Can rum punch its weight in duty free?

23 August, 2016

Every centimetre of shelf space has to pay its way in travel retail.

Airport stores and ferry shops are small, but the rents are eye-popping. As for those battered inflight shopping trolleys, well… you get the idea. The upshot is that the risks for any buyer taking a punt on a new brand or broadening a category are high. It’s this harsh space-cost analysis which has always weighed heavily against rum in travel retail – why take a chance and list more than a couple of household names when there are proven sellers in more popular categories, such as scotch whisky and cognac?

The truth is there were just four rum brands in the top 50-selling duty free spirit brands in 2014 (Bacardi, Captain Morgan, Havana Club and Cruzan) compared to 11 scotch whiskies and eight vodkas. Bacardi has a 41% market share and, ironically, it has been the category leader that has arguably done more than any other company to premiumise and diversify rum in travel retail at a time when domestic sales of super-premium and ultra-premium rums have started to pick up.

Recent initiatives have included the high-profile launch in 2014 of the super-premium white sipping rum Bacardi Gran Reserva Maestro de Ron in duty free before any other market, and the limited release last year of two Single Cane Estate rums from Jamaica and the Dominican Republic at nearly 60 Gebr Heinemann shops in 12 European countries.

This summer has also seen the launch of the Facundo Rum Collection at Los Angeles, New York JFK and San Francisco airports – a collection of four sipping rums created by Bacardi maestro de ron Manny Oliver as a tribute to company founder Don Facundo Bacardí Massó.

“We believe rum is the biggest long-term opportunity in global travel retail spirits,” says Mike Birch, Bacardi Global Travel Retail managing director. “There is massive headroom to grow and, as the rum category leader, we have the ability, insights and full range to drive transformational change.”

There are also some positive signs that other rum producers are starting to gain a foothold in travel retail. For instance, Venezuelan rum Diplomático has made a dramatic breakthrough into duty free this year, gaining listings for its flagship Diplomático Reserva Exclusiva at six hub airports – Paris Charles de Gaulle and Orly, Rome Fiumicino, Prague, Miami and Panama Tocumen. The launch at Paris CDG in France where Diplomatico has an established domestic presence was a particular success with the brand selling out on the first day on shelf.

“As a global premium rum brand, the entire [Diplomático] portfolio speaks to the cosmopolitan and adventurous traveller, especially those who frequent international shops,” says an upbeat Mario Navarro, business development manager for Diplomatico. He reveals the brand is confident of expanding distribution to 25 airports by the end of the year.

And Stoli Group is set to showcase US craft rum brand Bayou Rum at this year’s TFWA World Exhibition following the signing of a distribution deal with the Louisiana-based company earlier this year.

So is “transformational change” just around the corner for rum in travel retail? My gut feeling is that it is a few years off becoming a major force in the channel in the same way that gin, for instance, has suddenly become. Yet given that rum can appeal to both holidaymakers as a fun, mixable spirit, and to connoisseurs as a serious brown spirit at higher price points, its importance in the travel retail liquor mix can only grow in the years ahead.

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