Tequila has overtaken Rum as the fourth biggest sub-category within spirits, accounting for 11.7% share of spirits volume sales while Rum’s share declined to 11.4%. However, there are interesting dynamics at play that indicate Rum is still a category worth paying attention to.
“As a category, Rum has plenty of options to meet the desire for premiumization and experience that On Premise visitors come to expect,” says Scott Elliott, SVP of Nielsen CGA. “Consumers who purchase Rum out-of-home should be top of mind to retailers given they are younger, use the on trade more than average, spend more and have a higher preference towards the highest priced cocktails.”
From a distance, it may seem as if the premiumization trend bypassed Rum altogether (Rum volume declined at -0.4% while Total Spirits grew +1.8%), Nielsen says. However, Rum is a category of diversity with interesting dynamics at play when you look beyond topline dollar and volume declines. For example:
Ultra-Premium Rum: A new wave of premiumization is taking shape driven by ultra-premium brands which are growing at +15.8%, albeit from a relatively small base. In addition, flavored Rum, which accounts for 22% of the category, grew +1.0% in volume year-over-year.
Popularity of Rum Varieties: According to a Nielsen CGA On Premise consumer survey, among consumers who say they drink Rum out-of-home, preferences are for: Light Rum (56%), Spiced Rum (40%), Golden Rum (31%) and Dark Rum (31%).
Rum Cocktails (3 out of 10): Rum’s suitability for mixing ensures it’s a staple on cocktail menus around the country. Mojitos, Mai Tai’s and Daiquiris are within the top 10 list of the country’s most popular cocktails.
Bar Style: Tiki Bars are also on the rise which typically deliver well in the Rum category. Tiki Bars are especially popular among Millennials; within the last three months, 23% of Millennials visited one.
“As consumers continue to visit On Premise channels for the experience, bars and restaurants should continue to broaden their Rum range in the same way it does other categories. There is a portfolio distribution opportunity where, compared to the well-represented Light Rum category (stocked in 90% of traditional On Premise), 43% of bars and restaurants don’t stock a Dark Rum, and 24% don’t stock a Golden Rum,” Elliott says
Potential Quarter Billion Opportunity: Assuming current velocity per outlet is maintained and 25% of these distribution gaps were closed, the additional sales for the Rum category would generate $74 million for Light Rum and $180 million for Golden and Dark Rum combined.
Premium Mixers & Modern Classics: To achieve this potential, retailers will need to move Rum beyond the confines of generic serve styles (i.e., Rum & Cola) and place additional focus on premium mixers, such as traditional ginger beer; a larger range of aged sipping Rums; and by offering interesting takes on classic cocktails (such as a Rum version of the Whiskey Old Fashioned).