In October, news broke that American drinks giant Brown-Forman was set to purchase Diplomático Rum and the brand’s related assets from Spain’s Destillers United Group for an undisclosed fee purported to be $775m by the US Securities & Exchange Commission.
It marks the first move into the rum category by the owner of Jack Daniel’s, Woodford Reserve, and El Jimador and, while that fact may come as some surprise, with the premium-and-above rum category never being in better health, the timing doesn’t.
According to the IWSR, global premium-and-above rum volumes rose by a compound annual growth rate of 8% between 2014 and 2019, outpaced slightly by value, which rose by 9% over the same period.
Post a strong Covid recovery, that growth is expected to continue, volumes are forecast to climb by 6% CAGR and values by 6.5% CAGR between 2021 and 2026.
“We continue to see strong performance across all of our markets,” says Edouard Beaslay, global marketing director for Diplomático Rum.
“The increased interest in premium and super-premium rums with authentic heritage and provenance has helped to establish the growth trend, along with more rum-focused concepts and programmes in the on-trade and it’s the premium [rum] category that is growing the most.”
Rum is a global business but it’s Brown-Forman’s home market of the US that is seeing the greatest concentration of premium-plus rum consumption and it’s still growing. According to the IWSR, the American market has seen volumes increase by 2% between 2014 and 2019 but that growth is set to accelerate, growing by a forecasted CAGR of 7% between 2021 and 2026.
It makes sense then for a US market leader to bring Diplomático into its portfolio, but outside of the US, demand is still strong. Havana Club, a brand not available within the US, has nonetheless enjoyed a surge in popularity.
“It’s clear that rum is diversifying and attracting a growing number of consumers, evident in our record-breaking sales, 4.6 million nine-litre cases in FY22, and 20% year-on-year growth driven by double-digit growth in core markets and increased exports to emerging markets,” says Anne Martin, global marketing director for Havana Club.
“We are currently witnessing a surge in the demand for premium rum in our key markets –such as the UK, France, Germany, Italy and Spain – and we’re not expecting this to slow down yet.”
Conquering marketability
It appears premium rum has managed to crack the problem often levied against it in the past – its marketability.
While Scotch is Scotch and Cognac is Cognac, premium rum can be found in any number of styles, as Jose Luis Hermoso, research director at IWSR, notes: “The lack of a clear geographical indicator makes rum both more flexible and simultaneously harder to market than single malt.”
But it could be that very point that is now working in the category’s favour.
“What makes this category so interesting and appealing to an increasingly large number of consumers is its richness and diversity,” says Beaslay.
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“The rum category has a great history and cultural legacy and now there is a great opportunity to regain rum’s reputation as a refined spirit of special interest.”
Often the drinks industry is a perceptions game. So often brands talk about the need for them to be altered or updated and spirits categories can often be constrained or misrepresented by stereotypes. Being so ingrained, changing perceptions isn’t quick or easy, but premium rum has been able to somewhat navigate it.
“The change in perception of rum from a spirit that is drunk mixed to one that can be sipped continues,” says Hermoso. “Premium-and-above rum is therefore growing at the expense of lower qualities.”
Martin adds: “In recent years, rum has established itself as a fashionable and credible alternative to high-end classics such as Scotch and Cognac.
As such, a growing number of consumers are buying into the category and rum is demonstrating it has all the necessary credentials to establish a stronger foothold in the premium spirits market.”
Increasingly, the category is proving to have the collectability of other luxury categories, with bottlings of Caroni, Foursquare, Dictador and other sought-after brands regularly fetching thousands in the secondary market.
Not just a spirit to be sipped though the category has found itself an audience in the cocktail world, and as bartenders and guests become increasingly distinguished globally, there is a demand for ingredients that can offer more.
“Its versatility means it can be enjoyed neat, on the rocks, with a mixer or in a refined cocktail,” says Martin.
In the latest Drinks International Annual Brands Report, which surveys the 100 best bars globally according to the World’s 50 Best Bars list, all of the 10 bestselling rum brands were premium.
Premium rum has gone from being a ‘one-to-watch’ to a bonafide big hitter in the premium and premium-plus spirits world. Its variety has made it the perfect benefactor of so many of the wider trends of the industry.
Diplomático Rum is a wildly popular brand and, under the stewardship of Brown-Forman, if handled correctly, that popularity will only increase, but the ramifications for the wider category are exciting too.
Big money purchases go to show that there’s a category here that has made strides but still has further to go.
