and mainstream rums are here to stay.”   Consumption is changed by occasion, by lifestyle, and the consumer’s stage of life.  “I do not think there will ever be a time when rum is out of reach for the average consumer”.  “But there is an untapped market at the top end that is wide open, and I think rum will continue to push into areas once reserved for whisky.”

     This is a very interesting approach to the issue.  I have to agree with Genevieve Jodhan that there is a place for all of the levels of rum.  There is a demand for the premium expressions that is growing rapidly at this time, but likewise the entry level is you will, expressions have a place in the process to lead consumers to enjoy the more sophisticated expressions as they grow older and their tastes and budgets allow them to enjoy some of the better quality things in their lives.