It’s the third most consumed spirits category on the planet, but according to IWSR, more than 99% of all cachaça is consumed in Brazil. The next largest market, Germany, accounts for a mere 0.2% of global consumption.
There are 5,000 registered brands, many more unregistered, and 40,000 distilleries, according to The Brazil Business.
“Cachaça consumption in Brazil alone is twice the size of gin globally,” says Hamilton Lowe, co-founder of Yaguara cachaça. “Northern Brazil drinks more Caipirinhas than gin and tonics are drunk in the world. It’s enormous.”
The pandemic caused global spirit consumption to drop to its lowest level in recent history, so recent volume declines can be considered par for the course. Brazil has had a rough time with Covid, but all things considered, the category didn’t have a bad 2020. Globally, cachaça was down 0.4% in volume in 2020, according to IWSR, which was a better performance than the previous two years, when volumes had fallen 1.6% in 2018 and 2.3% in 2019. Some cachaça brands navigated difficult situations impressively. Category giant Pitú managed to post year-on-year growth of 11%, almost reaching 12 million 9-litre-cases in the process.
“Although many bars and restaurants were shut in 2020, there was a relevant increase in alcoholic beverage consumption at home and that helped us to achieve this result,” says Leila Lopes, international market coordinator at Pitú. “We reacted promptly to the pandemic changes by adjusting our communication and marketing strategies and our consumers kept on purchasing our products online and in supermarkets.”
But, despite decent performances domestically, the volume decreases are expected to continue. IWSR forecasts that global cachaça volume will fall by 1.6% CAGR from 2021-2025, but the top five export markets for cachaça, – Germany, France, the US, Portugal and Paraguay – are forecast to show volume growth over the same period. If cachaça brands are able to engage with international markets in any way resembling domestic performances, the scope for the category is enormous.
Cocktails could hold the keys to the rest of the world. Globally, cachaça is recognised for Caipirinhas, but as an ingredient, it’s no one-trick-pony.
“The Caipirinha is a cocktail icon of Brazilian culture, but it would be best to do twists on classics to show the versatility of the drink,” says Márcio Silva, bar consultant and former co-owner of Guilhotina in São Paulo. “Cachaça can be used in classics that would traditionally call for a different base spirit – a cachaça Negroni or a Daiquiri made with cachaça. There is a twist on a Manhattan that we call a Rabo de Galo in Brazil, it’s served on the rocks.”
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INTERNATIONAL BRANDS
Bridging the gap with cocktails is a tactic that has been adopted by the few cachaça brands that have focused their attention internationally.
Yaguara topped the category table in the 2021 Drinks International Annual Brands Report, meaning it’s o en the go-to cachaça for the world’s best bars. Keen to establish cocktail credentials from the outset, when the brand launched in Brazil in 2013, New York bar The Dead Rabbit mixed the drinks at the Rio launch and Experimental Cocktail Club did so in São Paolo. In 2016, the brand went international and now two-thirds of sales are accounted for by export.
“UK and Italy have been our strongest markets in Europe,” says Lowe. “Southeast Asia and France too, which we expect will overtake the UK and Italy by the end of next year.
“In the US, Florida and New York are especially strong. What unites all those places is the quality of bar. As a premium cachaça, it’s the more premium venues that appreciate our offering. We believe that you’ll always move perception from the top down. We were part of a big movement of cocktail making in Brazil and the Brazilian cocktail bar scene has really grown in the last six or seven years.”
Abelha is a brand produced in Brazil’s first organic distillery and is another premium cachaça brand built for export.
“The agreement with [master cachaçeiro] Marcos Vaccaro was that we work with every market outside of Brazil,” says Tom Stockley, co-founder of Abelha Organic cachaça.
“Abelha was created for the export market. Marcos has his local-only brand which he self-distributes in Bahia [in north east Brazil], but at some point, we would like to repatriate Abelha and work within the cocktail scene in São Paolo and Rio.
“We launched in London and started in cocktail bars. You can use artisanal cachaças in pretty much all the rum cocktails. We’ve seen great success in the London cocktail scene and pretty much every great cocktail city in Europe.”
Stockley adds: “In the cachaça category, there’s still a lot of aspects out there to educate, to raise awareness and interest about how you can use cachaça. People have heard of the Caipirinha and probably just associate cachaça with the Caipirinha, but even then, it’s how to make the best Caipirinha and what other cocktails to do. That all starts in the bars.”
Having successfully launched the brand outside of Brazil, Stockley believes the category is moving in the right direction.
“Ten years ago, there wasn’t really a cachaça presence in the UK market,” says Stockley. “You did see some of the mainstream brands but there wasn’t a small batch or artisanal side.”
IN TEQUILA’S FOOTSTEPS
One category that cachaça manufacturers might be looking at with envy is agave spirits, and the two do share similarities. Both have mixable white expressions as well as complex, dark wood-aged varieties. And it has been the rise of tequila’s role as a serious sipping drink that has helped revise the category from being a regretful decision made at the bar at one in the morning to a premium spirit of the highest calibre.
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“The perception of cachaça in the past was hangovers,” says Lowe. “I related it to tequila growing up and in 1999 we never would’ve believed that tequila would become a very well respected sipping spirit. Tequila has done it quicker than cachaça but we’re following a similar track.”
Abelha Gold is aged for three years in garapeira, a type of native Brazilian ash, and Stockley believes that the aged expressions could resonate globally.
“I feel at some point we’ll start to see a cachaça craze because there’s not only an incredible number of cachaças with regional characteristics and flavour proles, but also they use up to 25 different kinds of wood to age cachaça in. These are spirits not aged in American or French oak,” says Stockley. “There’s a lot to explore here. When we start seeing more aged cachaças, rested cachaças or even fine extra-aged cachaças, then I think there’ll be an increase in awareness and interest. At the moment, it’s perceived as just a white spirit really and in the last five to 10 years we’ve seen a movement away from white spirits like with golden and dark rums.”
To date, the international growth of the category hasn’t been without its hurdles. Until 2013, the spirit was labelled “Brazilian rum” in the US, a retaliation to Brazil refusing to label bourbon as an American product.
In response, cachaça brand Leblon, which was acquired by Bacardi in 2015, launched the Legalize Cachaça campaign. The movement successfully lobbied the United States Alcohol & Tobacco Tax & Trade Bureau into recognising the spirit as a distinct class in the US, but that’s not the case everywhere.
“Since the American ‘legalisation’ there has been a knock-on effect,” says Stockley. “It’s still not seen as its own category in many countries. Until we start seeing a differentiation between cachaça, rhum agricole, and rum, awareness won’t increase as much as it would do if separated.
“One of the key things I like to do is staff training, to go through the differences between cachaça, rhum agricole and white rum, give examples and go into the production methods, the definitions and the rules and regulations, not just for the staff but also at consumer tasting and promotion events. We’re raising awareness slowly but surely.”
As a category, cachaça seems to have all the tools to be a breakout hit and its huge dominance in Brazil is proof that it’s a crowd-pleaser.
There has been a criticism made by some producers that they’re not being pushed internationally in a meaningful way by the Brazilian government or a trade association, like Tequila’s Regulatory Council, and there may be merit in that.
As international drinkers become more discerning, the artisanal, aged, and small batch expressions of cachaça seem to be a secret waiting to be revealed. What the category’s exports must avoid is a race to the bottom.
