The rum diary

01 October, 2012

Hamish Smith unravels the complex politics of a diverse spirit

White, dark, spiced, and aged. The essential base of the Mojito and the Daiquiri, a best friend to cola, a virtual prefix to the word ‘punch’ and an oak-edged sipping spirit – rum is a jigsaw puzzle of parts that don’t quite seem to fit together.

As some would have it, this is rum’s great blessing; a category that can call upon styles to scratch any consumer itch. But there are those who call its diversity a curse, who say consumers are befuddled by the disparate styles and varied uses.

What consumers do understand is brands. Just look at Bacardi as it continues to cast its bat winged-shadow over the category. Since the brand flew its homeland upon the 1960 Cuban revolution, its impression in western markets has been deep and lasting. At a near 20 million 9-litre case sales a year (all figures quoted from Euromonitor International), Bacardi has not merely transcended its category, it has eclipsed it. For Bacardi, and international rum brands collectively, the US is the hallowed turf. Get it right here and volumes will follow. 

Enter Havanista, or at least, prepare to enter. Quite implausibly, one of the most significant US rum launches to be announced in decades may never develop beyond the bounds of the boardroom. Confused? Here’s how it works: “Havanista is Havana Club by a different name,” says Havana Club CEO Jerome Cottin-Bizonne. “Same bottle, same liquid, same quality from the same distilleries, the same brand identity and personality.” 

For the unaccustomed, Pernod Ricard and its partner in Havana Club, Ron Cuba, have spent more than 15 years fighting for the theoretical right to trade under the name Havana Club in the US. Bacardi – with its sister, US-registered brand Havana Club – won the latest Supreme Court appeal in May, a victory seen by many as a knock-out blow to its Cuban foe’s US ambitions. 

Pernod Ricard says the towel is far from thrown, but the arrival of Havanista surely represents an ideological switch from absolutism to pragmatism. “Although we will keep on fighting with the Havana Club brand, we have said no matter what happens, if the embargo is ever lifted we are ready – and we have a brand that was registered in 2011 called Havanista,” says Cottin-Bizonne. 

Whether we are closer to the embargo being lifted is a moot point. On the ground in Cuba, the feeling is that President Raul Castro’s doctrine is less hard-line than his brother Fidel’s, and Barack Obama is seen as a president of sympathetic sensibilities, at least compared with his predecessors. Either way, at 16% of total rum consumption (and a considerably larger chunk of the international rum market) the US matters far too much for Pernod Ricard to wait passively. At 3.84m cases sales in 2011, Havana Club may not be a volume-centric brand but there is a gaping, America-sized hole in its annual sales ledger. 

Yves Schladenhaufen, Havana Club’s international marketing director, picks up on the point: “Look at the brands selling more than 10 million cases – they’re all in the US... Smirnoff, Bacardi, Johnnie Walker, Absolut and Jack Daniel’s.”

Spiced vs White

The third drinks group of the rum triumvirate is, of course Diageo, with its 9.2 million case-selling spiced rum, Captain Morgan. This is a brand which Diageo believes has the potential to topple the seemingly immovable category leader, Bacardi. 

“I think we can catch up with Bacardi,” says Russell Jones, Captain Morgan global brand director. “In some markets we are ahead. In Canada we‘ve gone through a million cases and are on the cusp of taking over. The more holistic trend is that the market is going away from white rums to spiced, Latin American and aged rums. In nine out of 10 cases, where rum is performing well, it’s on the back of spiced rums.”

Jones’ assertions could be right. Last year global sales growth for white rum was pancake-flat at 0%, an uninspiring figure, especially off the back of three gloomy years (+0.2%, -2.5% and +1.3%). Euromonitor’s forecast for the segment between 2011 and 2016 isn’t much better with a CAGR of +1.2%. So if these numbers are anything to go by, white rum companies might well think about investing in some spices and barrels. 

Bacardi saw it coming and has diversified its offering. Last year there was Oakheart, a competitor to Captain Morgan and Sailor Jerry, and the brand has ploughed ahead into pre-mixed and flavoured rum, deliberately straying into vodka territory. “We have a wide range of variants, designed to meet the diverse and changing tastes of our core target consumer,” says Eugenio Mendez, global category director of rums at Bacardi Global Brands. “In recent years we have pioneered flavoured rum infusions with the successful launches of Dragonberry and Torched Cherry, and most recently the new 2012 flavours, Wolfberry and Black Razz.” 

“Within the first year Bacardi Oakheart has been rolled out in more than 28 markets across the Americas, Europe and the Middle East, and become the most successful launch in Bacardi rum history,” says Mendez. “In the biggest spiced rum market, the US, we have seen the growth of Captain Morgan slow. Conversely Bacardi Oakheart has grown the overall category and stolen share from other spiced rums.”

The US has had the best view of the pendulum arcing from white to spiced. “We’ve seen 16 spiced rums join the market in three years in the US,” says Jones. “[But] we are the number two bar call and the number three spirit in what is the number one spirits market in the world.” 

According to Diageo, growth for the brand has come from outside of the US too, with a taste for Captain & Cola firmly acquired in the number two market Canada, Great Britain – which is now up to 0.5 million case sales a year – and fourth-placed Germany, which grew from zero to 300,000 cases in three years. 

Jones reports that Mexico “is off to a flyer” too. As he puts it: “When we get it right with Captain Morgan, the growth comes quickly.” But with growth last year restricted to a modest 2.2%, presumably they must get it wrong with Captain Morgan too. Perhaps the brand suffered, like its peers, from the stagnating Italian and Spanish markets, and the double-digit down-trading Greece.

In April Diageo launched Captain Morgan Black Spiced. “Finished with double charred blackened oak”, “created with the whisk(e)y occasion in mind” said the marketing literature. The new product also saw a shift in marketing emphasis, a maturing of the brand perhaps. 

“Before it was around the modern incarnation of Captain Morgan but now we’re telling the story of the original Captain Henry Morgan – his exploits and escapades,” says Jones. But Diageo has stopped short of communicating about the story of Captain Morgan production. Perhaps a brand with a cartoon pirate as its figurehead has only so much to say about provenance. But then Diageo has its band of raconteur rum brands. “Cacique and Pampero are rich in history and heritage and I firmly believe Zacapa can play head to head with cognacs – it’s a great tasting product that has a story to tell,” says Jones. 

The super-premium Elements Eight it has identified opportunities in spiced too. “We saw growth through Captain Morgan and Sailor Jerry, but they weren’t doing it well,” says Andreas Redlefsen, Elements Eight director and co-founder. “Spiced meant vanilla and not a whole lot of complexity. So we developed a barrel-infused, all-natural spiced rum”  

Golden oldies

It’s hard to pin down the growth rate of aged rum, principally because of the discrepancy of definition and the industry’s peculiar predilection for using the words ‘golden’, ‘aged’ and ‘dark’ (clearly the latter can be an un-aged rum coloured with caramel) interchangeably. Euromonitor breaks rum down by colour. Dark (including spiced varieties) grew by 4.9% last year and is expected to have a 3.9% CAGR over the period 2011-2016. 

Anecdotally, the signs for aged rums are also good, with more and more consumers heading to rum for their oak fix. Of the big three global brands, Bacardi, Captain Morgan and Havana Club, it’s perhaps the latter that is considered best placed to answer the call. Diageo has its ‘heritage’ brands, but they are in their formative years as brands and will take some building. Bacardi’s portfolio has undoubted girth and includes an eight-year-old, Reserva Limitada, and now a 150th Limited Edition Bottle ($2,000), but it’s fair to say the brand is more associated with party-goers than after-dinner sippers.   

Havana Club’s aged-range pivots on the three-year-old, seven-year-old and the 2010-launched Selección de Maestros (on average 12-year-old rum). “On the dark side we probably have the best portfolio in the industry. Havana Club is about premium rum and premium cocktails. Using a three-year-old, genuine Cuban rum for Mojitos and Daiquiris adds value to the drink,” says Havana Club’s Cottin-Bizonne.

At the heart of Cuba Ron and Pernod’s plan to premiumise is the creation of a geographical denomination for Cuban rum in the EU. “We are creating an appellation for Cuban rum – in a few months we will be recognised,” says Havana Club’s commercial director, Sergio Valdés. 

Pernod Ricard appears to have backed a strong horse in Havana Club, should trends continue to lead down the track of aged, premium rums. Certainly, that’s the trend they’re hoping for at Jamaica’s Wray & Nephew: “Our focus has been to build the category of premium and ultra-premium rums,” says Bridget Watson, consumer innovation manager at Wray & Nephew’s global marketing division. “[Our brand] Appleton is in the Jamaican style and is as smooth as scotches and cognacs.” 

Within the Appelton range, the gamut of aged styles are available. There’s  VX (US$18)  a blend of 15 rums; Reserve ($22) containing 20 aged rums; Extra 12-year-old ($29), which, with its heavily oaked flavour profile is positioned against whiskies and cognacs; Master Blenders’ Legacy ($70), the combined work of the three Appleton distillers, Owen Tulloch, Joy Spence and David Morrissey; and the 21-year-old ($150), which is the pinnacle of the range. 

At least it was until last month’s unveiling of “the oldest rum available for sale in the world”.  Wray & Nephew managing director, Paul Henriques, told Drinks International the 50-year-old Jamaica Independence Reserve – which marks 50 years of the country’s independence – numbers only 800 bottles and retails for US$5,000. It has been launched in Canada, the company’s major export market, and the US. Apparently the company is readying a 100-year-old rum for the island’s centenary. Not many of us will be around to see the proof, though. Fewer still will be able to afford it. 

Mount Gay and Santa Teresa also have theirs fates tightly entwined with the progress of aged rums. “[In the UK] golden rum has managed to sustain growth over the past five years and is currently worth £12m,” says Alvin Saal, Mount Gay rum brand manager in the UK. Juan Medina, global marketing manager of Ron Santa Teresa adds: “Our belief is that rum is joining the pantheon of elite spirits. Products such as Santa Teresa 1796 are promoted as premium spirits, given their quality and complexity. Crafted aged rums go through the same refined processes that other premium spirits go through – harvesting, distilling, ageing and blending.” 

The brand has what Havana Club is lobbying hard to achieve – an appellation for its rums. The brand also has had the support of a national body, with Ron de Venezuela having been founded in 2003. 

A generic body to represent the whole of rum, with its disparate brands, styles, traditions and rules is so unlikely it’s hardly worth mentioning. But perhaps not every spirit category has to be treated holistically, with a neat and tidy definition of its styles and uses. With 3.5% growth recorded last year, rum – in all its shapes sizes and guises – seems to be doing just fine as it is.

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