Article By: Robert Bradford
Last year marked a full decade of consistent upbeat momentum for this second-largest distilled spirits category in the US, now well up over 2O million cases in total volume sales, and continuing to build on its consumer appeal with an ever-expanding introduction of trendy lower-proof flavored brands, lower-calorie product alternatives, and with marketing initiatives boosted by an unprecedented hefty annual category ad spend that, last year, topped the $6O million dollar advertising plateau for the first time ever.
Not surprisingly, a third of this advertising total was invested by the dominant category colossus, Bacardi USA, whose whopping nearly 9 million case sales peformance continues to represent close to a 5O% share of the US rum marketplace. Other major ad spenders were also familiar big brand leaders like Diageo's prodigiously successful Captain Morgan family of spiced rum products, the Puerto Rican Rum syndicate, Brown-Forman's high-flying Appleton labels from Jamaica, as well as the expansive flavored portfolios of Allied Domecq Spirits' Malibu and Cruzan, Ltd.'s widely-assorted flavors, both long-standing mixed-rum-drink favorites among bartenders. Without a doubt, it's been largely this flavors boom, as with vodka, that's been driving these rum volume sales figures skyward and generating most of the category excitement for many years. But so much for some of the more sanguine statistics about rum, because there have also been some disturbing and long-standing downsides to consider about this category that are not so swell.
Conspicuously missing and especially frustrating about rum has been the kind of higher premium cachet that has by now become so dramatically well-established with luxury-level vodkas, tequilas and even some ultra-premium gins. In this all-important image area, the rum category has been left far behind. And what makes this particularly aggravating, in the view of many knowledgable rum lovers - myself among them - is that rum has long possessed a virtual treasure-trove of fascinatingly complex, cosmopolitan, stylistically diverse upper-premium sipping experiences which are arguably some of the most refined in the entire spirits world. Yet, even today, few of the vast audience of rum drinkers out there are even aware of these higher category products, let alone providing them any purchasing support.
However, perhaps the best news the rum industry could possibly receive this year is that consumers are starting to wake up. The fog is lifting. Finally, the outline of a super-premium marketplace is emerging on the horizon line in significant and promising ways. Everyone seems determined to create an upscale consumer acceptance that this under-achieving category has never really enjoyed, but has long deserved.
In some ways, today's rum environment is reminiscent of that bygone age of infamous16th-century Spanish Conquistadors who ravaged every nook and cranny of the New World in their zealous hunt to discover El Dorado, the Aztec's legendary City of Gold. And who knows? Maybe that kind of wealth is out there today.
Some of the intriguing questions one has to ask about this enigmatical rum category are, first of all, why has this pitch of excitement taken so long to develop? Also, what are some of these promising new upper-tier products and what's in the works for their development? Finally, of course, are the questions on the minds of brand builders in every supplier's think-tank on the planet: Can rum truly achieve a marketable super-premium status? Is it worth rolling the dice?
To gather answers, I conferenced with a world-famous rum expert, the irrepressible owner of a genuine specialty rum bar restaurant in New Hampshire, as well as leading rum suppliers, distributors and marketing executives.
Let's start with Luis Ayala, the celebrated Texas-based rum guru-at-large. Internationally regarded as "The Rum Professor", Luis graciously provided me the most fascinating and insightful educational critique of any spirits category I have had the pleasure to hear. His career has been focused on the category in several distinguished capacities, as a writer, critic, publisher, lecturer, and educator. He is also a much sought-after consultant helping companies with product development, taste profiles for brands, product staff training, and tasting seminars for building consumer understanding of this highly complex spirit.
Among his many achievements, he is the world's most-published author on the rum subject, and is president and founder of Rum Runner Press, Inc. His works include an exhaustive masterful reference, The Rum Experience, a comprehensive Encyclopedia of Rum Drinks, containing over 13OO cocktail recipes dating as far back as the 18OOs, American Rum, which is a scholarly and fascinating study of rum heritage in North America from colonial times to the present, and his recent The Rum Buyer's Guide, designed to bring together rum producers, alcohol wholesalers, importers, and distributors. As such, it is the first guide of its type ever published.
surprisingly, Luis is much in demand as a celebrity judge at
many of the most prestigious international spirits tasting
competitions, and is noted for his unbiased opinions and
unusually discerning palate. Two years ago, he also founded
an on-line educational vehicle, The Rum University
(rumuniversity.com), whose mission is to increase global
awareness about rum as a quality premium distilled spirit,
and to encourage its responsible consumption. It's safe to
say that no one on the planet has a better grasp of the
present day rum marketplace, what consumers want, how they
feel about current products, and ways to motivate them to
try new ones.
current craze for flavored rums has been the principal force
driving the category the last few years, but many question
whether they are genuine rum products. How do you evaluate
LUIS AYALA There's no doubt flavors continue to be the category's most exciting growth items in terms of volume and trend, but very honestly I think of flavors as being almost distractions when it comes to advancing true rum appreciation. I mean, by themselves, most of these flavor products should not even be sold as rums, because they're produced with un-aged ethanol. And in most other rum-producing countries, this is unacceptable. For example, you go to Venezuela or the Dominican Republic or Guatemala, and so many other places of origin, any rum has to be aged three years by law before a producer can legally put the word rum on the label. But you see so many of these flavored products, and there's not a single hint on the label that this is a rum. So, the fact is, any kind of product like this could not be considered a rum in most of the rum-producing nations of the world. There are a few flavored products that are exceptions. One, in particular, is a Santa Theresa Orange from Venezuela. It's made with a blend of 3- to 5-year-old aged rums and is a very legitimate flavored rum brand of distinctive high quality, and with rum you can really taste. There are a few others out there, as well, and they stand out in the flavored segment of the category like pearls in a vast field of pebbles.
Another quality rum issue that seems to be unclear is the
use of the term "super-premium". How do you define it, and
when should it be legitimately assigned when describing a
LA Super-premium is indeed an extremely cloudy and often misleading terminology about rums, not to mention so many other spirits categories. It is frequently misused in so many cases, both in advertising and by producers. You can call almost anything you want a super-premium because there are really no set standards, and you certainly can't depend on a price-point gauge as a guideline. Obviously there are a few extreme collector rarities like the Mt. Gay Tricentennial bottling that retails anywhere from $3OO to $5OO for a 75Oml, depending on the market you're in - if you can even find it, that is. But let's just consider items that have a large enough production for an importer to be able to distribute in more than one niche market, and with a price that's not outside the purchasing power of the average consumer of that segment. And, with rums, this nomenclature gets very tricky. It's not at all like brandy and cognac where XO really means something. So, personally, when I talk about super-premium products, I'm not looking at price nor the history of the company nor all the various marketing spins. I focus on where a product has historically ranked in major competitions with other rums in the same age group and style. And the ones that consistently have received superior ratings is what I look for in determining genuine super-premium status.
What most excites you about the category today?
LA What's really exciting is seeing the amount of consumer attention the higher market segment is starting to generate. I recently returned from teaching rum classes at Florida International in Miami, and had a chance to go to South Beach and a lot of the happening places. And the excitement is what you're seeing with more and more younger consumers beginning to explore, discover and spend significant dollars on some of these higher level specialty rums. These are the consumers that can really start driving the demand for this segment of the rum marketplace faster than anything else. A great many of these South Beach establishments have been notably successful getting younger drinkers to trade up from tested and true standard classics like Cuba Libre or a mojito, and now ordering a Cadillac version with some of the aged products. Quality is really starting to count.
Rum also derives contemporary excitement from an identity with the growing popularity surrounding all the hip-hop and rap music culture and cuisine that's been coming, in part, from the Caribbean and Central and South America. Look what it's done for the cognac industry. The more that this wave can work as a cohesive movement for rum, the more all the surfers on it are going to benefit.
You've got to get excited about this, because what you're looking at is the future of the category. In the classes I teach, I spend time talking about what I call the 'old rum generation', that lived through the Depression and WW II. It dates all the way back to the end of Prohibition and, by now, has pretty much stopped being a driving factor in the economy. Fact is, it has virtually disappeared. And the next generation these Old Folks most influenced is also on the way out, as well. So, what this gives us in today's market is an influx of consumers who really have had no firsthand experience nor any of those stigmas that surrounded rum in these earlier years, when rum was frequently considered an "evil spirit" and held responsible for broken homes, abusive parents and all these kinds of negative images. Forget all that baggage. It means today's rum consumers are coming in with a clean plate and an open mind, and are not jaded by any cultural prejudices. And they're also not resisting rum because it might have been "grandfather's drink and I'm going to be different" type of problem that occur in many spirits categories. All this creates virgin territory and remarkable new opportunities for rum that are almost unprecedented. For the industry, it can't get much more exciting than this.
Does the phenomenal success and category leadership of
dominating lower market spiced and flavored brands like, for
instance, Captain Morgan, impede this upscale movement in
LA Admittedly, although the Captain Morgan persona may be a phenomenal marketing success story, the rum image it presents doesn't do much of anything for a sophisticated spirits consumer. Captain Morgan is all about party time at the introductory category level, and, despite the marketing image, as any student of Caribbean history well knows, the Captain himself was a less than admirable figure, who pillaged and burned his way through Jamaica, and, later, with full autocratic control, was appointed governor by a decidedly undemocratic process. Plainly speaking, the real life Captain Morgan was a ruthless tyrant.
But having said that, the one thing rum has greatly benefited from all these intense Captain Morgan brand marketing initiatives is that they have also now created a Captain Morgan Private Stock higher quality brand level that promotes a trading-up concept, not only for the brand, but actually for the entire category. And this really stirs up the market for a large contingency of young consumers. It's definitely a considerable upgrade to the Captain Morgan base brand and it plants some very significant seeds that can hold consumers within the category. If this trade-up idea wasn't there, a lot of these young party-animal consumers would be changing out of rum and moving up in other category directions as their lifestyles mature. So, as long as The Captain is keeping people in the rum arena, God bless his less than exemplary soul. Perhaps for the first time in his existence, he is performing a significant public service to others and to the rest of the rum category, as well. Also, quite apart from its own success, the brand has been opening up the doors for other companies to convince consumers to consider sideways or upper movements into higher category products.
You are a well-known brand strategy analyst. What strategies
do you feel make the most sense for the long-term future
health of the rum industry?
LA A very relevant question, and one of the most effective things I have seen in all my years is that the companies that spend all their time and money on strategies that are long-term are the only ones that are going to benefit long-term. Short term, you're going to have a company that's funded by entrepreneurs that will spend a couple million dollars on some hot product and then disappear a year or two after they've made some money. But they don't have the confidence or interest to continue with any long-term investment. It's the companies, who are my clients, who send me to places like Miami to teach classes on the differences of rum and distinguishing quality to future restaurant-hotel-and bar managers in training at the universities. These are the companies planting the seeds for the category with a long-term vision. They don't want to be teaching old dogs new tricks later on. They're trying to get qualified new people out there who will be very open to carrying their products in the future. You hear about all these on-premise wait and bar staff training that go on with so many brands. But doing it at the initial hotel school and university training level is head-start education well in advance.
There's nothing wrong with doing on-premise training. But, in so many markets, whether legal or not, there are all these cash incentives and companies that go to all these top bars flipping $1OO bills to the bartenders so they can push their products. And, while this may be worth it for short-term business, what happens the next time when someone comes in with $15O or $2OO. So, these are purely short-term incentives, and unless you have very deep pockets, you can't afford to stay on top. Yes, these on-premise people will take cash incentives from any company to promote their products, but, in between, and in the long run, they'll revert to the basics they learned in school when you planted the seeds, and they'll always be your advocates.
Can you name a few producers and brands you especially find
interesting, and who have this long-term philosophy?
LA Yes, from Guatemala, Ron Zacapa is an outstanding example. Their 23- and 15-year-old Ron Zacapa Centenario labels are tremendous rums, and they're really putting emphasis on long-term success of the brand. Their flagship is the 23-year-old, so you can be sure they're not just throwing money at a marketing campaign or interested in doubling their market share from one year to the next. You just don't have the volume production capability with very old artisan rums. So, they're riding on a game plan for growth that was put in place a couple of decades ago. Big numbers are not their concern. They're looking for being the elite in whatever market they're in, and looking for customers who don't have to keep being reminded of what the brand represents in terms of quality. They're spending a lot of time, far more than companies ten times their size, on educating young professionals, who can appreciate the brand's classic high premium qualities. I can only say that when I first tried the 23-year-old, it blew my socks off. Can any rum top this one, I asked myself? But they're introducing an XO this year in very select markets, and I have to tell you, it's even better. So, they're really delivering on this long-term promise for the brand, and I have to single it out as a role model at the top of the rum world's finest quality. It's been in leading world-class blind-tasting competitions, including many I have been asked to judge in, against maybe 1OO other rums all claiming to be the nectar of the gods, and it consistently stands out by itself. All I can say is that any serious rum drinker should keep their eyes on this brand.
Other specific producers I especially admire include an El Dorado 15-year-old made in Guyana, and Jamaica's Appleton brand lineup. It's one of those few brand families that combines notably ultra-premium brand quality with also fine quality labels at more affordable lower price points. And it's a large operation and they can make a lot of it. The 21-year-old shows you what they're capable of, but the lower marques are excellent quality products right down the line. I also admire Mt. Gay, the celebrated Barbados producer, which is the oldest, legally documented, continuously operating rum distillery on the planet, now over 3OO years in the rum business. One thing Mt. Gay does, as opposed to a great many of the other large volume distillers, is that they still use small batch pot-stills as well as continuous column stills, and many of their products are combinations of the two. This gives you a little of the refined brandy-like character of the pot-still, plus the clean neutrality associated with column stills. So, they are able to produce something that appeals to two major rum consumer palates, the ones looking for the clean Puerto Rican rum style, and the ones wanting a more Jamaican fruitness and heaviness.